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A  TREATISE 

ON  THE 

LAW  OF  DAMAGES 

EMBRACING 

AN  ELEMENTARY  EXPOSITION  OF  THE  LAW 

AND  ALSO 

ITS  APPLICATION  TO  PARTICULAR  SUBJECTS  OF 
CONTRACT  AND  TORT 


BY  J.  G.  SUTHERLAND 

III 

AUTHOR  OF  A  TREATISE  ON  "STATUTES  AND  STATUTORY  CONSTRUCTION' 


FOURTH  EDITION 

BY 

JOHN  R.  BERRYMAN 


IN  FIVE  VOLUMES 

VOL.  I 


CHICAGO 

CALLAGHAN  AND  COMPANY 

1916 


COPYRIGHT    1916 
Bv 

CALLAGHAN  &  COMPANY 


PREFACE  TO  FOURTH  EDITION. 

But  little  explanation  is  required  for  the  publication  of  the 
fourth  edition  of  Judge  Sutherland's  great  classic  on  Damages. 
For  thirty-four  years  it  has  been  the  standard  work  on  that 
subject  and  has  probably  been  cited  by  the  courts  more  fre- 
quently than  any  modern  text  book  on  any  subject. 

The  law  of  damages  is  a  continuously  developing  subject. 
It  is  the  law  governing  probably  ninety-eight  per  cent,  of  the 
relief  sought  in  civil  litigation. 

New  applications  of  old  principles  and  the  modification  of 
old  principles  themselves  to  meet  the  changing  views  of  society 
or  the  progress  of  the  age  have  affected  the  law  of  damages  as 
indeed  they  have  affected  every  other  branch  of  the  law,  but  to  a 
greater  extent.  Remedial  legislation  such  as  Federal  Employ- 
ers' Liability  Act  and  the  Workmen's  Compensation  Acts  have 
worked  great  changes  in  the  existing  law.  So  great  has  been 
the  increase  in  judicial  decisions  during  the  thirteen  years  elaps- 
ing since  the  publication  of  the  third  edition  of  this  work  that 
it  was  found  necessary  to  increase  the  number  of  volumes  ade- 
quately to  care  for  the  increased  material. 

Except  as  changes  were  necessary  owning  to  changes  in  the  law, 
the  text  of  the  third  edition  is  preserved  intact  while  some  fifteen 
thousand  additional  citations  have  been  incorporated  in  the  work. 

The  publishers  regTet  to  announce  that  this  is  a  posthumous 
work.  Mr.  John  R.  Berryman  who  in  1892  edited  the  second 
edition  and  in  1903  was  the  editor  of  the  third  edition  unfortu- 
nately did  not  live  to  witness  the  completion  of  his  labors  on 
the  fourth  edition.  The  publication  of  the  work  therefore  has 
been  superintended  by  the  publishers'  editorial  staff. 

CALLAGHAN  AND  COMPANY. 
October,  1916. 

iii 


i 


PREFACE  TO  FIRST  EDITION. 


The  law  of  damages  is  now,  and  for  many  years  has  heen, 
in  the  course  of  rapid  and  expansive  growth;  its  former  ap- 
plications have  been  subjected  to  frequent  forensic  and  judi- 
cial review,  with  the  advantage  of  the  experience  and  learning 
of  the  past,  and  the  stimulus  as  well  as  the  suggestive  aid  of 
new  and  diversified  interests  demanding  protection,  and  new 
forms  of  injury  invoking  redress. 

It  is  therefore  desirable  that  the  law  be  often  rewritten  to 
incorporate  in  its  structure  the  results  of  the  latest 'adjudica- 
tions, not  only  for  the  light  they  reflect  upon  the  earlier  cases, 
but  to  derive  the  full  benefit  of  these  accretions,  which  embody 
the  contribution  of  contemporary  jurists  and  master  minds  of 
the  profession. 

The  administration  of  justice  is  committed  to  so  many  inde- 
pendent tribunals,  that  it  is  not  surprising  their  determinations, 
especially  of  questions  of  first  impression,  have  not  proceeded 
in  a  very  harmonious  current.  Differences  of  judicial  opinion, 
more  or  less  radical,  under  such  circumstances,  are  unavoid- 
able. These  are  liable  to  result  in  permanent  divergencies; 
and  to  beget  local  exceptions  and  peculiarities  so  numerous 
as  to  greatly  mar  the  symmetry  and  impair  the  authority  of 
our  general  jurisprudence. 

Erequent  elementary  expositions  of  the  law,  embracing  a 
discussion  of  the  discordant  cases  with  reference  to  the  general 
principles  which  all  acknowledge,  are  of  great  importance; 
for,  to  the  extent  that  they  are  influential,  they  will  counter- 
act this  centrifugal  tendency. 

It  is  believed  that  the  work  now  offered  will  be  found  use- 
ful in  these  respects,  notwithstanding  that  excellent  works  on 

y 


yi 

the  same  subject  are  now  in  general  use.  It  has  extended  to 
three  volumes  by  being  made  to  embrace  a  wide  range  of 
topics  germane  to  the  general  subject,  and  by  an  elementary 
and  a  minutely  practical  treatment  of  them. 

The  First  Part  is  elementary,  and  designed  to  aid  the  in- 
quiries of  the  student,  and  to  facilitate  the  investigations  of 
the  practitioner.  In  it  are  stated  and  illustrated  the  general 
principles  upon  which  damages,  recognized  under  various 
names,  are  allowed  by  law;  their  scope  relatively  to  the  in- 
jury to  be  redressed;  the  principles  by  which  the  elements  of 
damage  may  be  tested,  and  the  amount  to  be  allowed  there- 
for determined;  by  which  facts  may  be  legitimately  weighed 
to  enhance  or  mitigate  damages;  how  they  may  be  juridically 
or  conventionally  liquidated  and  satisfied;  and  the  pleadings, 
evidence  and  procedure  suitable  and  necessary  for  their  re- 
covery. 

The  Second  Part  contains  a  particular  discussion  of  these 
principles  in  their  practical  application  to  the  subjects  of  con- 
tract and  tort,  which  give  rise  to  actual  demands  for  damages. 

The  whole  is  copiously  elucidated  by  decided  cases  and 
apposite  quotations;  and  the  supporting  authorities  will,  it  is 
believed,  be  found  to  embrace  all  the  decisions  of  any  impor- 
tance on  the  subject. 

The  author  submits  his  work  with  its  faults — for  he  dare 
not  hope  it  will  be  found  faultless — to  the  indulgent  judg- 
ment and  fair  criticism  of  the  profession. 

J.  G.  S. 

Salt  Lake  City,  September,  1882. 


PREFACE  TO  SECOND  EDITION. 


A  new  edition  of  this  work  has  been  deemed  necessary  to 
incorporate  into  it  the  results  of  the  numerous  adjudications 
during  the  ten  years  which  have  elapsed  since  the  publication 
of  the  first  edition.  A  thorough  revision  has  been  made,  and 
about  four  hundred  pages  of  new  matter  added  as  the  fruit  of 
nearly  seven  thousand  later  decisions.  By  a  judicious  con- 
densation of  the  old  matter  and  the  exclusion  of  some  redun- 
dancies, the  additions  have  not  so  materially  increased  the 
size  of  the  volumes  as  to  make  them  inconveniently  large.  The 
text  has  been  divided  into  sections  for  easier  reference;  but 
the  side-paging  will  serve  to  direct  the  reader  to  the  matter 
indicated  in  the  frequent  references  in  judicial  opinions  and 
by  text-writers  and  practitioners  to  the  first  edition. 

The  editors  submit  their  work  to  the  profession  with  the 
assvirance  that  they  have  spared  no  pains  to  make  it  compre- 
hensive and  accurate. 

J.  G.  S. 
J.  R.  B. 

KOVEMBEK,    1892. 

vii 


PREFACE  TO  THIRD  EDITION. 


This  edition  of  JKidge  Sutherland's  treatise  on  the  Law  of 
Damages  has  been  prepared  with  the  view  of  making  it  ex- 
pressive of  the  law  of  that  subject  as  it  is  at  the  present  time. 
This  has  not  been  done  at  the  expense  of  the  excellent  per- 
spective that  distinguished  wo-iter  gave  of  the  sul  ject  in  the 
first  edition.  That  part  of  the  work  remains  undisturbed. 
The  editor  has  sought  to  do  for  this  edition  what  he  endeav- 
ored to  do,  under  the  direction  of  the  author,  in  preparing  the 
second  edition:  incorporate  into  it  the  results  of  the  numerous 
adjudications  on  the  various  branches  of  the  law  of  damages 
made  during  the  eleven  years  which  have  elapsed  since  the 
publication  of  that  edition.  That  endeavor  met  the  approval 
of  the  author,  who  desired  that  this  edition  should  be  pre- 
pared by  the  editor  of  the  second  edition.  The  very  numer- 
ous references  in  the  reported  cases  and  treatises  on  various 
branches  of  the  law  to  that  edition  tend  to  show  that  it  has 
been  found  usoful  to  the  bench  and  bar.  The  controlling  aim 
in  the  preparation  of  this  edition  has  been  to  make  it  as  ad- 
vantageous as  possible  in  presenting  the  American  and  Eng- 
lish law  of  damages  as  it  has  been  declared  by  the  courts. 

The  American  cases  which  have  been  reported  in  unofficial 
series  of  reports  are  referred  to  therein.  These  references  and 
the  new  matter  added  to  the  text  and  notes  represent  about 
eight  hundred  pages.  To  make  room  for  so  much  additional 
matter,  it  has  been  found  necessary  to  condense  somewhat  a 
portion  of  the  matter  which  appeared  in  the  former  edition. 
It  is  hoped  that  this  has  been  done  without  serious  detriment 
to  the  value  of  the  work. 

Madison,  Wis.,  August,  1903.  John  R.  Bereyman. 


Vlll 


TABLE  OF  CONTENTS 


VOL.  L 

PAKT  I.— AN  EXPOSITION  OF  THE  ELEMENTS  OE 

DAMAGES. 


CHAPTER  I. — A  Geneeal  Statement  of  the  Right  to 
Damages,  Theib  Legal  Quality  and  Kinds. 

References  are  to  sections. 

General  observations 

The  right  to  damages ;  how  amount  ascertained 

Damnum  absque  injuria;  injuria  sine  damno 

Public  wrongs    - 

Illegal  transactions • 

Contractual  exemption  from  liability  for  damages   

Nature  of  the  right  to  damages;  its  survival;  what  law  governs  ^ 

the  measure  of  damages ^ 

Injuries  to  unborn  child  

CHAPTER  II. — Nominal  Damages. 

Nature  and  purpose  of  nominal  damages ^^ 

Illustrations  of  the  right  to  nominal  damages   ^^ 

The  right  a  substantial  one;  new  trials   

CHAPTER  III.— Compensation. 

Section  1.— Compensatory  Damages. 

Award  of  compensation  the  object  of  the  law  and  of  equity     ...-  12 

Lrmitation  of  liability  to  natural  and  proximate  consequences  . .  13 

Section  2.— Direct  Damages. 

14 

What  these   include   

iz 


X  TABLE    OF    CONTENTS. 

References  are  to  sections. 
Section  3. — Consequential  Damages  for  Torts. 

Awarded  for  probable  consequences   15 

Rule  of  consequential  damages  for  torts;  extension  of  liability  by 

statute 16 

Illustrations  of  the  doctrine  of  the  preceding  section 17-19 

Consequential  damages  under  fence  statutes 20 

Nervous  shock  without  impact;   the  Coultas  case  and  American 

cases  in  harmony  with  it    21 

Same  subject;  criticism  of  the  Coultas  case;  nervous  shock  a  phy- 
sical  injury 22 

Same  subject ;  an  earlier  ruling   23 

Same  subject ;  Dulien  v.  White 23a 

Same   subject ;    miscellaneous  cases    24 

Anticipation  of  injury  as  to  persons;   illustrations   25 

Consequential   damages   in  highway  cases    26 

Imputed   negligence    27 

Particular  injury  need  not  be  foreseen    28 

The  act  complained  of  must  be  the  efficient  cause  29-31 

Breach  of  statutory  duties   32 

Injury  through  third  person   33 

Liability   as  affected   by   extraordinary   circumstances    34 

Illustrations  of  the  doctrine  of  the  preceding  section 35 

Liability  of  carriers   for  consequential  damages;    extraordinary 

circumstances 36 

Intervening  cause   37,  38 

Acts  of  injured  party;  fraud  and  exposure  to  peril   39 

Act  of  third  person    40—42 

Wilful  or  malicious  injuriea   43,  44 

Section  4. — Ck)nsequential  Damages  for  Breach  of  Contract. 

Recoverable  only  when  contemplated  by  the  parties 45 

Illustrations  of  liability  under  the  rule  46 

Liability  not  affected  by  collateral  ventures  or  financial  condition 

of  a  party    47 

Distinction  between  consequential  liability  in  tort  and  on  contract  48 

Same  subject;  criticism  of  the  Hobbs  case 49 

Liability  under  special  circumstances;  Hadley  v.  Baxendale  ....  50 

Same  subject;   illustrations  and  discussion  of  the  rule   51 

Market  value ;   resale ;   special  circumstances    52 

Section  5. — Required  Certainty  of  Damages. 

Must  be  certain  in  their  nature  and  cause  63 

Liability  for  the  principal  loss  extends  to  details  and  incidents  54 

Only  the  items  which  are  certain  are  recoverable 55 

Recovery  on  successive  consequences   56-58 

Required  certainty  of  anticipated  profits 59,  60 


TABLE    OF    CONTENTS.  xi 

References  are  to  sections. 

Warranties  of  seeds  and  breeding  quality  of  animals 61 

Prospective  growth  of  orchard  and  of  animals 62 

Profits  of  special  contracts 63 

Same  subject ;  Masterton  v.  Mayor   64 

Violation  of  contract  to  lease 65 

Profits    of    labor     . ., 66 

Profits    from   commercial  ventures    67 

Profits  on  dissolution  of  partnership   68 

Commercial  and  insurance  agencies ;  proof  of  damages   69 

Tortious  interference  with  business   70 

Chances    for    prizes    and    promotions    71 

Contingent  advantage    .72 

Uncertain  mitigation  of  breach  of  marriage  promise   73 

Failure  to  provide  sinking  fund    74 

Section   6. — The   Constituents  of  Compensation,  or   Elements  of  Damage. 

Elementary  limitation  of  damages 75 

Damages  for  nonpayment  of  or  failure  to  loan  money 76 

Greater  damages  than  interest  for  failure  to  pay  or  loan  money  . ,  77 

Liability  for  gains  and  losses 78 

What  losses  elements  of  damage  79 

Same  subject;   labor  and  expenditures   80 

Same  subject;   damages  by  relying  on  performance   i  81 

Same  subject;  liability  to  third  persons;  covenants  of  indemnity  82 

Same  subject;   indemnity  to  municipalities;   counsel  fees   83 

Same  subject;  liability  for  losses  and  expenses 84 

Same  subject;  bonds  and  undertakings;  damages  and  costs   ....  85 

Same  subject;   necessity  of  notice  to  indemnitor  to  fix  liability  86,87 

Expenses  incurred  to  prevent  or  lessen  damages   88 

Same  subject;  between  vendor  and  vendee 89 

Same  subject;  extent  of  the  duty   , 90 

Same  subject;  employer  may  finish  work  at  contractor's  expense  91 
May  damages  for  breach  of  contract  include  other  than  pecuniary 

elements  ?    92 

Elements  of  damage  for  personal  torts 93 

Character    as   affecting    damages    for    personal    injuries,    and    in 

actions  for  death 94 

Mental    suffering    95, 96 

Same  subject;    liability   of  telegraph  companies    97 

Right  to  compensation  not  affected  by  motive    98 

Distinction  made  for  bad  motive ;   contracts   99 

Motive    in    tort   actions , 100 

How  motive  affects  consequences  of  confusion  of  goods 101 

Where  property  sued  for  improved  by  wrong-doer  102,  103 

Distinctions  in  the  matter  of  proof   104 

Value  of  property 105 


Xll  TABLE    OF    CONTENTS. 

References  are  to  sections. 

CHAPTER  IV. — Entieety  of  Causes  of  Action  and 

Damages. 

Section  1. — General  Principles. 

Cause  of  action  not  divisible  106 

Present   and   future   damages    107 

What  is  an  entire  demand  ?   108 

Entire  demand  may  be  severed    109 

Contracts   to   do   several   things   successively   or   one   thing   con- 
tinuously       110 

Items  of  account   Ill 

Continuing   obligations 112 

Damages  accruing  subsequent  to  the  action  113 

Damage  to  real  property    114-116 

Contracts   of   indemnity    117 

Damage  to  property  and  injury  to  person,  and  injury  to  the  per- 
son and  damage  to  reputation  by  same  act 118 

What  is  not  a  double  remedy    119 

Prospective  damages 120 

Certainty  of  proof  of  future  damages    121 

Same   subject;    action   for  enticing  away   apprentice,   servant   or 

son,  or  procuring  discharge  of   servant    122 

Future  damages  for  personal   injuries    123 

Only  present  worth  of  future  damages  given 124 

Continuous  breach  of  contract  or  infraction  of  rights  not  an  en- 
tirety       125 

Continuance  of  wrong  not  presumed 126 

Necessity  and  advantage  of  successive  actions   127 

Section  2. — Parties  to  Sue  and  Be  Sued. 

Damages  to  parties  jointly  injured  entire   128 

Actions    under    statutes 129 

Must  be  recovered  by  person  in  wliom  legal  interest  is  vested  .  . .  130 

Not  joint  when  contract  apportions  the  legal  interest 131 

Implied  assumpsit  follows  the  consideration 132 

Effect  of  release  by  or  death  of  one  of  several  entitU'd  to  entire  133 

Misjoinder  of  plaintiffs,  when  a  fatal  objection    134 

Joinder  of  defendants;  effect  of  non-joinder  and  misjoinder   ....  135 

How  joint  liability  extinguished  or  severed    136 

Principles  on  which  joint  right  or  liability  for  tort  determined  137 

Tortious  act  not  an  entirety  as  to  parties  injured   138 

General    and    special    owners    139 

Joint  and  several  liability  for  torts 140,  141 

Same  subject,  civil  damage  statutes;  acts  of  members  of  partner- 
ship   142 


TABLE    OF    CONTENTS.  Xlll 

References  are  to  sections. 

CHAPTER  V. — Legal  Liquidations  and  Reductions. 

Section  L — Circuity  of  Action. 

143 

Defense  of    '*  *  "  ^ . . 

Agreement  not  to  sue • 

Principle  operates  in  favor  of  plaintiff 

Damages  must  be  equal 

Reciprocal  obligations 

Section  2. — Mutual  Credit. 

Compensation  by  mutual  demands   

Section  3.— Mitigation  of  Damages. 

149 

Equitable  doctrine  of  -^^^ 

Absence  of  malice '  '  *  1 ' ,'  1 1 

Words  as  provocation  for  assault;  agreements  to  fight,  payment  ^^^ 

of  fine    -j^gg  153 

Provocation  in  libel  and  slander   • '      " 

Mitigating  circumstances  in  trespass  and  other  actions J^^ 

Plaintifl^'s  acts  and  negligence :""'.'. f ' 'i' V  ' 

Measures  of  prevention;  return  of  property;  discharge  of  plain-  ^^^  ^^^ 

tiff's  debt r;  '  V  ■+ '  158 

No  mitigation  when  benefit  not  derived  from  defendant     |_ 

Fuller  proof  of  the  res  gestce  in  trespass,  negligence,  etc J|>j^ 

OflScial    neglect ■^^^^^^ 

Same  subject ;  modification  of  the  old  rule •  •  •  •  •  ^^^ 

Plaintiff's    consent    • -j^g^ 

Injuries  to  character  and  feelings    •  ^^^ 

Reduction  of  loss  or  benefit  • "  " "  ^^^^  ^^^ 

Pleading   in   mitigation    ' ' '  *  *  '  ^q^ 

Payments    

Section  4.— Recoupment  and  Counter-Claim. 

.                                             ...     168,160 
Definition  and  history  of  recoupment •  •  •  • ^^^^  ^ ^^ 

Nature   of   defense 172 

Constituent  features  of  recoupment  .".']*.*..'.  173 

Remedy   by    counter-claim    ,....  174 

Validity    of    claim    essential    • '.'.*.*,*.'.'.".     175,176 

Parties        .<••••  177 

Maturity'  of  claim  or  demand ;  statute  of  limitations 

Cross-    aim  must  rest  on  contract  or  subject-matter  of  action  ..  8 

Recoupment  for  fraud,  breach  of  warranty,  negligence,  etc 179, 18^ 

What  acts  may  be  the  basis  of  recoupment  ^^^ 

Cross-claims  between  landlord  and  tenant ^^^ 

Cause  of  action,  connection  between  and  cross-claim   ^^^ 

Recoupment   between   vendor    and    purchaser    ■■^■^^■- '  ^gg 

Liquidated  and  unliquidated  damages  may  be  recouped 


XIV  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Affirmative  relief  not  obtainable 186 

Election  of  defendant  to  file  cross-claim  or  sue  upon  his  demand  187 

Burden  of  proof;  measure  of  damages   188 

A  cross-claim  used  in  defense  cannot  be  sued  upon 189 

Notice  of  cross-claim 190 

Section  5. — Marshalling  and  Distribution. 

Definition    191 

Sales  of  incumbered  property  in  parcels  to  different  purchasers  192 

Sales    subject   to    incumbrance    193 

Effect  of  creditor  releasing  part   194 

Rights  where  one  creditor  may  resort  to  two  funds  and  another 

to    only    one 195 

Same  where  the  funds  belong  to  two  debtors   196 

Principles  on  which  priority  determined  197 

Section  0. — Set-Off  of  Judgments. 

Power  to  direct  set-off  inherent   198 

When  it  will  or  will  not  be  granted   199 

Interest  of  the  real  parties  considered   200 

Set-off  not  granted  before  judgment   201 

Assignee  must  make  an  absolute  purchase  202 

Nature  of  action  immaterial;   foreign  judgments   203 

Liens  of  attorneys  204 

CHAPTER  VI. — Pecuniary  Representative  of  Value. 

Section  1. — Money. 

Characteristics  of  money 205 

Payment  to  be  made  in  money  of  country  of  performance 206 

Payment  in  currency   ,. .  207 

Effect  of  changes  in  the  value  of  money   208 

Value  of  money  at  time  of  contracting 209 

The  legal  tender  act   , 210 

Effect  of  fluctuations  in  currency   211 

Section  2. — Par  and  Rate  of  Exchange. 

Par   of   exchange    . ., 212 

Rate  of  exchange   213 

CHAPTER  VII. — Conventional  Liquidations  and 
Discharges. 

Section  1. — Payment. 
What  is ;  modes  of  making ,,..,..........•     214-216 


TABLE    OF    CONTENTS.  XV 

References  are  to  sections. 

What  is  not  payment   217 

Eflfeet  of  payment 218 

Payment  before  debt  due   219 

Payment  by  devise  or  legacy 220 

Payment  by  gift  inter  lAvos 221 

Retaining  money  by  executor,  etc 222 

Payment  in  counterfeit  money,  bills  of  broken  banks  or  forged 

notes  and  checks    223  224 

Payment  by  note,  bill   or  check    225-227 

Collaterals  collected  or  lost  by  negligence  of  creditor  are  pay- 
ments       228, 229 

Who   may   make  payments 230 

To  whom  payment  may  be  made  231 

Pleading   payment    232 

Evidence  of  payment 233 

Section  2. — Application  of  Payment. 

General    rule    234 

By    debtor     235, 236 

Same  subject ;   evidence   237 

By   creditor 238-240 

Appropriation  by  the  court 241 

When  payments  applied  pro  rata   242 

General  payment  applied  to  oldest  debt 243 

General  payment  applied  to  a  debt  bearing  interest,  and  first  to 

interest 244 

General  payments  applied  to  the  debt  least  secured;  comments  on 

conflicting  views  of  the  general  subject    245 

Section  3. — Accord  and  Satisfaction. 

Definition    246 

Consideration  . ., 247 

Payment  of  part  of  a  debt  will  not  support  agreement  to  dis- 
charge the  whole    248,  248a 

Any  other  act  or  promise  which  is  a  new  consideration  will  suffice  249 

Composition    with    creditors    250 

Compromise  of  disputed  claim   251 

Agreement  must  be  executed   252 

Rescission  or  exoneration  before  breach  252a 

Section  4. — Release. 

Definition    253 

Differs  from  accord  and  satisfaction    254 

Extrinsic  evidence  and  construction  255 

Who  may  execute 2^" 

Effect  when  executed  by  or  to  one  of  several  claiming  or  liable  257 


XVI  TABLE    OF    CONTENTS. 

References  are  to  sections. 

What  will  operate  as  a  release    258 

Covenant  not  to  sue 259 

Section  5. — Tender. 

Eight  to  make    . .; 260 

On  what  demands  it  may  be  made   261 

When  it  may  be  made 262 

In  what  money  ,. 263 

By  whom 264 

To  whom 265 

It  must  be  suflScient  in  amount   266, 267 

How  made    268 

Wliere  to  be  made    269 

Must  be  unconditional 270 

Effect  of   accepting    271 

Must  be  kept  good 272 

Waiver  and  omission  of  tender  on  sufficient  excuse   273 

Tender  must  be  pleaded  and  money  paid  into  court 274 

Effect  of  plea  of  tender   275 

Effect  of  tender  when  money  paid  into  court 276 

Effect  of  tender  on  collateral  securities  277 

Paying  money  into  court  278 

Section  6. — Stipulated  Damages. 

Contracts  to  liquidate  damages  valid   279 

Damages  can  be  liquidated  only  by  a  valid  contract 280 

Modes  of  liquidating  damages;   computation  of  time 281 

Alternative   contracts    282 

Liquidated  damages  contradistinguished  from  penalty 283 

The  evidence  and  effect  of  intention  to  liquidate 284 

Stipulated  sum  where  damages  otherwise  certain  or  uncertain  . .  285 

Contracts  for  the  payment  of  money   286,  287 

Large  sum  to  secure  payment  of  a  smaller 288 

Stipulation  where  damages  certain  and  easily  proved    289 

Stipulation  when  damages  uncertain    290-292 

Same   subject;    illustrations    293 

Stipulation  for  payment  of  a  fixed  sum  for  partial  or  total  breach     294,  295 

Effect  of  part  performance  accepted  where  damages  liquidated  296 

Liquidated  damages  are  in  lieu  of  performance  297 

Effect  of  stipulation  upon  right  of  action       298 

Waiver  of  right  to  stipulated  damages 299 

CHAPTER  VIII.— Interest. 

Definitions  and  general  view  300 

Interest  by  the  early  common  law 301 

InteresJ;  in   England   legalized  by   statute    302 


TABLE    OF    CONTENTS.  xvii 

References  are  to  sections. 

Interest  at  common  law  in  America    303 

Agreements  for  interest    304 

Section  1. — General  Promise  to  Pay  Money  "With  Interest." 

Rule    of    construction    305 

Law  or  custom  fixes  the   rate 306 

Legal  or  stipulated  rate  applies  from  date    307 

Whether   same   rate   will   apply   after   debt   due    308, 309 

Section  2. — Agreements  for  Interest  "Until  Paid." 

Agreements  for  interest  from  date  until  debt  paid 310 

Agreements  for  a  different  rate  after  debt  due 311,  312 

Section  3. — Agreements  for  More  Than  Legal  Rate  Before  Maturity. 

Effect  of  usury  found  313 

Who  may  take  advantage  of  usury    314 

When  contracts  not  void  for  usury  315 

Recoveries  under  usury  statutes    , 316,317 

Section  4. — Agreements  for  More  Than  Legal  Rate  After  Maturity. 

Not  usury ;  but  penalty   318 

Same  subject;   when  debtor  relieved  in  Illinois 319 

Section  5. — Interest  as  Compensation. 

Scope  of  section   320 

Right  not  absolute    321 

Tacit  agreements  to  pay  interest  on  accounts   322 

Interest  where  payment  unreasonably   and  vexatiously   delayed  323 

Quantum  meruit  claim  to  interest   .  .^ 324 

Allowed  on  money  loaned     325 

Allowed  on  money  paid    326,  327 

Quantum  meruit  claim  to  interest  between  vendor  and  purchaser  328 

Interest  allowed  from  time  when  money  ought  to  be  paid 329 

No  interest  on  penalties  nor  statutory  liability  for  riots  330 

When  allowed  on  penalty  of  bonds   331 

Interest  against  government   . ., 332 

Judgments  bear  interest   333,  334 

Not  allowed  on  revival  of  judgment  by  scire  facias   335 

Interest     in  condemnation    proceedings    336 

Interest  on  taxes,  license  fees,  special  assessments  and  customs 

duties     , 337 

Infants,  liable  for  338 

Interest  as  between  landlord  and  tenant 339 

Interest  on  damages   for  infringing  patents    340 

Right  to  interest  as  affected  by  the  marital  relation 341 

Interest  as  between   partners    , 342 


XVlll  TABLE    OF    CONTENTS. 

References  are  to  sections. 

Interest  on  stockholders'  statutory  liability   343 

Allowed  on  annuities  and  legacies    344 

Interest  on   advancements    345 

On  money  due  on  policy  of  insurance,  and  on  premiums 346 

Not  allowed  on  unliquidated  demands  347,  348 

Interest  on  accoimts    349,  350 

When  demand  necessary 351 

When  allowed  on  money  had  and   received    352 

When  allowed  against  agents,  trustees  and  oflBcers  353 

On  money  obtained  by  extortion  or  fraud,  or  wrongfully  withlield 

or    disposed   of    , 354 

laterest  in  actions  for  torts   355 

Section   6. — The  Law   of   What  Place  and  Time  Governs. 

Importance  of  subject   . . . ., 356 

General    rule   as    to   contracts    357 

Rule  as  to  notes  and  bills   358 

Bonds  to  the  United  States    359 

Between  parties  in  different  states   360,  361 

Where  usury  is  involved  362-365 

The  law  of  what  place  governs  the  rate  as  damages 366 

Pleading  and  proof  of  foreign  law 367 

Effect  of  change  in  law  of  place  of  contract   368-370 

Section  7. — Interest  as  an  Incident  to  the  Principal. 

Interest  due  by  agreement  a  debt    , 371 

Interest  as  damages  accessory  to  principal    372 

Section    8. — Interest   Upon    Interest. 

Compound  interest  373 

Instances  of  interest  on  interest   374 

Interest  on  instalments  of  interest   375 

Separate  agreements  for  interest   376 

Periodical  interest  after  maturity  of  debt 377 

Computation,  application  and  effect  of  partial  payments   378,  379 

Section  9. — Suspension  of  Interest. 

Miscellaneous  cases    380 

Where  payments  prevented  by  legal  process   381 

Where  war   prevents  payment 382 

Tender  stops  interest  383 

Tender  not  allowed  for  unliquidated  damages   384 

When  tender  may  be  made 385,  386 

Section  10. — Pleading. 
How  interest  claimed  in  pleading  387 


TABLE    OF    CONTENTS.  xix 

References  are  to  sections. 
Section    11. — Interest   During   Proceedings   to   Collect  a  Debt. 

Interest  on   verdict   before  judgment 388 

On  judgments  pending  review    389 


VOL.  n. 

CHAPTEK   IX. — Exemplary   Damages. 
CHAPTEEi  X. — Pleading  and  Procedueb. 

Section  1. — Pleading. 

Section  2. — Assessment  of  Damages. 

Section  3. — Paying  Money  into  Court. 

Section  4. — Evidence. 

Section  5. — Verdict   and   Judgment. 

Section  6. — Restitution  after  Reversal  of  Judgment. 

PART  II.— APPLICATION  OF  THE  LAW  OF  DAMAGES 
TO  VAEIOUS  CONTRACTS  AND  WRONGS. 

CHAPTER  XI. — Bonds  and  Penal  Obligations. 

Section  1. — Penalties. 

Section  2. — Bonds  of  Official  Depositaries  of  Money. 

Section  3. — Other  Official  Bonds. 

Section  4. — Probate  Bonds. 

Section  5. — Replevin  Bonds. 

Section  6. — Attachment  and  Forthcoming  Bonds. 

Section  7. — Injunction  Bonds. 

Section  8. — Appeal  and  Supersedeas  Bonds. 

Section  9. — Miscellaneous  Bonds. 

CHAPTER  XII.— Notes  and  Bills. 

CHAPTER  XIII. — Vendor  and  Purchaser — Real  Prop- 
erty. 

Section  1. — Vendor  against  Purchaser. 

Section  2. — ^Purchaser  against  Vendor. 

Section  3.— Covenants   for  Title— Of   Seizin  and   Good   Right  to   Convey. 

Section  4.— Covenants  of  Warranty  and   for  Quiet  Enjoyment. 

Section  5. — Covenants  against  Incumbrances. 

Section  6.— Defenses  and   Cross-Claims  against  Purchase-Money. 


XX  TABLE    OF    CONTENTS. 

CHAPTER  XIV. — Vendoe  and  Vendee — Peesonal  Prop- 
erty. 

Section  1. — Vendor  against  Vendee. 
Section  2. — Vendee  against  Vendor. 


VOL.  in. 

CHAPTER  XV. — Contracts  foe  Services. 

CHAPTER  XVI. — Contracts  for  Particular  Works. 

% 

Section  1. — Employer  against  Contractor. 
Section  2. — Contractor  against  Employer. 
Section  3. — Salvage. 

CHAPTER  XVII.— Suretyship. 

Section  1. — Creditor  against  Surety. 

Section  2. — Surety's  Remedies  for  Indemnity. 

Section  3. — Express  Indemnities. 

CHAPTER  XVIII.— AoENOT. 

Section  1. — Principal  against  Agent. 
Section  2. — Agent  against  Principal. 
Section  3. — Third  Persons  against  Agent. 

CHAPTER  XIX.— Insueanob. 

Section  1. — Marine  Insurance. 

Section  2. — Fire  Insurance. 

Section  3. — Life   and  Accident  Insurance. 

Section  4. — Title  Insurance. 

Section  5. — Indemnity  and  Surety  Insurance. 

CHAPTER  XX. — Landloed  and  Tenant. 

Section  1. — Landlord  against  Tenant. 

Section  2. — Tenant  against  Landlord.  • 


TABLE    OF    CONTENTS.  XXI 

CHAPTER  XXI.— Caeriees. 

Section  1. — Actions  by  Carriers. 
Section  2. — Actions  against  Carriers. 
Section  3. — Carriers  of  Passengers. 

CHAPTER  XXII. — Telegeaph  and  Telephone  Companies. 


VOL.  IV. 

CHAPTER  XXIII. — Breach  of  Markiage  Promise. 
CHAPTER  XXIV.— Ejectment. 

Section  1. — Mesne  Profits. 

Section  2. — Dower.  , 

CHAPTER  XXV. — Injuries  to  Real  Property. 

Section  1. — Trespass  to  Real  Property. 
Section  2. — Injury  to  Inheritance, 
Section  3. — Nuisance. 

CHAPTER  XXVI. — Taking  Property  foe  Public  Use. 

CHAPTER  XXVII. — Conversion. 

CHAPTER   XXVIII.— Trespass  to   Peesonal  Peopeety. 

CHAPTER  XXIX.— Replevin. 

Section  1. — Plaintiffs  Case. 
Section  2. — Defendant's  Case. 

CHAPTER  XXX.— Feaud. 
CHAPTER    XXXI.— Infeingement    of    Patent    Rights. 

CHAPTER  XXXII. — Infringement  of  Copyright. 
CHAPTER    XXXIII. — Infringement    of    Trade-Marks. 


XXll  TABLE    OF    CONTENTS. 

CHAPTER  XXXIV.— Slandee  and  Libel. 

Section  1. — Plaintiff's  Case. 
Section  2. — The  Defense. 

CHAPTER   XXXV.— Malicious   Prosecution. 
CHAPTER  XXXVI.— Personal  Injury. 

VOL.  V. 

CHAPTER  XXXVII. — Damages  Resulting  from  Death, 

CHAPTER  XXXVIII.— Seduction. 

CHAPTER  XXXIX.— Damages  for  Torts  in  Admiralty. 

CHAPTER  XL. — Damages  Under  the  Federal  Employers' 
Liability  Act. 

CHAPTER  XLL — Workmen's  Compensation  Acts. 


THE  LAW  OF  DAMAGES. 


PART  I. 


AN  EXPOSITION  OF  THE  ELEMENTS  OF 
DAMAGES. 


CHAPTEE  I. 

A  GENERAL  STATEMENT  OF  THE  RIGHT  TO  DAMAGES,  THEIR 
LEGAL  QUALITY  AND  KINDS. 

§  1.  General  observations. 

2.  The  right  to  damages;  how  amount  ascertained. 

3.  Damnum  absque  injuria;  injuria  sine  damno. 

4.  Public  wrongs. 

5.  Illegal  transactions. 

6.  Contractual   exemption   from   liability   for    damages. 

7.  Nature   of   the   right   to    damages;    its    survival;    what   law 

governs  the  measure  of  damages. 

8.  Injuries  to  unborn  child. 

§  1.  General  observations.  The  chief  practical  value  of  any 
system  of  law  is  in  its  adaptability  and  efficiency  to  secure  the 
individual  in  the  full  enjoyment  of  his  rights,  and  in  giving 
him  adequate  relief  when  they  are  violated.  The  common  law 
defines  these  rights,  and  professes  to  afford  a  remedy  for  their 
every  infraction.  In  the  nature  of  things,  this  remedy  cannot 
consist  in  so  annulling,  by  adjudication,  an  act  which  violates  a 
right  that  the  injured  party  will  be  restored  to  its  enjoyment  as 
though  there  had  been  no  interruption. 

The  consequences  of  an  act  which  is  an  invasion  of  another's 
right  may  be  arrested ;  in  some  cases  partial  restoration  is  prac- 
ticable. But  unless  compensation  can  be  made  as  a  substitute 
Suth.  Dam.  Vol.  I.— 1. 


SUTHERLAND    ON"    DA^IAGES. 


[§    1 


for  that  to  which  a  party  is  entitled,  and  of  which  he  has  been 
more  or  less  deprived,  there  will  l)e  an  irreparable  injury,  and  a 
corresponding  failure  of  justice.  This  compensation  the  law 
provides  for;  and  it  is  the  principal  object  of  legal  actions  to 
ascertain  what  it  should  be,  fix  the  amount,  and  enforce  its  pay- 
ment. In  some  actions  the  paramount  purpose  is  to  compel  the 
defendant  to  yield  up  possession  of  specific  property  which  the 
plaintiff  claims  to  own,  and  incidentally  to  obtain  compensation 
for  its  detention,  as  in  ejectment  and  replevin.  So  in  actions 
on  contracts  for  the  direct  payment  of  money,  the  effect  of  re- 
covery is  apparently  to  compel  the  defendant  to  do  the  very 
thing  he  agreed  to  do;  compensation  for  the  delay  in  the  form 
of  interest  is  a  subordinate  matter.^ 

§  2.  The  right  to  damages;  how  amount  ascertained.  In 
contemplation  of  law  every  infraction  of  a  legal  right  causes 
injury ;  this  is  practically  and  legally  an  incontrovertible  propo- 
sition. If  the  infraction  is  established,  the  conclusion  of  dam- 
age  inevitably   follows.^      This   deduction    is   made   though   it 


iRadlofT  V.  Haase,  196  111.  365. 
729,  citing  this  section;  Vandivei'  v. 
Robertson,  125  Mo.  App.  307,  cit- 
ing the  text;  International  T.  B. 
Co.  V.  Martin,  82  Neb.  403.     §  1095. 

2  Tubular  R.  &  S.  Co.  v.  Exeter 
B.  &  S.  Co.,  159  Fed.  824,  86  C.  C. 
A.  648 ;  Dewire  v.  Hanley,  79  Conn. 
454;  Lahiff  v.  St.  .Toseph's  Total 
A.  &  B.  Soc,  76  Conn.  648,  100  Am. 
Pt.  1012,  65  L.R.A.  92;  Graham  v. 
Macon,  etc.  R.  Co.,  120  Ga.  757; 
Polar  \yave  I.  &  F.  Co.  v.  Alton 
Branch  *H.  Soc,  155  111.  App.  310; 
Selman  v.  Barnett,  4  Ga.  App.  375 ; 
VonSclioick  v.  VonSchoick,  76  N. 
T.  L.  242;  Moore  v.  Camden  & 
T.  R.  Co.,  74  N.  J.  L.  498 ;  State  v. 
McKinnon,  11  Ohio  N.  P.  (N.  S.) 
165,  quoting  the  text;  Koerber  v. 
Patek,  123  Wis.  453.  68  L.R.A. 
956;  Columbus  Co.  v.  Clowes, 
[1903]  1  K.  B.  244:  Radloff  v. 
Haase,  supra;  Hahn  v.  Cotton,  136 
Mo.  216,  919;   Watson  v.  New  Mil- 


ford  W.  Co.,  71  Conn.  442;  Board 
of  Water  Com'rs  v.  Perry,  69  Conn. 
461  :  Quillen  v.  Betts,  1  Pennew. 
53;  Ross  V.  Louisville,  etc.  Co.,  70 
Miss.  725;  New  York  Rubber  Co.  v. 
Rothery,  132  N.  Y.  293,  28  Am.  St. 
575;  Green  Bay  &  M.  C.  Co.  v. 
Kaukauna  W.  P.  Co.,  112  Wis.  323, 
62  L.R.A.  579.     See  §§  9,  10. 

"All  precedents  necessarily  liave 
a  beginning."  Koerber  v.  Patek, 
supra. 

It  is  not  a  sufiicient  objection  to 
the  recover}'  of  damages  that  the 
action  brought  for  that  purpose  is 
without  precedent.  It  was  long 
since  determined  tliat  a  special  ac- 
tion on  the  case  was  introduced 
because  the  law  will  not  sufl"er  an 
injury  and  damage  without  afford- 
ing a  remedy.  Winsmore  v.  Green- 
bank,   Willes,   577,  580. 

One  who  is  induced  by  falsehood 
and  fraud  to  marry  a  woman  who 
is  pregnant  l)y  the  man  who  is  guilty 


§2]  lllGHT    TO    DxVMAGES.  3 

actually  appears  and  is  recognized  in  the  case  that  there  was 
in  fact  no  injury,  but  a  benefit  conferred.^  This  legal  conehi- 
sion  of  damage  is  generally  indeterminate  as  to  amount;  it  is 
that  some  damage  resulted ;  if  no  proof  is  made  of  the  actual 
damage  judgment  can  be  given  only  for  a  minimum  sum — nom- 
inal damages.  In  cases  of  contract  it  may  occur  that  for  any 
breach  a  large  and  determinate  sum  will  become  due,  for  which 
judgment  without  proof  may  be  rendered.  But  generally,  with- 
in certain  limits,  the  actual  injury  is  to  be  established  by  proof 
as  matter  of  fact.  In  many  cases  of  tort,  however,  the  injury 
complained  of  is  of  such  a  nature  that  compensation  cannot  l)e 
awarded  by  any  precise  pecuniary  standard  and  there  is  no  legal 
measure  of  damages,  because  the  injury  does  not  consist  of 
pecuniary  elements,  or  elements  of  which  the  value  can  be  meas- 
ured or  expressed  in  money.  The  compensation  which  shall 
be  allowed  for  an  injury  of  this  character  is  by  the  common 
law  referred  to  the  sound  discretion  and  dispassionate  judg- 
ment of ,  a  jury.*  Where  .there  is  a  legal  measure  of  damages 
the  jury  must  determine  the  amount  as  a  fact  according  to  that 
measure,  otherwise  the  law  which  measures  the  compensation 
would  be  of  no  avail ;  and  whether  they  have  done  so  or  not 
in  a  given  case  may  be  proximately  seen  by  a  comparison  of  the 
verdict  with  the  evidence.^     Courts  of  general  jurisdiction  have 

thereof  may  recover   from  him  the  exercise    li^    right    to    remove    the 

damage  sustained.     Kujek  v.   Gold-  cause  of  the  injury.    Smith  v.  Giddy 

man,  150  N.  Y.  176,  55  Am.  St.  670,  [1904]   2  K.  B.  448. 

34  L.R.A.  156.  3  Beattie  v.  New  York,  etc.  R.  Co., 

One  who,  notwithstanding  the  hus-  84  Conn.  555;  Mohr  v.  Williams,  i)5 
band's  protests,  persists  in  selling  Minn.  261,  1  L.R.A.  (N.S.)  43i),  111 
a  wife  drugs  knowing  that  she  uses  Am.  St.  462;  Murphy  v.  Fond  du 
them  constantly  and  that  their  use  Lac,  23  Wis.  365,  99  Am.  Dec.  181 ; 
is  destructive  to  her  mental  and  Roberts  v.  Glass,  112  Ga.  456;  Ex- 
physical  faculties,  and  causes  her  celsior  N.  Co.  v.  Smith,  61  Conn.  56. 
husband  the  loss  of  her  companion-  Compare  Bossu  v.  New  Orleans,  etc. 
ship  and  services,  is  liable  to  him.  R.  Co.,  49  La.  Ann.  1593. 
Holleman  v.  Harward,  119  N.  C.  150,  *  The  difficulty  of  determining  the 
56  Am.  St.  672,  34  L.R.A.  803.  See  exact  damages  done  by  a  wrongdoer 
as  to  the  right  of  action  in  favor  is  not  cause  for  denying  redress, 
of  a  widow  for  the  mutilation  of  the  Baker  v.  Akron,  145  Iowa,  485,  30 
body  of  her  deceased  husband.  Foley  L.R.A.  (N.S.)  619. 
v.  Phelps,  1  App.  Div.  551.  5  Gayton    v.    Day,    178    Fed.    249, 

The  injured  party  is  not  bound  to  101  C.  C.  A.  609;   Zibbell  v.  Soutli- 


SUTIIEKLAND    ON    DAMAGES. 


[§  2 


power  over  verdicts,  and  may  set  them  aside  when  the  jury 
have  been  influenced  by  passion  or  con*uption,  or  have  disre- 
garded the  legal  measure  of  compensation.  By  the  course  of 
the  current  of  modern  decisions,  whether  compensation  for  the 
actual  injury  in  actions  for  torts  is  subject  to  legal  measure  or 
not,  if  the  injury  was  done  maliciously,  fraudulently,  oppressive- 
ly or  with  wanton  violence,  such  measure,  if  any,  while  not 
entirely  ignored,  ceases  to  be  the  limit  of  recovery.  The  jury 
are  at  liberty,  in  the  exercise  of  their  judgTuent,  on  finding  such 
malice  or  other  aggravation,  to  give  additional  damages  as  a 
solatium  to  the  party  so  wronged,  and  as  a  punishment  to  the 
wrong-doer.  The  sums  so  allowed  by  law  and  found  by  a  jury 
for  tortious  injuries  or  losses  from  breach  of  contract  are  dam- 
ages-— the  pecuniary  redress  which  a  successful  plaintiff  obtains 
by  legal  action.     They  are  for  the  most  part  compensation  for 


ern  Tac.  Co.  160  Cal.  237 ;  Board  of 
Park  Com'rs  v.  Donahue,  140  Ky. 
502;  Carroll  Springs  D.  Co.  v. 
Schncpfe,  111  Md.  420;  Rock  Creek 
S,  Co.  V.  Boyd,  111  Md.  189;  West- 
ern M.  R.  Co.  V.  Martin,-  110  Md. 
554 ;  Western  U.  Tel.  Co.  v.  Lehman, 
106  Md.  318;  Yazoo,  etc.  R.  Co.  v. 
Smith,  82  Miss.  656;  Tourtellotte 
V.  Westchester  E.  R.  Co.,  120  App. 
Div.  417 ;  Seligraan  v.  Beeclier,  36 
Pa.  Super.  Ct.  475 ;  Parke  v.  Frank, 
75  Cal.  364,  citing  tlic  text;  Quanah, 
etc.  R.  Co.  V.  Galloway  (Tex.  Civ. 
App.)  154  S.  W.  653. 

Where  a  statute  enjoins  a  duty 
and  imposes  a  civil  liability  for  its 
nonperformance  the  rule  it  pre- 
scribes is  the  measure  of  liability. 
Yates  V.  Jones  Nat.  Bank,  206  U.  S. 
158,  51  L.  ed.  1002. 

In  the  exercise  of  its  police  power 
the  state  may  fix  a  minimum  sum  as 
compensatory  and  exemplary  dam- 
ages for  the  violation  of  a  statute. 
Cramer  v.  Danielson,  99  Mich.  531; 
Chicago,  etc.  R.  Co.  v.  Cram,  228 
U.  S.  70,  57  L.  ed.  734.  And  may 
provide  that  the  damages  found  by 


a  jury  shall  be  doubled  by  the  court. 
Fye  V.  Chapin,  121  Mich.  675,  7  Am. 
Neg.  Rep.  67 ;  Cummings  v.  Riley, 
52  N.  H.  368;  Chickering  v.  Lord, 
67  id.  555;  Fitzgerald  v.  Dobson,  78 
Me.  559;  Barrett  v.  Maiden  &  M. 
R.  Co.,  3  Allen,  101,  1  Am.  Neg.  Cas. 
141 ;  Hoole  V.  Dorroh,  75  Miss.  257 ; 
Kingsbury  v.  Missouri,  etc.  R.  Co., 
156  Mo.  379;  Carter  v.  Current 
River  R.  Co.,  156  Mo.  635;  Bekker 
V.  White  River  Valley  R.  Co.,  28 
S.  D.  84;  Jensen  v.  South  Dakota 
Cent.  R.  Co.,  25  S.  D.  506,  35  L.R.A. 
(N.S.)  1015.  Contra,  Atchison  &  N. 
R.  Co.  V.  Baty,  6  Neb.  37;  Grand 
Island,  etc.  R.  Co.  v.  Swinbank,  51 
Neb.  521,  the  court  being  influenced, 
to  some  extent  because  exemplary 
damages  are  not  recoverable  under 
the  local  law. 

Tlie  principle  stated  in  the  text 
is  affected  by  the  rule  of  practice 
which  permits  parties  to  try  an  ac- 
tion on  any  theory  of  damages  they 
may  adopt.  A  court  will  not  inter- 
fere of  its  own  motion  to  compel  the 
adoption  of  a  rule  contrary  to  that 
the  litigants  have  accepted.    Durkee 


3] 


RIGHT    TO    DAMAGES. 


civil  injury — exemplary  damages  being  an  exception ;  therefore, 
the  law  relating  to  the  subject  of  damages  is  principally  directed 
to  defining  and  measuring  compensation.®  The  civil  injury  for 
which  damages  may  be  recovered  must  be  one  which  is  recog- 
nized as  such  by  the  law ;  it  must  result  from  the  violation  in 
some  form  of  a  legal  right.  ]N"o  damages  can  be  recovered  for 
failure  to  fulfill  a  merely  moral  obligation,  nor  for  any  wrong 
or  injury  which  consists  in  a  neglect  of  social  amenities.' 

§  3.  Damnum  absque  injuria;  injuria  sine  damno.  The  right 
to  damages  constituting  a  legal  cause  of  action  requires  the 
concurrence  of  two  things:  that  the  party  claiming  them  has 
suffered  an  injury,  and  that  there  is  some  other  person  who  is 
legally  answerable  for  having  caused  it.  If  one  suffers  an 
injury  for  which  no  one  is  liable  it  gives  no  legal  claim  for 
damages :  it  is  damnum  absque  injuria;  so  if  one  does  a  wrong 
from  which  no  legal  injury  ensues,  there  is  no  legal  cause  of 
action:  it  is  injuria  sine  damno}  That  no  act  characterized 
by  these  negatious  is  actionable  is,  in  the  abstract,  a  truism. 
When  we  say  that  a  person  who  suffers  an  injury  which  does 
not  arise  from  any  other  person's  fault  has  no  cause  of  action 
a  self-evident  proposition  is  stated;  and  equally  so  when  we 
say  that  no  person  has  a  cause  of  action  against  another  for 
the  latter's  wrongful  act  unless  he  is  injured  by  it.     The  former 

V.  Chino  L.  &  W.  Co.,  151  Cal.  561;  111   Tcnn.   388,   64  L.R.A.   991,   102 

Mountz  V.  Apt,  51  Colo.  491;   New  Am.  St.  787;  McAllister  v.  Clement, 

York  E.  R.  Co.  v.  Fifth  Nat.  Bank,  75  Cal.  182;   Wittich  v.  First  Nat. 

135  U.  S.  432,  34  L.  ed.  231;  Porter  Bank,  20  Fla.  843,  51  Am.  Rep.  631. 
V.  Metropolitan  E.  R.  Co.,  120  N.  Y.  Acts    done    with    reasonable    care 

284.  pursuant  to  valid  statutes  will  not 

6  The    term    "compensatory    dam-  render  those  who  perform  them  lia- 

ages"  covers  all  loss  recoverable  as  ble  for  damages  resulting.    Highway 

matter  of  right;    it   is  synonymous  Com'rs  v.  Ely,  54  Mich.   173;   Tate 

with  "actual  damages."     Pecuniary  v.    Greensboro,    114    N.    C.    392,    24 

loss  is  an  actual  damage;  so  is  bod-  L.R.A.  671;  New  Haven  S.  S.  M.  Co. 

ily  pain   and  suffering.     Gatzow  v.  v.  New  Haven,  72  Conn.  276;  Trans- 

Buening,   106  Wis.  1,  19,  49  L.R.A.  portation  Co.   v.   Chicago,  99   U.   S. 

475,  80  Am.  St.  17.  635,  640,  25  L.  ed.  336,  337 ;   Rowe 

7Hardison  v.  Reel,  154  N.  C.  273,  v.  Granite  B.  Co.,  21  Pick.  344;  Dar- 

34  L.R.A.  (N.S.)   1098.  lington    v.    Mayor,    31    N.    Y.    164; 

8  Illinois  Cent.  R.  Co.  v.  Trustees,  Allegheny  Coimty  v.  Gibson,  90  Pa. 

212  111.  406;  McKelvey  v.  McKelvey,  397,  35  Am.  Rep.  670. 


SUTHERLAND    ON    DAMAGES. 


[§  3 


precludes  any  action  for  lawfnl  acts  lawfully  done,  though 
some  actual  hurt  or  loss  results  to  some  person  therefrom.^ 
Thus,  for  example,  adjoining  land-owners  have  a  mutual  right 
of  lateral  support  to  the  soil  in  its  natural  state,  hut  not  under 
the  pressure  of  buildings,  unless  a  prescriptive  right  to  the 
support  thereof  has  been  acquired.^"  When  one  has  so  loaded 
down  his  soil  near  the  line,  the  other  still  has  the  right  to  make 
any  use  he  pleases  of  his  premises  and  may  excavate  to  the 
line,  if  he  does  so  with  due  care  upon  proper  notice  to  the 
other;  and  if  by  such  excavation  the  stability  of  the  buildings 
of  the  adjoining  proprietor  is  endangered  or  they  are  destroyed, 
it  is  an  injury  for  which  no  action  lies/^  And  so  if  a  personal 
injury  results  because  of  the  weight  of  the  injured  person  upon 
the  land  adjoining  the  excavation. ^^     According  to  the  older 


9  Do  Bakor  v.  Southern  Califor- 
nia R.  Co.,  106  Cal.  257,  46  Am. 
St.  237;  Friend  v.  United  States, 
;i()  Ct.  of  Cls.  94,  107;  Durham  v. 
Lisbon  Falls  F.  Co.,  100  Me.  238; 
Emanuel  v.  Barnard,  71  Neb.  756; 
White  V.  Kincaid,  149  N.  C.  415,  23 
L.R.A.(N.S.)  1177,  128  Am.  St.  663; 
Rosenthal  v.  Goldsboro,  149  N.  C. 
128,  20  L.R.A.(N.S.)  809;  Riggers 
V.  Matthews,  147  N.  C.  299;  Dewey 
V.  Railroad,  142  N.  C.  392;  Cincin- 
nati C.  B.  R.  V.  Burski,  26  Ohio  C. 
C.  486;  Lane  v.  Barnard,  111  Va. 
680,  31  L.R.A.(N.S.)  1209;  Board  of 
Chosen  Freeholders  v.  Paxson,  196 
Fed.  156. 

10  Farnandis  v.  Great  Northern  R. 
Co.,  41  Wash.  486,  5  L.R.A.(N.S.) 
1086,  111  Am.  St.  1027;  A'Beckett 
V.  Warburton,  14  Vict.  L.  R.  308; 
Johnson  v.  St.  Louis,  172  Fed.  31, 
96  C.  C.  A.  617 ;  Simon  v.  Nance,  45 
Tex.  Civ.  App.  480;  Leerburger  v. 
Hennessey  R.  Co.,  154  App.  Div. 
158.  See  Hummel  v.  Peterson,  69 
Wash.  143. 

11  Ceffarelli  v.  Landino,  82  Conn. 
126;  vSerio  v.  Murphy,  99  Md.  545, 
16  Am.  Neg.  Rep.  468;   McClelland 


V.  Schwend,  32  Pa.  Super  Ct.  313; 
Jones  V.  Greenfield,  25  id.  315 ;  Han- 
nicker  V.  Lepper,  20  S.  D.  371,  6 
l..R.A.(N.S.)  ?43,  129  Am.  St.  938; 
Bass  V.  West,  110  Ga.  698;  Block 
V.  llaseltine,  3  Tnd.  App.  491;  Boh- 
rer  v.  Dienhart  11.  Co.,  19  Ind.  App. 
489;  Ulrick  v.  Dakota  L.  &  T.  Co., 
2  S.  D.  285;  Laycock  v.  Parker,  103 
Wis.  161;  Wyatt  v.  Harrison,  3  B. 
&  Ad.  875;  Thurston  v.  Hancock,  12 
Mass.  220;  Panton  v.  Holland,  17 
Johns.  92,  8  Am.  Dec.  369;  Lasala 
V.  Ilolbrook,  4  Paige  169,  25  Am. 
Dec.  524;  McGuire  v.  Grant,  25  N. 
J.  L.  356;  Hay  v.  Cohoes  Co.,  2  N. 
Y.  159;  Winn  v.  Abeles,  35  Kan. 
91 ;  White  v.  Nassau  T.  Co.,  168  N. 
Y.  149,  64  L.R.A.  275;  Noceto  v. 
Weill,   166  111.  App.   162. 

A  municipality  exercising  the 
right  of  eminent  domain  is  not  an 
adjoining  owner  within  this  rule 
where  compensation  must  be  made 
for  damage  done  to  property  Tyfe 
V.  Turtle  Creek,  22  Pa.  Super.  292. 
12  Pullan  V.  Stallman,  70  N.  J. 
L.  10;  ].-)  Am.  Neg.  Rep.  125;  Mc- 
Mullen  V.  Union  Drawn  S.  Co.,  47 
Pa.    Super.   570. 


§  3] 


EIGHT    TO    DAMAGES. 


cases  and  some  late  ones  the  exercise  of  one's  right  to  dig  in 
his  own  land  may  have  the  effect  of  diverting  an  undergronnd 
stream  of  water  which  is  beneficial  to  another,  or  of  draining 
his  well,  but  the  act  of  digging  w4iich  causes  either  result,  not 
being  wrongful  even  though  done  with  malice,  there  is  no 
redress  for  the  injury.^^  In  some  cases  the  rule  is  conditioned 
upon  the  stream  not  being  well  defined  and  its  existence  known 
or  easily  discernible,  and  also  upon  the  absence  of  malice." 
The  general  rule  has  limitations  attached  to  it  by  recent  cases. 
Where  an  owner  by  the  operation  of  a  water  system,  consist- 
ing of  wells  and  pumps  on  his  own  land,  taps  the  subsurface 
water  stored  in  the  land  of  an  adjacent  owner  and  in  all  the 
contiguous  territory,  and  leads  it  to  his  own  land,  and  by 
merchandizing  it  prevents  its  return,  whereby  the  land  of  such 
owner  is  impaired  for  agricultural  purposes,  he  may  recover 
for  the  wrong  done.^^  In  other  words,  the  right  of  an  adjoin- 
ing owner  does  not  extend  beyond  a  reasonable  and  beneficial 
use  of  the  water  underlying  his  own  land.^^ 


13  Acton  V.  Blundell,  12  M.  &  W 
324 ;  Chasemore  v.  Richards,  7  H 
of  L.  Cas.  349,  2  H.  &  N.  168 
Mosier  v.  Caldwell,  7  Nev.  363 
Chase  v.  Silverstone,  62  Me.  175 
Greenleaf  v.  Francis,  18  Pick.  117 
Trustees,  etc.  v.  Youmans,  .50  Barb 
316;  Ellis  v.  Duncan,  11  How.  Pr 
515;  Lybe's  App.,  106  Pa.  626 
Mayor,  etc.  v.  Pickles,  [1805]  App 
Cas.  587;  Houston  &  T.  Cent.  R 
Co.  V.  East,  98  Tex.  146,  66  L.R.A 
738,  107  Am.  St.  620:  Long  v 
Louisville  &  N.  R.  Co.,  128  Ky.  26, 
13  L.R.A.  (N.S.)  1063,  (in  the  ab- 
sence of  malice). 

Contra.  Bassett  v.  Salisbury 
Mfg.  Co.,  43  N.  H.  569,  82  Am 
Dec.  179.  See  Swett  v.  Cutts,  50 
N.  H.  439,  and  Fisher  v.  Feige,  137 
Cal.  39,  59  L.R.A.  333,  the  last  case 
dealing  with  the  question  of  mo- 
tive. The  same  principle  applies  to 
the  legitimate  use  of  natural  gas 
underlying    land.      Calor    0.    &    G. 


Co.  V.  Franzell,  128  Ky.  715,  36 
L.R.A.  (N.S.)  456.  See  Louisville 
G.  Co.  V.  Kentucky  H.  Co.  132  Ky. 
435. 

14  Barclay  v.  Abraham,  121  Iowa 
619,  100  Am.  St.  365,  04  L.R.A. 
255;  Stoner  v.  Patten.  132  Ga.  178, 
citing  Williams  v.  Ladew,  161  Pa. 
283,  41  Am.  St.  891 ;  Tampa  W.  Co. 
V.  Cline,  37  Fla.  586,  33  L.R.A.  376. 

15  Forbell  v.  New  York,  164  N.  Y. 
522.  51  L.R.A.  695,  79  Am.  St.  666, 
affirming  47  App.  Div.  371  ;  Willis 
v.  Perry,  92  Iowa  297,  26  L.R.A. 
124:  Stone  v.  Providence  W.  &  G 
Co.,  13  Pa.  Dist.  557;  Erickson  v. 
CrookstOn  W.  P.  &  L.  Co.,  100  Minn. 
481,  8  L.R.A.  (N.S.)  1250.  See 
Western  M.  R.  Co.  v.  Martin,  110 
Md.  554;  People  v.  New  York  C.  A. 
Gas  Co.,  196  N.  Y.  421:  Hathorn 
V.  Natural  C.  G.  Co.,  194  N.  Y.  326, 
23  L.R.A.  (N.S.)  4,36,  128  Am.  St. 
5.55. 

16  Ponce    V.    Carncv.    58    W.    Va. 


8 


SUTHERLAND    ON    DAMAGES. 


[§  3 


Where  the  civil  law  is  not  in  force  or  its  analogies  have  not 
been  followed,  surface  water  is  regarded  as  a  common  enemy, 
and  every  landed  proprietor  has  the  right  to  take  all  necessary, 
prudent  steps  to  protect  his  land  from  its  effects,  though  in 
doing  so  the  water  is  cast  upon  the  land  of  a  coterminous  propri- 
etor to  his  injury."  Mr.  Gould  says  this  rule  prevails  in  Eng- 
land, Massachusetts,  Maine,  Vermont,  New  York,  New 
Hampshire,  Rhode  Island,  New  Jersey,  Minnesota,  Wisconsin, 
Nebraska,  Washington,  New  Mexico,  and  Texas."  By  the  civil 
law  interference  with  the  natural  flow  of  surface  water  is  a 
nuisance,  for  which  nominal  damages  may  be  recovered  with- 
out proof  of  actual  damages.  The  courts  of  Pennsylvania, 
Illinois,  North  Carolina,  Alabama,  Kentucky,  Tennessee,  Cali- 
fornia and  Louisiana  have  adopted  this  rule,  and  it  has  been 
referred  to  with  approval  by  the  courts  of  Ohio  and  Missouri.^' 


296,   6   L.R.A.(N.S.)    266,    1]2   Am. 
St.  963. 

17  Edwards  v.  Charlotte,  etc.  R. 
Co.,  39  S.  C.  472,  22  L.R.A.  246; 
Morrissey  v.  Chicago,  etc.  R.  Co., 
38  Neb.  406,  430 ;  Rowe  v.  St.  Paul, 
etc.  R.  Co.,  41  Minn.  384;  Cairo, 
etc.  R.  Co.  V.  Stevens,  73  Ind.  278; 
O'Connor  v.  Fond  du  Lac,  etc.  R. 
Co.,  52  Wis.  526;  Johnson  v.  Chi- 
cago, etc.  R.  Co.,  80  Wis.  641,  14 
L.R.A.  495;  McCoy  v.  Board,  95 
Ark.  345,  29  L.R.A.  (N.S.)  396; 
Paola  V.  Carman,  80  Kan.  702; 
Bryant  v.  Merritt,  71  Kan.  272; 
Werner  v.  Popp,  94  Minn.  118;  Ap- 
plegate  v.  Franklin,  109  Mo.  App. 
293;  Sullivan  v.  Browning,  67  N. 
J.  Eq.  39] ;  Mason  v.  Commission- 
ers, 80  Ohio  St.  151,  24  L.R.A. 
(N.S.)  903,  131  Am.  St.  689;  Man- 
teufel  V.  Wetzel,  133  Wis.  619,  19 
L.R.A.  (N.S.)  167;  Thompson  v. 
Chicago,  etc.  R.  Co.,  137  Mo.  App. 
62.  See  Pohlman  v.  Chicago,  etc. 
R.  Co.,  131  Iowa  89,  6  L.R.A. 
(N.S.)  146;  Chicago,  etc.  R.  Co.  v. 
Groves,  20  Okla.  101,  22  L.R.A. 
(N.S.)   802. 


Surface  water  may  not  be  collect- 
ed and  discharged  upon  the  land  of 
an  adjoining  owner.  Grant  v.  St. 
Louis,  etc.  R.  Co.,  149  Mo.  App.  306; 
Shavlik  v.  Walla,  86  Neb.  708. 

"Gould  on  Waters  (3d  cd.),  § 
205;  Cox  V.  Hannibal,  etc.  R.  Co., 
174  Mo.  588. 

19  Gould  on  Waters,  (3d  ed.)  § 
266;  Southern  R.  Co.  v.  Lewis,  165 
Ala.  555,  138  Am.  St.  77  (indicating 
an  exception  to  the  rule  in  the  case 
of  city  or  village  lots)  ;  Cox  v.  Odell, 
1  Cal.  App.  682;  Baker  v.  Akron, 
]45  Iowa  485,  30  L.R.A.  (N.S.)  619; 
Chicago,  etc.  R.  Co.  v.  Davis,  26 
Okla.  434;  Taylor  v.  Canton,  30  Pa, 
Super.  Ct.  305;  Tracewell  v.  County, 
58  W.  Va.  283.  See  Launstein  v. 
Launstein,  150  Mich.  524,  121  Am. 
St.  635;  Rielly  v.  Stephenson,  222 
Pa.  252,  22  L.R.A.  (N.S.)  947,  128 
Am.  St.  804;  Tyrus  v.  Kansas  City, 
etc.  R.  Co.,  114  Tenn.  .579;  Pfeiffer  v. 
Brown,  165  Pa.  267,  44  Am.  St.  598; 
King  L.  Co.  V.  Bowen,  (Ala.  App.) 
01  So.  22. 


§    3]  BIGHT    TO    DAMAGES.  9 

The  rule  applies  only  to  land  in  its  natural  state.^°  The  owner 
of  property  may  thus  and  otherwise,  whilst  in  the  reasonable 
exercise  of  established  rights,  casually  cause  an  injury  which 
the  law  regards  as  a  misfortune  merely,  and  for  which  the  party 
from  whose  act  it  proceeds  is  liable  neither  at  law  nor  in  the 
forum  of  conscience.  No  legal  liability  is  incurred  by  the  nat- 
ural and  lawful  use  of  his  land  by  the  owner  thereof  in  the 
absence  of  malice  or  negligence.^^  Thus  it  has  been  held, 
(though  not  without  dissent),  that  one  opening  a  coal  mine  in 
the  ordinary  and  usual  manner  may,  upon  his  own  land,  drain 
or  pump  the  water  which  percolates  into  his  mine  into  a  stream 
which  forms  the  natural  drainage  of  the  basin  in  which  the 
mine  is  situate,  although  the  quantity  of  the  water  may  thereby 
be  increased  and  its  quality  so  affected  as  to  render  it  totally 
unlit  for  domestic  purposes  by  the  low^er  riparian  owners.^ 
In  cases  of  this  nature  a  loss  or  damage  is  indeed  sustained, 
but  it  results  from  an  act,  which  is  neither  unjust  nor  illegal, 
done  by  another  free  and  responsible  being. ^^  The  prosecu- 
tion in  good  faith  of  a  gToundless  action  may  give  the  defend- 

20  Hall  V.  Rising,  141  Ala.  431.  v.  Minneapolis  G.  L.  Co.,  60  Minn. 

21  Gordon  v.  EUenville  &  K.  R.  296;  Stroebel  v.  Kerr  S.  Co.,  164 
Co.,  195  N.  Y.  137;  Bennett  v.  Long  N.  Y.  303,  79  Am.  St.  643,  51  L.R.A. 
Island  R.  Co.,  181  N.  Y.  431;  687.  It  has  been  said  of  it  tliat  it 
Strauss  v.  Allentown,  215  Pa.  96;  was  of  great  hardship,  dilficulty  and 
Pennsylvania  C.  Co.  v.  Sanderson,  doubt,  involving  a  serious  choice  of 
113  Pa.  126,  57  Am.  Rep.  445;  Long  evils.  Strauss  v.  Allentown,  supra. 
V.  Elberton,  109  Ga.  28,  41  Am.  St.  And  that  it  is  not  in  accord  with 
454,  46  L.R.A.  428 ;  Barnard  v.  Slier-  principles  which  have  for  centuries 
ley,  135  Ind.  547,  24  L.R.A.  568,  575,  applied  in  determining  the  common 
151  Ind.   160,  41  L.R.A.  737.  interests  and  rights  of  riparian  pro- 

22  Pennsylvania  C.  Co.  v.  Sander-  prietors,  and  it  lias  received  but  lit- 
son,  supra.  This  case  has  been  con-  tie  approval  outside  of  the  juris- 
sidcred  in  Robb  v.  Carnegie,  145  Pa.  diction  in  which  it  was  decided. 
324,  27  Am.  St.  694,  14  L.R.A.  329 ;  "That  decision,  as  it  seems  to  us,  is 
Lentz  V.  Carnegie,  145  Pa.  612,  27  based  upon  two  grounds,  neither  of 
Am.  St.  717,  and  in  Drake  v.  Lady  which  is  sound,  viz.:  That  the  rights 
Ensley  C.  I.  &  R.  Co..  102  Ala.  501,  cf  one  riparian  owner  are  to  be  de- 
48  Am.  St.  77,  24  L.R.A.  64,  the  termined  by  the  necessities  of  anoth- 
latter  favoring  a  contrary  rule,  as  er,  and  by  the  importance  of  tlie  lat- 
does  Voss  v.  Chicago  Sandoval  C.  ter's  business  to  the  community  or 
Co.  165  111.  App.  565,  and  local  cases  public."  Arminius  C.  Co.  v.  Land- 
cited,  and  Teel  v.  Rio  Bravo  O.  Co.,  rum,  113  Va.  7,  38  L.R.A.  (N.S.)  272. 
47  Tex.  Civ.  App.  153.     See  Berger  23  Broom's  Max.  151. 


10 


SUTIIEltLAND    OJN    DAMAGES. 


[§  3 


ant  great  annoyance,  and  cause  him  loss  of  time  and  money ; 
but  the  plaintiff  in  such  case  is  exercising  a  legal  right,  and 
the  defendant,  according  to  the  weight  of  authority,  if  there 
has  been  no  interference  with  his  person  or  property,  is  entitled 
to  no  compensation  for  the  injury  he  suffers  beyond  the  costs 
which  may  be  taxed  in  his  favor.^*  Every  man  is  entitled  to 
come  into  a  court  of  justice  and  claim  what  he  deems  to  be  his 
right;  if  he  fails  he  shall  be  amerced  (according  to  the  old 
principle)  for  his  false  claim;  and  the  defendant  is  entitled 
to  his  costs,  and  with  these  he  must  be  content. ^^  The  motive 
of  the  plaintiff'  in  bringing  an  action  is  immaterial  if  he  had 


24  Avery  v.  Case  P.  Works,  103 
Fed.  842;  Fender  v.  Kamsey,  131 
Ga.  440;  Dendy  v.  Russell,  84  Kan. 
377;  Deere  P.  Co.  v.  Spatz,  78  Kan. 
786,  20  L.R.A.  492;  Jones  v.  Jones, 
119  La.  677;  Cuello  v.  Fuster,  3 
Porto  Rico  Fed.  193;  Cohen  v.  Min- 
zesheimer  (N.  Y.  Misc.)  118  Supp. 
385;  W'oodmansie  v.  Logan,  2  N.  J. 
L.  67 ;  Canter  v.  American  Ins.  Co., 
3  Pet.  307,  7  L.  ed.  688 ;  Muldoon  v. 
Rickey,  103  Pa.  110:  Eberly  v. 
llupp,  90  id.  259;  Bisliop  v.  Ameri- 
can P.  Co.,  105  Fed.  845.  See  cli. 
35, 

Where  there  was  an  intentional 
non-entry  of  an  action  in  whicii 
property  was  attached  and  a  new  ac- 
tion was  brought  for  the  same  cause 
of  action,  the  same  property  being  re- 
attached, the  only  claim  the  defend- 
ant in  those  actions  could  maintain 
was  for  the  costs  for  failure  to  enter 
the  first  writ;  for  the  malicious 
suing  out  of  the  second  attachment 
he  had  no  remedy  because  no  wrong 
was  done.  Johnson  v.  Reed,  136 
Mass.  421. 

One  cannot  maintain  an  action  for 
the  malicious  prosecution  of  a  pro- 
ceeding to  which  he  was  not  a  party. 
Duncan  v.  Griswold,  92  Ky.  546; 
Duncan  v.  Citizens'  Nat.  Bank,  20 
Ky.  L.  Rep.  237. 


If  an  attachment  is  not  wrongful- 
ly sued  out  tiie  plaintitf  is  not  re- 
sponsible for  the  death  of  A  horse 
owing  to  tlie  negligence  of  the  oHioer 
who  had  it  in  custody.  McFaddin 
V.  Sims,  43  Tex.  Civ.  App.  598.  The 
dissolution  of  an  attachment  does 
not  give  the  right  to  recover  at- 
torney's fees.  Bonds  v.  Garvey,  87 
Miss.  335. 

25  Henry  v.  Dufillio,  14  La.  48; 
Davies  v.  Jenkins,  11  M.  &  W. 
745;  Boardman  v.  Marshalltown  G. 
Co.,  105  Iowa  445;  Porter  v.  John- 
son, 96  Ga.  145;  McKenzie  v.  Mit- 
chell, 123  Ga.  72;  Mallard  v. 
Curran,  123  Ga.  872;  Rowland  v. 
Maddock,  183  Mass.  360:  Kaufmann 
v.  Kirker,  22  Pa.  Super.  201. 

The  same  principle  applies  wliere 
an  appeal  is  taken ;  there  is  no  lia- 
bility because  of  the  insolvency  of  a 
third  person  pending  the  appeal 
though  loss  results  to  some  of  the 
litigants.  Leary  v.  Murray,  178 
Fed.  209,  101  C.  C.  A.  529.  And 
M  here  a  member  of  a  body  has  been 
irregularly  suspended.  Lurman  v. 
-larvie,  82  App.  Div.  37.  And  where 
one  is  wrongfully  removed  from  the 
public  service.  Fallon  v.  Wright,  82 
App.  Div.  193.  A  partial  change  in 
the  rule  has  been  made  by  statute  in 
some  states  if  the  party  has  acted 


§3]  RIGHT    TO    DAMAGES.  11 

cause  therefor.  "Any  transaction  which  would  be  lawful  and 
proper  if  the  parties  were  friends  cannot  be  made  the  founda- 
tion of  an  action  merely  because  they  happened  to  be  enemies. 
As  long  as  a  man  keeps  within  the  law  by  doing  no  act  which 
violates  it  we  must  leave  his  motives  to  Him  who  searches  the 
heart."  ^^  But  if  the  suit  be  malicious,  as  well  as  -false  or 
groundless,  the  party  bringing  it  is  answerable  in  an  action 
at  law  by  the  party  injured.^'^  The  making,  bona  fide,  of  defam- 
atory statements,  though  they  are  harsh,  untrue  and  injurious, 
in  the  assertion  of  rights,  in  the  performance  of  a  duty,  or  in' 
fair  criticism  upon  a  matter  of  public  interest  is  also  damnum 
absque  vnjuria.^^  Private  houses  may  be"  pulled  down  in  the 
interest  of  the  public  to  prevent  the  spread  of  fire  ^^  and  bul- 
warks may  be  raised  on  private  property  as  a  defense  against 
a  public  enemy.  So  owners  of  land  exposed  to  the  inroads  of 
the  sea,  or  commissioners  having  a  statutory  power  to  act  for 
a  number  of  such  owners,  have  a  right  to  erect  barriers,  though 
they  are  consequentially  prejudicial  to  others.^"  Owners  of 
land  adjoining  streets  are  often  subjected  to  temporary  incon- 
venience while  work  is  being  done  thereon  for  their  improve- 
ment, or  to  change  their  grade,  or  by  their  temporary  use  for 
the  deposit  of  building  material  or  the  delivery  of  merchandise; 

in  bad  faith  or  lias  been  stubbornly  11  L.  ed.  591;  Lawson  v.  Hicks,  38 
litigious.  See  Carhart  V.  Wainman,  Ala.  279;  Calkins  v.  Sumner,  13 
114  Ga.  632,  88  Am.  St.  45'.  See  §§  Wis.  193,  80  Am.  Dec.  738;  Allen  v. 
1130  (conversion)  ;  516  (attachment  Crofoot,  2  Wend,  515,  20  Am.  Dec. 
bonds)  ;  524-5  (injunction  bonds)  ;  047;  Lawler  v.  Earle,  5  Allen,  22. 
1237  (malicious  prosecution);  564  29  Wheeler  v.  Aberdeen,  45  Wash, 
(stipulations  for  attorney's  fees  in  (;;j.  American  P.  Works  v.  Law- 
notes  and  bills).  ^^^^^^^    23    N.   J.    L.   9,   21   id.   248: 

26  Whitesell  V.  Study,  37  Ind.  App.  ^^^^^^^  ^,   q^^^^,^  3  ^^1.  69;  Russell 

429;    Stephens    v.    Head,    138    Ala.  v.  Mayor,  2  Denio,  461 ;  Field  v.  Des 

455;  Pegues  M.  Co.  v.  Brown,   (Tex.  ,,   .  „„   ^  __^    -,„    .        t^ 

^.        .    ^  ^    ___,,„    „„^  Moines,  .39  Iowa,  a/5,   18  Am.  Pvep. 

Civ.  App.)    145  S.  W .  280.  ,„      ..,,  „,  „     „.  S^ 

0^0        ,     or  46;    Aitken   v.   Wells   River,   70   \"t. 

*'  See  eh.  35.  ^^  t»  a    - 

28  Todd  v.  Hawkins,  8  C.  &  P.  88;  ^^^'  ^^  ^^■^"'^-  ^^^• 
Huntley  v.  Ward,  6  C.  B.  (N.  S.)  ^'"'^^^'^  ^'^''^''^  ^"  *''^'  discharge  of 
514;  Mackay  v.  Ford,  5  H.  &  N.  t''*^"'  ^^^^'^^  '"^.V  destroy  private 
792;  Revis  v.  Smith,  18  C.  B.  126;  property  in  the  interests  of  the  pub- 
Barnes  V.  McCrate,  32  Me.  442;  lie  health.  Perry  v.  Oxegon,  139 
Henderson  v.  Broomhead,  4  H.  &  N.  HI.  App.  606. 
569;  White  v.  Nicholls,  3  How.  266,  30  King  v.  Pagham,  8  B.  &  C.  355. 


12 


SUTHERLAND    ON    DAMAGES. 


[§  3 


yet,  in  the  absence  of  legislation,  there  is  no  right  to  compen- 
sation therefor;  no  legal  injury  is  recog-nized.^^  The  construc- 
tion of  a  new  way  or  the  discontinuance  of  an  old  one  may 
very  seriously  affect  the  value  of  property ;  the  same  may  result 
from  the  removal  of  a  state  capital  or  county  seat ;  but  persons 
suffering  only  general  loss  from  the  closing  of  a  street  have 
no  legal  remedy.'^  But  if  the  vacation  of  part  of  a  street 
destroys  all  access  from  property  abutting  on  the  remaining 
part  of  the  street  to  the  system  of  streets  in  one  direction,  it 
is  otherwise.^^  A  new  business  may,  by  competition,  greatly 
impair  the  productiveness  of  an  old  one,  but  there  is  no  redress 


81  Reading  v.  Kepplemann,  61  Pa 
233;   Griggs  v.  Foote,  4  Allen,  195 
Benjamin  v.  Wheeler,  8  Gray.  409 
Macey  v.  Indianapolis,  17  Ind.  267 
Torre  Haute  v.  Turner,  36  Ind.  522 
Radcliff  V.  Mayor,  etc.,  4  N.  Y.  195 
Mills   V.    Brooklyn,    32   M.    Y.   489 
Rome  V.  Omberg,  28  Ga.  40,  73  Am 
Dec.   748;    Hovey  v.  Mayo,  43   Me 
322;   Denver  v,  Bayer,  7  Colo.  113 
Lake  St.  E.  R.  Co.  v.  Brooks,  90  111 
App.   173;   Ridge  Ave.  P.  R.  Co.  v 
Philadelphia,  181  Pa.  592;   Fernan- 
dez V.  Smith,  43  La.  Ann.  708;  Pu- 
eblo V.  Strait,  20  Colo.  13,  24  L.R.A. 
392;    Talbot  v.  New  York  &  H.  R, 
Co.,  151  N.  Y.  155;    Sanitary  Dist. 
V.  McGuirl,  86  111.  App.  392;  Morris 
V.    Indianapolis,     (Ind.)     94    N.    E. 
705;   In  re  Grade  Crossing  Com'rs, 
201    N.    Y.    32;    Detroit    v.    Grand 
Trunk  R.  Co.,  163  Mich.  229;  War- 
ner   V.    State,    132    App.    Div.    611; 
Johns  V.  Salamanca,  129  App.  Div. 
717;  Dorsey  v.  Henderson,  148  N.  C. 
423;    Adams  v.   Oklahoma  City,   20 
Okla.  519;   Houston,  etc.  R.  Co.  v, 
Powell,  (Tex.  Civ.  App.)   125  S.  W. 
330;     In    re    Fifth    Ave.,    etc.,    62 
Wash.  218;   Clute  v.  North  Yakima 
&  V.  R.  Co.,  62  Wash.  531.    See  Le- 
high Valley  R.  Co.  v.  Canal  Board, 
204  N.  Y.  471. 

32  Swartz  V.  Board  of  Com'rs,  158 


Ind.  141,  and  cases  cited;  Cooley's 
Const.  Lim,  384;  Paul  v.  Carver,  24 
Pa.  207,  64  Am.  Dec.  649;  Fearing 
v,  Irwin,  55  N.  Y.  486;  Tomlin  v. 
Cedar  Rapids,  etc.  R.  &  L.  Co.  141 
Iowa,  599,  22  L.R.A.  (N.S.)  530; 
Ruscomb  St.,  In  re,  30  Pa.  Super. 
476  (if  access  to  property  is  not 
prevented,  thougli  it  is  less  direct 
than  formerly)  ;  Sensenig  v.  Lan- 
caster, 12  Pa.  Dist.  387;  Howell  v. 
Morrisville,  212  Pa.  349.  See  Albes 
v.  Southern  R.  Co.,  164  Ala.  356; 
Stout  v.  Noblesville  &  E.  G.  R.  Co., 
83  Ind.  466;  Huff  v.  Donehoo,  109 
Ga.  638;  Nichols  v.  Richmond,  162 
Mass.  170;  Buhl  v.  Fort  St.  U.  D. 
Co.,  98  Mich.  596,  23  L.R.A.  392; 
Frost  V.  W'ashington  County  R.  Co., 
96  Me.  76,  86,  59  L.R.A.  68,  and 
cases  cited. 

33  Park  City  Yacht  Club  v. 
Bridgeport,  85  Conn.  366,  39  L.R.A. 
(N.S.)  478,  citing  Johnston  v.  Old 
Colony  R.  Co.,  18  R.  I.  642,  49  Am. 
St.  800;  Chicago  v.  Burcky,  158  111. 
103,  29  L.R.A.  568,  42  Am.  St.  142; 
Highbarger  v.  Milford,  71  Kan.  340; 
Lewis  on  Em.  Dom.  (3d  ed.)  sec. 
368.  To  the  same  effect  are  Mari- 
etta C.  Co.  V.  Henderson,  121  Ga. 
399,  104  Am.  St.  156,  and  cases 
cited;  Winnetka  v.  Clifford,  201  111. 
475;  Ridgway  v.  Osceola,  139  Iowa, 


§  3] 


RIGHT    TO    DAMAGES. 


13 


for  the  loss,^*  unless  the  new  business  was  established  and 
conducted  solely  for  the  purpose  of  maliciously  injuring  that 
previously  existing.^^  One  who  accepts  a  license  from  a  munici- 
pality to  sell  liquors  does  so  with  knowledge  that  it  is  revocable 
at  the  pleasure  of  the  officers  who  issued  it,  and  cannot  recover 
damages  for  its  revocation  though  that  be  done  without  cause  ^^ 
or  through  malice.^'  Damage  by  way  of  increased  noise,  smoke, 
cinders,  etc.,  due  to  the  elevation  of  a  railroad  track  and  changes 
in  operating  the  road  is  dmnrmm,  absque  injurm  as  to  one  who 
purchased  a  lot  adjoining  the  road  with  notice  of  the  existence 
of  a  right  of  way.^®  A  breach  of  contract  does  not  afford  a 
cause  of  action  where  its  performance  is  prevented  by  law.^^ 
Regardless  of  his  motive,  so  long  as  his  acts  are  not  tainted 
with  fraud,^  a  person  may  sell  or  offer  for  sale  at  any  price 
goods  of  which  he  is  not  the  owner,  but  which  he  expects  or 
hopes  to  acquire,  and  may  make  his  price  public.*^  The  older 
cases,  at  least  to  some  extent,  conditioned  the  exemption  of 
the  owner  of  property  from  liability  for  damages  to  another 


590;  McCann  v.  Clarke  County,  149 
Iowa,  13,  36  L.R.A.(N.S.)  1115, 
overruling  Brady  v.  Shinkle,  40 
Iowa,  576,  and  other  cases. 

34  Ferry  Co.  v.  Eussell,  52  W.  Va. 
356,  59  L.R.A.  513;  Masterson  v. 
Short,  3  Abb.  Pr.  (N.  S.)  154; 
Hanger  v.  Little  Rock  J.  R.,  52  Ark. 
61. 

35  Dunshee  v.  Standard  Oil  Co.,  152 
Iowa,  618,  36  L.R.A.  (N.S.)  263,  and 
cases  cited;  Tuttle  v.  Buck,  107 
Minn.  145,  22  L.R.A. (N.S.)  599,  131 
Am.  St.  446,  and  cases  cited. 

36  Ison  V.  Griffin,  98  Ga.  623. 

37  Raycroft  v.  Tayntor,  68  Vt.  219, 
33  L.R.A.  225;  Docter  v.  Riedel,  96 
Wis.  158,  37  L.R.A.  580. 

38  Smith  V.  St.  Paul,  etc.  R.  Co., 
.39  Wash.  355,  70  L.R.A.  1018;  Cin- 
cinnati C.  B.  R.  Co.  V.  Bvirski,  4 
Ohio  C.  C.  (N.  S.)  98  (regardless 
of  when  the  landowner  acquired  ti- 
tle) ;  Kotz  V.  Illinois  Cent.  R.  Co., 
188  111.  578.   See  Harrison  v.  Denver 


City  T.  Co.,  54  Colo.  593,  44  L.R.A. 
(N.S.)    1164. 

39  Malcomson  v.  Wappoo  Mills,  88 
Fed.  680;  People  v.  Globe  Mut.  L. 
Ins.  Co.,  91  N.  Y.  174.  Contra, 
Spader  v.  Mural  Decoration  Mfg. 
Co.,   47   N.  J.  Eq.   18. 

40  See  Richardson  v.  Silvester,  L. 
R.  9  Q.  B.  34. 

"Ajello  V.  Worsley,  [1898]  1  Ch. 
Div.  274;  Gilly  v.  Hirsh,  122  La. 
966,  20  L.R.A.(N.S.)  972.  For 
other  illustrations  see  Southwestern 
Tel.  &  T.  Co.  V.  Beatty,  63  Ark. 
65;  Cleveland  City  R.  Co.  v.  Osborn, 
66  Ohio  St.  45;Macomber  v.  Nichols, 
34  Mich.  212;  Waffle  v.  Porter,  61 
Barb.  130;  Farmer  v.  Lewis,  1  Bush, 
66;  Pontiac  v.  Carter,  32  Mich.  164; 
Winters'  App.,  61  Pa.  307;  Tinicum 
F.  Co.  v.  Carter,  61  Pa.  21;  Conger 
V.  Weaver,  6  Cal.  548 ;  Baker  v.  Bos- 
ton, 12  Pick.  184;  Winchester  v.  Os- 
born, 62  Barb.  337;  Gould  v.  Hud- 
son River  R.  Co.,  6  N.  Y.  .522 ;  Rood 


14  SUTHERLAND    ON    DAMAGES.  [§    ^ 

caused  by  his  lawful  use  of  it  upon  the  motive  which  actu- 
ated such  use,  and  that  qualification  has  been  embodied  in 
several  of  the  propositions  stated  in  this  section.  The  better 
rule  doubtless  is  that  "no  use  of  i)ropertv  which  would  be  legal 
if  due  to  a  proper  motive  can  become  illegal  because  it  is  prompt- 
ed by  a  motive  which  is  improper  or  even  malicious."  ^  Ref- 
erence has  been  made  in  this  section  to  motive  as  affording 
a  ground  of  action  for  acts  which  wonld  not  be  snch  aside 
from  the  motive  which  prompted  them.  There  is  a  wide  diver- 
gence of  views  n])on  this  question,  aside  from  the  aspects  in 
which  it  has  been  touched  upon — as  in  the  institution  of  actions, 
competition  in  business  and  the  use  of  property.  There  are 
authorities  of  high  respectability  which  hold  that  the  doing  of 
a  lawful  act  for  the  express  purpose  of  causing  damage  to 
another  is  not  ground  for  an  action.*^  On  the  other  hand, 
courts  of  high  standing  declare  that  bad  motive  may  make 
that  a  wrong  which  would  not  otherwise  be  so,  as  where  one 
erects  a  spite  fence  on  his  premises  for  the  purpose  of  cut- 
ting oft"  light  and  air  from  another,**  or  digs  a  well  for  the 
sole  purpose  of  cutting  off  the  supply  of  water  from  a  well 
on  adj<jining  premises.** 

The  futility  of  cases  of  wrong  without  injury  is  illustrated 

V.  New  York,  etc.   K.  Co.,   18  Barb.  local      law.        Compare      Horan     v. 

80;    Tyson  v.   Com'rs,   28   Md.   510 :  J'yrnes,  72  N.  H.  93,  62  L.R.A.  602, 

Tonawanda    R.    Co.    v.    Munger,    5  101  Am.  St.  670,  and  Huskie  v.  Grif- 

Denio,  255;   RadclilT  v.  Mayor,  etc.,  fin,   75   X.   IT.   345,  27   L.R.A.  (N.S.) 

4  N.  Y.  195;  Botsford  v.  Wilson,  75  966. 

111.   132;    Mitchell   v.   Harmony,    13  43  J^.ehr  v.  Dickson,  141  Wis.  332, 

How.  135,   14  L.  ed.  84;   Cleveland,  30    L.R.A.  (X.S.)     495,    citing    local 

etc.    R.   Co.   V.    Speer,    56    Pa.    325;  cases    and    Dawson    v.    Kemper,    32 

Snyder  v.   Pennsylvania   R.   Co.,   55  Weekly  L.  Bull.  15,  Jenkins  v.  Fow- 

Pa!  340;    Hollister   v.  Union   Co.,   9  ler,  24  Pa.  308.     To  the  same  effect 

Conn.  430;   Runnels  v.  BuUen,  2  N.  is  C4arah]e  R.  Co.  v.  Chicago,  etc.  R. 

11.  532:    Banks  v.   Eastern   R.  &   L.  Co.,  1(58  Fed.   161,  94  C.  C.  A.  217, 

Co.,  46  Wasli.  610,  11  L.R.A.  (N.S.)  2l  L.R.A. (N.S.)  982.    See  next  note. 

485.  44  Barger  v.  Barringer,  151  N.  C. 

42  Mayor,   etc.   v.    Pickles,    [1895]  433,  25  L.R.A.  (N.S.)   831;   Burke  v. 

App.  Cas.  587;   Fisher  v.  Feige,  137  Smith,    69    Mich.    380;    Flaherty   v. 

Cal.  39,  59  L.R.A.  333.    A  limitation  Moran,  81  Mich.  52,  8  L.R.A.  183,  21 

of  the  rule  is  suggested  in  the  last  Am.  St.  51.     Numerous  cases  to  the 

case,  based  on  the  right  to  use  water  contrary  are  referred  to  in  these, 

for    irrigating    purposes    under    the  45  (^'hesley  v.  King,  74  Me.  177. 


§  ^] 


KiailT    TO    DAMAGES. 


15 


by  eases  in  which  damages  are  the  gist  of  the  action  and  none 
are  shown.*^  A  statute  making  it  a  misdemeanor  for  any  citi- 
zen to  assign  or  transfer  a  claim  for  debt  against  any  other 
citizen  for  the  purpose  of  having  the  same  collected  out  of  the 
wages  or  personal  earnings  of  the  debtor,  in  courts  outside 
of  the  state  of  the  parties'  residence,  was  held  to  be  designed 
merely  to  promote  the  public  welfare  and  not  to  redress  private 
grievances.  The  violation  of  it,  though  the  consequence  is 
the  collection  of  the  debt,  is  not  an  injury  in  a  legal  sense 
to  the  debtor,  though  such  collection  could  not  have  been  en- 
forced under  the  exemption  laws  of  the  state  in  which  the  debtor 
and  creditor  resided.^'  It  is  not  easy  to  harmonize  this  doc- 
trine with  that  which  gives  a  right  uf  action  against  a  creditor 
who  seizes  his  debtor's  exempt  property  or  garnishes  his  exempt 
wages  ;^®  or  with  that  which  enjoins  a  citizen  from  prosecut- 
ing an  attachment  in  the  courts  of  another  state  against  a  co- 
citizen  for  the  purpose  of  enforcing  the  payment  of  a  demand 
out  of  earnings  which  are  exempt  by  the  law  of  the  domicile.^^ 


46  Ford  V.  Smith,  1  Wend.  48; 
Kimball  v.  Connolly,  3  Keyes,  57, 
33  How.  Pr.  237;  Hutcluns  v.  Hut- 
chins,  7  Hill,  104;  Pollard  v.  Lyons, 
91  U.  S.  225,  23  L.  ed.  308;  Bassil 
v.  Elmore,  65  Barb.  627;  Kendall  v. 
Stone,  5  N.  Y.  14;  Swan  v.  Tappan, 
5  Cush.  104;  Dung  v.  Parker,  52  JS'. 
Y.  494;  Cook  v.  Cook,  100  ilass. 
194;  Millard  v.  Jenkins,  9  Wend. 
298;  Stark  v.  Chitwood,  5  Kan.  141; 
Franklin  v.  Smith,  21  \^■end.  624; 
Mayer  v.  W^alter,  64  Pa.  283 ;  Birch 
V.  Benton,  26  Mo.  153;  Speaker  v. 
McKenzie,  26  Mo.  2.55;  Girard  v. 
Moore,  86  Tex.  675. 

47  Uppinghouse  v.  ]Mundel,  103 
Ind.  238. 

A  statute  of  similar  import  is  re- 
pugnant to  the  fourteenth  amend- 
ment to  the  federal  constitution.  In 
re  Flukes,  157  Mo.  125,  51  L.R.A. 
176.  But  not  void  under  the  consti- 
tution of  Nebraska,  nor  under  sec. 
1,      art.      4,      federal      constitution. 


Singer  Mfg.  Co.  v.  Fleming,  39  Neb. 
679,  23  L.R.A.  210. 

A  debtor  is  not  defrauded  l)y  be- 
ing induced  by  a  false  representa- 
tion to  pay  his  debt.  Brown  v. 
Blunt,  72  Me.  415. 

A  creditor  who  fraudulently  in- 
duces his  creditor  to  come  from  the 
state  of  his  residence  into  that  of 
the  former's  domicile,  with  intent  to 
cause  his  arrest  and  compel  him  to 
pay  for  his  release  commits  an  ac- 
tionable fraud.  Sweet  v.  Kimball, 
im  Mass.  332,  55  Am.  St.  406. 

48Albrecht  v.  Treitschke,  ]7  Nel). 
205;  llaswcll  V.  Parsons,  15  Cal. 
266;  Cooper  v.  Scyoc,  104  Mo.  App. 
414.  See  Greer  v.  Newbill,  89  Ark. 
509. 

49  Snook  V.  Snetzer,  25  Ohio  St. 
51(i;  Zimmerman  v.  Franke,  34  Kan. 
650;  Stewart  v.  Thomson,  97  Ky. 
575,  36  L.B.A.  582,  53  Am.  St.  431. 
See  White  v.  Missouri,  etc.  K.  Co., 
230  Mo.   287,   29  L.R.A.  (N.S.)    874. 


16 


SUTHERLAND    ON    DAMAGES. 


[§  3 


It  has  been  held  that  a  citizen  who  sues  a  debtor  in  another 
state  for  the  purpose  of  evading  the  exemption  laws  of  the 
state  of  which  they  are  lx)th  residents  is  liable  for  such  dam- 
ages as  may  result.^"  Another  such  case  determines  that 
a  creditor  who  prosecutes  an  attachment  in  a  foreig-n  state 
against  a  resident  of  a  state,  a  statute  of  which  forbids  such 
proceedings  against  a  debtor's  exempt  property,  and  in  viola- 
tion of  an  order  of  court,  is  liable  to  his  debtor  after  collec- 
tion of  his  demand. ^^ 

§  4.  Public  wrongs.  The  law  does  not  give  a  private  remedy 
for  anything  but  a  private  wrong. ^^  A  public  wrong,  though 
the  perpetrator  of  it  may  be  subject  to  prosecution  by  the  public, 
may  also  have  the  nature  and  consequences  of  a  private  wrong, 
and  be  actionable  as  such  in  behalf  of  a  person  who  sustains 
an  injury  differing  in  kind  from  that  which  the  public  at 
large  suffers.^'  A  land-owner  who  has  a  right  of  egTess  in  a 
given  direction  by  way  of  a  street  may  have  an  injunction 
to  restrain  the  closing  of  the  street,  on  the  theory  that,  by 
being  obliged  to  take  a  circuitous  route  to  reach  a  place  or 


50  stark  v.  Bare,  39  Kan.  100. 

51  Main  v.  Field,  13  Ind.  App.  401. 

52  Morris  v.  Colorado  M.  R.  Co., 
48  Colo.  147,  31  L.R.A.(N.S.)  1106, 
139  Am.  St.  268;  Beck  &  G.  H.  Co. 
V.  Knight,  121  Ga.  2S7,  3  L.R.A. 
(N.S.)  420,  (neglect  of  oiricial 
dvity ) . 

53  Western  U.  Tel.  Co.  v.  Ford,  77 
Ark.  531;  Chicago  v.  Union  B.  Ass'n, 
102  111.  379,  393 ;  Wliitsett  v.  Union 
D.  &  R.  Co.,  10  Colo.  243;  Rose  v. 
Miles,  4  M.  &  S.  101;  Greasly  v. 
Codling,  2  Bing.  263 ;  Mayor,  etc.  v. 
Henley,  1  Bing.  N.  C.  222;  Gold- 
thorpe  V.  Hardman,  13  M.  &  W.  377  ; 
Wilkes  V.  Hungerford  M.  Co.,  2 
Bing.  N.  C.  281 ;  Crommelin  v.  Coxe, 
30  Ala.  318;  Lansing  v.  Wiswall,  5 
Denio,  213;  Lansing  v.  Smith,  8 
Cow.  146,  4  Wend.  9 ;  Pierce  v.  Dart, 
7  Cow.  609;  Mills  v.  Hall,  9  Wend. 
315;  Myers  v.  Malcolm,  6  Hill,  292; 


Gates  V.  Blincoe,  2  Dana,  158; 
'Shulte  V.  North  Pac.  T.  Co.,  50  Cal. 
592;  Baxter  v.  Winooski  T.  Co.,  22 
Vt.  114;  Seeley  v.  Bishop,  19  Conn. 
128;  Stetson  v.  Faxon,  19  Pick. 
J  47;  Francis  v.  Schoellkopf,  53  N. 
Y.  152;  Venard  v.  Cross,  8  Kan. 
248 ;  Pittsburgh  v.  Scott,  1  Pa.  309 ; 
Runyan  v.  Bordine,  14  N.  J.  L.  472 ; 
Hatch  V.  Vermont  Cent.  R.  Co.,  28 
Vt.  142;  Brown  v.  Watson,  47  Me. 
161;  Bruning  v.  New  Orleans,  etc. 
Co.,  12  La.  Ann.  541;  Clark  v.  Peck- 
ham,  10  R.  I.  35;  Gordon  v.  Baxter, 
74  N.  C.  470;  Dudley  v.  Kennedy, 
63  Me.  465;  Hamilton  v.  Mayor, 
etc.,  52  Ga.  435;  Baxter  v.  Coughlin, 
70  Minn.  1;  Pueblo  v.  Strait,  20 
Colo.  13,  24  L.R.A.  392.  See  Shau- 
but  V.  St.  Paul,  etc.  R.  Co.,  21  Minn. 
502;  Proprietors,  etc.  v.  Newcomb, 
7  Met.  276;  Pekin  v.  Brereton,  67 
111.  477;  §  972. 


§5]  RIGHT    TO    DAMAGES.  17 

object,  he  suffers  special  damage,^*  On  grounds  of  public 
policy,  and  because  judgments  cannot  be  impeached  in  collat- 
eral proceedings,  a  party  to  a  suit  cannot  maintain  an  action 
against  his  successful  adversary  for  suborning  a  witness  whose 
false  testimcfny  tended  to  produce  the  judgment,^^  nor  for  the 
adverse  party's  fraud  and  false  swearing,  so  long  as  the  judg- 
ment stands/^  For  like  reasons  a  defeated  suitor  cannot 
maintain  an  action  for  damages  against  a  witness  for  falsely 
testifying  in  favor  of  the  adverse  party.^'^  Where  a  statute  pro- 
hibited the  sending  of  animals  affected  with  a  contagious  disease 
to  market  and  inflicted  penalties  on  any  person  so  sending  them, 
the  violation  of  it,  with  knowledge,  was  a  public  offense,  but 
it  did  not  amount,  by  implication,  to  a  representation  that  the 
animals  sent  were  sound,  and  did  not  raise,  as  between  the 
parties  to  a  sale  of  them,  any  right  on  the  part  of  the  purchaser 
to  claim  damages  in  respect  of  an  injury  he  had  suffered  in 
consequence  of  buying  the  animals.^^  A  citizen  cannot  recover 
damages  from  a  canal  company  for  its  failure  to  reconstruct  a 
part  of  its  canal  because  he  was  thereby  prevented  from  deriv- 
ing a  profit  by  the  use  of  his  boat  on  the  canal.^^ 

§  5.  Illegal  transactions.  It  may  be  assumed  as  an  undis- 
puted principle  that  no  action  will  lie  to  recover  a  demand  or  a 
supposed  claim  for  damages  if,  to  establish  it,  the  plaintiff 
requires  aid  from  an  illegal  transaction,  or  is  under  the  neces- 

54  Sheedy     v.     Union     Press     B.  H.  542 ;  Lyford  v.  Demerritt,  32  M. 

Works,  25  Mo.  App.  527;   Glasgow  H.  234;  Damport  v.  Sympson,  Cro. 

V.   St.   Louis,   15   Mo.   App.   112,   87  Eliz.  520;  Revis  v.  Smith,  18  C.  B. 

Mo.  678 ;  Cummings  v.  St.  Louis,  90  125. 

jyjQ   259  ^'  Horner  v.   Schinstock,  SO   Kan. 

55Bostwick  V.  Lewis,  2  Day,  447;  136,  23  L.R.A.(N.S.)  134  (while  the 

Smith  V.  Lewis,  3  Johns.  157;  Ross  judgment  is  unreversed)  ;  Stevens  v. 

V.  Wood,  70  N.  Y.  8;  United  States  Rowe,  59  N.  H.   578,  47  Am.  Rep. 

V.   Throckmorton,    98   U.    S.   61,   25  231. 

L.  ed.  93 ;  Pico  v.  Cohn,  91  Cal.  129,  58  Ward  v.  Hobbs,  L.  R.  4  App. 

13  L.R.A.  336;   Gray  v.  Barton,  62  Cas.  13.     See  Mairs  v.  Baltimore  & 

Mich.     196;     Eyres    v.    Sedgewicke,  0.  R.  Co.,  175  N.  Y.  409;   Midland 

Cro.  Jac.  601;  Young  v.  Leach,  27  Ins.  Co.  v.  Smith,  6  Q.  B.  Div.  501; 

App.  Div.  293.  Bradlaugh  v.   Clarke,  L.  R.   8  App. 

56  Godette  v.   Gaskill,   151   N.   C.  Cas.  354. 

52,  24  L.R.A.(N.S.)    265,   134  Am.  59  Saylor  v.  Pennsylvania  C.  Co., 

St.  964;  Curtis  v.  Fairbanks,  16  N.  183  Pa.  167. 
Suth.  Dam.  Vol.  1.— 2. 


18 


SUTllEllLAND    ON    DAMAGES. 


[§ 


sity  of  showing  and  depending  in  any  degree  upon  an  illegal 
agreement  to  wliicli  he  was  a  party.®"  The  same  principle 
applies  to  an  illegal  agreement  set  up  in  defense  of  an  action ; 
either  party  may  plead  and  prove  its  real  character."  A 
bank  is  not  liable  for  failure  to  perform  its  contract  to  lend 
or  advance  money  to  be  used  in  speculating  in  futures.®^  The 
sender  of  a  telegram  relating  to  a  gambling  contract  in  stocks 
cannot  invoke  such  contract,  or  the  gain  or  loss  resulting  from 
it,  to  measure  the  damages  sustained  in  consequence  of  its  non- 
delivery.®^ This  principle  does  not  extend  to  a  contract  which 
is  merely  ultra  vires,  involves  no  turpitude,  and  does  not  offend 
against  any  express  statute.®*  Neither  does  it  follow  that  if 
two  persons  are  engaged  in  the  same  unlawful  enterprise,  each 
of  them  while  so  engaged  is  irresponsible  for  wilful  injuries 
done  to  the  property  of  the  other.  If,  in  such  a  case,  the 
plaintiff  can  maintain  his  action  without  being  obliged  to  show 
that  he  was  unlawfully  engaged  when  his  right  to  bring  it 
accrued  he  may  recover,  though  the  defendant  makes  proof  of 


60  Welch  V.  Wesson,  6  Gray,  505 ; 
Gregg  V.  Wyman,  4  Ciish.  122;  Pha- 
lenv.  Clark,  19  Conn.  421,  50  Am. 
Dec.  253 ;  Simpson  v.  Bloss,  7  Taunt. 
246;   Myers  v.  Meinrath,  101  Mass. 
306;   Connolly  v.  Boston,  117  Mass. 
64;    Gulf,    etc.    R.    Co.    v.    Johnson, 
71  Tex.  619,  1  L.R.A.  730;   Kitchen 
V.    Greenabaum,    61    Mo.    110;    The 
Arrogante  Barcelones,  7  Wheat.  496, 
5  L.  ed.  507;   The  Clarita  and  Tlie 
Clara,    23    Wall.    1,    23    L.    cd.    140; 
Meguire  v.  Corwine,  101   U.  S.   108, 
25    L.    ed.    899;    Oscanyan    v.    Win- 
chester   A.    Co.,   103    U.   S.   261,   26 
L.  ed.  539;   Magara  Falls  B.  Co.  v. 
Wall,  98  Mich.  158;  Haggerty  v.  St. 
Louis  I.  Mfg.  &  S.  Co.,  143  Mo.  238, 
G5  Am.  St.  647,  40  L.R.A.  151  ;  Pull- 
man's P.  C.   Co.   V.   Central   T.  Co., 
171    U.    S.    138,   150,   43  L.   ed.   108, 
113;  Bishop  v.  American  P.  Co.,  105 
Fed.  845;  Meyers  v.  Merrillion,  118 
Cal.    352;    Edwards    v.    Randle,    63 
Ark.  318,  58  Am.  St.  108,  36  L.R.A. 


174;  Kelly  v.  Courter,  1  Okla.  277; 
Richardson  v.  Scott's  Bluff  County, 
59  Neb.  400,  48  L.R.A.  294,  80  Am. 
St.  682;  Johnston  v.  United  States, 
41  Ct.  of  Cls,  76;  Lewis  v.  Brannen, 
6  Ga.  App.  419;   Coppedge  v.  Goetz 

B.  Co.,  67  Kan.  851  citing  the  text; 
Gloster  0.  Works  v.  Buckeye  C.  O. 
Co.,  87  Miss.  618;  People  v.  Mercan- 
tile Co-op.  Bank,  104  App.  Div.  219; 
Ilardison  v.  Reel,  154  N.  C.  273,  34 
L.R.A.  (N.S.)  1098.  See  Mitchell  v. 
Branham,  104  Mo.  App.  480. 

61  Lauer  v.  Banning,  152  Iowa, 
99;  Jenness  v.  Simpson,  84  Vt.  127. 

62  Garseed  v.   Sternberger,  135  N. 

C.  501;  Moss  v.  Exchange  Bank,  102 
Ga.  808,  overruling  Western  \J.  Tel. 
Co.  V.  Blanchard,  68  Ga.  299. 

63  Weld  V.  Postal  Tel.-C.  Co.,  199 
N.  Y.  88;  Morris  v.  Western  U.  Tel. 
Co.,   94   Me.  423. 

64  Bath  G.  L.  Co.  v.  Claffy,  151  N. 
Y.  24,  30  L.R.A.  664. 


§    5]  EIGTIT    TO    DAMAGES.  19 

the  illegal  act.  The  latter  cannot  be  relieved  from  the  conse- 
quences of  his  unlawful  conduct  by  showing  the  wrong-doing 
of  the  plaintitl'  and  his  own  participation  therein.^*  In  Massa- 
chusetts if  the  injury  is  sustained  on  the  Lord's  day  and  results 
from  the  negligence  of  the  defendant,  no  element  of  wilfulness 
existing,  the  violation  of  the  statute  concerning  the  observ- 
ance of  that  day  is  regarded  as  contributory  ifegligence,  though 
the  plaintiff  is  otherwise  free  fVom  fault.^^  As  applied  to 
actions  which  are  not  based  on  contract  the  rule  stated  is  gen- 
erally disapproved.^'''  ''The  cases  may  be  summed  up,"  said 
Dixon,  C.  J.,  "and  the  result  stated  generally  to  be  the  affirm- 
ance of  two  very  just  and  plain  principles  of  law  as  applicable 
to  civil  actions  of  this  nature,  namely :  first,  that  one  party  to 
the'  action,  when  called  upon  to  answer  for  the  consequences 
of  his  own  wrongful  act  done  to  the  other,  cannot  allege  or 
reply  the  separate  or  distinct  wrongful  act  of  the  other,  done 
not  to  himself  nor  to  his  injury,  and  not  necessarily  connected 
with,  or  leading  to,  or  causing  or  producing  the  wrongful  act 
complained  of;  and  secondly,  that  the  fault,  want  of  due  care 
or  negligence  on  the  part  of  the  plaintiff  which  will  preclude 
a  recovery  for  the  injury  complained  of  as  contributing  to  it 
must  be  some  act  or  conduct  of  the  plaintiff  having  the  rela- 
tion to  that  injury  of  a  cause  to  the  effect  produced  by  it."  ^^ 
Though  an  illegal  contract  will  not  be  executed,  yet  when 

65  Welch  V.  Wesson,  6  Gray,  505;  Co.,  59  Wis.  278;  Gulf,  etc.  R.  Co., 
Disbrow  v.  Creamery  &  P.  Mfg.  Co.,  v.  Johnson,  infra,  and  numerous  oth- 
110  Minn.  237,  and  cases  cited ;  if  er  cases  referred  to  in  the  three  first 
such  wrongdoing  did  not  proximate-  cited;  Kansas  City  v.  Orr,  62  Kan. 
ly  contribute  to  the  injury  sus-  01,  50  L.R.A.  783,  citing  numerous 
tained.     Moore  v.  Smith,  6  Ga.  App.  cases. 

649,   7    Ga.   App.   675.  An  action  lies  for  injury  done  to 

66  Bosworth  V.  Swansey,  10  Met.  property  used  for  gaming  purposes 
303,  43  Am.  Dec.  441;  Jones  v.  And-  if  it  was  not  so  used  at  tlie  time  it 
over,   10  Allen,   18.  was  damaged.     Gulf,   etc.  R.  Co.  v. 

67  Sutton  V.  Wauwatosa,  29  Wis.  Johnson,  71  Tex.  619,  1  L.R.A.  730. 
21,  9  Am.  Rep.  534;  Louisville,  etc.  68  Sutton  v.  Wauwatosa,  supra; 
R.  Co.  V.  Buck,  116  Ind.  566,  11  Am.  Taylor  v.  Western  U.  Tel.  Co.,  95 
Neg.  Cas.  508,  2  L.R.A.  520,  9  Am.  Iowa,  740;  Huglies  v.  Atlanta  S. 
St.  883;  Same  v.  Frawley,  110  Ind.  Co.,  136  Ga.  511,  36  L.R.A.  (N.S.) 
18,  14  Am.  Neg.  Cas.  541.  1  L.R.A.  547,  modifying  earlier  cases;  Cop- 
730;  Knowlton  v.  Milwaukee  City  R.  pedge   v.   Goetz,   ftiipra;  Gabbert   v. 


20  SUTHEKIAND    ON    DAMAGES.  [§    5 

it  has  been  executed  by  the  parties  and  the  illegal  object  has 
been  accomplished,  the  money  or  thing  which  is  the  price  of  it 
may  be  a  legal  consideration  between  the  parties  for  a  promise, 
express  or  implied,  and  the  court  will  not  unravel  the  trans- 
action to  discover  its  origin.^^ 

§  6.  Contractual  exemption  from  liability  for  damages.  The 
benefit  of  the  rules  of  law  which  provide  compensation  for 
injury  may,  where  no  question  of  public  policy  is  involved, 
be  waived  or  relinquished  in  whole  or  in  part  by  contract.'" 
Thus  persons  engaged  in  public  employments  out  of  which 
spring  duties  and  responsibilities  to  patrons  may  be  relieved 
to  some  extent  by  contract  of  liabilities  imposed  by  law,  where 
such  waivers  or  limitations  are  reasonable  and  not  inconsistent 
with  sound  public  policy.  The  responsibility  of  a  common 
carrier  as  an  insurer  may  be  so  limited  by  contract.''^  It  is 
settled,  however,  that  a  carrier  cannot,  by  any  agreement  with 
shippers  or  patrons,  relieve  itself  from  responsibility  for  its 
own  negligence  or  that  of  its  servants;  and  this  because  such 
release  is  unreasonable  and  contrary  to  public  policy. '^^  The 
weight  of  authority  is  to  the  contrary  where  injury  is  sus- 
tained  by   a   passenger   while   riding   on   a   free   pass   which 

Hackett,    135    Wis.    86,    14    L.R.A.  §  279  et  seq.  as  to  stipulated  dain- 

(N.S.)    1070.     See  McNeill  v.  Rail-  ages. 

road  Co.,  135  N.  C.  682,  67  L.R.A.  71  See    Mechem's    Hutchinson    on 

227.  carriers,    ch    7;    note    to    Cole    v. 

69  Planters'  Bank  v.  Union  Bank,  Goodwin,  32  Am.  Dec.  495-506;  ch. 
16  Wall.   483,   21  L.  ed.   473;    Mc-  21. 

Blair   v.    Gibbes,   17    How.   232,    15  72  Bank   v.    Adams    Exp.    Co.,   93 

L.  ed.  132;  Kinsman  v.  Parkhurst,  U.  S.  181;  23  L.  ed.  875;  Railway 

18  How.  289,  15  L.  ed.  385 ;  Brooks  Co.  v.  Stevens,  95  U,  S.  655,  10  Am. 

V.   Martin,    2   Wall.    70,    17    L.   ed.  Neg.  Cas.  638,  24  L.  ed.  535;   Chi- 

732.  cago,  etc.  R.  Co.  v.  Abels,  60  Miss. 

70  Geiser  Mfg.  Co.  v.  Krogman,  1017 ;  Wallingford  v.  Columbia  & 
111  Iowa,  503,  citing  the  text;  G.  R.  Co.,  26  S.  C.  258;  Alabama, 
Griswold  v.  Illinois  Cent.  R.  Co.,  etc.  R.  Co.  v.  Little,  71  Ala.  611; 
90  Iowa,  265,  24  L.R.A.  647;  Lam-  American  Exp.  Co.  v.  Sands,  55 
bert  H.  E.  Co.  v.  Paschal,  151  N.  Pa.  140;  United  States  Exp.  Co.  v. 
C.  27;  Terry  v.  Southern  R.,  81  S.  Backman,  28  Ohio  St.  144;  Jud- 
C.  279,  18  L.R.A.  (N.S.)  295;  An-  son  v.  Western  R.  Co.,  6  Allen  486; 
crum  V.  Camden  W.,  L.  &  I.  Co.,  Ball  v.  Wabash,  etc.  R.  Co.,  83 
82  S.  C.  284,  21  Am.  Neg.  Rep.  Mo.  574;  Christenson  v.  American 
74,     21     L.R.A. (N.S.)     1029.       See  Exp.  Co.,  15  Minn.  270. 


6] 


RIGHT    TO    DAMAGES. 


21 


stipulates  for  the  release  of  the  carrier's  liability  for  injury  sus- 
tained through  its  negligence.'^  At  common  law  there  was 
no  right  to  recover  damages  for  negligence  which  caused  the 
death  of  a  human  being.  That  right,  being  given  by  statute, 
may  be  abolished  or  limited.  But  after  the  right  of  unlimited 
recovery  for  personal  injury  or  for  death  caused  by  negligence 
has  been  declared  by  the  constitution  no  statute  which  purports 
to  fix  limits  to  the  amount  recoverable  can  have  effect.'*  The 
value  of  the  interest  of  a  wife  and  children  in  the  life  of  the 
husband  and  father,  and  the  amount  they  may  recover  in  case 
of  his  death  through  the  negligence  of  another,  cannot  be  affect- 
ed by  any  contract  he  may  make.'^  Neither  will  the  acceptance 
of  money  in  pursuance  of  such  a  contract,  nor  the  execution 
of  a  release  of  liability  by  the  widow  affect  the  administrator's 
right  of  action  on  behalf  of  the  widow  and  children.'^ 


The  rule  seems  to  be  different  in  - 


New  York  if  the  intention  is  clearly 
expressed.  Nelson  v.  Hudson  River 
R.  Co.,  48  N.  Y.  498;  Nicholas  v. 
New  York  Cent.  etc.  R.  Co.,  89  N. 
Y.  370. 

A  railway  company  may  contract 
as  a  private  carrier  for  the  trans- 
portation of  matter  for  express  com- 
panies and  require  exemption  from 
liability  as  a  condition  precedent 
to  carrying.  Pittsburgh,  etc.  R.  Co. 
V.  Mahoney,  148  Ind.  196,  2  Am. 
Neg.  Rep.  335,  40  L.R.A.  101. 
Contra,  Voight  v.  Baltimore,  etc.  R. 
Co.,  79  Fed.  561. 

73  Payne  v.  Terre  Haute  &  I. 
R.  Co.,  157  Ind.  616,  56  L.R.A.  472, 
11  Am.  Neg.  Rep.  205;  Griswold 
v.  New  York,  etc.  R.  Co.,  53  Conn. 
371,  55  Am.  Rep.  115;  Rogers  v. 
Kennebec  Co.,  86  Me.  261,  3  Am. 
Neg.  Cas.  590,  25  L.R.A.  491; 
Quimby  v.  Boston  &  M.  R.  Co.,  150 
Mass.  385,  3  Am.  Neg.  Cas.  859,  5 
L.R.A.  846;  Kinney  v.  Central  R. 
Co.,  34  N.  J.  L.  513,  9  Am.  Neg. 
Cas.  575,  3  Am.  Rep.  265;  Wells 
V.    New   York,   etc.    R.    Co.,    24    N. 


y 


Y.  181,  9  Am.  Neg.  Cas.  616;  Mul- 
doon  V.  Seattle  City  R.  Co.,  7 
Wash.  528,  10  Am.  Neg.  Cas.  400, 
401,  22  L.R.A.  794,  38  Am.  St.  901, 
10  Wash.  3"11,  45  Am.  St.  787. 

74  Pennsylvania  R.  Co.  v.  Bow- 
ers, 124  Pa.  183,  2  L.R.A.  621. 

Where  the  United  States  author- 
izes a  suit  to  be  brought  against  it, 
and  after  it  has  been  brought,  re- 
peals the  authorizing  act,  there  can- 
not be  a  recovery  for  damages  sus- 
tained after  such  repeal.  Paine 
L.  Co.  V.  United  States,  55  Fed. 
854. 

75  Maney  v.  Chicago,  etc.  R.  Co., 
49  111.  App.  105;  Chicago,  etc.  R. 
Co.  V.  Wymore,  40  Neb.  645,  12 
Am.  Neg.  Cas.  229,  Same  16  Am. 
Neg.  Cas.  590;  Same  v.  Martin,  59 
Kan,  437,  4  Am.  Neg.  Rep.  266.  See 
Oyster  v.  Burlington  Relief  Depart- 
ment,  65  Neb.  789,   59   L.R.A.   291. 

76  Chicago,  etc.  R.  Co.  v.  Healy, 
76  Neb.  783,  10  L.R.A.  (N.S.)  198, 
overruling  Walters  v.  Chicago,  etc. 
R.  Co.,  74  Neb.  531,  19  Am.  Neg. 
Rep.  350. 


22         *  SUTILEKLAND    ON    DAMAGES.  [§    0 

In  some  states  contracts  between  persons  who  sustain  the 
relation  of  master  and  servant  to  each  other,  by  which  the  former 
undertakes  to  secure  immunity  beforehand  from  the  liability 
attaching  to  his  negligence  as  master,  are  valid  if  any  criminal 
neglect  is  not  waived."  A  railroad  company  which  is  a  party 
to  such  a  contract  does  not  enter  into  it  as  a  common  carrier; 
hence  the  principle  which  limits  its  power  to  restrict  its  lia- 
bility in  the  latter  capacity  does  not  affect  the  agreement." 
It  is  strongly  intimated  in  Arkansas  that  a  stipulation  which 
relieves  the  employer  from  liability  for  the  negligence  of  co- 
servants  (he  having  selected  such  as  are  competent  in  the  first 
instance,  and  afterwards  discharged  those  found  careless,  vicious 
or  inefficient)  might  be  sustained  as  reasonable,  notwithstand- 
ing the  abolishment  of  the  common-law  rule  of  non-liability 
for  the  acts  and  omissions  of  fellow-servants.'^  This  intima- 
tion was  made  with  decisions  before  the  court  which  hold  other- 
wise. The  employer  may  not,  by  a  contract  with  his  employee, 
put  upon  the  latter  the  risks  arising  from  the  employer's  dis- 
regard of  specific  statutory  requirements  for  the  employee's 
safety.'" 

The  cases  which  deny  the  validity  of  such  contracts  do  so 
upon  the  ground  that  they  are  contrary  to  public  policy."     On 

77  Western  &  A.  R.  Co.  v.  Bish-  37  C.  C.  A.  49!),  48  L.R.A.  68; 
op,  50  Ga.  465;  Galloway  v.  West-  Durant  v.  Lexington  C.  M.  Co.,  97 
ern  &  A.  R.  Co.,  57  Ga.  512,  14  Mo.  62,  16  Am.  Neg.  Cas.  397; 
Am.  Neg.  Cas.  239;  Cook  v.  Same,  Greenlee  v.  Southern  R.  Co.,  122 
72  Ga.  48,  14  Am.  Neg.  Cas.  89;  N.  C.  977,  41  L.R.A.  399,  65  Am. 
Fulton  B.  &  C.  Mills  v.  Wilson,  89  St.  734;  Baddeley  v.  Earl  Gran- 
Ga.  318,  14  Am.  Neg.  Cas.  50;  ville,  19  Q.  B.  Div.  423;  Groves  v. 
Atlantic  C.  L.  R.  Co.  v.  Beazley,  Wimborne,  [1898]  2  Q.  B.  402;  Cur- 
54  Fla.  311,  citing  many  cases.  See  ran  v.  Grand  Trunk  R.  Co.,  25 
Piper   V.   Boston    &   M.    R.    Co.,    75  Ont.  App.  407. 

N.  H.  435.  81  Railway    Co.    v.    Spangler,    44 

78  Western  &  A.  R.  Co.  v.  Bish-  Ohio  St.  471;  Kansas  Pac.  R.  v. 
op,  supi-a;  Little  Rock,  etc.  R.  v.  Peavey,  34  Kan.  472,  29  Kan.  169, 
Eubanks,  48  Ark.  460.  15    Am.    Neg.    Cas.    26;     Weir    v. 

79  Little  Rock,  etc.  R.  Co.  v.  Eu-  Rountree,  173  Fed.  776,  97  C.  C. 
banks,  supra,  13  Am.  Neg.  Cas.  A.  500,  (Kansas  statute)  ;  Atchison, 
200.  t^te.  R.  Co.  V.  Fronk,  74  Kan.  519; 

80  Davis  C.  Co.  v.  Polland,  158  Johnston  v.  Fargo,  184  N.  Y.  379, 
Ind.  607,  618,  citing  Narramore  v.  7  L.R.A.  (N.S.)  537;  Pugmire  v. 
Cleveland,  etc.  R.  Co.,  96  Fed.  298,  Oregon   S.   L.   R.   Co.,   33  Utah,  27, 


6] 


RIGHT    TO    DAMAGES. 


23 


this  ground  contracts  which  assume  to  relieve  employers  from 
liability  for  neglect  to  furnish  suitable  appliances  are  void,®^ 
as  is  a  contract  of  a  parent  relieving  an  employer  from  liability 
for  negligence  resulting  in  injury  to  a  minor  employee.*^  It 
is  provided  by  the  English  employers'  liability  act,  1880,  that 
where  personal  injury  is  caused  to  a  workman  in  sjiecified  cases 
he  may,  or  in  case  death  is  caused  by  the  injury  his  representa- 
tives shall,  have  the  same  right  of  compensation  and  remedies 
against  the  employer  as  if  the  workman  had  not  been  in  the 
employer's  service.  This  has  been  held  to  affect  the  contract 
so  far  only  as  to  negative  the  implication  of  an  agreement  on 
the  workman's  part  to  assume  the  risks  of  the  employment.  It 
does  not  render  invalid  his  express  contract  to  relieve  the  em- 
ployer from  liability  for  injuries  snstained  in  the  employment ; 
and  a  contract  which  expressly  releases  all  right  on  behalf 
of  the  servant  and  his  representatives  to  claim  compensation 
is  not  void  as  against  public  policy  because  it  affects  only  the 
interest  of  the  employed.^*    This  position,  it  seems  to  the  writer. 


13  L.E.A.(N.S.)  565,  126  Am.  St. 
805 ;  Stone  v.  Union  Pac.  R.  Co., 
32  Utah  185;  Sewell  v.  Atchison, 
etc.  R.  Co.,  78  Kan.  1  (tlie  court 
being  divided  three  to  four  on  tlie 
question  of  the  validity  of  tlie  con- 
tract under  the  statute ) .  The  val- 
idity of  such  a  contract  was  recog- 
nized in  International,  etc.  R.  Co. 
V.  Hinzic,  82  Tex.  623,  but  it  has 
been  assumed  that  this  case  is 
overruled  by  the  refusal  of  a  writ 
of  error  in  Texas  &  P.  R.  Co.  v. 
Putnam  (Tex.  Civ.  App.),  63  S. 
W.  910,  which  liolds  otherwise.  In 
accord  with  the  last  is  Galveston, 
etc.  R.  Co.  v.  Pigott,  54  Tex.  Civ. 
App.  367. 

82  Davis  v.  Chesapeake  &  O.  R. 
Co.,  122  Ky.  528,  5  L.R.A.(N.S.) 
458,  121  Am.  St.  481,  (the  consti- 
tution forbids  a  limitation  of  the 
common-law  liability  of  carriers)  : 
Little  Rock,  etc.  R.  v.  Eubanks,  48 
Ark.   460,   13   Am.    Neg.    Cas.   200; 


Roesner  v.  Hermann,  10  Biss.  486, 
8  Fed.  782 ;  Runt  v.  Herring,  2  N.  Y. 
Misc.  105;  (including  besides  the 
agreement  not  to  sue  a  condition  not 
to  appear  as  a  witness,  etc. ) . 

A  contract  to  which  an  employee 
is  not  a  party  cannot  affect  his 
right  to  recover  against  his  employ- 
er. Ominger  v.  New  York  Cent.  R. 
Co.,  6  Thomp.  &  C.  498;  Keimey  v. 
Same,  54  Hun,  143.  Tlie  master's 
liability  is  not  affected  by  a  rule, 
made  part  of  the  contract,  requir- 
ing that  the  servant  shall  be  re- 
sponsible for  the  condition  of  the 
appliances  with  which  he  works. 
Ford  V.  Fitchburg  R.  Co.,  110  Mass. 
240,  261,  15  Am.  Neg.  Cas.  427. 

83  Pacific  Exp.  Co.  v.  Watson 
(Tex.  Civ.  App.),  124  S.  W.  127. 

84  Griffiths  V.  Earl  of  Dudley,  9 
Q.  B.  Div.  357.  The  substance  of 
the  opinion  in  this  case  is  given 
in  a  note  in  44  Am.  Rep.  633. 


24  SUTHERLAND    ON    DAMAGES.  [§    6 

is  well  answered  by  Smith,  J.,  who  said:  But  surely  the  state 
has  an  interest  in  the  lives  and  limbs  of  all  its  citizens.  Labor- 
ers for  hire  constitute  a  numerous  and  meritorious  class  in 
every  community.  And  it  is  for  the  welfare  of  society  that 
their  employers  shall  not  be  permitted,  under  the  guise  of 
enforcing  contract  rights,  to  abdicate  their  duties  to  them.  The 
consequence  would  be  that  every  railway  company  and  every 
owner  of  a  factory,  mill  or  mine  would  make  it  a  condition 
precedent  to  the  employment  of  labor  that  the  laborer  should 
release  all  right  of  action  for  injuries  sustained  in  the  course 
of  the  service,  whether  by  the  employer's  negligence  or  other- 
wise. The  natural  tendency  of  this  would  be  to  relax  the 
employer's  carefulness  in  those  matters  of  which  he  has  the 
ordering  and  control,  such  as  the  supplying  of  machinery  and 
materials,  and  thus  increase  the  perils  of  occupations  which 
are  hazardous  even  when  well  managed.  And  the  final  out- 
come would  be  to  fill  the  country  with  disabled  men  and  pau- 
pers, whose  support  would  become  a  charge  upon  the  counties 
or  upon  public  charity.^^ 

A  contract  of  membership  between  a  railroad  employee  and 
the  voluntary  relief  department  of  the  railroad,  such  depart- 
ment being  a  beneficial  insurance  association  largely  supported 
by  the  employer,  which  permits  the  employee,  if  he  sustains 
injury,  either  to  sue  for  damages  or  accept  the  benefit  of  the 
relief  fund,  and  which  makes  such  acceptance  a  release  and 
satisfaction  of  his  damages,  is  not  void  as  against  public  policy, 
and  the  acceptance  of  money  from  such  department  bars  an 
action  for  damages,^®  and  estops  the  employee  from  alleging 

85  Little    Rock,    etc.    R.    v.    Eu-  R.  Co.  v.  Montgomery,  152  Ind.  1, 

banks,  supra.  69    L.R.A.    875.     As   to    what   con- 

An  Indiana  statute  nulifies  con-  tracts  are  not  within  a  similar  stat- 
tracts  made  by  corporations  with  ute,  see  Railway  Co.  v.  Cox,  55 
their  employees  releasing  the  for-  Ohio  St.  497,  35  L.R.A.  507.  Such 
mer  from  liability  to  the  latter  for  statutes  are  void.  Shaver  v.  Penn- 
personal  injuries.  Such  statute  in-  sylvania  Co.,  71  Fed.  931.  It  is 
eludes  a  contract  which  binds  the  otherwise  in  Canada,  In  re  Rail- 
employee  to  accept  certain  benefits  way  Act,  36  Can.  Sup.  Ct.  136. 
in  lieu  of  damages,  and  the  accept-  86  Eckman  v.  Chicago,  etc.  R. 
ance  of  the  benefits  does  not  bar  Co.,  169  111.  312,  38  L.R.A.  750, 
his  right  of  action.    Pittsburgh,  etc.  affirming  64  111.  App.  444;  Chicago, 


6] 


EIGHT    TO    DAMAGES. 


25 


that  the  contract  was  ultra  vires  his  employer.^'  Such  con- 
tracts are  clearly  distinguishable  from  those  in  which  the  right 
of  action  is  bargained  away  in  advance  because  such  right  exists 
until  after  the  employee  has  knowledge  of  all  the  facts,  and 
then  he  elects  between  his  right  against  the  relief  fund  and 
his  action  for  damages.^®  Such  a  contract  is  binding  on  an 
infant  if  beneficial  to  him,*^  and  upon  all  who  claim  under 
the  person  who  was  a  party  to  it.^°  Upon  its  non-performance 
the  employee's  right  of  action  revests  for  such  damages  as  he 
sustained,  less  the  amount  paid.^^  Under  the  federal  statute 
governing  the  liability  of  employers  such  contracts  are  void 
except  to  the  extent  that  payments  made  by  a  common  carrier 
lessen  its  liability.^''     The  courts  of  another  jurisdiction  than 


etc.  R.  Co.  V.  Miller,  22  C.  C.  A. 
264,  76  Fed.  439 ;  Maine  v.  Cliicago, 
etc.  R.  Co.,  109  Iowa,  260;  Chi- 
cago, etc.  R.  Co.  V.  Bell,  44  Neb. 
44,  16  Am.  Neg.  Cas.  581,  Lease  v. 
Pennsylvania  Co.,  10  Ind.  App.  47; 
Pittsburgh,  etc.  R.  Co.  v.  Mahoney, 
148  Ind.  196,  2  Am.  Neg.  Rep.  335, 
40  L.R.A,  101;  Same  v.  Moore,  152 
Ind.  345,  44  L.R.A.  638;  Chicago, 
etc.  R.  Co.  V.  Curtis,  51  Neb.  442, 
2  Am.  Neg.  Rep.  743.  Railway  Co. 
V.  Cox,  supra;  Johnson  v.  Philadel- 
phia &  R.  R.  Co.,  163  Pa.  127; 
Ringle  v.  Pennsylvania  R.,  164  Pa. 
529;  Vickers  v.  Chicago,  etc.  R.  Co., 
71  Fed.  139;  Shaver  v.  Pennsyl- 
vania Co.,  71  Fed.  931;  Brown  v. 
Baltimore  &  O.  R.  Co.,  6  D.  C.  App. 
Cas.  237,  13  Am.  Neg.  Cas.  816, 
Spitze  V.  Same,  75  Md.  162;  Petty 
V.  Brunswick  &  W.  R.  Co.,  109  Ga 
666;  Carter  v.  Same,  115  Ga.  853; 
12  Am.  Neg.  Rep.  421;  Donald  v. 
Chicago,  etc.  R.  Co.,  93  Iowa,  284, 
33  L.R.A.  492,  14  Am.  Neg.  Cas. 
626;  Fuller  v.  Baltimore,  etc.  Ass'n, 
67  Md.  433;  Otis  v.  Pennsylvania 
Co.,  71  Fed.  136;  King  v.  Atlantic 
C.  L.  R.  Co.  157  N.  C.  44,  48 
L.R.A.  (NS)  450;  Reese  v.  Penn- 
sylvania R.  Co.,  229  Pa.  340.     But 


see  Wacksmuth  v.  Atlantic  C.  L. 
R.  Co.,  157  N.  C.  34,  Barden  v. 
Same,  152  N.  C.  318.  Contra,  Mil- 
ler V.  Chicago,  etc.  R.  Co.,  65  Fed. 
305.  The  South  Carolina  court 
was  equally  divided  on  the  question 
of  the  validity  of  such  a  contract. 
Johnson  v.  Charleston  &  S.  R.  Co., 
55  S.  C.  152,  44  L.R.A.  645.  The 
doctrine  of  the  Miller  case,  supra, 
is  inferentially  disapproved  in  76 
Fed.  439,  22  C.  C.  A.  264,  by  the 
statement  that  the  authorities  were 
all  the  other  way,  though  the  re- 
viewing court  did  not  expressly 
pass  upon  the  question.  See  article 
in  8  Va.  Law  Reg.   858. 

87  Eckman  v.  Chicago,  etc.  R. 
Co.,   169   111.   312,  38  L.R.A.   750. 

88  Jack  V.  Pennsylvania  R.  Co., 
43  Pa.  Sup-r.  Ct.  337;  Railway 
Co,  v.  Cr;.,  55  Ohio  St.  497,  35 
L.R.A.  507;  Johnson  v.  Philadel- 
phia J:  R.  R.  Co.,  supra. 

89  Clements  v.  London,  etc.  R. 
Co.,   [1894]   2  Q.  B.  482. 

90  Baltimore  &  0.  R.  Co.  v.  Ray, 
36  Ind.  App.  430. 

91  Pennsylvania  Co.  v.  Chapman, 
220  111.  428. 

92  McNamara  v.  Washington  T. 
Co.,   35   App.   D.   C.  230;    Philadel- 


26  SUTHEELAND  ON  DAMAGES.  [§  '^ 

that  in  which  such  a  contract  was  made  will  not  enforce  it  if 
a  local  statute  declares  it  void.^^ 

§  7.  Nature  of  the  right  to  damages;  its  survival;  what  law 
governs  the  measure  of  damages.  When  a  cause  of  action  arises 
it  has  a  legal  value  as  a  chose  in  action;  it  is  a  species  of 
property.^*  The  right  to  damages  vests  when  the  act  or  neg- 
lect out  of  which  it  arises  occurs.  Even  where  there  is  no  legal 
measure  of  damages,  as  in  case  of  slander  or  assault,  the 
injured  party  has  an  indeterminate  right  to  compensation  the 
instant  he  receives  the  injury.  The  verdict  of  the  jury  and 
the  judgment  of  the  court  thereon  do  not  give,  they  only  define, 
the  right.^^  Such  right  ^^•llen  vested  is  to  the  injured  party 
of  the  nature  of  property,  and  is  protected  as  property  in  tan- 
gible things  is  protected.  It  cannot  be  annulled  ^^  or  changed 
by  legislation,^'  nor  extinguished  except  by  satisfaction,  release 
or  the  operation  of  statutes  of  limitation.^*  Trover  will  lie 
for  its  conversion  ^^  or  the  conversion  of  paper  evidence  of  it;  ^ 
and  other  actions  will  lie  for  breaches  of  duty  or  contract, 
as  well  as  for  other  wrongs  relating  to  it.^     Except  when  the 

phia,    etc.    R.    Co.   v.    Schubert,  36       Allaire    v.    Whitney,    1    Hill,    484; 

App.  D.  C.  565.  Whitney   v.    Allaire,    1    N.    Y.    305: 

93  Hamilton  v.  Chicago,  etc.  R.  Christianson  v.  Linford,  3  Robert. 
Co.,   145   Iowa,  431.  215;    Baylis   v.   Usher,    4    Moore   & 

94  2  Black.  Com.  438.  P.   790;    Bayliss  v.  Fisher,  7   Bing. 

95  2  Black.  Com.  438.  153;    Willoughby    v.    Backhouse,    4 
96Cooley    on     Const.    Lira.    449;        Dovvl.   &   Ry.   539,   2   B.   &   C.   821; 

Streubel  v.  Milwaukee,  etc.   R.   Co.,  Clark  v.  Meigs,  10  Bosw.  337. 

12  Wis.  07 ;  Westervelt  v.  Gregg,  12  99  Ayres  v.  French,  41  Conn.  151 ; 

N.  Y.  211 ;   Dash  v.  Van  Kleeck,   7  Payne  v.  Elliot,  54  Cal.  341,  342. 

Johns.  477 ;  Thornton  v.  Turner,  11  1  Fullam    v.     Cummings,     16    Vt 

Minn.    336;     Terrill    v.    Rankin,    2  697;    Archer    v.    Williams,    2    C.    & 

Basil,  453,   92   Am.   Dec.  500;    Wil-  K.  26;  Comparet  v.  Burr,  5  Blackf 

liar  V.  Baltimore,  etc.  Ass'n,  45  Md.  419;    Hudspeth    v.    Wilson,    2    Dev 

546;  Griffin  v.  Wilcox,  21  Ind.  370;  372,    21    Am.    Dec.    344;    Pierce    v 

Ettor    V.    Tacoma,    228    U.    S.    148,  Gilson,  9  Vt.  216;   Moody  v.  Keen 

57  L.  ed.   773.  er,   7   Port.   218. 

97  0sborn  v.  Leach,  135  N.  C.  2  Terry  v.  Allis,  20  Wis.  32 
628,  66  L.R.A.  648;  Chicago,  etc.  Evans  v.  Trenton,  24  N.  J.  L.  764 
R.  Co.  V.  Pounds,  11  Lea,  127.  Allen    v.    Suydam,    17    Wend.    368 

98  State  V.  McKennon,  11  Ohio  N.  Walker  v.  Bank,  9  N.  Y.  582;  Mc 
P.  (N.  S.)  165,  quoting  the  text;  Nair  v.  Burns,  9  Watts,  130 ;  Rhine 
Bowman    v.    Teall,    23    Wend.    305;  lander  v.  Barrow,  17  Johns.  538. 


§  T] 


RIGHT    TO    DAMAGES. 


27 


right  of  action  and  to  damages  is  for  a  personal  tort  or  breach 
of  a  marriage  promise  it  survives  the  death  of  the  injured  party 
and  is  assignable.^ 

The  general  subject  embraces  the  principles  and  illustrative 
examples  by  which  all  legal  causes  of  action  may  be  tested  and 
their  pecuniary  value  measured  or  adjudicated.  By  these  courts 
determine,  first,  whether  the  party  complaining  has  suffered  a 
legal  injury,  and  how  the  conclusion  that  he  has  shall  be  ex- 
pressed in  damages;  and  secondly,  they  direct  and  limit  the 
inquiries  for  the  ascertainment  of  the  amount  which  shall  be 
recovered  by  way  of  recompense. 

In  other  sections  the  rule  of  damages  for  the  breach  of  vari- 
ous contracts  and  for  torts  where  the  parties  may  invoke  the 
law  of  different  jurisdictions  is  stated.*  All  that  need  be  ob- 
served here  in  connection  with  the  subject  of  conflict  of  laws 
is  that  for  the  breach  of  contracts  the  law  of  the  place  of  per- 


3Hullett     V.     Baker,     101     Tenn 
G89;  Final  v.  Backus,  18  Mich.  218 
Sears    v.    Conover,    3    Keyes,    113 
North    V.    Turner,   9    S.   &   R.    244 
Johnston    v.    Bennett,    5    Abb.    Pr 
(N.    S.)    331;    Riclitmeyer   v.    Rem 
sen,  38  N.  Y.  206;  Waldron  v.  Wil 
lard,  17  N.  Y.  466;  McKee  v.  Judd 
12  N.  Y.  622 ;  Rice  v.  Stone,  1  Allen 
566;  Munsell  v.  Lewis,  4  Hill,  635 
Jordan    v.    Gillen,    44    N.    H.    424 
Grant    v.    Ludlow,    8    Ohio    St.    1 
Taylor    v.    Galland,    3    Greene,    17 
Blakeney  v.  Blakeney,   6  Port.  109 
Nettles    V.    Barnctt,    8    Port.    181 
Hoyt   V.    Thompson,    5   N.    Y.    347 
Brig    Sarah    Ann,    2    Sumn.    211 
Meech  v.  Stoner,  19  N.  Y.  26;   Lin- 
ton V.  Hurley,  104  Mass.  353;  Love 
V.    Detroit,    etc.    R.    Co.    170    Mich. 
1 ;   Shields  v.  Cincinnati  T.  Co.,   13 
Ohio   N.   P.    (N.   S.)    133;    Prescott 
V.   Grimes,  143  Ky.   191,   33   L.R.A. 
(N.S.)    669,  Baltimore  B.  R.  Co.  v. 
Sattler,  105  Md.  264 ;  Hagar  v.  Nor- 
ton, 188  Mass.  47  ;  Holmes  v.  Loud, 
149  Mich.   410;    Mast  v.   Sapp,   140 
N.  C.  533,  5  L.R.A.(N.S.)   379,  111 


Am.  St.  864;  Texas,  etc.  R.  Co.  v. 
Smith,  35  Tex.  Civ.  App.  351;  Jor- 
dan V.  Welch,  61  Wash.  569.  See 
Sensenig  v.  Pennsylvania  R.  Co.,  229 
Pa.  168;  Barnard  v.  Harrington,  3 
Mass.  228. 

Lender  the  Kentucky  statute  the 
right  of  action  arising  out  of  a 
personal  injury  which  results  in 
the  death  of  a  child,  in  so  far 
as  it  is  based  on  his  suiTering, 
survives  to  the  personal  representa- 
tive. Meyer  v.  Zoll,  119  Ky.  480. 
Actions  arising  out  of  contracts  will 
not  survive  where  the  damages 
caused  by  their  breach  result  in  in- 
juries to  the  person.  Hedekin  v. 
Gillespie,  33  Ind.  App.  650,  and 
cases  cited.  An  action  for  the  breacli 
of  a  marriage  promise  survives  if 
the  obligor  has  been  put  in  de- 
fault. Johnson  v.  Levy,  118  La.  447, 
9  L.R.A.  (N.S.)  1020,  118  Am.  St. 
378. 

4  See  §§  356-370,  interest;  563, 
notes  and  bills;  958,  telegraph  com- 
panies; 1280,  actions  for  wrongful 
death. 


28  SUTHERLAND    ON    DAMAGES.  [§    8 

formance  governs  tlie  measure  of  compensation ;  ^  while  for 
torts  the  law  of  the  state  in  which  the  wrong  was  done  controls.^ 
§  8.  Injuries  to  unborn* child.  In  1884  the  question  was 
raised  in  Massachusetts  whether  a  child  prematurely  born  and 
surviving  only  a  few  minutes,  in  consequence  of  an  injury  to 
its  mother,  was  a  "person"  within  the  meaning  of  a  statute 
giving  an  action  for  the  loss  of  life  against  the  town  whose 
defective  highway  caused  the  death  of  any  person.  The  court, 
after  reviewing,  by  Holmes,  J.,  the  argument  in  favor  of  the 
administrator  of  the  child,  which  was  based  on  Lord  Coke's 
statement  to  the  effect  that  if  a  woman  is  quick  with  child, 
and  takes  a  potion,  or  if  a  man  beats  her  and  the  child  is 
bom  alive  and  dies  of  the  potion  or  battery,  this  is  murder  ' 
said  that  "no  case,  so  far  as  we  know,  has  ever  decided  that, 
if  the  infant  survived,  it  could  maintain  an  action  for  injuries 
received  by  it  while  in  its  mother's  womb.  Yet  that  is  the 
test  of  the  principle  relied  on  by  the  plaintiff,  who  can  hardly 
avoid  contending  that  a  pretty  large  field  of  litigation  has  been 
left  unexplored  until  the  present  moment."  If  the  difficulties 
stated  by  the  court  could  be  got  over,  "and  if  we  should  assume, 
irrespective  of  precedent,  that  a  man  might  owe  a  civil  duty 
and  incur  a  conditional  prospective  liability  in  tort  to  one  not 
yet  in  being,  and  if  we  should  assume  also  that  causing  an 
infant  to  be  born  prematurely  stands  on  the  same  footing  as 
wounding  or  poisoning,  we  should  then  be  confronted  with  the 
question  raised  by  the  defendant,  whether  an  infant  dying 
before  it  was  able  to  live  separate  from  its  mother  could  be 
said  to  be  a  person  recognized  by  the  law  as  capable  of  having 

6  Sandham    v.    Grounds,    94    Fed.  the  statement  in  the  text  would  be 

83,  36  C.  C.  A.  103 ;  Meyer  v.  Estes,  followed  by  it  if  the  question  were 

164  Mass.  457,  32  L.R.A.  283.  to   be  regarded   as   one   at   common 

6  Louisville  &  N.  R.  Co.  v.  Gra-  law,  but  observed  that  it  was  op- 
ham,  98  Ky.  688;  Same  v.  Withlow,  posed  to  the  case  in  3  Ass.,  pi.  2, 
105  Ky.  1,  41  L.R.A.  614.  Y.  B.   1   Ed.  III.  23,  pi.   18;   which 

7  3  Inst.  60;  1  Hawk.  P.  C,  c.  seems  not  to  have  been  doubted  by 
31,  §  16;  1  Black.  Com.  129,  130;  Fitzherbert  or  Brooke,  and  which 
4  id.  198 ;  Beale  v.  Beale,  1  P.  Wms.  was  afterwards  cited  as  law  by 
244,  246;  Burdet  v.  Hopegood,  id.  Lord  Hale.  Fitz.  Abr.,  "Endite- 
486;  Rex  v.  Senior,  1  Moody  C.  C.  ment,"  pi.  4;  "Corone,"  pi.  146; 
346.  Bro.  Abr.,  "Corone,"  pi.  146 ;  1  Hale 

The  court  did  not  consider  how  far      P.  C.  433.     See  note  10. 


§8]  KIGHT    TO    DAMAGES.  29 

a  locus  standi  in  court,  or  of  being  represented  there  by  an 
administrator.^     And  this  question  would  not  be  disposed  of 
by  citing  those  cases  where  equity  has  recognized  the  infant 
provisionally  while  still  alive  en  ventre.^    And  perhaps  not  by 
showing  that  such  an  infant  was  within  the  protection  of  the 
criminal  law.     .     .     •     Taking  all  the  foregoing  considerations 
into  account,  and  further,  that,  as  the  unborn  child  was  a  part 
of  the  mother  at  the  time  of  the  injury,  and  damage  to  it 
which  was  not  too  remote  to  be  recovered  for  at  all  was  recov- 
erable by  her,  we  think  it  clear  that  the  statute  sued  upon  does 
not   embrace  the  plaintiif's   intestate  within  its  meaning."" 
In  1891  the  court  of  queen's  bench  in  Ireland  ruled  that  an 
infant  who  was  deformed  from  its  birth  by  reason  of  an  acci- 
dent which  happened  to  its  mother  while  it  was  en  ventre  sa 
mere  could  not  maintain  an  action  for  the  permanent  injuries 
thereby  inflicted.     The  mother  was  injured  while  a  passenger 
on  a  railroad  train.     The  chief  justice  said  that  the  statement 
of  claim  did  not  allege  that  the  mother  made  any  contract  in 
reference  to  the  child— the  contract  was  with  the  mother  in 
respect  of  herself  alone.     It  did  not  allege  that  any  considera- 
tion was  received  by  the  company  in  respect  of  the  child.     It 
did  not  allege  that  the  company,  through  its  servants  or  other- 
wise, knew  anything  about  the  child  or  the  condition  of  the 
mother.     ''It  is  quite  plain,  for  aught  that  appears  in  this 
statement  of  claim,  that  however  the  child  in  the  womb  may 
be  regarded,  whether  as  part  of  the  mother  or  having  a  dis- 
tinct personality— whether  an  entity  or  a  nonentity,— it  was, 
so  far  as  any  actual  relation  the  company  had  with  it,  a  non- 
entity ;  and  therefore,  in  my  opinion,  the  existence  of  the  duty, 
for  the  breach  of  which  the  defendants  would  be  liable  as 
carriers  of  passengers,  cannot  be  inferred.     To  infer  the  exist- 

SMarsellis  v.  Thalhimer,  2  Paige,  9  Lutterel's   Case,   stated  in   Hale 

30 ;  Harper  V.  Archer,  4  Sm.  &  M.  99.  ^     Hale,    Prec.    Ch.    50;    Wallis    v. 

In  the  first  case  it  was  held  that  jj^jjgon    o  Atk.  114.     See  Musgrave 

"an  unborn  child,  after  conception,  ^^^     ^  ^^^^    ^^^ 

is  to  be  considered  m  esse  for  the  •           •^' 

purpose   of   enabling   it   to   take   an  10  Dietrich    v.    Northampton,    138 

estate    or    for    any    other    purpose  -^^^^^    14^   52   Am.   Rep.   242;    Bucl 

which    is    for    the    benefit    of    the  ^    United  R.  Co.,  248  Mo.  126,  45 

child,  if  it  should  be  afterwards  born  '                               .  .t  ^   r.    a    loo 

^li^;_»  L.R.A.(N.S.)  625,  4  N.  C.  C.  A.  129. 


30  SUTHERLAND    ON    DAMAGES.  [§    8 

ence  of  such  a  duty  from  the  mere  possibility  that  the  mother 
was  with  child  when  she  was  received  as  a  passenger  by  the 
defendants  would  be  to  act  without  the  sanction  of  any  judicial 
decision,  or,  in  my  opinion,  of  any  legal  principle."  "  The 
judge  was  anxious  to  have  it  understood  that  he  did  not  go  so 
far  as  to  hold  that  if  a  person,  knowing  that  a  woman  is  eiiceinie, 
wilfully  inflicts  injuries  on  her  with  a  view  to  injuring  the 
child,  which  is  born  a  cripple  or  becomes  so  subsequently  as  a 
result  of  the  injuries,  an  action  will  not  lie  at  the  suit  of  such 
child.  The  other  judges  concurred  in  separate  opinions  which 
are  very  interesting  and  instructive.  The  Massachusetts  case 
and  the  Irish  case  have  been  followed  where  an  action  was 
brought  on  behalf  of  a  child  liorn  with  serious  physical  defects 
because  of  injuries  sustained  by  its  mother  through  the  negli- 
gence of  the  officers  of  a  hospital  where  she  went  for  the  pur- 
pose of  being  cared  for  during  confinement.^^  An  action  will 
not  lie  to  recover  for  the  death  of  a  child  prematurely  born,  as 
the  result  of  injuries  to  the  mother,  in  consequence  of  which 
))irtli  it  died.^^  It  is  worthy  of  note  in  this  connection  that 
it  has  been  held  that  a  child  en  ventre  so,  mere  is  a  child  within 
the  meaning  of  Lord  Campbell's  act,  so  as  to  be  capable,  after 
its  birth,  of  maintaining  an  action  in  respect  of  the  pecuniary 
loss  sustained  by  the  death  of  its  father  owing  to  the  wrongful 
act  of  others  done  while  it  was  in  the  womb.^*  And  such  a 
child  may  maintain  an  action  for  loss  of  support  upon  a  bond 
given  under  a  civil  damage  act  for  the  recovery  of  damages 
sustained  in  consequence  of  the  illegal  sale  of  liquor  to  its 
father  before  it  was  born.^^ 

"Walker   v.    Great   Northern    R.  72,    IG    L.R.A.    808.      See   Lathrope 

Co.,    28    L.    R.    Ire.    69;    Nugent   v.  v.    Flood,    135    Cal.    458,    57   UR.A. 

Brooklyn  Heights  R.  Co.,  154  App.  215;   Kirk  v.  Middleb rook, -201   Mo. 

Div.    (N.  Y.)    667.  245. 

18  Allaire  v.  St.  Luke's  Hospital,  H  The  George  and  Richard,  L.  R. 

184  HI.  359,  75  Am.  St.  176,  7  Am.  3   Ad.   &   Eccl.   466;    Texas  &  P.  R. 

Neg.   Rep.   427,   48   L.R.A.   225,   af-  Co.   v.    Robertson,   82   Tex.    657,    27 

firming  76  111.  App.  441.     See  Pres-  Am.   St.  922;    Nelson  v.  Galveston, 

cott  V.  Robinson,  74  N.  H.  460,  17  etc.   R.  Co.,  78  Tex.  621,   11  L.R.A. 

L.R.A.  (N.S.)    594,  124  Am.  St.  987.  391,  22  Am.  St.  81;  Herndon  v.  St. 

13  Gorman    v.    Budlong,    23    R.    T.  Louis,  etc.  R.  Co.,  37  Okla.  256. 
169,    55    L.R.A.    118 ;     Hawkins    v.  15  State  v.  Soale,  36  Ind.  App.  73, 

Front  St.  C.  R.  Co.,  3  Wash.  592,  approving  Quinlen  v.  Welch,  69  Hun, 

10  Am.  Neg.  Gas.  397,  28  Am.  St.  584. 


§    9]  NOMINAL    DAMAGES.  31 


CHAPTER  II. 

NOMINAL  DAMAGES. 

§     n.  Nature  and  purpose  of  nominal  damages. 
10.   Illustrations  of  the  right  to  nominal  damages, 
n.  The  right  a  suhstantial  one;   new  trials. 

§  9.  Nature   and  purpose  of  nominal  damages.     For  every 
actionable  injury  there  is  an  absolute  right  to  damages;  the 
law  recognizes  such  an  injury  whenever  a  legal  right  is  vio- 
lated.    Rights  are  legal  when  recognized  and  protected  by  law. 
Every  invasion  of  such  right  threatens  the  right  itself,   and 
to  some  extent  impairs  the  possessor's  enjoyment  of  it.     The 
logical  sequence  of  finding  an  invasion  is  the  legal  sequence, 
—a  legal  injury;  this  entitles  the  injured  party  to  compensa- 
tion.    In  abstract  principle  the  law  is  that  the  person  whose 
rights  have  been  invaded  is  entitled  to  compensation  propor- 
tioned  in   amount  to   the  injury.      The  extent   of   the   actual 
injury,  however,  is  seldom  matter  of  law;  and  when  it  is  not, 
merely  showing  the  wrong  or  breach  of  contract  which  con- 
stitutes the  injury  will  only  authorize  the  court  to  judicially 
declare  that  the  party  injured  is  entitled  to  some  damages. 
If  there  is  no  inquiry  as  to  actual  damages,  or  none  appear 
on  inquiry,   the  legal   implication  of  damage  remains.      This 
requires  some  practical  expression  as  the  compensation  for  a 
technical   injury;    therefore,    nominal   damages   are  given,    as 
six  cents,  a  penny,  or  a  farthing,  a  sum  of  money  that  can 
be  spoken  of,  but  has  no  existence  in  point  of  quantity.     Ver- 
dicts  and   judgments   for  damages  generally   specify   a   small 
sum  which  may  be  paid.^     When  actual  damages  are  assessed 

iMcGlone    v.    Haugher,    5(5    Ind.  Me.   3r>5;    Ideal  Leather   Goods   Co. 

App.   243;    Brown   v.   Moslotter,   —  v.    Eastern    S.    S.    Corp.   220   Mass. 

Iowa    —    149  N    W    908,  citing  tlie  133;   Ochs  v.  Woods,  160  App.  Div. 

text' Meek  v.  Union  Pac.  R.  Co.,  95  (N.   Y.)   J40;    Grand   Boulevard   in 

Kan'  111-   Jean  v.  Brentlinger,  155  City  of  New  York,   flatter  of.   160 

Kv    509;    Croshy   v.   Plummer.    Ill  App.    Div.     (N.    Y.)    80;    Smith    v. 


32 


SUTHERLAND    ON    DAMAGES. 


[§  9 


those  which  are  nominal  are  included  and  are  not  separately 
added.     Where  a  plaintiff  sued  in  an  inferior  court  for  a  debt 


Postal     Telegraph-Cable     Co.,     167 
N.    C.   248;    Smith  v.   Holmes,    167 
N.  C.  561;  Caswell  v.  J.  S.  McCall 
&  Sons,  —  Tex.  Civ.  App.  — ,  163 
S.   VV.   1001;    Diana   Shooting   Club 
V.  Kohl,  156  Wis.  257;  Tuskegee  L. 
&  S.  Co.  V.  Birmingham  Realty  Co., 
161  Ala.  542,  23  L.R.A.(N.S.)   992; 
Trice  v.  High  Shoals  Mfg.  Co.,  132 
Ga.  246,  22  L.R.A.(N.S.)   684;  Bat- 
son   V.   Higginbotham,   7    Ga.    App. 
835;    Pratt  v.  Davis,  118  111.  App. 
161,  citing  the  text;  Green  v.  Farm- 
ers' Con.  D.  Co.,  113  La.  869,   ($50 
allowed)  ;    Lampert  v.   Judge   &  D. 
D.    Co.,    119    Mo.    App.    693,    citing 
the  text;  Roberts  v.  Brown,  43  Tex. 
Civ.  App.  206;  Hessey  v.  Quinn,  21 
Ont.    L.    R.    519;     Wilson    v.    St. 
Louis,    etc.    R.    Co.,    160   Mo.    App. 
649;    Clay   v.   Board,   85   Mo.   App. 
237,    citing    the    text;     Quigley    v. 
Birdseye,   11   Mont.   439;    Trumbull 
V.     School     Dist.     22     Wash.     631; 
Greensboro   v.   McGibboney,   93   Ga. 
672;   Jurnick  v.  Manhattan  O.  Co., 
66  N.  J.  L.  380;   Douglass  v.  Rail- 
road Co.,  51  W.  Va.  523;   Diana  S. 
Club  V.  Lamoreux,  114  Wis.  44,  58, 
citing   the   text;    Bourdette   v.    Sie- 
ward,    107    La.    258;    Beaumont    v. 
Greathead,  2   C.  B.  499;    Ashby  v. 
White,    2   Ld.    Raym.    938;    Parker 
v.  Griswold,   17    Conn.   303;    Ripka 
v.  Sergeant,  7  W.  &  S.  9,  42  Am. 
Dec.    214;    McConnel    v.    Kibbe,    33 
111.    175,   85  Am.   Dec.   265;    Pleas- 
ants  V.    North   Beach,   etc.    R.    Co., 
34   Cal.   586;    Tootle  v.   Clifton,   22 
Ohio,  247,  10  Am.  Rep.  732;    Pas- 
torius  V.  Fisher,  1  Rawle,  27;  Hob- 
son  V.  Todd,  4  T.  R.  71;  Clifton  v. 
Hooper,  6  Q.  B.  468;  Foster  v.  Elli- 
ott, 33  Iowa,  216;   Leeds  v.  Metro- 
politan   G.    L.    Co.,    90    N.    Y.    26; 
Anders  v.  Ellis,  87  N.  C.  207;  Hill 


V.  Forkner,  76  Ind.  115;  King  v. 
St.  Louis,  250  Mo.  501,  citing  the 
text;  Ladoga  C.  Co.  v.  Corydon  C. 
Co.,  52  Ind.  App.  23;  Eckman  v. 
Lehigh,  etc.  C.  Co.,  50  Pa.  Super. 
427;  Berney  v.  Adrianee,  157  App. 
Div.  628. 

But  see  Strait  v.  Wilkins,  23  Cal. 
App.  774,  afiirming  a  judgment 
denying  nominal  damages  for  de- 
fendants' breach  of  contract  to  ex- 
change lands  where  no  right  of  the 
plaintiff  would  have  been  conserved 
by  a  judgment  for  nominal  dam- 
ages. 

Where  the  plaintiff  establishes 
the  infraction  of  a  right  but  the 
evidence  adduced  fails  to  show 
with  sufficient  certainty  the  extent 
of  damage  resultant  therefrom  he  is 
entitled  to  nominal  damages  only. 
Birmingham  Ry.  Light  and  Power 
Co.  V.  Friedman,  187  Ala.  562; 
Birmingham  Ry.  Light  &  Power 
Co.  V.  Colbert,  —  Ala.  — ,  67  So 
513;  Welch  V.  Evans  Bros.  Const 
Co.,  —  Ala.  — ,  66  So.  517 
Stephenson  v.  Jebelea  &  Colias  Con 
fectionery  Co.,  10  Ala.  App.  431; 
Wynn  v.  Atlantic  Coast  Line  R. 
Co.,  66  Fla.  604;  Brooklyn  Church 
Soc.  V.  Brooklyn  F.  K,  Soc,  — 
App.  Div.  — , 'l52  N.  Y.  S.  41; 
Markowitz  v.  Lindeman,  164  App. 
Div.  (N.  Y.)  679;  Strauss  v.  Hoch, 
162   App.   Div.    (N.   Y.)    569. 

Where  property  involved  in  a  re- 
plevin action  is  of  no  intrinsic 
value,  such  as  canceled  stocks  and 
bonds,  nominal  damages  are  prop- 
erly awarded.  Duroth  Mfg.  Co.  v. 
Cauffiel,   243   Pa.    24. 

In  an  action  for  conversion,  when 
not  wilful,  malicious,  or  oppres- 
sive, the  return  of  the  property 
uninjured    and    undamaged,    before 


9] 


NOMINAL    DAMAGES. 


33 


of  50Z.,  which  was  the  extent  of  its  jurisdiction,  and  neither 
recovered  nor  sought  to  recover  damages  except  for  the  pur- 


suit, and  placed  in  statu  quo, 
though  against  the  will  and  with- 
out the  consent  of  the  owner  but 
with  his  knowledge  or  with  notice 
to  him  will,  where  special  damages 
are  neither  claimed  nor  shown,  jus- 
tify the  award  of  nominal  damages 
only.  Whittler  v.  Sharp,  43  Utah, 
419,    49    L.Il.A.(N.S.)     931. 

If  there  is  no  substantial  right 
involved  a  judgment  awarding  $1 
as  damages  will  not  be  reversed  be- 
cause some  smaller  sum  would 
have  been  sufficient.  Hill  v.  Fork- 
ner,  76  Ind.  115;  Moe  v.  Chesrown, 
54  Minn.  118;  Hogan  v.  Peterson, 
8  Wyo.  549,  564.  Contra,  White 
v.  Woodruff,  25  Neb.  797,  806. 

"Nominal  damages  mean  in  law 
some  small  amount  sufficient  to 
cover  and  carry  the  costs."  Ran- 
some  v.  Christian,  56  Ga.  351 ;  Con- 
ley  V.  Arnold,  93  Ga.  823.  But  in 
Western  U.  Tel.  Co.  v.  Glenn,  8  Ga. 
App.  168,  $250  was  regarded  as  a 
nominal  sum  in  view  of  the  amount 
involved,  the  court  saying  it  de- 
pends largely  upon  the  sum  in- 
volved what  amount  will  be  con- 
sidered trivial.  But  this  is  not  in 
accord  with  the  general  view.  See 
also,  Atkinson  v.  Mercer,  11  Ga. 
App.  462,  and  Atlantic  Coast  Line 
R.  Co.  V.  Stephens,  14  Ga.  App. 
173,  awarding  $150  for  failure  to 
transport  passenger.  See  also, 
Broads  v.  Mead,  159  Cal.  765. 

An  award  of  $25  as  nominal 
damages  has  been  sustained  (Quig- 
ley  v.  Birdseye,  supra)  ;  but  it  was 
otherwise  when  the  instruction  was 
to  find  $1  or  any  nominal  sum. 
Trumbull  v.  School  Dist.  supra. 

In  the  exercise  of  equity  powers 
in  an  action  to  recover  for  the 
death  of  a  child,  the  plaintiff  hav- 
Suth.  Dom.  Vol.  1,-3. 


ing  had  reason  to  ask  judicial  in- 
vestigation of  tlie  facts,  tlie  court 
awarded  "'nominal  damages  at 
$250.''  Hamilton  v.  Morgan's  L. 
&  T.  R.  &  S.  Co.,  42  La.  Ann.  824. 

In  Bourdette  v.  Sieward,  supra, 
$500  seems  to  have  been  considered 
nominal    damages. 

Tliere  appears  to  be  a  tendency 
in  some  states  to  treat  the  question 
of  nominal  damages  otherwise  than 
seriously.  No  doubt  there  are 
cases  in  which  no  injustice  results 
from  so  doing.  As  has  been  ob- 
served by  a  court  of  higli  standing: 
When  we  consider  that  the  doctrine 
of  res  judicata,  or  even  the  title  to 
property,  may  rest  upon  a  judg- 
ment for  nominal  damages  it  is 
evident  that  the  right  to  a  verdict 
is  not  controlled  by  the  incidental 
question  of  the  amount  of  damages 
to  be  recovered.  ,  New  .lersey  S.  & 
C.  F.  Co.  V.  Board  of  Education, 
58  N.  J.  L.  646.  See  Chicago  West 
Division  R.  Co.  v.  Metropolitan 
West  Side  E.  R.  Co.,  152  111.  519; 
Dady  v.  Condit,  188  111.  234;  Stan- 
ton v.  New  York  &  E.  R.  Co.,  59 
Conn.    272,    21    Am.    St.    110. 

The  right  to  recover  nominal 
damages  for  the  breach  of  an  in- 
demnifying official  bond  is  depend- 
ent upon  showing  a  substantial  in- 
jury. State  V.  Green,  112  Mo.  App. 
108.  And  so  where  the  right  de- 
nied or  infringed  upon  is  a  rela- 
tive, and  not  an  absolute,  one,  as 
where  an  officer  fails  to  make  re- 
turn to  a  writ  for  the  arrest  of  a 
debtor.  If  he  shows  that  by  no 
possibility  could  any  advantage 
have  accrued  to  the  creditor  from 
the  execution  of  the  writ  there  is 
no  liability  for  any  damages  what- 
ever.     Mayne's   Dam.    (8th   ed.)    p. 


34  SUTHERLAND    ON    DAMAGES.  [§    9 

pose  of  obtaining  costs  it  was  held  that  nominal  damages  for 
this  purpose  did  not  place  the  debt  beyond  the  jurisdiction.^ 
Where  judgment  by  default  was  taken  on  a  bond  in  the  pen- 
alty of  $250,  conditioned  to  pay  $150,  it  was  held  that  nom- 
inal damages  could  not  be  added  to  the  penalty  for  detention 
of  the  debt  to  affect  costs.^  The  theory  upon  which  and  the, 
purpose  for  which  such  damages  are  awarded  do  not  entitle 
the  defendant  who  seeks,  under  a  plea  of  recoupment,  to 
reduce  the  claim  of  the  plaintiff,  arising  under  a  contract,  by 
nominal  damages  in  consequence  of  some  breach  of  the  same 
contract  by  the  plaintiff.* 

The  damages  which  the  law  thus  infers  from  the  infraction 
of  a  legal  right  are  absolute;  they  cannot  be  controverted; 
they  are  the  necessary  consequent.  The  act  complained  of 
may  produce  no  actual  injury;  it  may  be  in  fact  beneficial,  by 
adding  to  the  value  of  property  or  by  averting  a  loss  which 
would  otherwise  have  happened;  yet  it  will  be  equally  true, 
in  law  and  in  fact,  that  it  was  in  itself  injurious  if  violative  of 
a  legal  right.  The  implied  injury  is  from  that  circumstance; 
the  fact  that  beyond  violating  a  right  it  was  not  detrimental, 
or  was  even  advantageous,  is  immaterial  to  the  legal  quality 
of  the  act  itself.^ 

7,   citing  Wylie   v.    Birch,   4   Q.   B.  v.    Smith,    128    Ga.    432;    Haber   v. 

566;    Williams  v.   Mostyn,   4   M.   &  Southern    Bell    Tel.    &    T.    Co.,    118 

W.  145;  Stimson  v.  Farnham,  L.  E.  Ga.  874. 

7    Q.    B.    489.      In    some    courts    a  2  .Joule  v.  Taylor,  7   Ex.   58. 

neglect  of  official  duty  gives  rise  to  3  People  v.  Hallett,  4  Cow.  67. 

the  presumption  of  damage.     Laflin  *  Foote  &  D.  Co.  v,  Malony,  115 

V.  Willard,  6  Pick.  64,  26  Am.  Dec.  Ga.  985. 

629;    State   v.    Dickmann,    146    Mo.  5  Brown  v.  Moatoller,  —  Iowa, — , 

App.  396;    State  v.  Miles,   149  Mo.  149  N.  W.  908;    Boston  v.  Alexan- 

App.   638;    Head   v.   Levy,   52   Xeb.  der,   185  Mo.  App.   16;   Western  U. 

456.  Tel.  Co.  v.  McMorris,  158  Ala.  563, 

In    the   absence   of    an   allegation  132   Am.   St.   46;    Gurr  v.   Western 

of  general  damages  a  nominal  sum  U.  Tel.  Co.,  8  Ga.  App.  556;  Moore 

may  not  be  recovered  if  the  claim  v.   Linneman,    143   Ky.   231;    Wood 

made    is    for    special    and    punitive  v.  Cummings,  197  Mass.  80;  Woll  v. 

damages.     Hadden   v.   Southern   M.  Voigt,    105    Minn.    371;    Lancaster 

Service,    135    Ga.    372;    Sparks    M.  &  J.  E.   L.  Co.  v.  Jones,  75  N.  H. 

Co.   V.   Western   U.   Tel.   Co.,   9   Ga.  172;     Smith    v.    Gunn,     (Tex.    Civ. 

App.     728;     Christophulus     C.     Co.  App.)     122    S.    W.    919;    Loehr    v. 

V.  Phillips,  4  Ga.  App.  819;  Wright  Dickinson,  141  Wis.  332,  30  L.R.A. 


§  10] 


NOMINAL,    DAMAGES. 


35 


§  10.  Illustrations  of  the  right  to  nominal  damages.  A  mes- 
sage containing  a  direction  to  purchase  a  specified  quantity 
of  wheat,  deliverable  at  a  stated  time  in  the  future,  was  fur- 
nished a  telegraph  company  for  transmission.  The  message, 
by  negligence  of  its  servants,  was  not  delivered.  The  market 
price  of  wheat  advanced  for  two  days,  then  fluctuated,  and  was 
less  on  the  day  specified  in  the  message  than  on  the  day  when 
it  should  have  been  delivered,  so  that  there  was  not  only  no 
damage,  but  the  sender  was  saved  from  the  loss  which  he  would 
have  suffered  if  his  message  had  been  delivered  and  acted 
upon.  But  there  was  a  neglect  of  duty,  an  infraction  of  the 
sender's  right  to  have  care  and  diligence  used  in  the  transmis- 
sion and  delivery  of  his  message ;  for  that  he  was  entitled  to 
nominal  damages.^   The  plaintiff  and  the  defendants  were  ripa- 


(N.S.)  495;  Kiblinger  v.  Sauk 
Bank,  131  Wis.  595;  Troutwine  v. 
Hoff,  126  App.  Div.  556;  Chaffin  v. 
Manufacturing  Co.,  136  N.  C.  364; 
135  N.  C.  95;  Erie  County  N.  G.  & 
F.  Co.  V.  Carroll,  [1911]  App.  Cas. 
105;  Jewett  v.  Whitney,  43  Me. 
242;  Cook  V.  Hull,  3  Pick.  269,  15 
Am.  Dec.  208;  Bolivar  Mfg.  Co.  v. 
Neponset  Mfg.  Co.,  10  Pick.  246; 
Stowell  V.  Lincoln,  11  Gray,  434; 
Hathorne  v.  Stinson,  12  Me.  183,  28 
Am.  Dec.  167;  Pollard  v.  Porter,  3 
Gray,  312;  Newcomb  v.  Wallace, 
112  Mass.  25;  Chamberlain  v.  Par- 
ker, 45  N,  Y.  569;  Marzetti  v.  Wil- 
liams, 1  B.  &  Ad.  415;  Kimel  v. 
Kimel,  4  Jones,  121;  Warre  v.  Cal- 
vert, 7  Ad.  &  El.  143;  Embrey  v. 
Owen,  6  Ex.  353;  Northam  v.  Hur- 
ley, 1  El.  &  Bl.  665;  Medway  Nav. 
Co.  V.  Romney,  9  C.  B.  (N.  S.) 
575:  McLeod  v.  Boulton,  3  Up. 
Can.  Q.  B.  84;  Smith  v.  Whiting, 
100  Mass.  122;  McConnel  v.  Kibbe, 
33  111.  175,  85  Am.  Dec.  265;  Barker 
V.  Green,  2  Bing.  317;  Graver  v. 
Sholl,  42  Pa.  58;  Chapman  v. 
Thames  Mfg.  Co.,  13  Conn.  269,  33 
Am.  Dec.  401 ;   Tyler  v.  Wilkinson, 


4  Mason,  397;  Bealey  v.  Shaw,  6 
East,  208;  Blodgett  v.  Stone,  60  N. 
H.  167;  Fulkerson  v.  Eads,  19  Mo. 
App.  623;  Adams  v.  Robinson,  65 
Ala.  586;  Drum  v.  Harrison,  83 
Ala.  384;  Barlow  v.  Lowder,  35 
Ark.  492;  Empire  G.  M.  Co.  v.  Bo- 
nanza G.  M.  Co.,  67  Cal.  406;  Han- 
cock v.  Hubbell,  71  Cal.  537;  Ken- 
ney  v.  Collier,  79  Ga.  743;  Brant 
v.  Gallup,  111  111.  487,  53  Am.  Rep. 
638;  Mize  v.  Glenn,  38  Mo.  App. 
98;  Jones  v.  Hannovan,  55  Mo.  462; 
Trammell  v.  Chambers  County,  93 
Ala.  388;  Treadwell  v.  Tillis,  108 
Ala.  262;  Patrick  v.  Colorado  S. 
Co.,  20  Colo.  268;  New  Jersey  S.  & 
C.  F.  Co.  V.  Board  of  Education,  58 
N.  J.  L.  646;  Taylor  v.  Henniker, 
12  Ad.  &  E.  488;  Borough  D.  Co.  v. 
Harmon,  154  App.  Div.  689.  See 
cases  cited  in  the  first  two  notes  to 
§  2. 

6  Hibbard  v.  Western  U.  Tel.  Co., 
33  Wis.  558,  14  Am.  Rep.  775. 
Nominal  damages  may  be  recovered 
for  such  negligence  though  it  does 
not  appear  anything  was  paid  for 
sending  the  telegram.  Kennon  v 
Same,  92  Ala.  399. 


36  SUTHERLAND    ON    DAMAGES.  [§    10 

riau  proprietors  on  a  water-course  and  had  mills  thereon ;  vari- 
ous other  mills  belonging  to  third  persons  were  located  on  the 
same  stream.  In  ease,  the  plaintiff  complained  that  the  defend- 
ants heated  the  water  of  the  stream  by  operating  steam  boilers 
in  their  mills,  increasing  the  evaporation  five  per  cent.,  which 
was  to  that  extent  an  abstraction  of  the  water;  also  that  they 
fouled  the  water  by  discharging  into  it  soap  suds,  etc.  But 
the  pollution  did  no  actual  damage  to  the  plaintiff,  because  the 
water  was  already  so  polluted  by  similar  acts  of  other  mill 
owners  and  dyers  above  the  defendants'  mill  that  the  latter's 
acts  made  no  appreciable  difference;  that  is,  the  pollution  by 
the  defendants  did  not  make  the  stream  less  applicable  to  prac- 
tical purposes  than  it  was  before.  It  was  held,  however,  that 
the  plaintiff  received  damage  in  point  of  law  from  such  pollu- 
tion. It  was  an  injury  to  a  right;  but  that  the  loss  of  five 
per  cent,  would  not  give  a  cause  of  action  if  such  diminution 
arose  from  a  reasonable  use  of  the  stream.'  Where  a  part 
owner  was  expelled  from  a  mill  property  and  while  wrongfully 
kept  out  of  possession  the  mill,  which  was  old,  was  replaced  by 
a  new  one  of  greater  value,  so  that  when  he  regained  possession 
the  property  w^as  much  more  valuable  and  he  was  a  gainer  after 
deducting  all  intermediate  lost  profits,  he  was  entitled  to  nom- 
inal damages.' 

The  principle  that  for  the  violation  of  every  legal  right  nom- 
inal damages  at  least  will  be  allowed  applies  to  all  actions, 
whether  for  tort  or  breach  of  contract,  and  whether  the  right 
is  personal  or  relates  to  property.  The  offer  of  violence  to  a 
person  is  an  assnult,  and  the  least  unjustifiable  touching  of 
him  a  battery.  AVhere  a  debtor  was  arrested  on  a  ca.  sa.  and 
judgment,  after  an  insolvent  discharge,  w'hich  gave  him  im- 
munity from  arrest,  it  was  held  that  the  party  at  whose  instance 
the  writ  was  issued,  as  well  as  the  attorney  who  issued  it,  were 
liable  for  false  imprisonment  whether  they  were  previously 
notified  of  the  discharge  or  not.  Want  of  notice  might  reduce 
the  damages  to  a  nominal  sum,  but  could  not  be  allowed  to 

7  Wood  V.  Waud,  3  Ex.  748;  Ul-  587,  11  Am.  St.  67,  4  L.E.A.  572. 
l)richt  V.   Eufaula   W.   Co.,   86   Ala.  «  Jewett  v.   Whitney,  43  Me.  242. 


§  10] 


NOMINAL    DAMAGES. 


37 


absolutely  excuse  a  trespass.^  The  death  of  a  child  was  caused 
by  the  neglect  or  unskilfulness  of  the  defendant's  clerk  in  sub- 
stituting morphine  for  quinine.  As  the  child  could  have  brought 
an  action  for  the  injury  had  he  survived  it  was  held  that  a 
liability  under  a  statute  existed  in  favor  of  the  administrator; 
and  because  the  statute  expressly  gave  a  right  of  action  at  least 
nominal  damages  were  recoverable.^"  In  actions  for  libel  and 
slander,  wherever  there  has  been  publication  of  matter  in  itself 
libelous  or  actionable  per  se,  the  law  infers  some  damage." 
Every  unauthorized  entry  upon  land  of  another,  or  inter- 
meddling with  his  goods,  is  an  actionable  trespass,  whether  there 
be  actual  injury  or  not ;  whether  the  owner  suffer  much  or  little 
he  is  entitled  to  a  verdict  for  some  damages.^^  In  an  action 
for  fishing  in  the  plaintiff's  fishery  he  was  entitled  to  nominal 
damages  though  the  defendant  took  no  fish  and  the  declaration 
did  not  allege  that  he  caught  any.^^  One's  right  of  property 
is  infringed  by  any  unlawful  flowage  of  his  land.^*  A  riparian 
owner  has  a  right  to  the  natural  flow  of  water  not  increased  or 


9  Mill  V.  Roulliard,  —  Iowa,  — , 
149  N.  W.  875,  awarding  $1  for 
assault  and  battery;  Deyo  v.  Van 
Valkenburgh,  5  Hill,  242.  See  Flint 
V.  Clark,  13  Conn.  361. 

lOQuin  V.  Moore,  15  N.  Y.  432; 
Mclntyre  v.  New  York  Cent.  R.  Co., 
43  Barb.  532;  Ihl  v.  Forty-second 
St.  etc.  R.  Co.,  47  N.  Y.  317,  12  Am. 
Neg.  Cas.  327,  7  Am.  Rep.  450. 

Tlie  failure  to  comply  with  a  stat- 
ute requiring  that,  at  stated  times, 
tlie  officers  of  a  corporation  shall 
file  verified  accounts  necessarily  im- 
plies an  injury  to  the  stockholders 
though  no  actual  damages  be 
shown;  and  neither  the  recovery  of 
judgment  nor  the  pendency  of  an 
action  for  a  past  default  bars  a  sub- 
sequent action  for  a  default  which 
occurred  after  commencement  of  the 
prior  action.  Shanklin  v.  Gray,  111 
Cal.  88.  Where  the  law  gives  an 
action  for  the  doing  of  an  act,  the 
doing    thereof    imports    a    damage. 


Whittemore  v.  Cutter,   1   Gall.  429, 
433.     See  Enos  v.  Cole,  53  Wis.  235. 

11  Holmes  V.  Clisby,  12]  Ga.  241; 
Ashliy  V.  White,  1  Salk.  19,  2  Ld. 
Raym.  955;  Flint  v.  Clark,  13  Conn. 
361 ;  Kelly  v.  Slierlock,  L.  R.  1  Q.  B. 
686. 

12  Dixon  V.  Clow,  24  Wend.  188; 
McAneany  v.  Jewett,  10  Allen,  151; 
Carter  v.  Wallace,  2  Tex.  206; 
Plummcr  v.  Harbut,  5  Iowa,  308; 
Coe  V.  Peacock,  14  Ohio  St.  187; 
Pierce  v.  Hosmer,  66  Barb.  345; 
White  v.  Griffin,  4  Jones,  139:  Wat- 
son V.  New  Milford  W.  Co.,  71  Conn. 
442. 

13  Patrick  v.  Greenway,  1  Saund. 
346&,   note. 

14  Amoskeag  Mfg.  Co.  v.  Goodale, 
46  N.  H.  53;  McCoy  v.  Danley,  20 
Pa.  89;  Tootle  v.  Clifton,  22  Ohio 
St.  247,  10  Am.  Rep.  732;  Kem- 
merrer  v.  Edelman,  23  Pa.  143 ; 
Warren  v.  Deslippes,  33  Up.  Can. 
Q.   B.   59;    Plumleigh  v.   Dawson,  6 


38 


SUTHEELAND    ON    DAMAGES. 


[§  10 


diminished  in  quantity  and  nnpolluted  in  quality,  and  for  any 
infraction  of  this  right  at  least  nominal  damages  may  be  re- 
covered.^^ A  fraud  by  which  one  is  drawn  into  a  contract  is 
an  injury  actionable  per  se}^  Actual  damage  is  not  necessary 
to  an  action.  A  violation  of  a  right  with  the  possibility  of 
damage  is  sufficient  ground."  One  who  has  suffered  a  slight 
deformity  in  the  enlargement  of  the  wrist  is  entitled  to  nominal 
damages  although  there  is  no  evidence  showing  a  decreased 
earning  capacity. ^^  Nominal  damages  will  be  awarded  a  dis- 
trainor as  against  one  effecting  a  pound  breach  or  rescue  of 
goods  properly  distrained  though  no  substantial  damages  are 
shown.  ^^ 


111.  544,  41  Am.  Dec.  199;  Pastorius 
V.  Fisher,  1  Rawle,  27 ;  Whipple  v. 
Cumberland  Mfg.  Co.,  2  Story,  661 
Jones  V.  Hannovan,  55  Mo.  462 
Doud  V.  Guthrie,  13  111,  App.  653 
Mellor  V.  Pilgrim,  7  111.  App.  306 
Mize  V.  Glenn,  38  Mo.  App.  98. 

15  New  York  Rubber  Co.  v.  Roth- 
ery,  132  N.  Y.  293,  28  Am.  St.  575; 
Newhall  v.  Gilson,  8  Cush.  595; 
Tillotson  V.  Smith,  32  X.  H.  90,  64 
Am.  Dec.  365;  Wadsworth  v.  Tillot- 
son, 15  Conn.  366,  39  Am.  Dec. 
391;  Clinton  v.  Myers,  46  N.  Y. 
511,  7  Am.  Rep.  373;  Holsman  v. 
Boiling  Spring  B.  Co.,  14  N.  J.  Eq. 
335;  Embrey  v.  Owen,  6  Ex.  353; 
Northam  v.  Hurley,  1  El.  &  Bl.  665 ; 
Stockport  W.  W.  Co.  v.  Potter,  7 
H.  &  N.  160;  Tyler  v.  Wilkinson,  4 
Mason,  397;  Wood  v.  Waud,  3  Ex. 
748;  Tuthill  v.  Scott,  43  Vt.  525, 
5  Am.  Rep.  301;  Munroe  v.  Stick- 
ney,  48  Me.  462;  Mitchell  v.  Barry, 
26  Up.  Can.  Q.  B.  416;  Blanchard  v. 
Baker,  8  Me.  253,  23  Am.  Dec.  504; 
Stein  V.  Burden,  24  Ala.  130,  60 
Am.  Dec.  453. 

16  Allaire  v.  Whitney,  1  Hill,  484; 
Ledbetter  v.  Morris,  3  Jones,  543; 
Pontifex  v.  Bignold,  3  Scott  N.  R. 
390. 

17  National  Exch.  Bank  v.  Sibley, 


71  Ga.  726,  734;  Ross  v.  Thomp- 
son, 78  Ind.  90;  Hooten  v.  Barnard, 
137  Mass.  36;  Blodgett  v.  Stone,  60 
N.  H.  167;  Alabama  M.  R.  Co.  v. 
Jones,  121  Ala.  113. 

Mr.  Justice  Story  observed  in 
Webb  V.  Portland  Mfg.  Co.,  3  Sum- 
ner, 189,  that  actual  perceptible 
damage  is  not  indispensable  as  the 
foundation  of  an  action.  The  law 
tolerates  no  further  inquiry  than 
whether  there  has  been  the  violation 
of  a  right.  If  so,  the  party  is  en- 
titled to  maintain  his  action  in  vin- 
dication of  his  right. 

Tlie  speculative  or  conjectural  na- 
ture of  the  damages  flowing  from 
the  breach  of  a  contract  do  not 
affect  the  right  to  recover  nominal 
damages.  In  re  Publishers'  Syndi- 
cate, 7  Ont.  L.  R.  223. 

Damages  for  the  removal  of  lat- 
eral support  to  land  used  as  a  ceme- 
tery, in  consequence  of  which  bodies 
therein  are  disturbed,  are  so  inca- 
pable of  measurement  that  only  a 
nominal  sum  may  be  recovered. 
Orr  v.  Dayton  &  M.  T.  Co.,  178  Ind. 
40,  48  L.R.A.(N.S.)    474. 

18  Sloss-Sheffield  Steel  &  Iron  Co. 
v.  Dunn,  9  Ala.  App.  524. 

19  Van  Home  v.  Brown,  85  N.  J. 
L.  544. 


§  11] 


NOMINAL    DAMAGES. 


39 


§  11.  The  right  a  substantial  one;  new  trials.  The  failure 
to  perform  a  duty  or  contract  is  a  legal  wrong  independently 
of  actual  damage  to  the  party  for  whose  benefit  the  performance 
of  such  duty  or  contract  is  due.^°  The  omission  to  show  actual 
damages  and  the  inference  therefrom  that  none  have  been  sus- 
tained do  not  necessarily  render  the  case  trivial.  The  law  has 
regard  for  the  substantial  rights  of  parties  though  it  may 
overlook  trivial  things.^^  When  such  a  right  is  violated  the 
maxim  de  minimis  non  curat  lex  has  no  application,^^     The 


20  Smith  V.  Woolf,  160  Ala.  644; 
State  V.  Dickmann,  146  Mo.  App. 
396;  Spafford  v.  Goodell,  3  McLean, 
97;  Runlett  v.  Bell,  4  N.  H.  433; 
Hagan  v.  Riley,  13  Gray,  515;  Pond 
V.  Merrifield,  12  Gush.  181;  Bagby 
V.  Harris,  9  Ala.  173;  Clinton,  v. 
Mercer,  3  Murph.  119;  Conger  v. 
Weaver,  20  N.  Y.  140;  Mecklem  v. 
Blake,  22  Wis.  495 ;  Freese  v.  Crary, 
29  Ind.  525;  Worth  v.  Edmonds,  52 
Barb.  40;  French  v.  Bent,  43  N.  H. 
448;  Johnson  v.  Stear,  15  C.  B.  (N. 
S.)  330;  Steer  v.  Crowley,  14  C.  B. 
(N.  S.)  337;  Brown  v.  Emerson,  18 
Mo.  103;  Tracy  v.  Buchanan,  167 
Mo.  App.  432;  Laflin  v.  Willard,  16 
Pick.  64;  Goodnow  v.  Willard,  5 
Met.  517 ;  Browner  v.  Davis,  15  Cal. 
9;  Seat  V.  Moreland,  7  Humph.  575; 
Bond  V.  Holton,  2  Jones,  149;  Craig 
V.  Chambers,  17  Ohio  St.  254;  Dow 
V.  Humbert,  91  U.  S.  294,  23  L.  ed. 
368;  Smith  v.  Whiting,  100  Mass. 
122;  Blot  V.  Boiceau,  3  N.  Y.  78; 
Hickey  v.  Baird,  9  Mich.  32;  New- 
comb  V.  Wallace,  112  Mass.  25; 
Chamberlain,  v.  Parker,  45  N.  Y. 
569;  Wilcox  v.  Pluramer,  4  Pet. 
172,  7  L.  ed.  821;  Clark  v.  Smith, 
9  Conn.  379;  Barker  v.  Green,  2 
Bing.  317:  Pollard  v.  Porter,  3 
Gray,  312;  Marzetti  v.  Williams, 
1  B.  &  Ad.  415;  Jordan  v.  Gallup, 
16  Conn.  536;  Cooper  v.  Wolf,  15 
Ohio  St.  523;  Mickles  v.  Hart,  1 
Denio,  548;   Carl  v.  Granger  C.  Co. 


69  Iowa,  519;  Rosser  v.  Timberlake, 
78  Ala.  162. 

21  Sloss-Sheffield  Steel  &  I.  Co.  v. 
Stewart,  172  Ala.  516;  Smith  v. 
Gugerty,  4  Barb.  614;  Hathornc 
V.  Stinson,  12  Me.  183;  Stowell 
V.  Lincoln,  11  Gray,  434;  Kirael  v. 
Kimel,  4  Jones,  121;  Ellicottville, 
etc.  R.  Co.  V.  Buffalo,  etc.  R.  Co.,  20 
Barb.  644. 

The  Georgia  court  is  not  aware  of 
any  precedent  authorizing  a  trial 
court  to  deprive  a  plaintilT  of  his 
right  to  recover  nominal  damages. 
To  so  hold  would  put  it  in  the 
power  of  the  court  to  prevent  the 
recovery  thereof,  and  render  the  law 
authorizing  it  inoperative.  Adding- 
ton  v.  Western  &  A.  R.  Co.,  93  Ga. 
566;  Sappington  v.  Atlanta,  etc.  R. 
Co.,   127   Ga.   178. 

Hence  if  the  right  to  recover  such 
damages  is  shown,  a  judgment  di- 
recting a  verdict  for  tlie  defendant 
will  be  reversed.  Addington  v.  R. 
Co.  supra.  And  so  of  a  judgment 
sustaining  a  demurrer  to  the  peti- 
tion, only  nominal  damages  being 
recoverable.  Kenny  v.  Collier,  79 
Ga.  743:  Sutton  v.  Southern  R.  Co., 
101  Ga.  776,  3  Am.  Neg.  Rep.  784; 
and  a  judgment  dismissing  the  ac- 
tion.   Roberts  v.  Glass,  112  Ga.  456. 

22  Pendleton  v.  Atlantic  L.  Co.,  3 
Ga.  App.  714;  Moore  v.  Linnemann, 
143  Ky.  231:  State  v.  McKinnon,  11 
Ohio  N.  P.   (N.  S.)    165,  quoting  the 


40 


SUTHERLAND    ON    DAMAGES. 


[§    11 


court  will  add  nominal  damages  to  the  finding  of  a  jury  when 
necessary  to  such  rights,  as  to  carry  costs.^^  So  where  judgment 
should  have  been  given  for  plaintiff  for  nominal  damages,  but 
was  rendered  for  defendant,  it  will  be  reversed  if  such  damages 
will  entitle  the  plaintiff  to  costs;  ^*  otherwise  a  judgment  which 
is  erroneous  only  because  it  fails  to  award  plaintiff"  nominal 
damages    will    not    be    reversed,^^    nor    will    a    new    trial    be 


text;    Waitman   v.   Swindell,   54  N. 
J,  L.  589,  18  L.R.A.  44. 

23  Von  Schoening  v.  Buchanan, 
14  Abb.  Pr.   185. 

If  the  award  of  nominal  damages 
is  made  by  a  jury  the  plaintiff  is  en- 
titled to  costs.  Whitling  v.  Flem- 
ing, 16  Ont.  App.  263. 

24  Potter  V.  Mellen,  36  Minn.  122; 
Enos  V.  Cole,  53  Wis.  235;  Sayles 
V.  Bemis,  57  Wis.  315;  Eaton  v. 
Lyman,  30  Wis.  41;  Schweer  v. 
Schwabacker,  17  111.  App.  78;  Crut- 
cher  V.  Choctaw,  etc.  R,  Co.,  74  Ark. 
358;  State  v.  Dickmann,  146  Mo. 
App.  396 ;  Earner  v.  Thompson,  3  Ga. 
App.  415;  Glenn  v.  Western  U.  Tel. 
Co.,  1  Ga.  App.  821;  State  v.  Fra- 
lick,  154  Mo.  App.  690;  American 
S.  S.  Co.  V.  Rush  (N.  Y.  Misc.), 
100  Supp.  1019;  Clark  Mfg.  Co.  v. 
Western  U.  Tel.  Co.,  152  N.  C.  157, 
27  L.R.A.  (N.S.)  643;  Cronemillar 
V.  Dukith-S.  M.  Co.,  134  Wis.  248; 
Blass  V.  Linsley,  78  N.  Y.  Misc.  422. 
Contra  if  an  appeal  does  not  lie  to 
determine  who  is  entitled  to  costs. 
Commercial  I.  Co.  v.  National  Bank, 
36   Wash.  287. 

In  Wm.  Foerster  &  Co.  v.  Faulk- 
Christian  Lumber  Co.,  105  Miss. 
612,  judgment  for  the  defendant 
was  reversed  and  judgment  entered 
for  the  plaintiff  for  .$1  and  all  costs 
in  botli  courts. 

25  Strait  V.  Wilkins,  23  Cal.  App. 
774;  Adams  v.  Bridges,  141  Ga.  418; 
Benfield  v.  Croson,  90  Kan.  061; 
Fisk   V.   Neptune,   —   Kan.   — ,   149 


Pac.  692;  Foster  v.  Wagener,  129 
Minn.  11;  Braun  v.  Peet,  97  Neb. 
443;  Northcutt  v.  Hume,  —  Tex. 
Civ.  App.  — ,  174  S.  W.  974;  Major 
V.  Hefiey-Coleman  Co.,  —  Tex.  Civ. 
App.  — ,  164  S.  W.  445,  citing  the 
text;  Cook  V.  Fidelity  &  D.  Co.,  167 
Fed.  95,  92  C.  C.  A.  547;  United 
States  V.  Withers,  130  Fed.  696,  65 
C.  C.  A.  16;  DeMange  v.  Blooming- 
ton,  155  111.  App.  49;  New  York, 
etc.  R.  Co.  V.  Rhodes,  171  Ind.  521, 
24  L.R.A. (N.S.)  1225;  White  v. 
Sun  Pub.  Co.,  164  Ind.  426;  Green 
V.  Macy,  36  Ind.  App.  560;  Castor 
V.  Dufur,  133  Iowa,  535;  State  v. 
Kelly,  78  Kan.  42;  Cook  v.  Smith, 
67  Kan.  53;  Morgan  v.  Lexington 
Herald  Co.,  138  Ky.  637;  Laetz  v. 
Tierney,  153  Mich.  279;  Wilcox  v. 
Morton,  132  Mich.  63;  School  Dist. 
v.  Burress.  2  Neb.  (Unof.)  554; 
Willson  V.  Faxon,  138  App.  Div. 
366;  Seal  v.  Holcomb,  48  Tex.  Civ. 
App.  330;  Cronemillar  v.  Duluth, 
S.-M.  Co.,  134  Wis.  248;  Ladd  v. 
Redle,  12  Wyo.  362;  Strock  v. 
Russell,  148  App.  Div.  483;  Grif- 
fiths v.  Johnson,  3  New  South 
Wales  St.  Rep.  107;  Mortimer  v. 
Otto,  206  N.  Y.  89;  Checkley  v. 
Illinois  Cent.  R.  Co.,  257  111.  491, 
44  L.R.A.  (N.S.)  1127;  Padgett  v. 
Atlantic  C.  L.  R.  Co.,  63  Fla.  248; 
Mickey  v.  Baird,  9  Mich.  32;  Rob- 
ertson V.  Gentry,  2  Bibb,  542;  Wat- 
son v.  Van  Meter,  43  Iowa,  76; 
Wire  V.  Foster,  62  Iowa,  114;  Ely  v. 
Parsons,  55  Conn.  83,  101;   Platter 


11] 


NOMINAL    DAMAGES. 


41 


granted.^^  A  contract  will  not  be  reformed  to  permit  the  recov- 
ery of  a  nominal  sum.^^  In  California  a  distinction  is  taken 
between  actions  for  defamation  and  actions  for  the  breach  of 
contracts ;  in  the  former  a  new  trial  may  be  granted  though  the 
damages  recovered  may  be  merely  nominal.^*  If  the  reviewing 
court  recognizes  that  substantial  damages  have  been  sustained 
and  that  the  party  entitled  to  them  mistook  the  basis  on  which 
they  should  be  determined,  or  was  precluded  from  making  proof 


V.    Seymour,    86    Ind.    323;     Rhine 
V.   Morris,   96   Ind.   81;    Norman   v. 
Winch,    65    Iowa,    263;     Harris    v. 
Kerr,    37    Minn.    537;    Hibbard    v. 
Western  U.  Tel.  Co.,  33   Wis.  558, 
14  Am.  Rep.   775;   Benson  v.  Wau- 
i<esha,  74  Wis.  31;   Beatty  v.  Oille, 
12    Can.    Sup.    Ct.    706;     Mears    v. 
Cornwall,    73    Mich.    78;    Haven    v. 
Manufacturing   Co.,   40   Mich.    286; 
McLean  v.  Wright  M.  Co.,  96  Mich. 
479;  Thisler  v.  Hopkins,  85  111.  App. 
207;    People  v.   Petrie,  94  111.  App. 
652;    Coffin   v.   State,   144  Ind.   578, 
55   Am.   St.   188;    Smith  v.   Parker, 
148   Ind.   127;    Harwood   v.   Lee,   85 
Iowa,   622;    Boardman  v.  Marshall- 
town  G.  Co.,  105  Iowa,  445;  United 
States     Exp.     Co.     v.    Koerner,     65 
Minn.  540,   33   L.R.A.  600;   Kenyon 
V.  Western  U.  Tel.  Co.,  100  Cal.  454, 
quoting  the  text;  Phillips  v.  Covell, 
79    Hun,    210;     Roberts    v.    Minne- 
apolis T.  M.  Co.,  8  S.  D.  579;  Ternes 
V.  Dunn,  7  Utah,  497 ;  Farr  v.  State 
Bank,  87  Wis.  223,  41  Am.  St.  40; 
East  Moline  Co.  v.  Weir  P.  Co.,  37 
C.  C.  A.  62,  95  Fed.  250;   Kelly  v. 
Fahrney,   38   C.   C.  A.   103,   105,   97 
Fed.    176;    Scammell    v.    Clark,    31 
New  Bruns.  250;   Glasscock  v.  Ro- 
sengrant,    55    Ark.    376;    Bunch    v. 
Potts,    57    Ark.    257;    Hartmann    v. 
Burtis,    65    App.    Div.    481;    Briggs 
V.  Cook,  99  Va.  273. 

For  refusal  to  reverse  a  judgment 
denying  nominal  damages  on  a 
counterclaim    where    an    allowance 


would  not  liave  carried  costs  see 
Busbee  v.  Gagnon  Co.,  50  Mont. 
203. 

Where  the  sole  object  of  the  ac- 
tion is  the  recovery  of  damages  the 
failure  to  prove  substantial  dam- 
ages is  a  failure  to  prove  the  sub- 
stance of  the  issue  and  entitles  the 
defendant  to  judgment.  Woodhouse 
v.  Powles,  43  Wash..  617,  8  L.R.A. 
(N.S.)  783,  117  Am.  St.  1079:  Hew- 
son  V.  Peternian  Mfg.  Co.,  76  Wash. 
600,  51  L.R.A.{N.S.)  398;  Casassa 
V.  City  of  Seattle,  75  Wash.  367. 

26  Backburn  v.  Alabama  G.  S.  R. 
Co.,  143  Ala.  346;  Beattic  v.  New 
York,  etc.  R.  Co.,  84  Conn.  555; 
Edwards  v.  Hale,  129  Ga.  302; 
Fulghum  V.  Beck  D.  Co.,  121  Ga. 
273;  Central  Altagracia  v.  Wilson, 
5  Porto  Rico  Fed.  36;  Storseth  v. 
Folsom,  50  Wash.  456;  Branting- 
ham  V.  Fay,  1  .Johns.  Cas.  256; 
Jennings  v.  Loring,  5  Ind.  250; 
Walson  V.  Hamilton,  6  Rich.  75; 
Haines  v.  Dunlap,  33  New  Bruns. 
556;  Ringlehaupt  v.  Young,  55 
Ark.    128. 

Costs  are.  not  taxed  in  the  court 
of   claims  and   it  is  not   in  accord- 
ance   with    its    practice    to    render 
nominal     damages. 
United    States,    35 


judgment  for 
Friedenstein  v 
Ct.  of  Cls.  1,  9 

27  Whitley     ^ 
Ala.  264. 

28  Schroedcr  v.  Spreckles,  147  Cal. 
186,  citing  local  cases. 


Willingham,     176 


42  SUTHEELAND    ON    DAMAGES.  [§    11 

of  them,  the  denial  of  his  right  to  nominal  damages,  to  which  he 
was  entitled,  will  be  ground  for  reversing  the  judgment.^'  And 
if  the  object  of  the  action  is  to  determine  some  question  of 
permanent  right,  and  through  error  the  plaintiff  is  deprived  of 
the  judgment  he  is  entitled  to,  the  fact  that  he  can  recover  only 
nominal  damages  will  not  be  reason  for  denying  a  new  trial. ^° 
If  the  right  to  such  damages  is  established  the  court  cannot 
ignore  it  and  give  the  defendant  judgment  although  the  jury 
erroneously  find  substantial  damages  in  the  plaintiff's  favor.^* 
There  is  much  to  commend  the  practice  adopted  in  some  recent 
cases  in  which  judgments  ignoring  the  right  to  nominal  dam- 
ages have  been  reversed  and  judgments  rendered  therefor  and 
also  for  the  costs  of  the  appeal ;  ^^  though  this  may  not  be  done 
in  equity  where  discretion  may  be  exercised  in  awarding  costs.^^ 
A  cause  of  action  may  be  so  intrinsically  trivial  and  vexatious 
that  it  would  be  almost  a  pardonable  departure  from  the  tech- 
nical rule  to  apply  the  maxim  de  minimis  non  curat  lex  and 
direct  a  verdict  for  the  defendant.  It  w^as  so  ruled  in  a  Vermont 
case.  The  defendant  as  an  officer  had  attached  certain  hay, 
straw,  etc.,  and  used  a  pitchfork  belonging  to  the  debtor  in  re- 
moving the  same;  he  did  no  injury  to  the  fork,  and  after  its  use 
returned  it  where  he  found  it.     The  court  held  there  was  no 

29  Harman  v.  Washington  F.  Co.,  App.  85 ;  Ely  v.  Parsons,  55  Conn. 
228  111.  298;  Morris  v.  Vulgamott,  83,  101:  Skinner  v.  Allison,  54  App. 
158  111.  App.  434 ;  Raymond  v.  Yar-  Div.  47 :  Olson  v.  Huntiraer,  8  S.  D. 
rington,  96  Tex.  443,  62  L.R.A.  962  ;  220 ;  Bungenstock  v.  Nishnabotna 
Canthen  V.  Breyer,  (Tex.  Civ.  App.)  D.    Dist.,    163    Mo.    198. 

131    S.   W.   853.     See  Pinkerton   v.  31  Carl    v.    Granger    C.    Co.,    69 

Randolph,  200  Mass.  24;    Hutchin-  Iowa,   519. 

son  V.  Mt.  Vermon  W.  &  P.  Co.,  49  32  Jones    v.     Telegraph    Co.,     101 

Wash.   469;    Thomson-H.   E.   Co.   v.  Tenn.  442;    Foerster  v.  Faulk-C.  L. 

Durant   L.    I.    Co.,    144    N.    Y.    94;  Co.,  105  Miss.  612;  Bass  v.  Starnes, 

Stevens  v.  Amsinck,  149  App.  Div.  108  Ark.  357;  Dilley  v.  Thomas,  106 

220.  Ark.    274:    Howard   v.   Western   U. 

30  Blackburn  v.  Alabama  G.  S.  R.  Tel.  Co.,  106  Ark.  559. 

Co.,  143  Ala.  346 ;  Arkley  v.  Union  33  Campbell  v.   Southwestern  Tel. 

S.    Co.,    147    Cal.    195,   quoting   the  &  T.  Co.,  108  Ark.  569. 

text;    Harvey    v.    Mason    City,    etc.  The  insignificance  of  a  claim  for 

R.    Co.,    129    Iowa,    465,    3    L.R.A.  damages    is    cause    for    refusing   to 

(N.S.)    973,  113   Am.  St.  483;   Rol-  take   jurisdiction   in   equity.      Gira- 

lins  V.  Bowman  City  C.  Co.,  96  App.  gosian  v.   Chutjian,   194  Mass.   504, 

Div.  365;   Merrill  v.  Dibble,  12  111.  120  Am.  St.  570. 


§  11] 


NOMINAL    DAMAGES. 


43 


liability.^^  It  is  to  be  observed  that,  though  there  was  a  techni- 
cal wrong  by  an  nnanthorized  intermeddling  with  another's 
property  there  was  no  assertion  of  an  adverse  right  and  no  actual 
injury.  The  action  was  not  necessary  for  the  vindication  of  a 
right  nor  to  redress  a  wrong  deserving  compensation.  It  was, 
however,  a  case  in  which,  upon  strict  principles,  nominal  dam- 
ages should  have  been  given ;  for  they  are  always  due  for  the 
positive  and  wrongful  invasion  of  another's  propcrty.^^  Tech- 
nical rules  and  rules  as  to  the  forms  of  proceedings  must  be 
observed  without  regard  to  the  consequences-  which  may  follow 
in  particular  cases ;  otherwise  the  stability  of  judicial  decisions 
and  the  certainty  of  the  law  cannot  be  preserved.^® 


34  Paul  V.  Slason,  22  Vt.  231,  54 
Am.  Dec.  75;  Pronk  v.  Brooklyn 
Heights  R.   Co.,  68   App.  Div.  390. 

35  Seneca  Road  Co.  v.  Auburn,  etc. 
R.  Co.,  5  Hill  175;  Heater  v. 
Pearce,  595  Neb.  583,  citing  the 
text. 

36  Clark  V.  Swift,  3  Met.  390,  395. 
In  Fullara  v.  Stearns,  30  Vt.  443, 

it  was  said  that  whenever  the  max- 
im de  minimis  non  curat  les  is  ap- 
plied to  take  away  a  right  of  recov- 
ery it  has  reference  to  the  injury 
and  not  to  the  resulting  damage. 
The  opinion  of  Bennett,  J.,  in  that 


case  states  the  result  of  several 
cases  on  this  proposition.  See  Ash- 
by  V.  White,  2  Ld.  Raym.  938; 
Kidder  v.  Barker,  18  Vt.  454;  Clif- 
ton V.  Hooper,  6  Q.  B.  468;  Barker 
V.  Green,  2  Bing.  317;  Williams  v. 
Mostyn,  4  M.  &  W.  145;  Cady  v. 
Huntington,  1  N.  H.  138;  Young 
V.  Spencer,  10  B.  &  C.  145;  Embrey 
V.  Owen,  6  Ex.  353,  372;  Williams  v. 
Esling,  4  Pa.  486,  45  Am.  Dec.  710; 
Glanvill  v.  Stacey,  6  B.  &  C.  543; 
Seneca  Road  Co.  v.  Auburn,  etc.  R. 
Co.,  5  Hill,  175;  Bustamente  v. 
Stewart,   55   Cal.   115. 


44:  SUTllEELAND    ON    DAMAGES. 


CHAPTER  III. 

COMPENSATION. 
Section  1. 

compensatoby  damages. 

§12.  Award  of  compensation  the  object  of  the  law  and  of  equity. 

13.  Liinitatiou  of  liability  to  natural  and  proximate  consequences. 

Section  2. 

dibect  damages. 

14.  What  these  include. 

Section  3. 

consequential  damages  fob  tobts. 

15.  Awarded   for   probable   consequences. 

16.  Rule   of  consequential   damages   for  torts;    extension   of  liability  by 

statute. 
17-19.  Illustrations  of  the  doctrine  of  the  preceding  section. 

20.  Consequential  damages  under  fence  statutes. 

21.  Nervous    sliock    without    impact;    the    Coultas    case    and    American 

cases  in  harmony  with   it. 

22.  Same  subject;  criticism  of  the  Coultas  case;  nervous  shock  a  physi- 

cal injury. 

23.  Same  subject;    an   earlier   ruling. 
23a.  Same   subject;    Dulien  v.   White. 

24.  Same  subject;   miscellaneous  cases. 

25.  Anticipation  of  injury  as  to  persons;    illustrations. 

26.  Consequential    danuiges   in   highway  cases. 

27.  Imputed  negligence. 

28.  Particular   injury  need  not  be  foreseen. 

29-31.  Tlie  act  complained  of  must  be  the  efficient  cause. 

32.  Breach  of  statutory  duties. 

33.  Injury  through  third  person. 

34.  Liability  as  affected  by  extraordinary  circumstances. 

35.  Illustrations  of  the  doctrine  of  the  preceding  section. 

36.  Liability  of  carriers  for  consequential  damages;    extraordinary  cir- 

cumstances. 
37-38.  Intervening   cause. 

39.  Acts  of  injured  party;  fraud  and  exposure  to  peril. 
40-42.  Act  of  third  person. 
43-44.  Wilful  or  malicious  injuries. 


COMPENSATION.  45 

Section  4. 

consequential  damages  for  breach  of  contract 

45.  Recoverable  only  when  contemplated  by  the  parties. 

46.  Illustrations  of  liability  under  the  rule. 

47.  Liability  not  affected  by  collateral  ventures  or  financial  condition 

of  a  party. 

48.  Distinction  between  consequential  liability  in  tort  and  on  contract. 

49.  Same  subject;   criticism  of  the  Hobbs  case. 

50.  Liability    under   special   circumstances;    Hadley    v.   Baxendale. 

51.  Same  sul)ject;    illustrations  and  discussion  of  the  rule. 

52.  Market   value;    resale;    special  circumstances. 

Section  5. 

required  certainty  of  damages. 

53.  Must  be  certain  in  their  nature  and  cause. 

54.  Liability  for  the  principal  loss  extends  to  details  and  incidents. 

55.  Only  the  items  which  are  certain  are  recoverable. 
56-58.  Recovery  on  successive  consequences. 

59-60.  Required   certainty   of   anticipated   profits. 

61.  Warranties  of  seeds  and  breeding  quality  of  animals. 

62.  Prospective  growth  of  orchard  and  of  animals. 

63.  Profits  of  special  contracts. 

64.  Same  subject;    Masterton  v.  Mayor. 
05.  Violation  of  contract  to  lease. 

66.  Profits  of   labor. 

67.  Profits  from  commercial  ventures. 

68.  Profits  on  dissolution  of  partnership. 

69.  Commercial   and   insurance   agencies;    proof  of  damages. 

70.  Tortious  interference  with  business. 

71.  Chances  for  prizes  and  promotions. 

72.  Contingent   advantage. 

73.  Uncertain  mitigation  of  breach  of  marriage  promise. 

74.  Failure  to  provide  sinking  fund. 

Section  6. 
the  constituents  of  compensation,  or  elements  of  damaoe. 

75.  Elementary  limitation  of  damages. 

76.  Damages  for  nonpayment  of  or  failure  to  loan  money. 

77.  Greater   damages  than  interest  for  failure  to  pay  or  loan  money. 

78.  Liability  for  gains  and  losses. 

79.  What  losses  elements  of  damage. 

80.  Same  subject;   labor  and  expenditures. 

81.  Same  subject;   damages  by  relying  on  performance. 

82.  Same  subject;  liability  to  third  persons;  covenants  of  indeuuiity. 

83.  Same  subject;  indemnity  to  municipalities;  counsel  foes. 


46  SUTHERLAND    OX    DAMAGES.  [§    12 

84.  Same  subject;  liability  for  losses  and  expenses. 

85.  Same  subject;   bonds    and    undertakings;    damages    and   costs. 
86-87.  Same  subject;  necessity  of  notice  to  indemnitor  to  fix  liability. 

88.  Expenses  incurred  to  prevent  or  lessen  damages. 

89.  Same  subject;  between  vendor  and  vendee. 

90.  Same  subject;  extent  of  the  duty. 

91.  Same  subject;  employer   may   finish   work   at   contractor's   expense. 

92.  May  damages   for  breach   of  contract  include  other  than  pecuniary 

elements  ? 

93.  Elements  of  damage  for  personal  torts. 

94.  Character  as  affecting  damages  for  personal  injuries,  and  in  actions 

for  death. 
95-90.  Mental   suffering. 

97.  Same  subject;   liability  of  telegraph  companies. 

98.  Right  to  compensation  not  affected  by  motive. 

99.  Distinction  made  for  bad  motive;   contracts. 

100.  Motives  in  tort  actions. 

101.  How  motive  affects  consequences  of  confusion  of  goods. 
102-103.  Where  property  sued  for  improved  by  wrong-doer. 

104.  Distinctions  in  the  matter  of  proof. 

105.  Value  of  property. 

Section  1. 

compensation  damages. 

§  12.  Award  of  compensation  the  object  of  the  law  and  of 
equity.  Actions  at  law  are  usually  brought  to  recover  compen- 
sation for  the  wrong  complained  of.  The  law  which  is  denomi- 
nated the  law^  of  damages  is  principally  that  which  defines, 
measures  and  awards  compensation.  Such  damages  as  are  not 
compensatory  are  either  nominal  or  exceptional.  Compensation 
is  the  redress  which  the  law  affords  to  all  persons  whose  rights 
have  been  invaded;  in  the  nature  of  things  they  must  accept 
that  by  way  of  reparation.  Therefore  the  principles  which 
underlie  this  right,  so  necessary  and  so  frequently  invoked,  and 
the  rules  which  govern  its  enforcement  are  of  the  greatest  im- 
portance. The  law  defines  very  precisely  all  personal  and 
property  rights  so  that  every  person  may  enjoy  his  own  with  con- 
fidence and  repose.  If  they  are  infringed  the  extent  of  the 
encroachment  is  readily  seen  when  the  facts  appear.  The  law 
defines  the  scope  of  responsibility  with  as  much  precision  as  the 
nature  of  the  subject  will  permit,  and  lays  down  a  universal 
measure  of  recompense  for  civil  injury  which  the  sufferer  is 


§  12] 


COMPENSATION. 


47 


entitled  to  recover  and  the  person  who  is  liable  is  bound  to  pay 
when  the  injury  has  been  done  without  a  motive  for  which  the 
law  subjects  him  to  punishment.  The  universal  and  cardinal 
principle  is  that  the  person  injured  shall  receive  a  compensation 
commensurate  with  his  loss  or  injury,  and  no  more;  and  it  is 
a  right  of  the  person  who  is  bound  to  pay  this  compensation 
not  to  be  compelled  to  pay  more,  except  costs.^  It  is  not  within 
legislative  j)ower  to  deprive  an  individual  who  has  been  injured 


1  Kansas  City,  etc.  R.  Co.  v. 
Thornhill,  141  Ala.  215;  Prestwood 
V.  Carlton,  162  Ala.  327;  Barker 
V.  Lewis  S.  &  T.  Co.  78  Conn.  198, 
citing  the  text ;  Hartman  v.  Warner, 
75  Conn.  197 ;  Timmerman  v.  Stan- 
ley, 123  Ga.  850,  1  L.R.A.(N.S.) 
379;  People  v.  Schwartz,  151  111. 
App.  190;  Chicago  &  M.  E.  R.  Co. 
V.  Krempel,  116  id.  253;  Toledo,  etc. 
R.  Co.  V.  Smart,  116  id.  523;  Mathre 
V.  Devendorf,  130  Iowa,  107;  Jenk- 
ins V.  Kirtley,  70  Kan.  801;  Balti- 
more B.  R.  Co.  V.  Sattler,  102  Md. 
595,  quoting  the  text;  Cape  Girar- 
deau &  C.  R.  Co.  V.  Wingerter,  124 
Mo.  App.  426;  Rhodes  v.  Holladay- 
K.  L.  &  L.  Co.,  105  id.  279;  Hurx- 
thal  V.  Boom  &  L.  Co.,  53  W.  Va. 
87,  97  Am.  St.  954,  citing  the  text; 
Baltimore  &  O.  R.  Co.  v.  Kahl,  124 
Md.  299;  Shoemaker  v.  Central  R. 
of  New  Jersey,  —  N.  J.  L.  — ,  89 
Atl.  518;  Rockwood  v.  Allen,  7  Mass 
254;  Dexter  v.  Spear,  4  Mason,  115 
Walker  v.  Smith,  1  Wash.  C.  C.  152 
Ferrer  v.  Beale,  1  Ld.  Raym.  692 
Allison  V.  Chandler,  11  Mich.  542 
Northrup  v.  McGill,  27  id.  234 
Bussy  V.  Donaldson,  4  Dall.  206, 
1  L.  ed.  802;  Griffin  v.  Colver,  16 
N.  Y.  494 ;  Milwaukee,  etc.  R.  Co.  v. 
Arms,  91  U.  S.  489,  23  L.  ed.  374, 
12  Am.  Neg.  Cas.  686;  Baker  v. 
Drake,  53  N.  Y.  216;  United  States 
V.  Smith,  94  U.  S.  214,  24  L.  ed. 
115;  Robinson  v.  Harman,  1  Ex. 
850;   Peltz  v.  Eichele,  62  Mo.  171; 


Noble  V.  Ames  Mfg.  Co.,  112  Mass. 
492;  Buckley  v.  Buckley,  12  Nev. 
423 ;  Suydam  v.  Jenkins,  3  Sandf . 
614;  Parker  V.  Simonds,  8  Met.  205; 
Jacobson  v.  Poindexter,  42  Ark.  97 ; 
Goodbar  v.  Lindsley,  51  Ark.  380, 
14  Am.  St.  54;  Mason  v.  Hawes,  52 
Conn.  12,  52  Am.  Rep.  552;  Jones 
V.  People,  19  111.  App.  300;  Page  v. 
Sumpter,  53  Wis.  652;  Henson-H. 
S.  Co.  V.  Minnesota  B.  Co.,  55  Minn. 
530,  citing  the  preceding  sentence  of 
the  text;  Horst  v.  Roehm,  84  Fed. 
505 ;  Alleghany  I.  Co.  v.  Teaford, 
96  Va.  372. 

A  charge  is  objectionable  if  the 
jury  are  told  that  plaintiff  is  en- 
titled to  "full,  complete  and  ample" 
compensation.  The  adjectives  should 
not  be  used.  Sale  v.  Eichberg,  105 
Tenn.  332,  352. 

To  say  to  the  jury  that  the  plain- 
tiff's damages  may  be  assessed  at 
such  sum  as  they  maj^  think  he  has 
sustained  is  to  give  them  a  "roving 
commission"  to  apply  their  own 
measure  of  damages  instead  of  that 
defined  by  the  law.  Camp  v.  Wabash 
R.  Co.,  94  Mo.  App.  272.    See  §  1256. 

An  instruction  authorizing  the 
jury  to  find  for  the  plaintiff  dam- 
ages, as  they  "might  think  proper, 
commensurate"  witli  his  injuries  not 
exceeding  the  sum  sued  for,  was 
held  proper  in  Yates  v.  Crozer  Coal 
&  Coke  Co.,  —  W.  Va.  — ,  84  S.  E. 
626.  See  also.  Cheeks  v.  Virgin ia- 
Pocahontas  Coal  Co.,  74  W.  Va.  553. 


48  SUTHERLAND    ON    DAMAGES.  [§12 

in  his  person  or  estate  of  redress  either  in  whole  or  in  part. 
"jSTothing  less  than  the  full  amount  of  pecuniary  damage  which 
a  man  suffers  from  an  injury  to  him  in  his  lands,  goods  or 
person  fills  the  measure  secured  to  him  in  the  declaration  of 
rights."  ^  The  principle  of  just  compensation  is  paramount. 
By  it  all  rules  on  the  subject  of  compensatory  damages  are 
tested  and  corrected.  They  are  but  aids  and  means  to  carry 
it  out ;  and  when  in  any  instance  such  rules  do  not  contribute 
to  this  end,  but  operate  to  give  less  or  more  than  just  compen- 
sation for  actual  injury,  they  are  either  abandoned  as  inap- 
plicable or  turned  aside  by  an  exception.^  There  are,  however, 
upon  certain  subjects  some  arbitrary  rules,  or  those  which  have 
been  adopted  from  considerations  of  policy,  ostensibly  on  the 
basis  of  compensation,  which  really  fall  short  of  that  object  in 
a  conservative  deference  to  possible  consequences  to  the  party 
who  must  respond  to  the  demand.  With  these  necessary  or 
expedient  exceptions,  the  person  who  has  broken  his  contract 
or  caused  injury  by  any  tortious  act  is  liable  to  the  other  party 
to  the  contract  or  to  the  sufferer  from  such  act  or  neglect  for 
such  damages  as  will  place  the  person  so  injured  in  as  good  con- 
dition as  though  the  contract  had  been  performed  or  the  tort 
had  not  been  committed.*  It  is  not  meant  by  this  that  the 
party  liable  must  answer  for  all  consequences  which  may  in- 

Where  a  penalty  is  claimed  as  the  instruct  the  jury  as  to  the  proper 

damage  and  recovery  of  it  is  sought  measure  of  damages  though  no  re- 

as  measuring  the  damage  there  can  quest  to  do  so  be  made.     Burns  v. 

not  be  a  recovery  of  both.     Hughes  Pennsylvania  R.   Co.,   233  Pa.  304; 

V.   Arkansas   &   O.   R.   Co.,   74   Ark.  Same  v.  Same,  239  id.  207. 

194.     A  statute  imposing  a  penalty  2  ciiase  v.  Hoosac  T.  &  W.  R.  Co., 

in  favor  of  the  party  aggrieved  in  .^-,   y^    ,j„.    Tliirteenth   &   P.  St.  P. 

a  case  where  no  cause  of  action  ex-  j,    ^^    ^    Boudrou    92  Pa.  475    482, 

isted   at   common   law   may   be   re-  ^^  j^^   -^^^   ^^^    jge. 

carded   as  providing   for   full   com-  _  ^t,,      ,      ,   .           j.  j  •     iv    *  n 

>-■  I               >^  3  The  text  is  quoted  in  the  follow- 

pensation.  St.  Louis,  etc.  R.  Co.  v.  .                                           t       •    /^   /-. 

'  .   ,       ing  cases:    Sweeney  v.  Lewis  C.  Co., 

Busick,  74  Ark.  589.  ""                             -^ 

The  damages  caused  by  the  breach 
of  a  contract  should  not  be  left  to 

the  jury  without  instructions  as  to  ^  ^^^'-  (^'"of.)   776;  Hunt  v.  Thomp- 

the  measure  thereof.     King  v.  Ivan-  »on,  19  Wyo.  523. 

hoe  G.  Co.,  7  Aust.  Com.  L.  R.  617.  *  Wertheim  v.  Chicoutini  P.  Co.; 

It  is  the  duty  of  the  trial  judge  to  [1911]  App.  Cas.  301. 


66    Wash.   490;    Foss   v.   Heineman, 
144  Wis.  146;  Paxton  v.  Vadbonker, 


§    13]  COMPENSATION.  49 

directly  and  remotely  ensue.  The  latter  are,  beyond  a  certain 
point,  incapable  of  being  traced ;  they  combine  with  the  results 
of  other  causes,  and  any  attempt  to  follow  and  apportion  them 
would  be  abortive,  and  any  conclusion  of  liability  based  upon 
such  consequences  would  rest  on  conjecture  and  lead  to  great 
injustice.  If  men  were  held  to  such  a  far-reaching  respon- 
sibility they  would  be  timid  or  reckless ;  if  it  were  legally  recog- 
nized it  would  be  fatal  to  all  activity  and  enterprise. 

In  suits  in  which  equity  will  award  damages  the  measure 
thereof  will  be  the  same  as  applied  at  law,  and  the  same  prin- 
ciples govern  in  ascertaining  the  scope  of  the  natural  and  prox- 
imate consequences  of  the  wrong  done.^ 

§  13.  Limitation  of  liability  to  natural  and  proximate  con- 
sequences. As  before  remarked,  the  law  defines  the  scope  of 
responsibility  for  consequences ;  beyond  that  they  are  supposed 
to  cease  or  the  injured  party  is  presumed  to  counteract  them 
by  preventive  measures.  The  legal  scope  is  a  reasonable  one; 
in  general  it  extends  as  far  as  the  moral  judgment  and  practical 
sense  of  mankind  recognize  responsibility  in  the  domain  of 
morals,  and  in  those  aifairs  of  life  which  are  not  referred  to 
the  courts  for  regulation  or  adjustment.  The  law  defines  it 
generally  by  the  principle  which  limits  the  recovery  of  damages 
to  those  which  ncUurally  and  iJroximately  result  from  the  act 
complained  of;  or,  in  other  words,  to  those  consequences  of 
which  the  act  complained  of  is  the  natural  and  proximate  cause.® 
This  limitation  is  expressed  in  such  general  terms  that  the 
distinction  between  those  damages  which  are  compensable  and 
those  which,  because  being  too  remote,  are  not,  is  not  always 
verv  clear.  On  similar  facts  different  courts  have  come  to 
diverse  conclusions,  though  equally  acknowledging  the  principle. 
It  is  made  more  specific,  however,  by  rules  of  an  elementary 
character  formulated  under  it,  and  by  judicial  exposition  and 

5  Stewart  v.  Joyce,  205  Mass.  371.  Louis  &  S.   Ry.   Co.,   184  111,  App. 

eConnersville   W.   Co.   v.   McFad-  395.   Deyo  v.  Hudson,  89  Misc.   (N. 

den  C.  Co.,   166  Ind.   123,   3  L.R.A.  y.)  525;  Smith  v.  Postal  Telegraph- 
(N.S.)   709,  quoting  the  text;  Bene- 

nato  V.  McDougall,  166  Cal.  405,  49  Cable  Co.,  167  N.  C.  248;  Chambers 

L.R.A.  (N. 8.)   1202;  Lisenbury  v.  St.  v,  Everding  &  Farrell,  71  Ore.  521. 
Suth.  Dam.  Vol.  I.— 4. 


50  SUTHERLAND    ON    DAMAGES.  [§    1^ 

illiistratious  which  impart  to  this  legal  generality  a  more  precise 
and  determinate  import  than  is  suggested  by  its  words;  and  it 
is  only  by  resort  to  them  that  the  principle  of  this  limitation 
can  be  definitely  understood,  explained  or  elucidated.  Damages 
which  are  recoverable  may,  therefore,  be  conveniently  divided 
primarily  for  this  purpose  into  two  classes :  first,  direct ;  second, 
consequential. 

Section  2. 
direct  damages. 

§  14.  What  these  include.  These  include  damages  for  all  such 
injurious  consequences  as  proceed  immediately  from  the  cause 
which  is  the  basis  of  the  action ;  '  not  merely  the  consequences 
which  invariably  or  necessarily  result  and  are  always  provable 
under  the  general  allegation  of  damages  in  the  declaration,  but 
also  other  direct  effects  which  have  in  the  particular  instance 
naturally  ensued,  and  must  be  alleged  specially  to  be  recovered 
for.'  The  liability  of  the  defendant  for  these,  if  responsible 
for  the  cause,  is  clear.  All  such  damages,  whether  for  tort  or 
breach  of  contract,  are  recoverable  without  regard  to  his  inten- 
tion or  motive,  or  any  previous  actual  contemplation  of  them. 
A  defendant  is  conclusively  presumed  to  have  contemplated  the 
damages  which  result  directly  and  necessarily  or  naturally  from 
his  breach  of  contract,^  as  will  be  more  particularly  illustrated 
in  another  place;  and  in  cases  of  tort  his  responsibility  to  this 
extent  is  absolute."     An  illustration  of  this  rule  is  found  in  a 

7  City  of  Dublin  v.  Ogburn,  142  Cole  v.  Stearns,  20  N.  Y.  Misc.  502; 
Ga.  840.  Boyden  v.  Hill,  198  Mass.  477. 

8  Moore  v.  Fredericks,  24  Cal.  10  Southern  Bell  Tel.  &  T.  Co.  v. 
App.  536.  McTyer,  137  Ala.   601,  97  Am.   St. 

9  Hadley  v.  Baxendale,  9  Ex.  341,  62 ;  Wells  v.  Western  U.  Tel.  Co., 
2  Am.  Neg.  Rep.  400 ;  Burrell  V.  New  144  Iowa,  605,  24  L.E.A.(N.S.) 
York,  etc.  Co.,  14  Mich.  34;  Brown  1045,  138  Am.  St.  317;  Cumberland 
V.  Foster,  51  Pa.  165;  Collard  v.  Tel.  &  T.  Co.  v.  Hobart,  89  Miss.  252, 
Southeastern  R.  Co.,  7  H.  &  N.  79;  119  Am.  St.  702;  Sadlier  v.  New 
Williams  v.  Vanderbilt,  28  N.  Y.  York,  40  N.  Y.  Misc.  78 ;  Galveston, 
217,  84  Am.  Dec.  333;  Smith  v.  St.  etc.  R.  Co.  v.  Averill,  (Tex.  Civ. 
Paul,  etc.  R.  Co.,  30  Minn.  169,  4  App.)  136  S.  W.  98;  Cogdell  v.  Yett, 
Am.  Neg.  Cas.  218;  Agius  v.  Great  1  Cold.  230;  Tally  v.  Ayres,  3  Sneed, 
Western  C.  Co.,  [1899]  1  Q.  B.  413;  677;    Bowas  v.   Pioneer  T.   Line,   2 


§    15]  COMPENSATION.  51 

ease  where  an  administrator  sold  a  chattel  which  the  intestate 
had  in  his  possession  when  he  died,  but  which  in  truth  belonged 
to  another,  and  applied  the  proceeds  to  the  payment  of  the  debts 
of  the  intestate,  in  due  course  of  administration,  w'ithout  notice 
of  the  right  or  claim  of  the  owner ;  he  was  personally  liable  to 
such  owner  for  the  value  of  the  property.^^  In  another  case  a 
factor  bought  goods  for  his  principal  residing  at  W.,  and  by 
mistake  sent  them  to  a  third  person  at  S.,  who  received  them 
in  good  faith  and  paid  the  freight ;  he  was  liable  for  the  goods 
to  the  owner,  but  was  allowed  a  deduction  for  the  freight  paid.*^ 

Section  3. 

consequential  damages  for  torts 

§  15.  Awarded  for  probable  consequences.  Consequential 
damages  are  those  which  the  cause  in  question  naturally,  but 
indirectly,  produced.  An  example:  the  defendant  was  liable 
for  killing  a  mare ;  the  plaintiff  suffered  injury  in  the  loss  of 
that  animal  to  the  extent  of  her  value,  but  circumstances  gave 
her  an  additional  value  to  him ;  she  had  an  unweaned  colt,  and 
was  suckling  the  colt  of  another  mare  which  had  died.  The 
direct  consequence  of  the  killing  of  the  mare  was  her  loss — the 
necessity  of  employing  other  means  to  raise  the  colts  was  con- 
sequential.^^ The  consequential  damages  which  may  be  recov- 
ered are  governed  by  one  consideration  when  they  are  claimed 
for  a  tort,  and  by  another  when  they  are  sued  for  as  the  result 
of  a  breach  of  contract.^*  The  latter  will  be  the  subject  of  the 
next  section.  The  question  of  the  remoteness  of  damage,  if  the 
material  facts  are  not  in  dispute,  is  for  the  court.    Blackburn, 

Sawyer,   21 ;    Perley   v.   Eastern   R.  Keenan  v.  Cavanagh,  44  Vt.  288,  1 

Co.,  98  Mass.  414 ;  Lane  v.  Atlantic  Am.  Neg.  Cas.  434 ;  Little  v.  Boston, 

Works,  111  Mass.  136;  Martachow-  etc.  R.  Co.,  66  Me.  239;   Bowas  v. 

ski  V.  Orawitz,  14  Pa.  Super.  Ct.  175,  Pioneer  T.  Line,  2  Sawyer  21. 
186,  citing  the  text.    See  chs.  21,  22,  13  McDonell    v.    Minneapolis,    etc. 

36;  Lathers  v.  Wyman,  76  Wis.  616.  R.  Co.,  17  N.  D.  606;  Teagarden  v. 

11  Newsum  v.   Newsum,   1   Leigh,  Hetfield,  11  Ind.  522. 

86,  19  Am.  Dec.  739.  14  Kentucky  H.  Co.  v.  Hood,  133 

12  Whitney  V.  Beckford,  105  Mass.  Ky.  383,  22  L.R.A.(N.S.)  588,  1.34 
267;  Eten  v.  Luyster,  60  N.  Y.  252;       Am.  St.  457,  citing  the  text. 


52  SUTHEELAND  ON  DAMAGES.  [§  15 

J.,  has  said  that  it  never  ought  to  be  left  to  a  jury;  to  do  that 
would  be  in  effect  to  say  that  there  shall  be  no  rule  as  to  dam- 
ages being  too  remote/^  On  the  other  hand,  it  has  been  laid 
down  that  the  question  of  proximate  cause  is  not  one  of  science 
or  legal  knowledge ;  it  is  to  be  determined  as  a  fact  in  view  of 
all  the  circumstances,"  and  that,  unless  the  facts  are  undisputed 
and  are  such  that  there  can  be  no  difference  in  the  judgment 
of  reasonable  men  as  to  the  inferences  they  warrant,  the  ques- 
tion is  for  the  jury.^^ 

§  16.  Rule  of  consequential  damages  for  torts;  extension  of 
liability  by  statute.  In  an  action  for  a  tort,  if  no  improper 
motive  is  attributed  to  the  defendant,  the  injured  party  is 
entitled  to  recover  such  damages  as  will  compensate  him  for  the 
injury  received  so  far  as  it  might  reasonably  have  been  expected 
to  follow  from  the  circumstances;  such  as,  according  to  com- 
mon experience  and  the  usual  course  of  events,  might  have  been 
reasonably  anticipated."  The  damages  are  not  limited  or 
affected,  so  far  as  they  are  compensatory,  by  what  was  in  fact 
in  contemplation  by  the  party  in  fault.    He  who  is  responsible 

i5Hobbs   V.   London   &   S.   R.,   L.  165  Ind.  132;  Home  O.  &  G.  Co.  v. 

R.  10  Q.  B.  Ill,  122;  Hammond  v.  Dabney,  79  Kan.  820.     But  see  New 

Bussey,  20  Q.  B.  Div.  79,  89;  Read  Castle  v.  Grubbs,  171  Ind.  482    (if 

V.  Nichols,  118  N.  Y.  224,  7  L.R.A.  the  facts  are  in  dispute). 

130 ;  Cuflf  V.  Newark,  etc.  R.  Co.,  35  16  Milwaukee,  etc.  R.   Co.  v.  Kel- 

N.  J.  L.  17,  16  Am.  Neg.  Cas.  G68,  logg,  94  U.   S.  469,  24  L.  ed.  256; 

10  Am.  Rep.  205 ;  Behling  v.  South-  Schwarzschild  &  S.  Co.  v.  Weeks,  72 

west   Pipe   Lines,    160    Pa.    359,   40  Kan.    190,   4   L.R.A.  (N.S.)    515,    19 

Am.  St.  724;  Goodlander  M.  Co.  v.  Am.  Neg.  Rep.  242;   St.  Louis,  etc. 

Standard   O.   Co.,   63   Fed.   400,    11  R.  Co.  v.  Hook,  83  Ark.  584. 

C.  C.  A.  253,  27  L.R.A.  583 ;  Penn-  "  Illinois   Cent.   R.    Co.   v.    Siler, 

sylvania  Co.  V.  Whitlock,  99  Ind.  16,  229  111.   390,  15  L.R.A. (N.S.)    819, 

50  Am.  Rep.  71 ;   Stone  v.  Boston  &  citing  local  cases ;  Waschow  v.  Kelly 

A.   R.    Co.,    171    Mass.   536,    4   Am.  C.  Co.,  245  111.  516;   Reiser  v.  Cin- 

Neg.  Rep.  490,  41  L.R.A.  794;  Dei-  cinnati,   etc.    R.    Co.,    152   Ky.    522. 

senrieter    v.    Kraus-M.    M.    Co.,    97  See  Gulf,  etc.  R.  Co.  v.  Hayter,  93 

Wis.  279;   Consolidated  E.  L.  &  P.  Tex.  239,  7  Am.  Neg.  Rep.  359,  47 

Co.  V.  Koepp,  64  Kan.  735,  1  Am.  L.R.A.    325;    Kelly   v.    Lembeck    & 

Neg.   Rep.  404;    Ultima  Thule,   etc.  Belz   Eagle   Brewing  Co.,    86   N.   J. 

R.   Co.  V.   Benton,   86  Ark.   289    (if  L.  471. 

the  facts  are  undisputed);  Haskell  18  j.   B.   Carr   &   Co.   v.   Southern 

&  B.  C.  Co.  V.  Przezdziankowski,  170  Ry.   Co.,  12  Ga.  App.  830;   Ross  v. 

Ind.    1,    14    L.R.A.  (N.S.)     972,    127  St.  Louis,  I.  M.  &  S.  R.  Co.,  185  Mo. 

Am.  St.  352;  Roots  Co.  v.  Meeker,  App.  154. 


COMPENSATION. 


53 


§  16] 

for  a  negligent  act  must  answer  ''for  all  the  injnrions  results 
whicli  flow  therefrom,  by  ordinary  natural  sequence,  without 
the  interposition  of  any  other  negligent  ac^  o^  oyerpow^rmg_ 
force      Whether   the  injurious   consequences  may  Have  been 
-^^^^ably  expected'  to  have  followed  from  the  commission  of 
the  act  is  not  at  all  determinative  of  the  liability  of  the  person 
who  committed  the  act  to  respond  to  the  person  suffering  there- 
from.     Such  reasonable  expectation  bears  more  clearly  upon 
the  intent  with  which  the  act  was  committed  than  upon  the 
liability  of  the  doer  for  the  injurious  consequences.     If  he 
might  reasonably  have  expected  that  the  injurious  consequences 
which  did  flow  from  the  act  would  flow  from  its  commission, 
the  prima  facie  legal  presumption  would  be  that  he  intended 
the  consequences,  and  the  action  should  be  trespass  rather  than 
case     It  is  the  unexpected  rather  than  the  expected  that  happens 
in  the  great  majority  of  the  cases  of  negligence."  ''    Mr.  Whar- 
ton says  that  a  man  may  be  negligent  in  a  particular  matter 


V^ 


19  Stevens  v.  Dudley,  56  Vt.  158, 

166. 

"When   negligence   is   established 
it  imposes  liability  for   all  the  in- 
jurious consequences  that  flow  there- 
from, whatever  they  are,  until  the 
intervention  of  some  diverting  force 
that  makes  the  injury  its  own,   or 
until  the  force  set  in  motion  by  the 
negligent  act  has  so  far  spent  itself 
as  to  be  too  small  for  the  law's  no- 
tice.   But  in  administering  this  rule 
care  must  be  taken  to  distinguish 
between  what  is  negligence  and  what 
the  liability  for  its  injurious  conse- 
quences. <Qn  the  question   of  what 
Is  negligence,  it  is  material  to  con- 
sider  what   a   prudent   man    might 
reasonably    have     anticipated,)  but 
when  negligence  is  once  established 
that    consideration    is    entirely    im- 
material on  the  question  of  how  far 
that    negligence    imposes    liability." 
Isham  V.  Dow's  Est.,  70  Vt.  588.  5 
Am.  Neg.  Hep.  106,  67  Am.  St.  691, 
45    y.R.A.    87;    Home    Tel.    Co.    v. 


Fields,     150     Ala.     306.       Compare 
Renner  v.   Canfield,  36  Minn.  90. 

But  see  City  of  Dublin  v.  Ogburn, 
142  Ga.  840,  holding  that  where  a 
municipal   corporation   operated   an 
electric  light  plant,  furnishing  pow- 
er  and  light  to  its  customers,  and 
installing   necessary   appliances   for 
that   purpose,   and  where   it  placed 
a  switch  within  a  building  so  care- 
lessly that  a  tire  resulted,  and  the 
building  was  destroyed,  it  was  liable 
for    property    so    destroyed,    but    in 
the  absence  of  anything  to  indicate 
that   such  damage  was  in   the  con- 
templation of  the  parties,   or  that 
tlie   duty   so  omitted  was  with  the 
knowledge   and   for   the   purpose   of 
depriving  the  party  injured  of  such 
benefits,  the  cost  of  renting  another 
building    while    the    owner    rebuilt 
that  which  was  burned,  and  damage 
to  the  business  of  the  owner  by  rea- 
son of  being  without  a  building  for 
two  months  after  the  fire  were  too 
remote  to  be  recovered. 


54 


SUTHERLAND    ON    DAMAGES. 


[§  16 


V 


"a  thousand  times  without  mischief ;  yet,  though  the  chance  of 
mischief  is  only  one  to  a  thousand,  we  would  continue  to  hold 
that  the  mischief,  when  it  occurs,  is  imputable  to  the  negli- 
gence. Hence  it  has  been  properly  held  that  it  is  no  defense 
that  a  particular  injurious  consequence  is  'improbable,'  and  'not 
to  be  reasonably  expected,'  if  it  really  appear  that  it  naturally 
followed  from  the  negligence  under  examination."  ^°  Continu- 
ing, the  same  author  says:  "iSTor,  when  we  scrutinize  the  cases 
in  which  the  test  of  'reasonable  expectation'  is  applied,  do  we 
find  that  the  'expectation'  spoken  of  is  anything  more  than  an 
expectation  that  some  such  disaster  as  that  under  investigation 


20  Wharton  on  Neg.  §  77,  referring 
to  Higgins  v.  Dewey,  107  Mass.  494, 
9  Am.  Rep.  63;   White  v.  Ballou,  8 
Allen,  408;  Luce  v.  Dorchester  Ins. 
Co.,  105  Mass.  297,  7  Am.  Rep.  522; 
Lewis  V.  Smith,  107  Mass.  334,  and 
several    English    cases.      See,    also, 
Stevens    v.    Dudley,    56     Vt.     158; 
Brown   v.    Chicago,   etc.   R.   Co.,   54 
Wis.  342,  7  Am.  Neg.  Cas.  203 ;  Terre 
Haute  &  I.  R.  Co.  v.  Buck,  96  Ind. 
346,  3  Am.   Neg.  Cas.   148,  49  Am. 
Rep.  168;  Winkler  v.  St.  Louis,  etc. 
R.  Co.,  21  Mo.  App.  99,  9  Am.  Neg. 
Cas.  497 ;  Evans  v.  Same,  11  id.  463, 
8  Am.  Neg.  Cas.  486;  Baltimore  City 
P.   R.  V.   Kemp,   61  Md.   74,  3   Am. 
Neg.  Cas.  655 ;  Hoadley  v.  Northern 
T,  Co.,  115  Mass.  304,  15  Am.  Rep. 
106 ;  Ehrgott  v.  Mayor,  96  N.  Y.  264, 
281,  48   Am.   Rep.  622;   Milwaukee, 
etc.  R.  Co.  v.  Kellogg,  94  U.  S.  469, 
24   L.   ed.   529;    Wygant  v.   Crouse, 
127  Mich.  158,  53  L.R.A.  626;   Cut- 
ter v.  Des  Moinesr'l3f  Iowa,  643; 
Missouri,  etc.  R.  Co.  v.  Hawkins,  50 
Tex.    Civ.    App.    128;    Holledge    v. 
Duncan,   199   Mass.   121,   17^  L.R.A.y 
(N.S.)    982;  Hunter  v.  SoMherft-'R./ 
Co.,  152  N.  C.  682,  29  L.R.A.  (N.S.  Vf 
851;   Winters  v.  Baltimore  &  0.  R. 
Co.,  177  Fed.  44,  100  C.  C.  A.  462; 
Green  v.  Shoemaker,  111  Md.  69,  23 
L.R.A.  (N.S.)    667. 


Where  there  was  a  fraudulent  in- 
crease of  the  mortgage  indebtedness 
of  a  corporation  which  had  issued 
stock  to  the  amount  of  $21,000,000 
from  $2,579,149  to  $4,299,000  and 
the  value  of  the  stock  was  deprecia- 
ted $6,580,000,  it  was  held  that  such 
result  was  not  to  have  been  expected. 
Rockefeller  v.  Merritt,  22  C.  C.  A. 
608,  76  Fed.  909,  35  L.R.A.  633. 
The  test  applied  seems  to  indicate 
tliat  the  wrongdoer,  even  in  a  case 
of  fraud,  must  anticipate,  approxi- 
mately at  least,  the  extent  of  the  in- 
jury his  act  may  do.  Such  a  rule 
would  add  another  large  element  of 
uncertainty  as  to  what  constitutes 
proximate  cause.  It  ought  to  be 
enough  to  make  the  wrongdoer 
liable  for  all  the  financial  loss  re- 
sulting from  a  fraudulent  transac- 
tion if  it  appears  that  such  loss, 
to  any  considerable  extent,  would  be 
reasonably  sure  to  follow. 

The  fact  that  the  licensee  of  a 
barn  which  was  torn  down  was  ob- 
liged to  sell  his  horses  is  not  the 
natural  and  proximate  result  of  the 
tortious  act,  but  of  his  financial 
situation.  Chandler  v.  Smith,  70 
111.  App.  658,  citing  the  first  edition 
of  this  work. 


§    16]  COMPENSATION.  55 

will  occur  oil  the  lung  run  from  a  series  of  such  negligences  as 
those  with  which  the  defendant  is  charged."  ^^  This  doctrine 
is  fully  approved  bj  the  supreme  court  of  Vermont,'^^  and  is 
logically  sustained  by  other  recent  adjudications  in  this  country, 
some  of  which  are  cited  in  the  preceding  note;  others  will  be 
referred  to  in  the  pages  devoted  to  this  branch  of  the  law  of 
damages. 

The  correct  doctrine,  as  we  conceive,  is  that  if  the  act  or 
neglect  complained  of  was  Avrongful,  and  the  injury  sustained 
resulted  in  the  natural  order  of  cause  and  effect,  the  person 
injured  thereby  is  entitled  to  recover.  There  need  not  be  in 
the  mind  of  the  individual  whose  act  or  omission  has  wrought 
the  injul-y  the  least  contemplation  of  the  probable  consequences 
of  his  conduct;  he  is  responsible  therefor  because  the  result 
proximately  follows  his  wrongful  act  or  non-action.  'All  persons 
are  imperatively  required  to  foresee  what  will  be  the  natural 
consequences  of  their  acts  and  omissions  according  to  the  usual 
course  of  nature  and  the  general  experience.  The  lawfulness 
of  their  acts  and  the  degree  of  care  required  of  them  depend 
upon  this  foresight. ^^     An  apt  illustration  of  this  principle  is 

21  §  78.  See  Bryant  v.  Beebe  &  R.  Am.  St.  205,  43  L.R.A.  214;  Brad- 
F.  Co.,  78  Neb.  155;  Johnston  v.  shaw  v.  Frazier,  113  Iowa,  579,  15 
New  Omaha  T.  H.  E.  L.  Co.,  78  Neb.       Am.  Neg.  Rep.  700,  55  L.R.A.  258 ; 

*/24,   17   L.R.A.  (N.S.)    435;    Douglass  Wallin  v.  Eastern  R.  Co.,  83  Minn. 

V.  New  York  Cent.  etc.  R.  Co.,  209  149,  54  L.R.A.  481,  10  Am.  Neg.  Rep. 

Pa.  128.  517;    King  v.   Cooney-Eckstein   Co., 

22  Stevens  v.  Dudley,  56  Vt.  158.  66  Fla.  246 ;  Buries  v.  Oregon  Short 

23  Witham  v.  Cohen,  100  Ga.  670,  Line  R.  Co.,  49  Mont.  129 ;  Nirdling- 
676,  citing  the  text;  Murdock  v.  er  v.  American  Dist.  Tel.  Co.,  245 
Walker,  43  111.  App.  590;  Chicago,  Pa.  453;  Bigbee  F.  Co.  v.  Scott,  3 
etc.  R.  Co.  V.  Mochell,  96  id.  178;  Ala.  App.  333;  Birmingham  W.  Co. 
Coy  V.  Indianapolis  G.  Co.,  146  Ind.  v.  Martini,  2  Ala.  App.  652;  Silver- 
055,  663,  1  Am.  Neg.  Rep.  222,  36  blatt  v.  Brooklyn  Tel.  &  M.  Co.,  73 
L.R.A.  535,  quoting  the  major  por-  N.  Y.  Misc.  38;  Moore  S.  Co.  v. 
tion  of  the  section;  Licking  R.  M.  Boston  I.  Co.,  210  Mass.  364;  And- 
Co.  V.  Fischer,  8  Ky.  L.  Rep.  89,  95  erson  v.  Evansville  B.  Ass'n,  49  Ind. 
(Ky.  Super.  Ct.)  ;  Hughes  V.  Austin,  App.  403;  Lopes  v.  Connolly,  210 
12  Tex.  Civ.  App.  178,  citing  the  Mass.  487,  38  L.R.A. (N.S.)  986; 
text;  Hardaker  v.  Idle  Dist.  Council,  Helena  G.  Co.  vCllogers,  104  Ark.  59; 
[]89G]  1  Q.  B.  335;  IMcIIugh  v.  Davis  v.  Big  Muddy  C.  &  I.  Co.,  173 
Schlosser,  159  Pa.  480,  39  Am.  St.  HI.  App.  162;  Wliittcmore  v.  Boston 
699,  23  L.R.A.  574;  McPeek  v.  West-  &  M.  R.,  (N.  H.)  86  Atl  824;  Car- 
ern  U.  Tel.  Co.,  107  Iowa,  356,  70  son  v.  Ft.  Smith  L.  &  T.  Co.,  108 


56 


SUTHERLAND    ON    DAMAGES. 


[§   16 


afforded  by  the  rule  of  law  which  compels  a  person  who  is 
insane,  unless  bis  condition  was  caused  by  the  unlawful  violence 


Ark.  452;  Chicago,  etc.  R.  Co.  v. 
Word,  (Tex.  Civ.  App.)  158  S.  W. 
561,  citing  the  text;  San  Antonio 
T.  Co.  V.  Cassanova,  (Tex.  Civ. 
App.)  154  S.  W.  1190;  Carmichael 
V.  Southern  Bell  Tel.  &  T.  Co.,  162 
N.  C.  333,  quoting  the  text;  Western 
U.  Tel.  Co.  V.  Lawson,  182  Fed.  369, 
5  N.  C.  C.  A.  337,  105  C.  C.  A.  451; 
Armour  v.  Kollmeyer,  161  Fed.  78, 
88  C.  C.  A.  242,  16  L.R.A.(N.S.) 
1110;  Eisele  v.  Oddie,  128  Fed.  941; 
Pulaski  G.  L.  Co.  v.  MeClintock,  97 
Ark.  576,  32  L.R.A.(N.S.)  825; 
St.  Louis,  etc.  R.  Co.  v.  Buckner,  89 
Ark.  58,  20  L.R.A.(N.S.)  458,  quot- 
ing the  text;  Sacchi  v.  Bayside  L. 
Co.,  13  Cal.  App.  72;  Hawkey  v. 
Ketchum,    39    Colo.    353;    Brennan 

C.  Co.  V.  Cumberland,  29  App.  Cas. 

D.  C.  554,  15  L.R.A.(N.S.)  535; 
Savannah  E.  Co.  v.  Wheeler, 
128  Ga.  550,  10  L.R.A.(N.S.) 
1176;  Illinois  Cent.  R.  Co.  v. 
Siler,  229  111.  390,  15  L.R.A. 
(N.S.)  819;  Metropolitan  S.  Co.  v. 
Garden  City  B.  B.  &  T.  Co.,  114  111. 
App.  318;  Chicago,  etc.  R.  Co.  v. 
Willard,  111  id.  225;  Pittsburgh, 
etc.  R.  Co.  V.  Sudhoff,  173  Ind.  314; 
Flint  &  W.  Mfg.  Co.  v.  Beckett,  167 
Ind.  491,  12  L.R.A.  (N.S.)  924; 
Evausville  &  I.  R.  Go.  v.  Allen,  34 
Ind.  App,  636;  Central  Union  Tel. 
Co.  V.  Sokola,  34  id.  429,  19  Am. 
Neg.  Rep.  517;   Black  v.  Minneapo- 

'lis,  etc.  R.  Co.,  122  Iowa,  32;  Cowan 
V.  Western  U.  Tel.  Co.,  122  Iowa, 
379,  101  Am.  St.  268,  64  L.R.A.  545; 
Walbridge  v.  Walbridge,  80  Kan. 
567;  Kentucky  H.  Co.  v.  Hood,  133 
Ky.  383,  22  L.R.A. (N.S.)  588,  134 
Am.  St.  457,  quoting  the  major  part 
of  this  section,  and  saying  the  gen- 
eral rule  is  very  well  stated ;  Payne 
V.  Georgetown  L.  Co.,  117  La.  983; 


Marsh  v.  Great  Northern  P.  Co.,  101 
Me.  489 ;  D'Almeida  v.  Boston  &  M. 
R.,  209  Mass.  81 ;  Fottler  v.  Moseley, 
185  Mass.  563 ;  Johnson  v.  Cakes, 
110  Minn.  94;  McDowell  v.  Preston, 
104  Minn.  263,  IS  L.R.A.  (N.S.)  190; 
Paquin  v.  Wisconsin  Cent.  R.  Co., 
99  Minn.  170,  20  Am.  Neg.  Rep.  607; 
Emerson  v.  Pacific  Coast  &  N.  P. 
Co.,  96  Minn.  1,  1  L.R.A. (N.S.)  445, 
113  Am.  St.  603 ;  Temple  v.  McComb 
City  E.  L.  &  P.  Co.,  89  Miss.  1,  11 
L.R.A.  (N.S.)  449,  119  Am.  St.  698; 
Murrell  v.  Smith,  152  Mo.  App.  95 ; 
Bouillon  V.  Laclede  G.  L.  Co.,  148 
Mo.  App.  462;  Gillespie  v.  Louis- 
ville &  N.  R.  Co.,  144  id.  508 ;  Foley 
V.  McMahon,  114  id.  442,  19  Am. 
Neg.  Rep.  393 ;  Mize  v.  Rocky  Moun- 
tain Bell  Tel.  Co.,  38  Mont.  521,  12fl 
Am.  St.  659;  Powell  v.  Nevada,  etc. 
R.  Co.,  28  Nev.  40,  17  Am.  Neg. 
Rep.  628;  Challis  v.  Lake,  71  N.  H. 
90;  Kuelling  v.  Lean  Mfg.  Co.,  183 
N.  Y.  78,  2  L.R.A. (N.S.)  303;  May 
v.  Western  U.  Tel.  Co.,  157  N.  C. 
416,  37  L.R.A.(N.S.)  912;  Cordell 
v.  Same,  149  N.  C.  402,  22  L.R.A. 
(N.S.)  540,  citing  the  text;  Home 
V.  Consolidated  R.,  L.  &  P.  Co.,  144 
N.  C.  375 ;  Johnson  v.  Railroad  Co., 
140  N.  C.  574,  quoting  the  first  two 
sentences  of  this  section;  Lothian 
v.  Western  U.  Tel.  Co.,  25  S.  D.  319 ; 
Southwestern  P.  C.  Co.  v.  Reitzer, 
(Tex.  Civ.  App.)  135  S.  W.  237; 
Vicksburg,  etc.  R.  Co.  v.  Jackson, 
(Tex.  Civ.  App.)  133  S.  W.  925; 
El  Paso  S.  R.  Co.  v.  Barrett,  46  Tex. 
Civ.  App.  14;  Missouri,  etc.  R.  Co. 
V.  Rauey,  44  Tex.  Civ.  App.  517; 
Stone  v.  Union  Pac.  R.  Co.,  32  Utah, 
185;  Fisher  v.  Western  U.  Tel.  Co.. 
119  Wis.  146,  citing  the  text.  See 
Freeman  v.  Macon  G.  L.  &  W.  Co., 
126   Ga.   843,   7   L.R.A. (N.S.)    917; 


16] 


COMPENSATION. 


57 


of  the  plaintiff,^^  to  make  recompense  for  bis  torts  in  any  case 
in  which  the  intent  is  not  material  This  is  rested,  it  is  true, 
on  grounds  of  public  policy ;  ^^  and  the  liability  of  all  persons 


McGowan  v.  Chicago,  etc.  R.  Co., 
91  Wis.  147,  154,  17  Am.  Neg.  Cas. 
910;  Sydnor  v.  Arnold,  122  Ky.  557. 
A  person  who  places  a  man  whom 
he  has  made  helplessly  drunk  in 
charge  of  a  horse  is  presumed  to 
know  that  injury  may  result,  be- 
cause horses  reqviire  management  by 
persons  who  are  possessed  of  mental 
and  physical  capacities.  Dunlap  v. 
Wagner,  85  Ind.  529,  44  Am.  Rep. 
42;  Mead  v.  Stratton,  87  N.  Y.  493, 
41  Am.  Rep.  386;  Bertholf  v. 
O'Reilly,  8  Hun,  16,  74  N.  Y.  509, 
30  Am.  Rep.  323;  Aldrich  v.  Sager, 
9  Hun,  537;  Mulcahey  v.  Givens, 
115  Ind.  286;  Brink  v.  Kansas  City, 
etc.  R.  Co.,  17  Mo.  App.  177,  199. 
See  Smith  v.  Bolles,  132  U.  S.  125, 
33  L.  ed.  279. 

A  man  who  is  engaged  to  be  mar- 
ried and  who  is  examined  by  a  phy- 
sician employed  by  the  father  of  his 
fiancee  for  the  purpose  of  ascertain- 
ing whether  he  is  diseased  or  not 
may  maintain  an  action  against  the 
physician  for  a  negligent  diagnosis; 
the  breaking  of  the  marriage  en- 
gagement is  not  too  remote  a  dam- 
age. Harriott  v.  Plimpton,  166 
Mass.  585. 

One  who  negligently  causes  a  fire 
which  endangers  property  is  bound 
to  know  that  the  owner  may  take 
means  to  preserve  it,  and  if,  in  doing 
so,  he  is  personally  injured,  without 
negligence  on  his  part,  may  recover. 
Berg  V.  Great  Northern  R.  Co.,  70 
Minn.  272,  68  Am.  St.  524. 

A  wife  who  endeavors  to  preserve 
her  husband's  property  from  a  fire 
so  set  is  not  a  mere  volunteer,  and 
the  damage  she  sustains  in  so  doing 
is  not  too  remote.     Edwards  v.  Mel- 


bourne &  M.  Board  of  Works,  19 
Vict.  L.  R.  432. 

This  measure  of  liability  may  be 
limited  by  statute,  as  under  the  In- 
dian Depredation  Act  of  1891, 
which  jjrovided  for  the  recovery  of 
property  "taken  or  destroyed;  " 
claims  for  consequential  damages 
were  not  recoverable.  Price  v.  Unit- 
ed States,  33  Ct.  of  Cls.  106. 

If  the  act  which  produced  the  in- 
jury was  lawful,  liability  depends 
upon  the  ability  of  a  prudent  man, 
exercising  ordinary  care,  to  foresee 
that  injury  will  naturally  or  proba- 
l)ly  result.  Drum  v.  Miller,  135  N. 
C.  204,  65  L.R.A.  890,  16  Am.  Neg. 
Rep.  215. 

24  Jenkins  v.  Hankins,  98  Tenn. 
545. 

25  Central  R.  Co.  v.  Hall,  124  Ga. 
322,  4  L.R.A.  (N.S.)  898,  110  Am. 
St.  170;  Young  v.  Young,  141  Ky. 
76;  Bindell  v.  Kenton  County  A.  F. 
Ins.  Co.,  128  Ky.  389,  17  L.R.A. 
(N.S.)  189,  129  Am.  St.  303;  Feld 
V.  Borodfski,  87  Miss.  727,  citing  the 
text ;  Moore  v.  Home,  153  N.  C.  413, 
138  Am.  St.  675;  Williams  v.  Hays, 
143  N.  Y.  442,  47  Am.  St.  743,  26 
L.R.A.  153 ;  Donaghy  v.  Brennan,  19 
New  Zeal.  L.  R.  289;  Mclntyre  v. 
Sholty,  121  111.  660,  2  Am.  St.  140; 
Krom  v.  Sehoonmaker,  3  Barb.  647 ; 
Behrens  v.  McKenzie,  23  Iowa,  333, 
92  Am.  Dec.  428 ;  Ward  v.  Conatser, 
4  Baxter,  64 ;  Cross  v.  Kent,  32  Md. 
581 ;  In  re  Heller,  3  Paige,  199.  See 
§  394. 

A  master  is  liable  for  the  tort  of 
an  insane  servant.  Chesapeake  & 
0.  R.  Co.  V.  Francisco,  149  Ky.  307, 
42  L.R.A. (N.S.)   83. 


58  SUTHERLAND    OX    DAMAGES.  [§    16 

may  be  rested  there  as  well  as  on  the  principles  of  natural 
justice.  The  injury,  however,  must  proceed  from  and  be  caused 
by  the  Avrongful  act  of  the  defendant;  but  the  causation  is  not 
to  be  tested  metaphysically  or  by  any  occult  principles  of  science, 
but  rather  as  persons  of  ordinary  intelligence  apprehend  cause 
and  effect.  The  law  is  practical,  and  courts  do  not  indulge 
refinements  and  subleties  as  to  causation  if  they  tend  to  defeat 
tlie  claims  of  natural  justice.  They  rather  adopt  the  practical 
rule  that  the  efficient  and  predominating  cause  in  producing  a 
given  effect  or  result,  though  subordinate  and  dependent  causes 
may  have  operated,  must  be  looked  to  in  determining  the  rights 
and  liabilities  of  the  parties.^®  Hence  if  the  defendant's  negli- 
gence greatly  multiplied  the  chances  of  accident  and  was  of  a 
character  naturally  leading  to  its  occurrence,  the  possibility 
that  it  might  have  happened  without  such  negligence  is  not 
sufficient  to  break  the  chain  of  cause  and  effect.*^'  An  act  of 
negligence  will  be  regarded  as  the  cause  of  an  injury  which 
results  unless  the  consequences  were  so  unnatural  and  unusual 
that  they  could  not  have  been  foreseen  and  prevented  by  the 
highest  practicable  care.^*  An  attorney  whose  negligence  causes 
his  client  the  loss  of  a  right  of  action  for  slander  may  not  escape 

26  Thompson  v.  Seaboard  Air  Line  27  Keynolds  v.  Texas  &  P.  R.  Co., 

R.,  165  N.  C.  377,  52  L.R.A.(N.S.)  37  La.  Ann.  694,  3  Am.  Keg.  Cas. 

97;   Waschow  v.  Kelly  C.  Co.,  245  528;    Windeler  v.   Rush   County   F. 

111.   516;    Bessler   v.   Laughlin,    168  Ass'n,  27  Ind.  App.  92,  12  Am.  Neg. 

Ind.    387,   quoting   the   text;    Shep-  Rep.  487;   Howe  v.  Ashland  L.  Co., 

herd   v.   Templeman,   143   Ky.   334;  110   Me.   14;    Phillips  v.   St.  Louis, 

Phaar    v.    Morgan's    etc.    Co.,    115  etc.  R.  Co.,  211  Mo.  419,  17  L.R.A. 

La.  138,  10  L.R.A.  (N.S.)    710;  Con-  (X.S.)    1167;    Hudson   v.   Railroad, 

solidated   G.   Co.   v.   Getty,  96   Md.  142  X.   C.   198;   Railey  v.  Hopkins 

683,  94  Am.  St.   603;   Lawrence  v.  (Tex.   Civ.   App.),   131   S.   W.   624, 

Heidbreder  I.  Co.,  119  Mo.  App.  316;  citing   the   text.      See   Foley  v.   Mc- 

Lan caster  &  J.  E.  L.  Co.  v.  Jones,  Mahon,   114  Mo.   App.  442,   19  Am. 

75  N.  H.  172,  citing  the  text;   Bat-  Xeg.  Rep.  393. 

ton  V.  Public  Service  Co.,  75  N.  J.  28  Kimberly  v.  Howland,  143  N.  C. 
L.  857,  18  L.R.A.(N.S.)  640,  127  398,  7  L.R.A.  (X.S.)  545;  Louisville, 
Am.  St.  855;  Bush  v.  Independent  etc.  R.  Co.  v.  Lucas,  119  Ind.  583,  3 
M.  Co.,  54  Wash.  212;  Baltimore  &  Am.  Neg.  Cas.  240,  6  L.R.A.  193. 
P.  R.  Co.  v.  Reaney,  42  Md.  117,  136;  But  see  Board  of  Chosen  Freehold- 
Stone  v.  Boston  &  A.  R.  Co.,  171  ers  v.  Paxson  Co.,  196  Fed.  156, 
Mass.  536,  4  Am.  Neg.  Rep.  490,  41  holding  in  a  case  where  a  county 
L.R.A.  794.  bridge  was  negligently  injured  that 


§  16] 


COMPENSATION. 


59 


liability  for  the  damages  wliicli  inigiit  reasonably  have  been 
expected  to  have  been  recovered,  including  such  as  were  puni- 
tive, because  they  cannot  be  measured  with  certainty ;  the  dam- 
ages were  not  too  remote.'^^ 

It  is  competent  for  the  legislature  to  change  the  rule  oi  the 
common  law,  which  looks  only  to  the  proximate  cause  of  the 
mischief  so  far  as  legal  responsibility  is  concerned,  and  allow 
a  recovery  to  be  had  against  those  whose  acts  contributed,  al- 
though remotely,  to  produce  the  wrong.^°  This  is  the  effect  of 
statutes  making  the  vendor  of  intoxicants,  who  sells  them  C(jn- 
trary  to  law,  liable  to  any  person  who  shall  sustain  injury  or 
damage  to  person,  property  or  means  of  support  by  reason  of 
such  violation.  Such  a  statute  includes  both  direct  and  conse- 
quential injuries  and  creates  a  right  of  action  unknown  to  the 
common  law.^^  The  rule  is  laid  down  in  many  cases  that  an 
action  may  be  maintained  under  similar  statutes  for  loss  of 
means  of  support,  when  occasioned  in  whole  or  in  part  by  such 
sales.     If  the  means  of  support  are  lessened,  and  this  result 


the  expense  connected  with  resulting 
meetings  of  the  freeholders,  the  cost 
of  advertising  for  bids  and  other  in- 
cidental expenses  were  too  remote. 
Presumably  these  expenses  were  in- 
curred in  pursuance  of  law,  and  if  so 
or  they  were  otherwise  necessary  to 
the  restoration  of  the  bridge  they 
seem  to  the  writer  to  be  clearly  ele- 
ments of  recoverable  damage. 

29  Bertholf  v.  O'Reilley,  74  N.  Y. 
509,  30  Am.  Rep.  323 ;  Beers  v.  Wal- 
hizer,  43  Hun,  254;  Homire  v.  Half- 
man,  156  Ind.  470.  See  Riley  v.  New 
England  Tel.  &  T.  Co.,  184  Mass.  150, 
14  Am.  Neg.  Rep.  566. 

30  Patterson  v.  Frazer,  (Tex.  Civ. 
App.)  93  S.  W.  146. 

31  Currier  v.  McKee,  99  Me.  364 ; 
Shepard  v.  Piatt,  158  Mich.  181; 
Montross  v.  Alexander,  152  Mich. 
513;  Dice  v.  Sherberneau,  152  Mich. 
601,  16  L.R.A.(N.S.)  765;  Carpen- 
ter V.  Hyman,  67  W.  Va.  4;  Duck- 
worth v.  Stalnaker,  68  W.  Va.  197 ; 


Volans  V.  Owen,  74  N.  Y.  528,  30 
Am.  Rep.  337 :  Meade  v.  Stratton,  87 
N.  Y.  493,  41  Am.  Rep.  386;  Homire 
V.  Half  man,  supra;  Neu  v.  McKech- 
nie,  95  N.  Y.  632,  47  Am.  Rep.  89; 
De  Struve  v.  McGuire,  25  Ont.  L.  R. 
87,  id.  491. 

A  minor  may  show  that  he  was 
deprived  of  school  books.  Strattman 
V.  Moore,  134  111.  App.  275. 

Under  a  statute  which  provides 
that  every  child  injured  in  means 
of  support  by  any  intoxicated  per- 
son, or  in  consequence  of  the  intox- 
ication of  any  person,  shall  have  a 
right  of  action  against  any  person 
who,  by  selling  or  giving  liquor  con- 
trary to  law  shall  cause  the  intoxi- 
cation of  such  person,  where  the 
injury  is  caused  by  an  intox- 
icated person  it  need  not  be  shown 
that  it  was  in  consequence  of  his 
intoxication.  Lee  v.  Hederman,  158 
Iowa,  719. 


60 


SUTHERLAND    ON    DAMAGES. 


[§  16 


can  be  traced  to  the  sale  of  intoxicants,  there  is  a  right  of  re- 
covery for  such  loss,  as  in  case  of  lessened  ability  to  labor  and 
loss  of  attention  to  business.^^  The  connection  between  the 
wrongful  act  and  the  injury  exists  where  the  person  to  whom 
liquor  Avas  sold  assaulted  another  who  injured  him  in  self  de- 
fense.^^  So,  where  accident,  sickness,  death,  or  insanity  is  the 
result  of  intoxication^*  and  where  expenses  are  incurred  for 
care  and  medical  attention. ^^  Where  the  husband  was  robbed 
while  intoxicated  the  wife  was  allowed  to  sue ;  ^^  and,  so,  where 
he  spent  his  wife's  money  for  drink.^'^  iVnd  a  mother  recovered 
where  her  son  overdrove  her  horse  because  he  was  intoxicated.^' 
The  mere  spending  by  the  husband  of  his  own  money,  it  has 
been  said,  will  give  a  right  of  action  by  the  wife.^^  And  so  a 
widow,  dependent  on  her  son,  may  maintain  an  action  for  the 
sale  of  liquors  to  him  if  injury  results  to  her  means  of  support ;  ^^ 
and  a  father,  if  dependent.*^  Where  a  husband  became  so 
crazed  by  licpior  tliat  he  committed  murder  and  w^as  sent  to  the 
penitentiary  his  wife  had  a  cause  of  action  against  the  person 
who  sold  the  liquor  to  him,*^  and,  so,  where  a  husband  was  in- 


32  Selders  v.  Brothers,  88  Neb.  61 
Acken  v.  Tinglehoff,  83  Neb.  296 
Wiese  v.  Gerndorf,  75  Neb.  826 
Wightman  v.  Devere,  33  Wis.  570 
Hutchinson  v.  Hubbard,  21  Neb.  33 
Volans  V.  Owen,  supra;  Schneider  v. 
Hosier,  21  Ohio  St.  98. 

33  Currier  v.  McKee,  supra. 

34  Neu  V.  McKechnie ;  Duckworth 
V.  Stahiaker,  supra;  Garrigan  v. 
Kennedy,  19  S.  D.  11,  (plaintiff's 
husband  committed  suicide  while 
sober)  ;  Nelson  v.  State,  32  Ind 
App.  88,  17  Am.  Neg.  Rep.  257 ;  Bist 
line  V.  Ney,  134  Iowa,  172,  13  L.E.A 
(N.S.)  1158,  (suicide  of  the  plain 
tiff's  husband)  ;  Mulford  v.  Clewell 
21  Ohio  St.  191.  See  Terame  v 
Schwindt,  210  Pa.  507. 

35  Wightman  v.  Devere,  supra ; 
Aldrich  v.  Sager,  9  Hun,  537  (plain- 
tiff's wife  injured  by  his  reckless 
driving  while  he  was   intoxicated ) . 

36  Franklin    v.     Schermerhorn,     8 


Hun,  112.  Contra,  Gage  v.  Harvey, 
66  Ark.  68,  43  L.R.A.  143  (action  by 
person  robbed ) . 

37McEvoy  V.  Humphrey,  77  111. 
388. 

38  Bertholf  v.  O'Reilly,  8  Hun,  16, 
74  N.  Y.  509,  30  Am.  Rep.  323; 
Morenus  v.  Crawford,  51  Hun,  89. 

39Quain  v.  Russell,  8  Hun,  319; 
Mulford  V.  Clewell,  supra;  Wool- 
heather  V.  Risley,  38  Iowa,  486; 
Hackett  v.  Smelsley,  77  111.  109. 

40  McClay  v.  Worrall,  18  Neb.  44. 

41  Stevens  v.  Cheney,  36  Hun,  1 ; 
Volans  V.  Owen,  Bertholf  v.  O'Reilly, 
supra. 

42  Homire  v.  Half  man,  supra; 
Beers  v.  Walhizer,  43  Hun,  254; 
Zibold  V.  Rener,  73  Kan.  312;  Sea- 
hill  V.  Aetna  Ind.  Co.,  157  Mich. 
310;  Woodring  v.  Jacobino,  54 
Wash.  504;  American  S.  Co.  v. 
Souers,  50  Ind.  App.  475. 


§    17]  COMPENSATION.  61 

jured  bj  the  accidental  discharge  of  a  revolver  during  a  fight 
by  persons  M^ho  were  intoxicated.*^  But  if  the  statute  does  not 
give  a  wife  an  action  for  an  injury  to  the  person  or  property 
of  her  husband  she  cannot  recover  because  he  has  been  impris- 
oned for  a  crime  committed  while  under  the  influence  of  liquor 
unlawfully  sold  to  him.  His  imprisonment  is  not  the  proxi- 
mate consequence  of  the  dealer's  act,  but  is  the  act  of  the  law, 
the  direct  result  of  the  intervention  of  an  independent  agency.** 
The  Pennsylvania  act  provides  that  any  person  furnishing 
liquor  to  another  in  violation  of  law  shall  be  civilly  responsible 
for  any  injury  to  person  or  property  in  consequence  thereof, 
and  that  any  person  aggrieved  may  recover  full  damages.  This 
does  not  extend  the  common-law  rule  as  to  proximate  cause,  and 
there  was  no  liability  for  the  death  of  a  man  to  whom  liquors 
were  sold  while  intoxicated  where  death  resulted  in  an  attempt 
to  evade  arrest  for  violating  the  law  after  deceased  left  the 
place  where  the  liquors  were  sold  him.*^ 

Under  a  statute  providing  that  if  a  person  is  injured  in  his 
person  or  property  by  collision  with  the  engines  or  cars  of  a 
railroad  corporation  at  a  crossing,  and  it  appears  that  the  cor- 
poration neglected  to  give  the  signals  required  and  that  such 
neglect  contributed  to  the  injury,  the  corporation  shall  be  liable 
for  all  damages  caused  by  the  collision,  unless  the  person  in- 
jured, etc.,  was  guilty  of  gross  or  wilful  negligence,  the  liability 
of  the  company  does  not  de]iend  upon  whether  its  negligence 
was  the  pr  iximate  or  efficient  cause  of  the  injur3^*^ 

§  17.  Illustrations  of  the  doctrine  of  the  preceding  section. 
It  is  a  misfeasance  to  go  through  a  militia  drill  in  the  piil^lic 

43  Judson  V.  Parry,  38  Wash.  37.  man,   supra.      In    Illinois   tiio   cases 

44  Bradford  v.  Boley,  ]67  Pa.  506;  appear  to  be  in  harmony  with  the 
disapproving  Beers  v.  Walhizer,  su-  Pennsylvania  view.  See  Shugart  v. 
pra;  Dennison  v.  Van  Wormer,  107  Eg^n,  83  111.  56,  25  Am.  Rep.  359; 

^^^^-  '^^^-  Schmidt  v.  Mitchell,  84  111.  195,  25 

45  Roach  v.  Kellv,  194  Pa.  24,  75        .        ^        ,i<^     o  i    ,+         en 

„  ,       '  Am.  Rep.  446 ;  Schulte  v.  Schleeper, 

Am.   St.   685;    Schulte  v.   Schleeper,  _  ^ 

210  111.  357,  17  Am.  Neg.  Rep.  279.  ^"^*"'*' 

See  Stecher  v.  People,  217  111.  348.  ^^  Wragge  v.  Railroad  Co.,  47   S. 

Some  early  cases  in  Indiana  are  in  C.   105,   58  Am.  St.   870,   33  L.R.A. 

harmony   with   this   view,   but   they  191 ;  Chattanooga  R.  T.  Co.  v.  Wal- 

are   overruled   by   Homire   v.    Half-  ton,  105  Tenn.  415. 


02  SUTHERLAND    ON    DAMAGES.  [§1'^ 

squares  and  business  resorts  of  towns  or  villages ;  the  officer 
under  whose  command  it  is  done  is  responsible  for  consequential 
damages ;  if  a  team  hitched  to  a  wagon  and  standing  in  the 
usual  place  takes  fright  at  the  exercises,  the  discharge  of  small 
arms,  and  the  "pomp  and  circumstance"  of  mimic  war,  and 
runs  away,  and  one  of  the  horses  is  thereby  killed,  the  officer 
is  responsible  for  its  value.*'  This  case  is  a  fair  exemplification 
of  the  rule  under  consideration.  Drilling  the  militia  was  law- 
ful, but  doing  it  in  an  improper  manner  or  in  an  unsuitable 
place  was  a  legal  wrong  to  any  person  who  in  consequence  there- 
of received  injury.  In  ordering  it  to  take  place  in  a  public 
square  the  officer  may  not  have  considered  the  effect  of  frighten- 
ing horses,  but  such  an  effect  was  natural ;  horses  have  to  be 
trained  to  witness  such  a  spectacle  without  being  frightened; 
they  were  to  be  expected  where  the  drill  was  appointed  to  take 
place,  and  if  one  or  a  team,  with  or  without  a  driver  or  attend- 
ant, got  frightened  it  would  naturally  run  away,  and  in  running 
away  the  usual  collisions  and  casualties  might  occur.  The  officer 
who  gave  the  command  was  bound  to  consider  all  these  prob- 
abilities. Giving  the  command,  which  no  subordinate  could 
decline  to  obey,  made  the  drill  at  the  place  appointed  the  act 
of  the  officer,  whether  he  was  present  or  not;  the  frightening 
of  the  horses  which  ensued  was  probable  from  their  known 
characteristics,  and  from  their  being  where  horses  were  likel}' 
to  be ;  their  breaking  loose  and  running  off  in  a  state  of  fright, 
with  or  without  a  driver,  made  the  usual  collisions  and  casualties 
a  natural  sequence.  Here  were  a  series  of  acts  so  concatenated 
that  the  final  damage  from  killing  a  horse  was  a  result  which 
the  officer  was  bound  to  consider  as  likely  to  ensue;  all  the 

47  Childress  v.  Yourie,  Meigs,  561 ;  removing  lioney  from  the  hives,  and 

Forney  v.  Geldmacher,  75  Mo.  113,  smoked  them  for  that  purpose,  being 

1  Am.  Neg.  Cas.  319.  protected   from  the  assaults  of  the 
In  O'Gorman  v.  O'Gorman  [1903]  bees.      The   plaintiff  was   then   har- 

2  Irish,  573,  the  parties  resided  on  nessing  his  horse,  as  the  defendant 
adjoining  farms.  The  defendant  knew  or  ought  to  have  known.  The 
kept  a  large  number  of  beehives  at  plaintiff  and  his  horse  were  stung 
the  boundary  fence  beside  the  plain-  by  the  bees,  and  the  horse,  in  con- 
tiff's  yard.  On  the  occasion  in  ques-  sequence,  injured  the  plaintiff.  A 
tion  the  defendant  was  engaged  in  recovery  was  sustained. 


§    17]  COMPENSATION".  .  63 

effects  of  the  drill  were  an  entiretj^  and  therefore  proceeded 
naturally  and  proximately  from  his  act. 

In  a  Massachusetts  case  this  subject  was  well  illustrated  and 
explained.  By  careless  driving  the  defendant's  sled  was  caused 
to  strike  against  the  sleigh  of  one  Baker  with  such  violence  as 
to  break  it  in  pieces,  throwing  Baker  out,  frightening  his  horse, 
and  causing  the  animal  to  escape  from  the  control  of  his  driver, 
and  to  run  violently  along  Fremont  street,  round  a  corner  near 
by  into  Eliot  street,  where  he  ran  over  the  plaintiff  and  his 
sleigh,  breaking  that  in  pieces  and  dashing  him  on  the  ground. 
"Upon  this  statement,"  says  Foster,  J.,  delivering  the  opinion, 
"indisputably  the  defendant  would  be  liable  for  the  injuries 
received  by  Baker  and  his  horse  and  sleigh.  Why  is  he  not 
also  responsible  for  the  mischief  done  by  Baker's  horse  in  its 
flight  ?  If  he  had  struck  that  animal  with  his  whip  and  so  made 
it  run  away,  would  he  not  be  liable  for  an  injury  like  the 
present  ?  By  the  fault  and  direct  agency  of  his  servant  the  de- 
fendant started  the  horse  in  uncontrollable  flight  through  the 
streets.  As  a  natural  consequence  it  was  obviously  probable 
that  the  animal  might  run  over  and  injure  persons  traveling  in 
the  vicinity.  Every  one  can  plainly  see  that  the  accident  to  the 
plaintiff  was  one  very  likely  to  ensue  from  the  careless  act. 
We  are  not,  therefore,  dealing  with  remote  or  unexpected  con- 
sequences, not  easily  foreseen  nor  ordinarily  unlikely  to  occur ; 
and  the  plaintiff's  case  falls  clearly  within  the  rule  already 
stated  as  to  the  liability  of  one  guilty  of  negligence  for  the  conse- 
quential damages  resulting  therefrom.  .  .  .  Here  the  defend- 
ant is  alleged  to  have  been  guilty  of  culpable  negligence.  And 
his  liability  depends,  not  upon  any  contract  or  statute  obliga- 
tion, but  upon  the  duty  of  due  care  which  every  man  owes  to 
the  community,  expressed  by  the  maxim  sic  utere  tuo  ut  alienum 
non  Icedas.  Where  a  right  or  duty  is  created  wholly  by  contract 
it  can  only  be  enforced  between  the  contracting  parties.  But 
where  the  defendant  has  violated  a  law  it  seems  just  and  reason- 
able that  he  should  be  held  liable  to  every  person  injured,  whose 
injury  is  the  natural  and  probable  consequence  of  the  miscon- 
duct. In  our  opinion  this  is  the  well  established  and  ancient 
doctrine  of  the  common  law;  and  such  a  liability  extends  to 


l\ 


64  SUTHERLAND    ON    DAMAGES.  [§    17 

consequential  injuries  by  whomsoever  sustained,  so  long  as  they 
are  of  a  character  likely  to  follow  and  which  might  reasonably? 
have  been  anticipated  as  the  natural  and  probable  result  under  \  i 
ordinary  circumstances  of  the  wrongful  act.  TThe  damage  is 
not  too  remote  if,  according  to  the  usual  experience  of  man- 
kind, the  result  was  to  be  expected.  This  is  not  an  impracticable 
or  unlimited  sphere  of  accountability  extending  indefinitely  to 
all  possible  contingent  consequences.  An  action  can  be  main- 
tained only  where  there  is  shown  to  be,  first,  a  misfeasance  or 
negligence  in  some  particular  as  to  which  there  was  a  duty  to- 
wards the  party  injured  or  the  community  generally;  and 
secondly,  where  it  is  apparent  that  the  harm  to  the  person  or 
property  of  another  which  has  actually  ensued  was  reasonably 
likely  to  ensue  from  the  act  or  omission  complained  of.  .  .  . 
It  is  clear  from  numerous  authorities  that  the  mere  circumstance 
that  there  have  intervened  between  the  wrongful  cause  and  the 
injurious  consequence  acts  produced  by  the  volition  of  animals 
or  of  human  beings  does  not  necessarily  make  the  result  so 
remote  that  no  action  can  be  maintained.  The  test  is  to  be 
found,  not  in  the  number  of  intervening  events  or  agents,  but- 
in  their  character  and  in  the  natural  and  probable  connection 
between  the  wrong  done  and  the  injurious  consequence.  So 
long  as  it  afiirmatively  a])pears  that  the  mischief  is  attributable 
tt)  the  negligence  as  a  result  which  might  reasonabl}'^  have  been 
foreseen  as  probable  the  legal  liability  continues.  There  can 
be  no  doubt  that  the  negligent  management  of  horses  in  the 
public  street  of  a  city  is  so  far  a  culpable  act  that  any  party 
injured  thereby  is  entitled  to  redress.  Whoever  drives  a  horse 
in  a  thoroughfare  owes  the  duty  of  due  care  to  the  community 
or  to  all  persons  whom  his  negligence  may  expose  to  injury. 
jSTor  is  it  open  to  ([uestion  that  the  master  in  such  a  case  is 
responsible  for  the  misconduct  of  his  servant."  ** 

48  McDonald  v.  Snelling,  14  AUon,  Corona  C.  &  I.  Co.  v.  Wliite,  158  Ala. 

292;    Weick  v.   Lander,   75   111.   9:3;  027,  20  L.R.A.  (N.S.)  958. 

Clowdis  V.  Fresno  F.  &  I.  Co.,  118  In  Clark  v.  Chambers,  supra,  the 

Cal.  315,   3  Am.  Neg.  Rep.  326,  62  defendant  was  liable  for  an  injury 

Am.  St.  238;   Clark  v.  Chambers,  3  caused  by  a  dangerous  thing  put  by 

O.   B.   Div.   327,   7   Cent.   L.   J.   11 ;  liim  in  a  carriage  way,  although  it 


§    18]  COMPENSATION.  65 

§  18.  Further  illustrations.  Where  a  teamster's  wagon, 
while  being  loaded  at  a  depot,  was  injured  by  a  train  of  cars, 
he  recovered  for  damage  done  thereto,  for  the  loss  of  the  trip 
in  which  he  was  engaged  and  for  the  loss  of  the  use  of  the 
wagon  until  it  could  be  repaired.^^  A  similar  measure  is  ap- 
plied in  cases  of  collision  of  boats ;  a  reasonable  sum  for  the 
damage  the  injured  boat  has  received ;  the  expense  of  raising  it, 
if  sunk,  and  of  repairing  it,  and  compensation  for  the  loss  of 
the  use  during  the  time  it  is  being  refitted,  with  interest  on  such 
items.^°  In  an  action  of  trespass  by  forcibly  invading  a  plan- 
tation, carrying  off  some  slaves  and  frightening  others  away, 
it  was  proper  for  the  plaintiff  to  give  in  evidence  the  conse- 
quential damages  which  resulted  to  his  wood  and  crops — to  the 
former  for  want  of  the  assistance  of  the  slaves  to  preserve  it 
from  a  subsequent  flood,  and  to  the  latter  to  protect  them 
against  animals.^^  The  wrong  included  leaving  a  plantation 
with  growing  crops  and  other  property  exposed  to  injury  from 
any  cause  which  might  arise;  there  being  no  force  of  laborers 
to  meet  any  exigency,  the  wrongdoer  was  bound  to  take  notice 
at  his  peril  of  any  exposure  to  injury  thus  created  by  flood, 
marauding  cattle  or  otherwise;  whether  an  action  would  lie 
against  the  owner  of  trespassing  cattle  or  not  for  the  damage 
done  by  them  was  immaterial.^^  The  owner  of  sheep  which 
had  a  contagious  disease  suffered  them  to  trespass  on  another's 
land  and  to  mingle  with  his  sheep,  to  which  the  disease  was 

was  afterwards  removed  to  a  foot-  Conn.   420;    Williamson   v.   Barrett, 

path    by    a    third    person    and    was  13  How.  101,  14  L.  ed.  68.     See  ch. 

there  when  the  plaintiff  was  injured.  39. 

49  Shelbyville,  etc.  R.  Co.  v.  Lew-  51  McAfee  v.  Crofford,  13  How. 
ark,  4  Ind.  471.  447,  14  L.  ed.  217;  Hobbs  v.  Davis, 

Damages  for  loss  of  use  of  an  au-  30   Ga.   423;    Johnson   v.   Courts,   3 

tomobile  used  for  pleasure  only  are  Har.  &  McHen.  510;   Crane  v.  Pat- 

neovcralil^    Cook  v.  Packard  Motor  ton,  57  Ark.  340,  346. 

Car  Co.  of  New  York,  88  Conn.  590,  52  Where  a  dog  went  onto  plain- 

L.R.A.1915C,   319.  tiff's  land  and  barked  at  his  horse 

50  Mailler  v.  Express  Propeller  grazing  in  an  inclosed  field,  and  the 
Line,  61  N.  Y.  312;  Brown  v.  Beatty,  horse  ran,  tried  to  leap  a  fence  and 
35  Up.  Can.  Q.  B.  328;  Steamboat  fell  and  broke  its  neck  the  owner 
Co.  v.  Whilldin,  4  Ilarr.  228;  New  of  the  dog  was  liable.  Doyle  v. 
Haven,    etc.    Co.    v.    Vanderbilt,    16  Vance,  6  Vict.  L.  R.  (law)  87. 

Suth.  Dam.  Vol.  L— 5. 


66  SUTHERLAND    ON    DAMAGES.  [§    18 

communicated,  causing  the  death  of  many  of  the  latter.  He 
was  liable  for  the  breach  of  the  close,  also  for  the  loss  of  the 
sheep  that  so  died.^^  A  railroad  company's  servant  left  bars 
down  between  the  plaintiff's  field  and  the  railroad  track ;  horses 
escaped  through  the  opening  to  the  railroad  and  were  killed 
bv  the  engine;  the  company  was  liable.^*  Plaintiff's  horses 
escaped  into  the  defendant's  close  by  reason  of  the  latter  not 
keeping  his  fence  in  repair,  and  were  there  killed  by  the  falling 
of  a  hay  stack;  he  was  responsible.^^  The  defendant's  cow  es- 
caped from  his  enclosure  without  fault  on  his  part,  passed  to 
the  plaintiff's  premises  and  entered  his  barn ;  her  weight  broke 
the  sleepers  and  floor  at  a  point  over  a  cistern  and  she  fell  in- 
to it.  Soon  after  this  the  plaintiff  went  to  his  barn  and  fell  into 
the  cistern  through  the  hole  made  by  the  cow.  It  was  conceded 
that  the  defendant  was  liable  for  the  trespass  by  the  cow,^^  but 
the  damages  resulting  to  the  plaintiff  from  his  fall  were  too  re- 
mote." The  proximate  cause  of  a  personal  injury  produced  by 
the  running  away  of  a  horse  which  left  a  race  track  through 
an  opening  in  the  fence  surrounding  the  same  is  not  the  running 
away  of  the  horse,  but  the  opening.^* 

The  lessee  of  a  wharf  was  guilty  of  negligence  in  not  keep- 
ing it  in  repair;  he  suffered  the  railing  to  become  dilapidated, 
and  in  consequence  a  horse  backed  into  the  river  with  a  wagon, 
and  both  were  lost.  This  loss  was  the  natural  and  proximate 
effect  of  the  negligence.^^  A  gas  company,  having  contracted 
to  supply  plaintiff"  with  a  service  pipe  from  its  main  to  the 

63  Barnum  v.  Vandusen,  16  Conn.  B.  502;   Lawrence  v.  Jenkins,  L.  R. 

200;    Fiiltz  V.  Wycoff,  25   Ind.   321.  8  Q.  B.  274;  Couch  v.  Steel,  3  El.  & 

See  Oilman  v.  Noyes,  57  N.  H.  627.  B.  402;   Lee  v.  Riley,  18  C.  B.    (N. 

See,  as  to  liability  under  the  Act  of  g  )    722. 

Congress  of  1884,  23  Stats.  31;  Croff  56  Dickson    v.    McCoy,    39    N.    Y. 

V.    Crease,    Ijykh^jqS^    Lynch    v.  ^^^^  ^  ^^  ^.^^  ^^^  ^^^ 

Grayson,  5  N.  M.  487,  affirmed  sub  k^tt  n     .     ,         t  u  to  u 

"'        '  T        1     ,/,o  TT    0  5' Hollenbeck  v.  Johnson,  79  Hun, 

nom.     Grayson  v.  Lynch,  163   U.  o. 

468,  41  L.  ed.  230. 

54Whitev.  McNett,  33N.  Y.  371;  ^8  Windeler    v.    Rush    County    F. 

Henly  v.  Neal,  2  Humph.  551;  Haw-  ^ss'n,  27  Ind.  App.  92,  97,  12  Am. 

key  V.  Ketchum,  39  Colo.  353.  Nejr.   Rep.  487. 

55  Powell  V.  Salisbury,  2  Y.  &  J.  ^9  Radway  v.  Briggs,  37  N.  Y.  256, 

391;  Gilbertson  v.  Richardson,  5  C.  35  How.  Pr.  422. 


§    18]  COMPENSATION.  67 

meter  on  bis  premises,  laid  a  defective  pipe  from  which  gas 
escaped.  A  workman,  in  the  employ  of  a  gas-fitter  engaged 
by  the  plaintiff  to  lay  pipes  leading  from  the  meter  over  his 
premises,  negligently  took  a  lighted  candle  for  the  pnrpose  of 
finding  out  where  the  gas  escaped.  An  explosion  took  place 
damaging  the  plaintiff's  premises;  he  brought  an  action  against 
the  gas  company  and  it  was  held  that  the  damages  were  not  too 
remote.^"  The  failure  of  a  natural-gas  company  to  supply  gas 
to  a  consumer  in  accordance  with  its  contract  is  a  tort,  the 
agreement  being  a  mere  statement  of  the  reasonable  conditions 
under  which  the  duty  was  to  be  performed.  If  there  is  a 
failure  to  supply  gas  during  cold  weather  and  the  company 
has  been  notified  of  its  customer's  inability  to  procure  fuel 
elsewhere,  and  of  the  sickness  of  his  children,  and  as  a  result 
of  such  failure  the  sick  children  take  a  relapse  and  die,  the 
company  is  responsible  for  their  death.^^  In  consequence  of 
the  negligence  of  a  contractor  for  a  public  body  in  constructing 
a  sewer  a  gas  main  was  broken,  and  the  gas  escaped  from  it  by 
percolation  into  the  plaintiffs'  house,  and  an  explosion  followed 
which  injured  one  of  them  and  damaged  the  furniture  of  the 
other.  The  damages  were  not  too  remote,  and  the  contractor's 
negligence  was  that  of  the  public  body  because  he  failed  to 
do  what  it  was  its  duty  to  do.^^  A  railroad  company  by  wrong- 
fully excavating  in  a  public  street  destroyed  the  lateral  support 
of  the  soil  to  the  foundation  of  a  house,  and  thereby  plaintiff's 
adjoining  house,  depending  on  the  other  for  support,  was  in- 
jured; the  company  was  liable  for  the  injury.^^    By  the  weight 

60  Burrows  v.   March   G.   Co.,   39  Winnipesaukee  G.  &  E.  Co.,  69  N.  H. 

L.    J.    (Ex.)    33,    L.    R.   5    Ex.    67;  312,  42  L.R.A.  569. 

Lannen  v.  Albany  G.  L.  Co.,  44  N.  61  Coy  v.  Indianapolis  G.  Co.,  146 

Y.  459;  Louisville  G.  Co.  v.  Guten-  i„(j.   655,  1  Am.  Neg.   Rep.  222,  36 

kuntz,  82  Ky.  432;  Koelscli  v.  Phil-  j,ji_a.  535;  Hoehle  v.  Allegheny  H. 

adelphia  Co.,  152  Pa.  355,  34  Am.  St.  ^^^   g   p^    g^,pgj.    ^l.     In   the   last 

653,  18  L.R.A.  759;  Consolidated  G.  ^^^^   ^j^^   defendant   had   no   knowl- 

Co.   V.   Getty,   96   Md.   683,   94   Am.  ,         .  .,       u  *  +i  ^. 

•"  I'djre  of  the  lUness  of  the  person  who 

St.  603.  "  ^ 

The  injury  resulting  to  the  busi- 
ness reputation  of  a  florist  from  the 
sale   of  plants   injured   by   escaping       [1896]   1  Q.  B.  335. 
gas  and  which  were  sold  as  sound,  ^^  Baltimore,  etc.  R.  Co.  v.  Reaney, 

but  were  not,  is  too  remote.    Dow  v.       42  Md.  118. 


died. 

62  Hardaker  v.  Idle  Dist.  Council 


68  SUTIIEIJLAND    ON    DAMAGES.  [§18 

of  authority  a  person  who  negligently  sets  a  fire  is  not  only 
liable  for  the  first  building  consumed,  but  for  all  subsequently 
destroyed  by  the  same  continuous  conflagration,  without  regard 
to  the  distance  the  fire  runs  or  the  time  it  is  in  progress.^* 
In  jSTew  York  the  liability  is  much  more  restricted  on  the 
ground  that  the  loss  of  the  first  building  which  is  negligently 
set  on  fire  was  to  be  anticipated;  its  destruction  was  the  ordi- 
nary and  natural  result  of  its  being  fired.  But  this  does  not 
hold  good  as  to  buildings  on  other  property  which  became 
ignited  from  the  building  first  taking  fire;  that  the  fire  should 
spread  and  other  buildings  be  consumed  is  not  a  necessary  or 
the  usual  result.  That  result  depends,  not  upon  any  necessity 
of  a  further  communication  of  the  fire,  but  upon  a  concurrence 
of  accidental  circumstances,  such  as  the  degree  of  the  heat,  the 
state  of  the  atmosphere,  the  condition  and  materials  of  the 
adjoining  structures  and  the  direction  of  the  wind.  These  are 
said  to  be  accidental  and  varying  circumstances  over  which 
the  party  responsible  for  the  loss  of  the  first  building  has  no 
control,  and  is  not  liable  for  their  effect.^^  The  same  rule  has 
been  applied  where  two  buildings  owned  by  one  person  were 
burned — the  recovery  was  limited  to  the  one  to  which  the  fire 
was  directly  carried  from  the  engine.^^     It  applies  to  fires  on 

64  Atkinson  v.  Goodrich  T.  Co.,  R.  Co.  v.  Luddington,  10  Ind.  App. 
60  Wis.  141,  50  Am.  Eep.  352;  636;  Chicago,  etc.  R.  Co.  v.  Will- 
Adams  V.  Young,  44  Ohio  St.  80;  iams,  131  Ind.  30;  Louisville,  etc. 
Small  V.  C,  R.  I.  &  P.  R.  Co.,  55  R.  Co.  v.  Nitsche,  126  Ind.  229,  9 
Jowa,  582;  Kellogg  v.  Chicago,  etc.  L.R.A.  750;  Wj'ant  v.  Crouse,  127 
R.  Co.,  26  Wis.  223,  7  Am.  Rep.  69;  Mich.  158,  53  L.R.A.  626. 
Hart  V.  Western  R.  Co.,  13  Met.  99;  One  who  sets  fire  to  grass  on  the 
Milwaukee,  etc.  R.  Co.  v.  Kellogg,  land  of  another  is  liable  for  injuries 
94  U.  S.  469,  24  L.  od.  256;  Perley  to  animals  caused  thereby.  Chicago, 
V.  Eastern  R.  Co.,  98  Mass.  414;  etc.  R.  Co.  v.  Willard,  111  111.  App. 
Higgins  V.  Dewey,  107  Mass.  494,  9  225. 

Am.  Rep.  63 ;  Pennsylvania  R.  Co.  65  Ryan  v.  New  York  Cent.  R.  Co., 

V.  Hope,   80   Pa.   373,  21  Am.   Rep.  35  N.  Y.  210,  91  Am.  Dec.  49;  Webb 

100;  St.  Joseph,  etc.  R.  Co.  v.  Chase,  v.  Rome  &  0.  R.  Co.,  49  N.  Y.  420, 

11  Kan.  47;  Atchison,  etc.  R.  Co.  v.  10   Am.   Rep.    389.      See   Lowery   v. 

Stanford,  12  Kan.  354,  15  Am.  Rep.  Manhattan  R.  Co.,  99  N.  Y.  158. 

302;    Same  v.   Bales,   16  Kan.  252;  66  Frace  v.  New  York,  etc.  R.  Co., 

Dougherty   v.    Smith,    5   New    Zeal.  143  N.  Y.  182;  Read  v.  Nichols,  118 

(Supreme  Ct.)    374;    Chicago  &  E.  N.  Y.  224,  7  L.R.A.  130. 


§    18]  COMPENSATION.  (59 

woodlands  as  well  as  to  fires  in  villages  or  cities."  This  re- 
striction seems  very  arbitrary,  and  to  be  out  of  harmony  with 
the  general  principle  of  the  law  governing  proximate  (;ause. 
It  has  not  become  the  rulef  in  N^ew  York  without  vigorous  dis- 
sent from  individual  members  of  the  court  of  appeals,  extend- 
ing to  the  latest  case  cited.  The  burning  of  property  is  not 
the  natural  and  proximate  result  of  an  engineer  runnino-  a 
train  of  oil-tanks  into  a  mass  of  earth  which  had  come  on  the 
track  as  a  result  of  a  landslide,  the  obstruction  being  unexpected 
and  an  engine  having  passed  over  a  clear  track  only  ten  min- 
utes before  the  accident.  He  was  not  bound  to  anticipate 
the  bursting  of  the  tanks,  the  taking  fire  of  the  oil,  the  burning 
oil  being  carried  down  the  stream  into  which  the  tanks  rolled, 
the  sudden  rise  of  the  water  and  the  setting  fire  of  property 
on  the  bank  of  the  stream.^^  One  who  makes  a  fire  on  his 
own  land  is  not  bound  to  guard  against  extraordinary  winds 

that  may  arise.'''' 

I  •'  _..      I.I 

The  fall  of  a  negligently  constructed  tower,  the  overturning 
of  a  lighted  lamp  and  the  consequent  death  of  a  person  are 
the  proximate  result  of  the  negligent  construction^"  The  main- 
tenance of  a  culvert  in  a  condition  to  hold  a  large  pool  of  water 
in  close  proximity  to  the  street  and  sidewalk  is  the  cause  of 
death  of  a  child  who  falls  therein  while  playing  along  the  edge 
thereof.''^  The  negligent  operation  of  a  defective  locomotive 
which  emits  sparks  is  the  proximate  cause  of  the  death  of  an 
infant  asleep  in  the  house  of  its  parents  when  a  fire  occurs 
from  such  sparks.'^  If  a  train  is  stopped  on  a  mountain  side 
and  the  engineer  leaves  his  engine,  and  during  his  absence 
the  fireman,  accidentally  or  otherwise,  sets  the  engine  in  motion 
and  the  train  moves  downward,  the  violation  of  the  rules  of 
the  company  by  the  engineer  will  authorize  a  finding  that  his 

67  HofFman  v.  King,  160  N.  Y.  618,  70  Rigdon  v.  Temple,  W.   W.   Co., 

73  Am.  St.  715,  17  Am.  Neg.  Rep.  11  Tex.  Civ.  App.  542. 

277,  46  L.R.A.  672.  71  Elwood  v.  Addison,  26  Tnd.  App. 

eSHoag    V.    Lake    Shore,    etc.    R.  28. 

Co.,  85  Pa.  293,  27  Am.  Rep.  653.  72  Gulf,  etc.,  R.  Co.  v.  Johnson,  51 

69  Bock  V.  Grooms,  2  Neb.  (Unof.)  S.  W.  531,   (Tex.  Civ.  App.)    6  Am. 

803;    Sweeney   v.   Merrill,   38    Kan,  Neg.  Rep.  719;  Birmingham  R.,  L.  & 

216,  5  Am.  St.  734.  P.  Co.  v.  Hinton,  158  Ala.  470 


70  SUTHERLAND    OJST    DAMAGES.  [§19 

act  was  the  proximate  cause  of  the  injury  to  the  conductor, 
who  was  thrown  off  the  train.'' 

§  19.  Further  illustrations.  The  owner  of  a  horse  anH  cart 
who  leaves  them  unattended  in  a'  public  street  is  liable  for 
any  damage  to  children  resorting  there  and  meddling  with 
either."''*  The  owner  of  a  loaded  gun,  who  puts  it  into  the 
hands  of  a  child,  by  whose  indiscretion  it  is  discharged,  is 
liable  for  the  damage  occasioned  thereby.'^  It  is  negligence 
for  a  dealer  to  unlawfully  sell  dangerous  explosives  to  children. 
When  this  is  done  with  knowledge  that  the  purchasers  are  not 
familiar  with  their  use  he  is  held  to  know  that  the  probable 
consequences  will  be  injury  to  them  or  to  their  associates;  and 
is  liable  to  the  party  injured  although  the  injuries  were  the 
result  of  the  natural  conduct  of  a  child  who  did  not  purchase 
the  article  which  produced  them."^®  But  the  mere  fact  that 
the  law  forl)ids  the  sale  of  fire-arms  to  a  minor  does  not  make 
the  vendor  liable  for  the  consequences  unless  he  knew  the  pur- 
chaser was  ignorant  of  their  character,  inexperienced  in  the 
use  of  them,  or  that  there  was  something  in  his  character  or 
disposition  which  rendered  it  unsafe  for  him  to  have  them.'' 
Leaving  an  iron  truck  with  a  hot  iron  casting  upon  it  in  a 
street  where  children  are  accustomed  to  go  and  in  a  condition 

78 Mexican    ^tional    R.    Co.    v.  tender  jears,  and  a  younger  brotlier 

Musaette,    86    Tex.    708,    24    L.R.A.  set    it    up,    after    which    it    again 

642,  7  Tex.  Civ.  App.  169.  blow  over  and  injured  the  plaintiff, 

74  Lynch  v.   Nurdin,   1   Q.   B,   29;  Tlie  intervening  act  did  not  relieve 

Illidge  V.  Goodwin,  5  C.  &  P.  190;  the  defendant  from  liability  for  its 

Dickson  v.  McCoy,  39  N.  Y.  400,  1  negligence    in   erecting   the   fence. 

Am.  Neg.  Cas.  321;  Mills  v.  Bunke,  "7  Poland    v.    Earhart,    70    Iowa, 

59  App.  Div.  39;  Mahoney  v.  Dwyer,  285:   ileyer  v.  King,  72  Miss.  1,  7, 

84  Hun,   34.  35  L.R.A.  474,  citing  the  text,  and 

76  Dixon  V.  Bell,  5  M.  &  S.  198 ;  disapproving  a  criticism  of  the  Iowa 

Meers  v.  McDowell,  23  Ky.  L.  Rep.  case   in  36  Am.  St.  807,  817.     See 

461,  53  L.R.A.  789.  Harris    v.    Cameron,    81    Wis.    239, 

76Binford    v.    Johnston,    82    Ind.  29    Am.    St.    891;     Stark    v.    Mus- 

426,  42  Am.  Rep.  508.  kegon  T.  &   L.   Co.,   141   Mich.   575, 

In   Fishburn   v.   Burlington   &   N.  1    L.R.A.  (N.S.)    822,    19    Am.    Neg. 

R.  Co.,  127  Iowa,  483,  17  Am    Neg.  Rep.  514,  and  compare  McDowell  v. 

Rep.  270,  the  defendant  erected  un-  Great  Western  R.  Co.,  [1903]   2  K. 

der  a  license  a  snow  fence  upon  the  B.  331,  reversing  S.  C.  [1902]   1  K. 

premises   of    the    plaintiff's    father;  B.  618,  cited  to  this  section  in  the 

after  it  blew  down  the  plaintiff,  of  3d   ed. 


§    19]  COMPENSATION.  71 

to  do  injury  by  slight  interference  is  negligence,  which  will 
be  regarded  as  the  proximate  cause  of  any  injury  to  a  child 
which  results  therefrom/^  The  rule  is  the  same  when  lumber 
is  so  carelessly  piled  on  an  unfenced  lot  abutting  upon  a  street 
as  to  fall  upon  children  playing  near  it.*"  The  defendant's 
servant  left  a  truck  standing  near  a  sidewalk  in  a  public  street, 
with  the  shafts  shored  up  by  a  plank  in  the  usual  way.  An- 
other truckman  temporarily  left  his  loaded  truck  directly  oppo- 
site on  the  other  side  of  the  same  street,  after  which  a  third 
person  tried  to  drive  his  truck  between  those  two.  In  attempt- 
ing to  do  so  with  due  care  he  hit  the  defendant's  truck  in  such 
a  manner  as  to  whirl  its  shafts  round  on  the  sidewalk  so  that 
they  struck  the  plaintiff,  who  was  walking  by,  and  broke  her 
leg.  For  this  injury  she  maintained  her  action,  the  only  fault 
imputable  to  the  defendant  being  the  careless  position  in  which 
the  truck  was  left  by  his  servant.  This  was  treated  as  the  sole 
cause  of  the  plaintiff's  injury,  and  deemed  sufficiently  proxi- 
mate to  render  the  defendant  responsible.®"  He  was  liable  for 
the  act  of  his  servant,  for  the  latter  was  engaged  in  his  master's 
work ;  it  was  negligence  to  leave  the  truck  in  the  street  when 
not  in  use;  the  driver  of  the  truck,  who  was  the  immediate 
agent  of  the  force  which  injured  the  plaintiff,  had  a  right  to 
attempt  to  pass  between  the  two  trucks,  if  he  conducted  him- 
self with  due  care  and  exercised  a  sound  discretion  in  deter- 
mining whether  the  attempt  could  be  made  with  safety  to 
persons  lawfully  using  the  street.  And  as  the  jury  found  that 
in  the  exercise  of  such  care,  prudence  and  discretion  he  made 
the  attempt  which  resulted  in  the  injury  sustained  by  the  plain- 
tiff, the  defendant  was  liable  inasmuch  as  his  truck  was  unlaw- 
fully in  the  street,  and  that  was  regarded  as  the  natural  and 
proximate  cause  of  the  injury.  The  decision  imports  that  a 
danger  not  apparent  enough  to  deter  the  driver  from  attempt- 
ing to  pass  the  truck  of  the  defendant  could  legally  be  apparent 

78  Lane    v.    Atlantic    Works,    107  '9  Bransom  v.  Labrot,  81  Ky.  G38. 

Mass.  104;  Osake  v.  Larkin,  40  Kan. 

206,  2  L.R.A.  56,  15  Am.  Neg.  Cas.  80  Powell  v.  Devcnoy,  3  Cush.  300, 

709;  Travell  v.  Banncrman,  71  App. 
Div.   (N.  Y.)   43fl  50  Am.  Dec.  738. 


72  HU'J  lIKliLANJ>    ON    DAMAGES.  [§    10 

enoij^})  to  render  tho  injury  proximate  to  tfio  illojral  mho  of 
the  street  \>y  leaving  the  truck  there. 

The  jury  may  find  that  the  irijury  waH  prohahhi,  although 
brought  about  by  a  new  agency,  when  heavy  articlcH  left  near 
an  opening  in  the  floor  of  an  unfinished  building  or  in  the  deck 
of  a  vesHel  were  ar^iidentally  jostled  ho  that  they  fell  u[)on 
persons  y>elow.'* 

A  man  who  negligently  sets  and  kerjps  a  fire  on  his  own  land 
is  liable  for  any  injury  done  by  its  direct  c/jmmunication  to 
his  neighbor's  land,  whether  through  the  air  or  along  the  grf;und, 
and  whether  or  not  he  might  reasonably  have  anticipated  thfj 
particular  manner  and  direction  in  which  it  was  communi- 
cated,'^ and  he  is  not  per  se  absolved  therefrom  hf^^ause  the  fire 
traversed  the  land  of  adjoining  owners  before  it  reached  the 
premises  of  the  plaintiff.'^  1'he  defendants  moored  tlicir  boats 
in  the  channel  and  entrance  to  the  locks  at  a  dam  across  a  river 
80  that  the  Ixjats  of  others  were  stopf^ed  outside  and  exposed 
to  the  current,  then  rapidly  rising,  until  by  its  forr^j  such  Fjoats 
were  carried  over  the  dam  and  lost  without  any  fault  of  the 
owners;  the  defendants  negligently  or  wantonly  caused  this 
injury  and  were  liable  for  it."  'J'he  plaintiff's  boat  had  an- 
chored at  a  wharf  when  the  water  was  low.  The  river  rose  after- 
wards, covering  certain  piles  of  pig  iron  negligently  left  by 
the  defendant  on  the  wharf  about  a  foot  above  low-water  m;irk. 
To  avoid  these  piles  the  \x>Ht  was  comjirJIed  te  back  out  into 
the  stream,  where  she  was  struck  by  some  floating  body,  stove 
and  sunk.  The  defendant  wa«  liable  for  the  loss  of  the  l^x^at." 
The  defendant  broke  and  entered  the  plaintiff's  close  adjacent 
to  a  river  and  carried  away  gravel  from  a  bank,  near  to  a  dam 

•1  MftCaiilfcy      V.      Smcvmu,     155  li.  Co.   v.   Haldwin,    (Mihh.)    52  Ho. 

Ma.Hn,  584,   15  Am,   .V«:g,  Ca«.  582;  358;  iiimU-.r  v.  I'fnrixylvania  K.  ('a>., 

lUf.  ./owtph  h.  Thomsm,  81  Vcd.  ftlH,  45    /'a.   Hufx-.r.   4C,H.     Hw;    Mafiafffty 

20  C.  C.  A.  '/.?.,  46  L.ii.A.  r,H.  v.  H.  urn  ha  r(?»rr  L.  Va>.,  «I  VV,  Vm.,  57), 

*i  li'ififiU'-A    V.    iJftwriy,    107    Manx,  8   L.li.A. iS.H.)    12«»;    ^    18. 

4JH,  ii  Am.  J'ufp,  «;{;  .Vfartin  v.  .New  •«  I'hillipft  v.   haWronA,    \?,H  S.  (I. 

York,    (df:,    K.   Co.,    62   Conn,    331;  12. 

Kant  T(fTiut-im*:<-,  HU;,   K.  Co.   v,   n<m-  M  H(u,ii  v,  HunU^r,  46  I'a,   102. 

t^-rx,  i)()  Ca.   1 1  ;  Craij?  v.  f'arkftr,  8  •»  f'iUnUnr((h  v.  Ori<:r,  22  I'a.  ,''»4, 

Wft«t  Auxt.  L.  It,  161 ;  Alahama  &  V,  60  Am.  I>m:,  65, 


§     lyj  COJVH»10NSA.TlOiV.  73 

acroHH  iJio  river,  in  conseciiiencc  of  wliicli  n.  Ihxxl  in  jlio  river 
tlireo  \v(M!k.s  iiTlxirwurd  swept  away  a  porliou  of  the  oloso  and 
a  eider  mill.  It  was  held  thai  the  whole  damage  might  be 
rocovorod.*"  A  hiirJH.r  company  which  had  been  in  the  habit 
of  kce])ing  a  light  on  the  end  of  one  of  its  piers  to  enable 
vessels  to  snfely  enter  the  harbor  at  night  discontinued  the  light 
without  pnblie  notice.  A  vessel  was  afterwards  lost  in  attempt- 
ing to  enter  in  IIk^  nbs(Mic(!  of  tlic  light.  The  company  was 
liable  for  i\\r.  valiK!  of  the  vessel  lost  and  also  for  certain  mon- 
eys (expended  in  good  f:iith,  with  ii.  reasonable  expectation  of 
success,  in  jiticmpting  to  niise  Ikm-."  One  who  maliciously 
causes  tlu;  arrest  of  :in  engineer  while  li(>,  is  engjiged  in  run- 
ning ii.  trjiiii  is  li;d)l(!  to  his  eni|doy(!r  for  the  daniagX!  resultiu"- 
from  the  deliiy.^^ 

It  ciinnot  b(!  alliruicd  tluit  it  is  not  the  natural  and  reason- 
id)l(!  cons(M|uence  of  tlu^  sale  of  li(in()rs  to  an  intoxicated  per- 
son lK;twe(Mi  whose  home  and  the  j)la(;e  where  the  sale  is  made 
there  are  railroad  tracks  that  such'  person  should  in  a  dark 
night  wwvA.  with  injury  or  death  from  a  train  of  cars.^"  If 
weeds  or  bi-nsh  arc  allowc<l  lo  grow  upon  the  right  of  way  of 
a  railroad  company  to  siich  a  height  as  to  obstruct  the  view  of 
a  highway  crossing  and  animals  are  injured  by  a  train  the 
company  will  be  liable;""  and  so  if  cattle  concealed  in  such 
weeds  or  brush  ca,us(>.  IIk^  wrecking  of  a  train  and  injury  of 
a  person  thereon."^  If  the  unlawful  speed  of  a  train  upon 
station  grounds  siampcdcs  animals  at  large  there  and  they  run 
u|)ou  the  track,  cillicr  by  breaking  down  fence's  or  otherwise, 
and  are  killetl  by  tli(>  negligent  running  of  the  train,  such  speed 
is  the  dii'cM't  cause  of  tlie  killing."^  It  is  not  the  mitural  con- 
s(MpHMic(^  of  tlic  inlo\icati(Ui  of  a  man  to  whom  li(]uors  are 
sold   in   violation  of  law  that  his  wife,  while  following  him  in 

80  DickiiiHoii  V.  Uoylc.  17  rick.  78,  90  huiiunapolia,     etc.     R.     Co.     v. 

2H   Am.   I)i>e.  281.  o      .,     -o  ,,,     ,  ,., 

.^mil  li,  /S  111.   112. 

87  SwiHMiey    v.     I'orl     nuiwi'll     II. 

Co.,  17  llp.Can.  C.  V.  574.  °^  Kmin-n  v.  T.  c^'  N.  O.  K.  Co.,  (13 

88  St.    tloliiiflbiiry,    oto.    U.    Co.    v.       Ti^\.  (](]0. 

Hunt.  ryCi  Vt.  570,  45  Am.  Rep.  639. 

so  o  1         1  /^        (•      1     n  I    Til  92  Story  V.  Chicairo,  etc.  R.  Co.,  79 

80  Sfluocdfr    V.   Crawford.    91    III.  •'  '^  '  v^w  ,  ■ 

;557.  Iowa,  402. 


74  SUTllEKLAND    ON    DAMAGES.  [§    19 

the  street  for  the  purpose  of  ascertaining  where  he  procures 
liquor,  shall  fall  and  injure  herself,  and  the  seller  is  not  liable 
for  such  injury.^^  The  neglect  to  fence  a  railroad  and  track 
is  not  the  proximate  cause  of  an  injury  to  an  animal  sustained 
by  putting  its  foot  into  a  small  hole  while  running  along  the 
track;  such  an  occurrence  is  so  unusual  as  not  to  be  expected 
by  a  reasonable  man.^*  There  is  no  connection  between  the 
failure  of  a  railroad  company  to  provide  separate-  accommoda- 
tions for  white  and  colored  passengers,  where  that  is  required, 
and  an  assault  made  upon  one  of  the  latter  by  a  fellow  pas- 
senger, without  the  knowledge  or  consent  of  the  company's 
servants,  after  the  removal  of  the  passenger  assaulted  from 
the  ladies'  car  to  a  smoking  car ;  ^^  nor  between  the  act  of  a 
mortgagee  who  takes  possession  of  property  under  his  mortgage 
before  default  and  injury  to  crops  because  a  mule  needed  to 
work  them  was  taken ;  ^^  nor  between  threats  made  to  arrest  a 
debtor  and  a  miscarriage  by  his  wife,  no  physical  violence 
being  used ;  ^^  nor  between  a  like  result  and  the  false  imprison- 
ment of  a  husband ;  ®^  nor  as  a  result  of  the  wrongful  finding 
of  an  indictment  against  him.^^  One  who  invites  a  person  to 
drink  liquor  with  him  is  not  responsible  for  an  assault  made 
by  the  person  who  accepts  such  invitation  upon  a  third  indi- 
vidual, although  the  liquor  so  drank  made  him  intoxicated.* 
§  20.  Consequential  damages  under  fence  statutes.  When 
a  new  right  is  conferred  by  statute  and  a  corresponding  duty 
is  thereby  enjoined  the  liability  of  the  defaulting  party  to  the 
other  is  confined  to  the  limits  prescribed  by  the  statute.  Hence, 
when  a  statute  concerning  division  fences  provides  that  the 
party  who  shall  neglect  to  maintain  such  fences  shall  be  liable 
to  the  party  injured  by  his  defaidt  for  ''such  damages  as  shall 
accrue  to  his  lands,  crops,  fruit-trees,  shrubbery  and  fixtures," 

93  Johnson   V.   Drummond,   16   111.  97  Wulstein  v.  Mohlman,  57  N.  Y. 
App.  041.  Super.  Ct.  50. 

94  Nelson  v.  Chicaiio,  etc.  E.  Co.,  ^^  EHis  v.  Cleveland,  55  Vt.  358; 
30  Minn.   74.  Huxley  v.  Berg,  1  Starkie,  98. 


99  Hampton    v.    Jones,    58    Iowa, 
317:   Hutchinson  v.  Stern,  115  App. 
67  Miss.  376,  8  Am.  Xeg.  Cas.  453.       Djy    245. 


95  Royston  v.  Illinois  Cent.  R.  Co., 
■  Miss.  376,  8  Am.  Xeg.  Cas.  453. 

96  Jackson  v.  Hall,  84  N.  C.  489.  1  Swinfin  v.  Lowry,  37  Minn.  345. 


§    20]  COMPEXSATIOX.  75 

there  is  no  liability  for  injuries  which  may  be  sustained  by 
animals  while  trespassing  on  the  lands  of  the  party  who  has 
failed  to  maintain  his  fence.^  It  has  been  attempted,  in  order 
to  restrict  the  liability  of  railroad  companies  for  neglect  to 
fence  their  tracks,  to  apply  this  principle.  The  duty  is  for  the 
protection  of  the  public  as  well  as  for  the  benefit  of  persons 
who  stand  in  other  relations  to  the  party  upon  whom  it  is 
enjoined,  and  the  neglect  of  the  duty  entitles  the  party  who  is 
thereby  injured  to  all  the  relief  due  him  in  either  or  botli 
relations.^  13ut  this  view  is  not  accepted  in  some  jurisdictions, 
or  at  least  the  strict  construction  given  such  statutes  is  not  in 
harmony  with  it,  though  the  question  in  the  aspect  stated  is 
not  considered.  Under  a  statute  requiring  railroad  companies 
to  fence  and  declaring  them  liable  for  all  damages  resulting 
from  their  neglect  to  do  so  which  may  be  done  by  their  "agents, 
engines  or  cars,"  liability  does  not  extend  to  consequential 
injuries  to  an  animal  which  gets  upon  the  track  by  reason  of 
the  failure  to  fence,  as  where  it  is  injured  after  being  fright- 
ened by  an  approaching  train,  either  by  jumping  a  cattle-guard 
or  by  coming  in  contact  with  a  wire  fence,  or  both,  no  wilful 
misconduct  being  charged  against  the  train-men.*    The  injuries 

2  Crandall  v.  Eldridge,  46  Hun,  upon  tlie  right  of  way  at  a  place 
411.  where  a  fence  should  liave  been,  but 

3  Graliam  v.  President,  etc.,  46  was  not,  and  injury  was  done  a 
Hun,  386 ;  Galveston,  etc.  R.  Co.  v.  third  person  by  the  cars.  Paquin  v. 
Salisbury,  (Tex.  Civ.  App.)  143  S.  Wisconsin  Cent.  R.  Co.,  90  Minn. 
W.  252.  170. 

Under  a  statute   imposing   liabil-  Under    a    statute    providing   that 

ity  for  all  damages  done  to  persons  the  failure  to  keep  a  fence  in  repair 

on  the  road  in  any  manner,  in  whole  should  be  attended  with  liability  for 

or  part,  by   the  absence  of  a  fence  all  damages  done  to  or  suffered  by 

it   is  not  necessary  that  proximate  another  party  because  thereof,  such 

causal    relation    exist    between    the  neglect  is  attended  with  liability  for 

absence  of  the  fence  and  the  injury,  injury  to  animals  which  enter  upon 

but    merely    that    the    omission    to  the   premises   of   the   defendant   be- 

fence   shall   be   the   causa   sine   qua  cause  of  a  defective  fence  by  being 

non.      Schwlnd    v.    Chicago,   etc.   R.  gored   by   a  vicious  bull  he  owned, 

Co.,   140  Wis.   1,  133   Am.  St.  10.55.  regardless  of  his   knowledge   of  his 

But  liability  does  not  extend  to  the  propensity.      Saxton    v.    Bacon,    31 

consequences   of    the   acts    of    third  Vt.   540. 

persons,   as   where   cars   are   set   in  *  Sohertz   v.   Indianapolis,   etc.  R. 

motion  by  a  trespasser  who  entered  Co.,    107    111.    577:    Knight   v.   New 


76  SUTHERLAND    ON    DAMAGES.  [§    20 

contemplated  by  suck  language  are  only  those  which  result 
from  a  direct  or  actual  collision  of  the  engines  or  cars  with 
the  animal  injured.^  The  same  conclusion  has  been  reached 
from  language  which  imposed  liability  if  animals  "shall  be 
killed  or  injured  by  the  cars,  or  locomotive,  or  other  carriages."  ° 
Where  it  is  provided  that  railroad  companies  shall  be  liable 
for  animals  killed  or  injured  by  their  negligence  and  that  a 
"failure  to  build  and  maintain  fences  shall  be  deemed  an  act 
of  negligence,"  such  a  construction  as  was  given  in  the  above 
cases  is  unwarranted.''^  Under  a  statute  which  provides  that 
on  neglect  to  fence  the  road  the  company  shall  be  liable  for 
all  damages  sustained  by  any  person  in  consequence,  damages 
may  be  recovered  for  injury  done  to  a  farm  by  rendering  it 
less  fit  for  pasturage  because  of  such  neglect.®  The  same  lia- 
bility has  been  declared  to  exist  under  a  statute  which  employs 
the  words  ''shall  be  liable  for  all  damages  which  shall  be  done 
by  their  agents  or  engines  to  cattle,  horses  Or  other  animals;"  ^ 
and  under  that  statute  a  railroad  company  has  been  held  liable 
where  a  horse  fell  into  a  cut  made  by  the  company  along  a 
pasture,  which  cut  was  not  fenced.^"  The  failure  to  fence  a 
railroad  track  or  to  construct  cattle  guards  is  attended  with  lia- 
bility for  the  loss  of  the  rental  value  of  land  to  the  extent  and 
for  the  time  the  owner  is  deprived  of  its  use.'^^ 

York,  etc.  R.  Co.,  99  N.  Y.  25,  re-  killed.     A  recovery  was  allowed  for 

versing  30  Hun,  415,  distinguished  but   one. 

in  Leggett  v.  Rome,  etc.  R.  Co.,  41  The  construction  given  the  Mis- 
Hun,  80.  souri   statute   is   forcibly   criticised 

5  Ibid.;  Laflerty  v.  Hannibal,  etc.  in  25  Am.  L.  Rev.  114,  264. 

R.   Co.,   44   Mo.   291;    Foster   v.   St.  7  Nelson   v.   Chicago,   etc.  R.   Co., 

Louis,  etc.  R.  Co.,  90  Mo.  116,  and  30  Minn.  74. 

other  Missouri   cases  cited  therein,  8  Emmons  v.  Minneapolis,  etc.  R. 

Hires  v.  St.  Louis  R.  Co.,  157  Mo.  Co.,  35  Minn.  503;  Nelson  v.  Same, 

App.  46;  McKellar  v.  Canadian  Pac.  41  Minn.  131. 

R.  Co.,  14  Manitoba,  614.  9  Leggett  v.  Rome,  etc.  R.  Co.,  41 

8  Peru  &  I.  R.  Co.  v.  Basket,  10  Hun,    80.      It    is    doubtful    whether 

Ind.  409,  71  Am.  Dec.  335;   Jeflfer-  this  case  is  in  harmony  with  Knight 

sonville,  etc.  R.  Co.  v.  Downey,  B'l  v.  New  York,  etc,  R.  Co.,  99  N.  Y. 

Ind.  287.  25. 

In  the  last  case  one  of  two  ani-  1°  Graham   v.    President,   etc.,    46 

mals,  which  were  tied  together,  was  Him,  386. 

struck    by    the    train ;     both    were  n  Gould    v.    Great    Northern    R. 


§21]  COMPENSATION. 


7  7 


In  the  absence  of  a  statutory  declaration  concerning  the 
damages  recoverable  for  default  in  maintaining  fences  common- 
law  principles  apply,  and  there  is  liability  for  the  injury  to 
or  loss  of  animals  which,  without  the  fault  of  their  (jwncr,  pass 
through,  over  or  under  a  defective  fence  aud  thus  get  on  the 
track  of  a  railroad  company/^  The  damage  done  the  land 
of  an  adjoining  owner  by  the  animals  of  a  neighbor  trespass- 
ing thereon  because  of  the  defective  fence  of  such  a  company 
may  be  recovered  in  an  action  for  the  killing  of  theni,^^ 

§  21.  Nervous  shock  without  impact;  the  Coultas  case  and 
American  cases  in  harmony  with  it.  In  1888  the  question 
whether  damages  for  a  nervous  shock  or  injury  caused  by  the 
defendant's  negligence  in  permitting  the  plaintiff  to  cross  its 
track  when  it  was  dangerous  to  do  so,  and  its  servant  had  knowl- 
edge of  the  danger,  came  before  the  English  privy  council  on 
appeal  from  the  supreme  court  of  Victoria.  The  latter  court 
was  of  the  opinion  that  the  damages  were  not  too  remote.^* 
Its  judgment  was  reversed,  and  the  rule  declared  to  be  that 
damages  arising  from  mere  sudden  terror,  unaccompanied  by 
actual  physical  injury,  cannot  be  considered  a  consequence 
which,  in  the  ordinary  course  of  things,  would  flow  from  such 
negligence. ^^     The  court  observed  that  it  was  remarkable  that 

Co.,  63  Minn.  37,  30  L.R.A.  590,  56  v.  Rochester  R.  Co.,  151  N.  Y.  101, 

Am.  St,  453;  Louisville  &  N.  R.  Co.  1  Am.  Neg.  Rep.  21,  34  L.R.A.  78J, 

V.  Timmons,  116  Tenn.  29.  56  Am.  St.  604,  reversing  77  Hun, 

12  Crawford  v.  Southern  R.,  153  607;  Hack  v.  Dady,  142  App.  Div. 
Ky.  812,  6  N.  C.  C.  A.  38.  510;    Gulf,  etc.  R.  Co.  v.  Trott,  86 

13  Lizotte  v.  Tenniacouata  R.  Co.,  Tex.  412,  40  Am.  St.  866 ;  San  An- 
37  New  Bruns.  397.  tonio,  etc.  R.  Co.  v.  Corley,  87  Tex. 

14  Coultas  V.  Victorian  Ry.  Com'rs,  432,  (see  §  24  for  Texas  cases  al- 
12  Vict.  L.  R.  895.  lowing    recovery,    under    some    cir- 

15  Victorian  Ry.  Com'rs  v.  Coul-  cumstances,  for  nervous  injury); 
tas,  13  App.  Cas.  222.  The  facts  Denver,  etc.  R.  Co.  v.  Roller,  41 
are  stated  in  the  next  section.  C,  C.  A.  22,  100  Fed.  738,  49  L.R.A. 

The  doctrine  of  the  Coultas  case,  77;  Spade  v.  Lynn  &  B.  R.  Co.,  172 

though  repeatedly  dissented  from  in  Mass.    488,    70    Am.    St.    298,    168 

England   (see  §  23a)   and  denied  in  Mass.    285,    60    Am.    St.    393,    38 

Ireland,  is  favored  by  several  Amer-  L.R.A.    512;    Ewing   v.    Pittsburgh, 

lean  courts.     Braun  v.  Craven,  175  etc.  R.   Co.,   147   Pa.  40,   14   L.R.A. 

111.   401,    5    Am.   Neg.    Rep.    15,    42  G66,    30    Am.    St.    709;    Wyman    v. 

L.R.A.     199,     affirming     Craven     v.  Leavitt,  71  Me.  227;  Haile  v.  Texas 

Braun,   73   111.   App.   401  ;    Mitchell  &  P.  R.  Co.,  60  Fed.  557,  9  C.  C.  A. 


78 


SUTHERLAND    ON    DAMAGES. 


[§  21 


no  precedent  was  cited  of  a  similar  action  having  been  main- 
tained or  even  instituted.     It  has  since  come  to  the  knowledge 


134,  23  L.R.A.  774;  Kalen  v.  Terre 
Haute  &  I.  R.  Co.,  18  Ind.  App. 
202;  Gaskins  v.  Runkle,  25  Ind. 
App.  548;  Lee  v.  Burlington,  113 
Iowa,  356,  86  Am.  St.  379;  Nelson 
V.  Crawford,  122  Midi.  466,  80  Am. 
St.  577 ;  Johnson  v.  Wells,  Fargo  & 
Co.,  6  Nev.  224,  3  Am.  Rep.  245; 
Atchison,  etc.  R.  Co.  v.  McGinnis, 
46  Kan.  109;  St.  Louis,  etc.  R.  Co. 
V.  Bragg,  69  Ark.  402,  86  Am.  St. 
206;  Same  v.  Taylor,  84  Ark.  42, 
13  L.R.A.  (N.S.)  159;  Chicago,  etc. 
R.  Co.  V.  Moes,  89  Ark.  187;  Pierce 
V.  St.  Louis,  etc.  R.  Co.,  94  Ark. 
489;  Reed  v.  Ford,  129  Ky.  471,  19 
L.R.A. (N.S.)  225;  Reed  v.  Maley, 
115  Ky.  816,  17  Am,  Neg.  Rep.  275, 
62  L.R.A.  900;  Morse  v.  Chesapeake 
&  0,  R.  Co.,  117  Ky.  11;  McGee  v. 
Vanover,  148  Ky.  737;  Chesapeake 
&  0.  R.  Co.  V.  -Robinett,  151  Ky. 
778,  45  L.R.A.  (N.S.)  433;  Kyle  v. 
Chicago,  etc.  R.  Co.,  182  Fed.  613, 
105  C.  C.  A.  151;  Western  U.  Tel. 
Co.  V.  Sklar,  126  Fed.  295,  61  C.  C. 
A.  281;  Tiller  v.  St.  Louis,  etc.  R. 
Co.,  189  Fed.  994;  Indianapolis  St. 
R.  Co.  V.  Ray,  167  Ind.  236;  Crut- 
cher  V.  Big  Four  R.  Co.,  132  Mo. 
App.  311;  Morris  v.  Lackawanna, 
etc.  R.  Co.,  228  Pa.  198,  citing 
local  cases;  Chittick  v.  Philadelphia 
R.  T.  Co.,  224  Pa.  13,  22  L.R.A. 
(N.S.)  1073;  Huston  v.  Freemans- 
burg,  212  Pa.  548,  3  L.R.A.  (N.S.) 
49;  Reardon  v.  Philadelphia  R.  T. 
Co.,  43  Pa.  Super.  344 ;  Norris  v. 
Southern  R.,  84  S.  C.  15  (except 
under  statute  imposing  liability 
therefor  on  telegraph  companies)  ; 
Taylor  v.  Atlantic  C.  L.  R.  Co.,  78 
S.  C.  552 ;  Geiger  v.  Grand  Trunk  R. 
Co.,  10  Ont.  L.  R.  511  (slight 
bruises  were  inflicted  on  the  plain- 
titt)  ;   Kentucky  Traction  &   Termi- 


nal Co.  V.  Bain,  161  Ky.  44;  Shella- 
barger  v.  Morris,  115  Mo.  App.  566, 
(the  presiding  justice  of  the  Kan- 
sas City  court  of  appeals  said:  The 
Missouri  rule  is  that  where  there 
has  been  no  bodily  impact,  no  dam- 
ages are  recoverable  for  mental 
anguish,  but  such  damages  are  recov- 
erable for  injuries  received  in  con- 
nection with  such  impact.  There 
can  be  no  good  reason  for  the  dis- 
tinction. It  is  merely  arbitrary). 
See  §  95. 

The  principal  case  is  recognized 
as  binding  in  Ontario  (Henderson 
v.  Canada  Atlantic  R.  Co.,  25  Ont. 
App.  437),  as  it  doubtless  is  in  all 
the  other  British  colonies.  It  has 
been  said  of  it  in  New  South  Wales 
that  it  is  binding  there,  "and  when 
we  are  called  upon  to  decide  a  case 
in  which  the  facts  are  identical  we 
shall  be  compelled  to  follow  it.  But 
I,"  said  the  chief  justice,  "do  not 
feel  inclined  to  extend  the  principle 
of  the  decision  in  any  way."  Rea 
V.  Balraain  New  F.  Co.,  17  New 
South  W.  (law)  92.  See  Pelmothe 
V.  Phillips,  20  id.  61,  and  1  Beven 
on  Neg.  (2d  ed.)  p.  76  et  seq.  In  a 
recent  case  in  Ontario  it  was  ob- 
served: "Tlie  Coultas  case,  as  the 
decision  of  our  viltimate  court  of 
appeal,  is  still,  of  course,  a  binding 
authority  in  this  province,  although 
it  is  impossible  not  to  feel  that  the 
situation  is  not  satisfactory,  and 
that  the  decision  is  to  be  applied 
with  careful  discrimination."  Toms 
V.  Toronto  R.  Co.,  22  Ont.  L.  R. 
204.  See  Toronto  R.  Co.  v.  Toms, 
44  Can.  Sup.  Ct.  268. 

The  American  cases  which  deny 
redress  for  nervous  shock  and  its 
results  do  not  all  rest  upon  the 
same  ground,  though  most  of  them 


!1] 


COMPENSATION. 


71) 


of  the  legal  world  that  such  an  action  had  been  maintained 
before  that   time.      In    1890   substantially  the  same  question 


take  the  view  tliat  the  damages  arc 
too  remote.  It  is  said  in  Massa- 
chusetts: "The  logical  vindication 
of  this  rule  is,  that  it  is  unreason- 
able to  hold  persons  who  are  merely 
negligent  bound  to  anticipate  and 
guard  against  frigiit  and  the  conse- 
quences of  fright;  and  that  this 
would  open  a  wide  door  for  unjust 
claims,  which  could  not  successfully 
be  met."  The  rule  is  thus  limited 
there:  "It  is  hardly  necessary  to 
add  that  this  decision  does  not 
reach  those  classes  of  actions  where 
an  intention  to  cause  mental  dis- 
tress or  to  hurt  the  feelings  is 
shown,  or  is  reasonably  to  be  in- 
ferred, as,  for  example,  in  cases  of 
seduction,  slander,  malicious  prose- 
cution, or  arrest,  and  some  others. 
Nor  do  we  include  cases  of  acts  done 
with  gross  carelessness  or  reckless- 
ness, showing  utter  indifference  to 
such  consequences,  when  they  must 
have  been  on  the  actor's  mind." 
Spade  V.  Lynn  &  B.  R.  Co.,  168 
Mass.  285,  5  Am.  Neg.  Rep.  3G7, 
60  Am.  St.  393,  38  L.R.A.  512.  See 
Homans  v.  Boston  E.  R.  Co.,  180 
Mass.  456,  11  Am.  Neg.  Rep.  248, 
57  L.R.A.  291,  stated  in  last  para- 
graph of  §  22;  Crutcher  v.  Big  Four 
R.  Co.,  supra.  The  rule  of  the  Spade 
case  "is  confined  strictly  to  cases 
where  the  connection  of  the  physical 
illness  with  the  fright  is  wholly  in- 
ternal. When  tlie  fright  reason- 
ably induces  action  which  results 
in  external  injury  the  defendant 
may  be  liable,  as  well  wlien 
the  impact  is  brought  about  with- 
out the  intervention  of  the  plain- 
tiff's consciousness."  Cameron  v. 
New  England  Tel.  &  T.  Co.,  182 
Mass.  310,  13  Am.  Neg.  Rep.  86. 
In  a  Wisconsin  case  the  rule  was 


applied  under  conditions  which 
make  it  particularly  noticeable,  and 
lead  to  some  doubt  as  to  wlictlier 
the  decision  is  right  if  damages  for 
mental  suffering  are  recoveral)le  at 
all  as  an  independent  liead  of  dam- 
age. A  combination  of  liverymen 
was  formed  to  limit  their  services  to 
persons  patronizing  them  exclusive- 
ly and  to  monopolize  the  livery 
business  in  Milwaukee,  including 
service  for  funerals.  Such  combina- 
tion, the  court  held,  was  unlawful, 
and  any  member  of  it  wiio  acted  in 
accordance  with  the  regulations  was 
liable  for  compensatory  damages  to 
a  person  specially  injured  by  an 
overt  act.  A  member  of  such  asso- 
ciation let  a  hearse  and  carriage  to 
the  plaintiff"  for  the  funeral  of  his 
child,  but  upon  learning  that  the 
person  in  charge  was  an  undertaker 
and  liveryman  doing  an  independent 
business,  joined  with  the  associa- 
tion in  sending  the  vehicles  away 
from  the  plaintiff's  house  just  as 
they  were  about  to  be  used.  Here, 
then,  is  an  unlawful  combination, 
doing  or  causing  tiie  doing  of  an 
act  wilfully,  with  knowledge  tliat 
the  natural  result  will  be  to  cause 
plaintiff  mental  distress  or  nervous 
shock.  It  is  said  in  the  opinion: 
"There  was  no  physical  injury  to 
plaintiff,  and  no  personal  injuj-y  to 
him  of  any  kind  save  to  iiis  feelings. 
The  case  does  not  fall  within  the 
few  exceptions  to  the  rule, — which 
prevails  in  this  state  and  in  most 
jurisdictions, — that  mental  distress 
alone  is  too  remote  and  difficult  of 
measurement  to  be  the  subject  of 
an  assessment  of  damages.  The 
true  idea  is  that,  under  the  general 
principle  applicable  to  tort  actions 
tliat   recoverable   damages   are   lim- 


80 


SUTHERLAND    ON    DAMAGES. 


[§  21 


came,  for  the  second  time,  before  the  courts  of  Ireland,  and 
tliey  reached  a  conclusion  squarely  opposed  to  that  arrived  at 


ited  to  sucli  as  are  the  natural  and 
proximate  result  of  the  act  com- 
plained of,  some  physical  injury 
is  necessary  to  a  definite  causal  con- 
nection between  tlie  wrongful  act 
and  the  mental  condition,  to  ren- 
der the  former,  in  a  legal  sense,  the 
cause  of  the  latter,  and  such  condi- 
tion, with  its  immediate  cause,  suffi- 
ciently significant  to  be  compre- 
liended  and  measured  in  a  money 
standard  by  average  human  wisdom 
with  a  reasonable  degree  of  cer- 
tainty." Gatzow  V.  Buening,  106 
Wis.  1,  20,  49  L.R.A.  475,  80  Am. 
St.  17.  Compare  Browning  v.  Fies, 
4  Ala.  App.  580,  stated  in  §  92. 

In  the  New  York  case  the  plain- 
tiff was  standing  upon  a  crosswalk 
awaiting  an  opportunity  to  board 
one  of  the  defendant's  cars  which 
had  stopped  there.  While  there, 
and  as  she  was  about  to  step  upon 
the  car,  a  vehicle  of  the  defendant's 
came  down  the  street,  and  as  the 
team  attached  to  it  drew  near  it 
turned  and  came  so  close  to  the 
plaintiff  that  she  stood  between  the 
horses'  heads  when  they  were 
stopped.  The  fright  and  excitement 
rendered  her  unconscious,  and  there 
was  a  miscarriage  and  consequent 
illness.  Because  there  could  be  no 
recovery  for  the  fright,  there  could 
be  none  for  the  illness  consequent 
upon  it.  The  miscarriage  was  not  the 
proximate  result  of  the  defendant's 
negligence,  but  the  result  of  an  ac- 
cidental or  unusual  combination  of 
circumstances  which  could  not  have 
been  reasonably  anticipated.  An- 
other reason  for  denying  the  right 
of  action  was  that  a  flood  of  litiga- 
tion might  be  anticipated,  with  a 
wide  field  opened  for  fictitious  or 
speculative      claims.       Mitchell     v. 


Rochester  R.  Co.,  151  N.  Y.  107,  56 
Am.  St.  604,  34  L.R.A.  781;  Hack 
V.  Dady,  134  App.  Div.  253;  Cook 
V.  Mohawk,  207  N.  Y.  311. 

In  Hutchinson  v.  Stern,  115  App. 
Div.  791,  a  husband  was  denied  a 
recovery  for  the  loss  of  his  wife's 
services  caused  by  a  fright  result- 
ing from  an  assault  made  upon  him 
in  her  presence. 

The  difficulty  of  testing  the  state- 
ments of  the  plaintiff,  the  remote- 
ness of  the  damages  and  the  meta- 
physical character  of  the  injury, 
considered  apart  from  physical 
pain,  are  the  reasons  assigned  in 
Reed  v.  Maley  and  McGee  v.  Van- 
over,  supra.  See  §  44  as  to  the 
effect   of   wilfulness. 

"The  reason  that  mental  suffer- 
ing, unaccompanied  by  physical  in- 
jury, is  not  considered  an  element 
of  recoverable  damages  is  that  it  is 
deemed  to  be  too  remote,  uncertain 
and  difficult  of  ascertainment."  St. 
Louis,  etc.  R.  Co.  v.  Taylor,  supra. 

See  15  Harvard  L.  Rev.  304,  for 
an  answer  to  some  of  the  foregoing 
objections  to  recovery  in  such  cases. 

The  Minnesota  cases  on  this  ques- 
tion are  reviewed  in  Sanderson  v. 
Northern  Pac.  R.  Co.,  88  Minn. 
162,  60  L.R.A.  403.  In  that  case 
the  plaintiff  sought  to  recover  for 
personal  injuries,  due  solely  to 
fright  and  grief,  because  an  attempt 
was  made  to  put  her  children  off 
the  car,  she  not  having  been  inter- 
fered with,  nor  having  been  put  in 
fear  of  any  physical  injury  or  per- 
sonal violence.  The  rule  was  de- 
clared to  be  that  there  can  be  no 
recovery  for  fright  which  results 
in  physical  injuries,  in  the  absence 
of  contemporaneous  injury  to  the 
plaintiff,    unless    the    fright    is   the 


§    21]  COMPENSATION.  81 

by  the  pi'ivy  council,  and  one  wliicli  is  sup2)orted  by  l^etter 
reasoning  and  is  more  in  harmony  with  justice. ^^  Tlio  action 
was  brought  by  a  husband  and  his  wife,  and  arose  out  of  the 
following  facts :  The  female  plaintiff  was  a  passenger  in  au 
excursion  train  on  the  defendant's  railway.  The  train  was 
too  heavy  to  be  drawn  up  an  incline,  and  was  divided,  the  car 
in  which  the  plaintiff  was  remaining  attached  to  the  engine. 
The  rear  part  of  the  train  descended  the  incline  with  great 
velocity;  the  engine  was  thereafter  reversed  and  with  the  car 
the  jdaintiff  occupied  followed  at  a  high  rate  of  speed,  until 
stopped  with  a  violent  jerk.  The  proof  showed  that  A.  was 
put  in  great  fright  by  the  occurrence,  and  suffered  from  nervous 
shock  in  consequence  that  she  was  incapacitated  from  per- 
forming her  ordinary  avocations,  and  medical  witnesses  ex- 
pressed the  opinion  that  paralysis  might  result.  The  jury 
were  charged  that  if  great  fright  was,  in  their  opinion,  a 
reasonable  and  natural  consequence  of  the  circumstances  in 
which  the  defendant  had  placed  the  plaintiff,  and  she  was 
actually  put  in  great  fright  by  the  circumstances,  and  if  injury 
to  her  health  was,  in  their  opinion,  a  reasonable  and  natural 
consequence  of  such  fright  and  was  actually  occasioned  thereby, 
damages  for  such  injury  would  not  be  too  remote.  The  mate- 
proximate  result  of  a  legal  wrong  tiff's  injury  and  entitled  lier  to  re- 
against  the  plaintiff  by  the  defend-       cover. 

ant.     See  Bucknam  v.  Great  North-  In  Miller  v.  Baltimore  &  0.  S.  R. 

ern  R.  Co.,  76  Minn.  373,  6  Am.  Co.,  78  Ohio  St.  309,  18  L.R.A.  (N.S.) 
Neg.  Rep.  302.  An  earlier  case  in  949^  ]25  Am.  St.  699,  it  was  alleged 
that  state  is  contrary  to  the  Coultas       that  the  defendant  negligently  and 

^^^^-  with  great  force  pushed  cars  off  the 

In  Purcell  v.  St.  Paul  City  R.  Co.,  ^^^  ^^  j^^  ^^^j^^j^  ^^.^^^  ^^^^^^  ^  p^^^,. 

48   Minn.    134,  16   L.R.A.    203,   the  ,.^    ^^^.^^^    ^^^    .^^^    ^^^   plaintiff's 

plaintiff,    who  was    pregnant,    was  ^^^^^j^g^   ^^^   ^j^^^   in    consequence 

a  passenger  on  one  of  the  defend-  ^,        ,   ■   .-a,      <v       , 

\  -^      .,  ,.  .  the  plaintiff  suffered  a  severe  nerv- 

ant's    cars.      By    its    negligence    m  ,      ,       ,  .  ,  ,  1     ,., 

,    .  ,  ,,.  .  J  ous  shock  which  caused  bodilv  pain, 

their  management  a  collision  seemed  -    '■ 

inevitable,  and  the  plaintiff  was  put  ^^^^t^^     ^"^"'^^^      ^"^     ^"J"''^     ^^^ 

in    a   position   of    such   peril   as   to  health,   and   that   actual   bodily   in- 

cause     fright,     which     produced    a  J^'T  ^^'^s  sustained  or  that  the  neg- 

miscarriage.     Though  there  was  no  Hgence  was  wilful  or  wanton.     The 

collision   and   no   impact  the   negli-  right  to  recover  was  denied, 
gence  was   the   cause   of   the   plain-  16  gee  §  23. 

Suth.  Dam.  Vol.  I.— 6. 


82  SUTllEllLAND    ON    DAMAGES.  [§    21 

rial  facts  were  found  in  the  plaintiff's  favor.  In  considering 
the  ohjections  to  the  refusal  of  the  court  to  charge,  as  requested 
by  the  defendant,  that  if  damages  or  injury  were  the  result  of, 
or  arose  from,  mere  fright,  not  accompanied  by  actual  physical 
injury,  even  though  there  might  be  a  nervous  or  mental  shock 
occasioned  by  the  fright,  such  damages  would  be  too  remote, 
Palles,  C.B.,  said :  'This  objection  presupposes  that  the  plain- 
tiff" sustained,  by  reason  of  the  defendant's  negligence,  'injury' 
of  the  class  left  to  the  consideration  of  the  jury  by  the  sum- 
ming-up, i.  e.,  injury  to  health,  which  is  bodily  or  physical 
injury ;  and  the  proposition  presented  is  that  damages  for 
such  injury  are  not  recoverable  if  two  circumstances  occur : 
(1)  if  the  only  connection  between  the  negligence  and  this 
bodily  injury  is  that  the  former  caused  fright,  which  caused 
nervous  or  mental  shock,  which  shock  caused  the  bodily  injury 
complained  of;  and  (2)  that  this  so-called  bodily  injury  did 
not  accompany  the  fright,  which  I  suppose  means  that  the 
injury,  although  in  part  occasioned  by  the  fright,  assumed 
the  character  of  bodily  injury  subsequently  to,  and  not  at, 
the  time  of  the  negligence  or  fright.  To  sustain  this  conten- 
tion, it  must  be  true  whether  the  shock  which  it  assumed  to 
have  been  caused  was  either  mental  or  nervous ;  and  as  the 
introduction  of  the  word  'mental'  may  cause  obscurity,  by 
involving  matter  of  a  wholly  different  nature,  unnecessary  to 
be  taken  into  consideration  here,  I  eliminate  it  from  the  ques- 
tion. If  there  be  a  distinction  between  mental  shock  and 
nervous  shock,  then  the  objection  cannot  be  sustained.  It  is 
then  to  be  observed:  (I)  that  the  negligence  is  a  cause  of  the 
injury,  at  least  in  the  sense  of  a  causa  sine  qua  non;  (2)  that 
no  intervening  indei)endent  cause  of  the  injury  is  suggested; 
(3)  that  jurors,  having  regard  to  their  experience  of  life,  may 
hold  fright  to  be  a  natural  and  reasonable  consequence  of 
such  negligence  as  occurred  in  the  present  case.  If,  then, 
such  bodily  injury  as  we  have  here  may  be  a  natural  conse- 
(pience  of  fright,  the  chain  of  reasoning  is  complete.  But 
the  medical  evidence  here  is  such  that  the  jury  might  from 
it  reasonably  arrive  at  the  conclusion  that  the  injury,  similar 


§    21  I  COMPEXSATIO?^.  83 

to  that  wliieh  actually  resulted  to  the  plaintiff  from  the  fright, 
might  reasonably  have  resulted  to  any  person  who  had  been 
placed  in  a  similar  position.  It  has  not  been  suggested  that 
there  was  anything  sj)ecial  in  the  nervous  organization  of  the 
plaintiff  which  might  render  the  effect  of  the  negligence  or 
fright  upon  her  different  in  character  from  that  which  it  would 
have  produced  in  any  other  individual.  I  do  not  myself  think 
that  proof  that  the  plaintiff  was  of  an  unusually  nervous  dis- 
position would  have  been  material  to  the  question;  for  ])er- 
sons,  whether  nervous  or  strong-minded,  are  entitled  to  be 
carried  by  railway  companies  without  unreasonal)le  risk  of 
danger ;  and  my  only  reason  for  referring  to  the  circumstance 
is  to  show  that,  in  this  particular  case,  the  jury  might  have 
arrived  at  the  conclusion  that  the  injury  which  did  in  fact 
ensue  was  a  natural  and  reasonable  consequence  of  the  negli- 
gence which  actually  caused  it, 

"Again,  it  is  admitted  that,  as  the  negligence  caused  fright, 
if  the  fright  contemporaneously  caused  physical  injury,  the 
damage  would  not  be  too  remote.  The  distinction  insisted 
upon  is  one  of  time  only.  The  proposition  is  that,  although, 
if  an  act  of  negligence  produces  such  an  effect  upon  particu- 
lar structures  of  the  body  as  at  the  moment  to  afford  palpable 
evidence  of  physical  injury,  the  relation  of  proximate  cause 
and  effect  exists  between  such  negligence  and  the  injury,  yet 
such  relation  cannot  in  law  exist  in  the  case  of  a  similar  act 
producing  upon  the  same  structures  an  effect  which,  at  a  sub- 
sequent time — say  a  week,  a  fortnight,  or  a  month — must 
result,  without  any  intervening  cause,  in  the  same  physical 
injury.  As  well  might  it  be  said  that  a  death  caused  by 
poison  is  not  to  be  attributed  to  the  person  'who  administered 
it  because  the  mortal  effect  is  not  produced  contemporaneously 
with  its  administration.  This  train  of  reasoning  might  be 
pursued  much  farther;  but  in  consequence  of  the  decision  to 
which  I  shall  hereafter  refer,  I  deem  it  unnecessary  to  do  so." 


84  SUTHERLAND    ON    DAMAGES.  [§22 

§  22.  Same  subject;  criticism  of  the  Coultas  case;  nervous 
shock  a  physical  injury.  The  chief  baron  then  proceeded  to 
review  the  English  ease  cited  in  the  opening  paragrapli  of  the 
previous  section:  "In  support  of  their  contention  the  defend- 
ants relied  upon  the  Victorian  Railway  Commissioners  v.  Coul- 
tas. That  was  a  remarkable  case.  The  statement  of  claim 
alleged  that  through  the  negligence  of  the  servants  of  the  de- 
fendants, in  charge  of  a  railway  gate  at  a  level  crossing,  the 
plaintiffs,  while  driving  over  it,  were  placed  in  imminent  peril 
of  being  killed  by  a  train,  and  by  reason  thereof  the  plaintiff, 
Mary,  received  a  shock  and  suffered  personal  injuries.  It 
appeared  that  the  female  plaintiff,  whilst  returning  with  her 
husband  and  brother  in  the  evening,  from  Melbourne  to  Haw- 
thorn, in  a  buggy,  had  to  cross  the  defendant's  line  of  railway 
at  a  level  crossing.  When  they  came  to  it  the  gates  were  closed ; 
the  gate-keeper  opened  the  gates  nearest  to  the  plaintiffs  and 
then  went  across  the  line  to  those  on  the  opposite  side.  The 
plaintiffs  followed  him,  and  were  partly  onto  the  up-line 
(the  further  one),  when  the  train  was  seen  approaching  on  it. 
The  gate-keeper  directed  them  to  go  back,  but  James  Conltas, 
who  was  driving,  shouted  to  him  to  open  the  opposite  gate,  and 
went  on.  He  succeeded  in  getting  the  buggy  across  the  line, 
so  that  the  train,  which  was  going  at  a  rapid  speed,  did  not 
touch  it,  although  it  passed  close  at  the  back  of  it.  As  the 
train  approached  the  plaintiff,  Mary,  fainted.  The  medical 
evidence  showed  that  she  received  a  severe  nervous  shock  from 
the  fright,  and  that  the  illness  from  which  she  afterward  suf- 
fered (and  which  is  stated  in  Mr.  Beven's  book  on  JSTegligence 
to  have  included  a  miscarriage)  was  the  consequence  of  the 
fright.  One  of  the  plaintiffs'  witnesses  said  she  was  suffering 
from  profound  impression  on  the  nervous  system — nervous 
shock;  and  that  the  shock  from  which  she  suffered  would  be 
a  natural  consequence  of  the  fright.  Another  said  he  was 
unable  to  detect  any  physical  damage;  he  put  down  her  symp- 
toms to  nervous  shock.  It  is  to  be  observed  from  this  evi- 
dence the  jury  might  have  inferred  that  physical  injury  was 
sustained  by  the  female  plaintiff  at  the  time  of  the  occurrence 
in  question.     Although  one  witness  spoke  of  nervous  shock  as 


§    22]  COMPENSATION.  85 

contradistinguished  from  physical  damage,  the  question  would 
still  have  been  open  for  the  jury  whether  the  nervous  shock 
was  not — as  in  the  generality  of,  if  not  indeed  all,  cases  it 
necessarily  must  be — physical  injury.  The  jury  found  for 
the  plaintiffs.  Upon  an  appeal  the  privy  council,  without 
deciding  that  an  impact  was  necessary  to  sustain  the  action, 
not  only  set  aside  the  verdict,  but  entered  judgment  for  the 
defendants.  In  delivering  judgment  Sir  R.  Couch  says :  'Her 
fright  was  caused  from  seeing  the  train  approaching,  and  think- 
ing she  was  going  to  be  killed.  Damages  arising  from  mere 
sudden  terror,  unaccompanied  by  any  actual  physical  injui-y, 
but  occasioning  a  nervous  or  mental  shock,  cannot,  uncle)'  such 
circumstances  (their  lordships  think),  be  considered  a  conse- 
quence which,  in  the  ordinary  course  of  things,  would  flow 
from  the  negligence  of  the  gate-keeper.' 

'"Amongst  the  reasons  stated  in  the  judgment  in  support 
of  this  conclusion  are:  1,  that  a  contrary  doctrine  would 
involve  damages  on  account  of  mental  injury  being  given  in 
every  case  where  the  accident  caused  by  the  negligence  had 
given  the  person  a  severe  nervous  shock ;  2,  that  no  decision 
of  an  English  court  had  been  produced  in  which,  upon  such 
facts,  damages  were  recovered;  3,  that  a  decision,  of  the  su- 
preme court  of  New  York  (Vandenburgh  v.  Truax)^'  which  M'as 
relied  upon,  was  distinguishable  as  being  a  case  of  palpable 
injury.  Of  these  reasons,  the  first  seems  to  involve  that  inju- 
ries other  than  mental  cannot  result  from  nervous  shock;  and 
the  third  implies  that  injuries  resulting  from  such  a  shock  can- 
not be  'palpable.'  I  am  unable  (I  say  it  with  deference) 
to  follow  this  reasoning;  and  further,  it  seems  to  me  that  even 
were  the  proposition  of  law  upon  which  the  judgment  is  based 
sustainable,  the  privy  council  were  not  warranted  in  assimi- 
ing  as  a  fact,  against  the  verdict  of  the  jury,  and  without  any 
special  finding  in  regard  to  it,  that  the  fright  was,  in  that 
particular  case,  unaccompanied  by  any  actual  physical  injury. 
Further,  the  judgment  assumes,  as  a  matter  of  law,  that  nerv- 
ous shock  is  something  which  affects  merely  the  mental  func- 
tions, and  is  not  in  itself  a  peculiar  physical  state  of  the  body. 

17  4  Denio,  464. 


86  SUTHERLAND    OX    DAMAGES.  [§    22 

This  error  pervades  the  entire  judgment.  Mr.  Beven  states 
in  his  recent  work  on  Negligence/^  and  I  entirely  concur  with 
him,  that  'the  starting  point  of  the  reasoning  there  is  that 
nervous  shock  and  mental  shock  are  identical;  and  that  they 
are  opposed  to  actual  physical  injury.'  " 

This  view  is  in  accord  with  that  favored  by  the  California 
court,  which  has  thus  expressed  itself  in  a  case  in  which  there 

^  was  a  nervous  shock  without  physical  impact:  "The  inter- 
dependence of  the  mind  and  body  is  in  many  respects  so  close 
that  it  is  impossible  to  distinguish  their  respective  influence 
u])on  each  other.  It  must  be  conceded  that  a  nervous  shock 
or  paroxysm,  or  a  disturbance  of  the  nervous  system,  is  distinct 

.  from  mental  anguish,  and  falls  within  the  physiological,  rather 
than  the  psychological,  branch  of  the  human  organism.  It  is 
a  matter  of  general  knowledge  that  an  attack  of  sudden  fright 
or  an  exposure  to  imminent  peril  has  produced  in  individuals 
a  complete  change  in  their  nervous  system,  and  rendered  one 
who  was  physically  strong  and  vigorous  weak  and  timid.  Such 
a  result  must  be  regarded  as  an  injury  to  the  body  rather  than 
to  the  mind,  even  though  the  mind  be  injuriously  affected. 
Whatever  may  be  the  influence  by  which  the  nervous  system 
is  affected,  its  action  under  that  influence  is  entirely  distinct 
from  the  mental  process  which  is  set  in  motion  by  the  brain. 
The  nerves  and  nerve  centers  of  the  body  are  a  part  of  the 
physical  system,  and  are  not  only  susceptible  of  lesion  from 
external  causes,  but  are  also  liable  to  be  weakened  and  de- 
stroyed from  causes  primarily  acting  upon  the  mind.  If  these 
nerves  or  the  entire  nervous  system  is  thus  affected  there  is  a 
physical  injury  thereby  produced,  and  if  the  primal  cause  of 
this  injury  is  tortious,  it  is  immaterial  whether  it  is  direct,  as 
l)y  a  blow,  or  indirect  through  some  action  upon  the  mind.^^ 

18  p.  67    (Ist  ed.).  131    N.    C.   536,   60   L.R.A.    617,    13 

19  Sloane  v.  Southern  California  Am.  Xeg.  Rep.  197 ;  Mack  v.  South 
R.  Co.,  Ill  Cal.  668,  680,  8  Am.  Round  R.  Co.,  52  S.  C.  323,  40 
Neg.  Cas.  76,  32  L.R.A.  193.  To  the  L.R.A.  679;  Louisville  &  N.  R.  Co. 
same  efifect,  Rea  v.  Balmain  New  v.  Ritcliel,  148  Ky.  701,  41  L.R.A. 
F.  Co.,  17  New  South  Wales  (law)  (N.S.)  958;  Arthur  v.  Henry,  157 
92;  Hickey  v.  Welch,  91  Mo.  App.  N.  C.  438  (it  seems);  Weatherford, 
4,  10;   Watkins  v.  Kaolin  Mfg.  Co.,  etc.   R.   Co.  v.   Crutcher,    (Tex.   Civ. 


«    221  COMIMONSATIOX.  ^' 

A  satisfactory  discussion  of  the  question  may  be  found  in 
a  recent  Rhode  Island  case  sustaining  a  recovery  for  the  physi- 
cal consequences  arising  from  nervous  disturbances  caused  by 
fright.     The  rule  of  the  Coultas  case  and  of  the  cases  in  har- 
mony with  it  is  disapproved,  and  that  of  the  California  court, 
the  Irish  cases  and  Dulien  v.  White  is  approved.'^"    In  a  recent 
Wisconsin  case  the  plaintitl'  while  riding  in  a  carriage  was 
frightened  or  shocked  by  the  negligent  steering  of  an  automo- 
bile directly  into  the  horses  attached  to  the  carriage,  tlm.wing 
or  pushing  the  horses  off  the  road,  and  causing  the  carriage 
to  move  with  such  force  and  violence  that  the  plaintiff  received 
a  fright  and  shock,  causing  bodily  injury  which  resulted  in 
a  miscarriage.     The  allegation  as  to  shock  was  construed  not 
to  mean  external   violence  or   physical   inconvenience,  but  as 
signifying  an  abnormal  condition  either  of  mind  or  body,  or 
of  both,  resulting  from  the  imminent  apparent  danger  of  injury 
or  death.     On  these  facts  this  principle  was  announced:     When 
physical  injury  flows  directly  from  extreme  fright  or  shock, 
caused  by  the  ordinary  negligence  of  one  who  owes  the  duty 
of  care  to  the  injured  person,  such  fright  or  shock  is  a  link 
in  the  chain  of  proximate  causation   as  efficient   as  physical 
impact  from  which  like  results  flow.'^^     The  Alabama  court  of 
appeals  has  taken  a  step  in  advance  of  any  of  the  cases  which 

App.)   141  S.  W.  137  ;  St.  Louis  S.  R.  249.     See  1  Beven  on  Neg.   (2cl  cd.), 

Co    V    Alexander,    (Tex.  Civ.  App.)  p.  7G  et  scq. 

Ul  S  W.  135;  Georgia  S.  &  F.  R.  A  wife  may  recover  damages  for 
Co.  V.  Ransom,  5  Ga.  App.  740;  Green  sickness  resulting  from  nervousness 
V.  Shoemaker,  111  Md.  69,  23  L.R.A.  occasioned  by  the  verbal  abuse  of 
(N.S.)  667;  Philadelphia,  etc.  R.  i,er  by  her  liusband  while  intoxi- 
Co.  V.  Mitchell,  107  Md.  600,  17  eated,  the  liquor  which  caused  him 
L.R.A. (N.S.)  974;  Bouillon  v.  La-  to  be  so  having  been  unlawfully  sold 
cledc  G.  L.  Co.,  148  Mo.  App.  462;  j^j^  ^^  ^^le  defendant.  Rear  v.  Gar- 
Dreyfus  V.  St.  Louis  &  S.  R.  Co.,  ^..^^^^^  ^^  qj^j^  q  q  447 
124'id.  585;  Kimberly  v.  Howland,  20  Shnone  v.  Rhode  Island  Co.,  28 
143  N.  C.  398,  7  L.R.A. (N.  S.)  ^^  ^  ^^^  ^  L.R.A. (N.S.)  740. 
545;  Fernandez  v.  Valdes,  4  Porto  gi  p^„,,opf  ,..  Hinklev.  141  Wis. 
Rico  Fed.  48;  Chicag^o,  etc.  R.  Co.  ^^^^  ^^  l.k.a.(N.S.)  11.59.  The 
V.    Barnes,    50   Tex.    C.v.    App     4  ^^^^  ^^^^^^  ^^^^^ 

Kirkoatrick    v.    Canadian    Pac.    K.       "l  '  . 

KirkpatricK  ^.    ^  j^^^j^p,,  ^.    ^yj^.^p^  ,„. 

Co    -35  New  Bruns.  598 ;  bt.  J^ouis  ri. 

R.  Co.  V.  Murdock,  54  Tex.  Civ.  App.      /'«,  and  other  cases. 


88  SUTJIEKLAND    ON    DAMAGES.  [§    22 

Lave  coinc  to  the  notice  of  the  writer.  The  plaintiff  was  fright- 
ened or  shocked  by  the  wrongful  conduct  of  the  defendant  in 
the  operation  of  his  automobile  on  a  highway  which  caused 
the  plaintiff's  mule,  attached  to  a  buggy  from  which  the  plain- 
tiff and  her  husband  had  just  alighted  and  which  contained 
their  small  children,  to  run  away.  The  plaintiff  was  not  physi- 
cally injured  otherwise  than  by  the  shock  or  fright  which 
caused  her  to  faint  and  become  ill;  her  right  to  recover  was 
sustained.^^  But  this  seems  contrary  to  a  later  case  in  the 
supreme  court  of  that  state  in  which  it  is  said:  If,  from 
mere  fright  or  excitement,  the  plaintiff  fell  and  was  not  touched 
by  the  defendant,  then  the  defendant  was  not  liable.^^  As  ap- 
pears elsewhere,^^  the  injury  which  will  sustain  a  recovery  for 
the  resulting  mental  suffering  need  not  be  severe;  it  is  suffi- 
cient if  it  will  support  an  action,  and  this  though  it  does  not 
leave  any  visible  sign.^^  The  court  will  not  inquire  whether 
the  mental  suffering  or  shock  came  through  the  injury  or  along 
with  it.  The  arbitrary  exception,  based  on  a  notion  of  what 
is  practicable,^^  that  prevents  a  recovei-y  for  visible  illness  re- 
sulting from  nervous  shock  alone  will  not  be  pressed  further 
to  exclude  a  recovery  where  there  has  been  a  battery  and  the 
shock  results  from  the  same  wrongful  management  as  the  bat- 
tery.2' 

22  Spearman  v.  McCrary,  (Ala.  in  contact  with  the  clothing  of  the 
App.)  58  So.  927.  person  against  whom  it  is  directed, 

23  Bachelder  v.  Morgan,  179  Ala.  although  he  may  neither  be  bruised 
330,  4  N.  C.  C.  A.  2.  This  case  nor  wounded."  If  an  external  in- 
does  not  notice  the  one  previously  jury  accompanied  with  severe  nerv- 
cited.  ous     shock,     causing    pain,     accom- 

§  1245.  panics  such  a  battery  they  are  the 

25Driscoll    V.    Gaffey,    207    Mass.  ^-.^.^^^    y^^^^^   ^f    it.      Steverman    v. 

102,  4  N.  C.  C.  A.  54.  Boston  E.  R.  Co.,  205  Mass.  508. 

26  Expediency     is     recognized     in  27  Homans   v.    Boston    E.   R.    Co., 

other  cases  as  cause  for  denying  re-  ^g^   ^^^^^    ^^^^   ^^    ^^^    2^^^    ^^ 

dress.    Huston  v.  Freemansburg,  212  .         ^^        ^         ^.^      xt  •, 

■D       rAo    o   T  -D  \  ,-KJc,  ^    AC.     T  ^™-    Neg.    Rep.    248;    Heiberger    v. 

Pa.   548,   3   L.R.A. (N.S.)    49;    Linn  '^          ^                       ^^      . 

r.                   onA    T>      cKi     no    A  Missouri  &  K.  Tel.  Co.,  133  Mo.  App. 

v.   Duquesne,   204  Pa.   551,  93  Am.  ^^ 

St.    800;    Reardon    v.    Philadelphia  ^^^'    '^°''«"*°   ^-    ^''-   ^-    T""'^'    ^^ 

R.  &  T.  Co.,  43  Pa.  Super.  344.  Can.  Sup.  Ct.  268;  Toms  v.  Toronto 

"It  is  not  only  an  assault,  but  a  R-  Co.,  22  Ont.  L.  R.  204.    See  Cassa- 

battery  by  the  actor,  where  a  dan-  dy   v.    Old   Colony    St.   R.   Co.,    184 

gerous  physical  force  which  he  has  Mass.    156,   14   Am.   Neg.   Rep.   559, 

intentionally  put   in   motion   comes  63   L.R,  A..   285. 


§    23]  COMPENSATION.  89 

§  23.  Same  subject;  an  earlier  ruling.  Continuing  tlie  discus- 
sion in  the  case  in  the  Irish  court,  the  cliief  baron  said : 
"Possibly,  were  there  no  decision  the  other  way,  T  should  from 
courtesy  defer  my  opinion  to  that  of  the  privy  council,  and 
leave  it  to  the  plaintiff  to  test  our  decision  upon  appeal.  The 
very  point,  however,  had  been,  four  years  before  the  decision  of 
the  privy  council  in  the  Victorian  Railway  Commissioners  v. 
Coultas,  decided  in  this  coimtry,  first  in  the  common  ])]eas 
division,  then  presided  over  by  the  present  Lord  Morris,  and 
afterwards  in  the  court  of  appeal,  in  the  judgment  delivered 
by  the  late  Sir  Edward  Sullivan;  and  it  is  a  sad  commentary 
upon  our  present  system  of  reporting  that  a  decision  so  im- 
portant and  so  novel  has  never  found  its  way  into  our  law 
reports.  The  case  I  refer  to  is  Byrne  v.  Great  Southern  and 
Western  Railway  Company.  It  was  tried  before  me  on  the 
5th  and  6th  of  December,  1882 ;  and  a  motion  to  enter  a  ver- 
dict for  the  defendants  was  heard  in  1883  by  the  common 
pleas  division;  and  by  the  court  of  appeal  in  February,  1884, 
It  was  an  action  by  the  superintendent  of  the  telegi-aph  office 
at  the  Limerick  Junction  station  of  the  defendant's  railway. 
His  office  consisted  of  a  small  building  at  the  end  of  one  of 
the  defendant's  sidings,  between  which  and  the  office  there 
was  a  permanent  buffer  strongly  fixed.  On  the  7th  December, 
1881,  through  some  railway  points  having  been  negligently 
left  open,  a  train  entered  this  siding,  broke  down  the  perma- 
nent buffer  and  the  wall  of  the  telegraph  office.  The  plaintift"s 
case  was  that  by  hearing  the  noise  and  seeing  the  wall  falling 
he  sustained  a  nervous  shock  which  resulted  in  certain  injuries 
to  his  health.  ...  A  verdict  having  been  found  for  the 
plaintiff  with  £325  damages,  a  motion  to  set  it  aside,  and  enter 
a  verdict  for  the  defendant,  on  the  ground  that  there  was  no 
evidence  of  injury  sufficient  to  sustain  the  action,  was  refused 
by  the  common  pleas  division;  and  this  refusal  was  affirmed 
by  the  court  of  appeal.  That  case  goes  much  further  than 
is  necessary  to  sustain  the  direction  here,  as  in  it  there  was 
nothing  in  the  nature  of  impact.  As  between  it,  by  which  we 
are  bound,  and  the  decision  of  the  privy  council,  by  which 
we  are  not,  I  must  prefer  the  former.     T  desire,  liowevor,  to 


90  SUTHEELAND    ON    DAMAGES.  [§    23 

add  that  I  entirely  concur  in  the  decision  in  Byrne  v.  Great 
Southern  and  Western  Eailway  Co.  and  that  I  should  have  been 
prepared  to  have  arrived  at  the  same  conclusion,  even  without 
its  high  authority.  ...  In  conclusion,  then,  I  am  of  opin- 
ion that,  as  the  relation  between  fright  and  injury  to  the  nerve 
and  brain  structures  of  the  body  is  a  matter  which  depends 
entirely  upon  scientific  and  medical  testimony,  it  is  impossible 
for  any  court  to  lay  down,  as  a  matter  of  law,  that  if  negli- 
gence cause  fright,  and  such  fright,  in  its  turn,  so  affects  such 
structures  as  to  cause  injury  to  health,  such  injury  cannot  be 
a  consequence  which,  in  the  ordinary  course  of  things,  would 
flow  from  the  negligence,  unless  such  injury  'accompany  such 
negligence  in  point  of  time.'  "  ^* 

§  23a.  Same  subject;  Dulien  v.  White.  In  1901  practically 
the  same  question  came  before  Kennedy  and  Phillimore,  jus- 
tices of  the  king's  bench  division,  and  was  decided  in  accord- 
ance with  the  rule  of  the  Irish  case.  The  plaintiff's  case  was 
that  when  she  was  behind  the  bar  of  her  husband's  public 
house,  being  then  pregnant,  the  defendant's  servant  negligently 
drove  a  van  into  the  public  house ;  that  plaintiff  in  consequence 
sustained  a  severe  shock  and  was  seriously  ill,  and  at  a  later 
time  gave  premature  birth  to  a  child,  which,  in  consequence 
of  the  shock  sustained  by  plaintiff,  was  born  an  idiot.  This 
last  claim  was  abandoned  as  a  ground  for  damages  because 
untenable.  The  action  was  held  sustainable,  the  result  being- 
reached  by  somewhat  different  courses  of  reasoning.  Kenned}^ 
said,  in  part :  This  is  an  action  on  the  case  for  negligence, 
that  is  to  say,  for  a  breach  on  the  part  of  defendant's  servant 

28  Bell  V.  Great  Northern  R.  Co.,  Neg.  Cas.   76;    Hickey  v.  Welch,  91 

26  L.  R.  Ire.  428  (1890).    The  opin-  Mo.  App.  4,  10;   Watkins  v.  Kaolin 

ion  of  the  chief  baron  was  concurred  Mfg.  Co.,  131  N.  C.  536,  60  L.R.A. 

in  by  Andrews  and  Murphy,  JJ.  617,  13  Am.  Neg.  Rep.  197;   Cooper 

The  general  doctrine  of  the  Irish  v.    Caledonian   R.   Co.,   9    Scotch   L. 

court  is  recognized  in  Mack  v.  South  T.   Rep.  273,   10  id.   104;   Gulf,  etc. 

Bound  R.  Co.,  .52  S.  C.  323,  40  L.R.A.  R.     Co.    v.    Luther,    40    Tex.     Civ. 

679;  Purcell  v.  St.  Paul  City  R.  Co.,  App.   517,   Missouri,   etc.   R.   Co.   v. 

48  Minn.  134,  16  L.R.A.  203;   Fitz-  Dickson,  (Tex.  Civ.  App.)   153  S.  W. 

Patrick  v.  Great  Western  R.  Co.,  12  933.      To   much    the    same   effect   is 

Up.  Can.  Q.  B.  645;  Sloane  v.  South-  Green  v.  Shoemaker,  111  Md.  69,  29 

crn  California  R.  Co.,  supra,  8  Am.  L.R.A.  (N.S.)   667. 


§    23a]  COMPENSATION.  91 

of  the  duty  to  use  reasonable  and  proper  care  and  skill.  In 
order  to  succeed  the  plaintiff  has  to  prove  resulting  damage 
to  herself,  and  a  natural  and  continuous  sequence  uninterrupt- 
edly connecting  the  breach  of  duty  with  the  damage  as  cause 
and  effect.  .  .  .  The  only  question  here  is  Avhether  there 
is  an  actionable  breach  of  those  obligations  if  the  man  in  either 
case  is  made  ill  in  body  by  negligent  driving  which  does  not 
break  his  ribs,  but  shocks  his  nerves.  As  regards  the  facts  we 
must,  for  the  purposes  of  this  argument,  assume  all  that,  con- 
sistently with  the  allegations  of  the  statement  of  claim,  can 
be  assumed  in  plaintiff's  favor.  Now,  what  are  defendant's 
arguments  against  her  right  to  recover  damages  in  this  action  ? 
First  of  all,  it  is  argued,  fright  caused  by  negligence  is  not 
itself  a  cause  of  action ;  ergo,  none  of  its  consequences  can  give 
a  cause  of  action — Mitchell  v.  Rochester  R.  Co.^^  With  all 
respect  to  the  learned  judges  who  decided  that  case,  I  feel  a 
difficulty  in  following  their  reasoning.  Xo  doubt  damage  is 
an  essential  element  in  a  right  of  action  for  negligence.  ''Fear 
taken  alone,"- — as  Sir  Frederick  Pollock  has  stated  in  his  work 
on  Torts  ^® — "falls  short  of  being  actual  damage,  not  because 
it  is  a  remote  or  unlikely  consequence,  but  because  it  can  be 
proved  and  measured  only  by  physical  effects." 

That  fright,  where  physical  injury  is  directly  produced  by 
it,  cannot  be  a  ground  of  action  merely  because  of  the  absence 
of  any  accompanying  impact  appears  to  me  to  be  unreasonable 
and  contrary  to  the  authorities.  We  have,  as  reported,  deci- 
sions which  go  far,  at  any  rate  in  my  judginent,  to  negative 
the  correctness  of  any  such  contentions.^^     Further,  we  have 

29  151  N.   Y.   107,   34   L.R.A.   781,  be    liable    altliouyli    tlie    coaeli    was 

50  Am.  St.  604.  not  turned  over.     Also  to  Harris  v. 

30Gth   ed.,    p.    51.  Mobbs,   3   Ex.   Div.   268.     The   facts 

31  Referring  to  Jones  v.  Boyce,   1  were  that  a  house-van  attached  to  a 

Stark.  493,  where  it  was  ruled  that  steam-plow   was   left   for   the   night 

if  through  the  fault  of  a  coach  pro-  on   tlie  side  of  a  highway,  four  or 

prietor     in     neglecting    to     provide  five    feet    from    the    metaled    part, 

proper  means  of  conveyance,  a  pas-  During   the    evening    the    plaintiff's 

scngor   be   placed    in    so   perilous   a  testator    drove    his    horse    attached 

situation  as  to  render  it  prudent  for  to  a  cart  along  the  metaled   road; 

liim  to  leap  from  the  coach,  whereby  the  liorse  was  a  kicker,  ])ut  he  did 

Iiis  leg  is  broken,  the  proprietor  will  not   know   it.      Passing  the   van   he 


92  SUTHERLAND  ON  DAMAGES.  [§  23a 

directly  in  point  the  decision  of  the  court  of  appeal  and  common 
pleas  division  in  Ireland  in  the  unreported  case  of  Byrne  v. 
Grreat  Southern  &  Western  R.  Co.,^^  approved  of  in  Bell 
V.  Great  Northern  R.  Co.^^  In  Victorian  Ry.  Commissioners  v. 
Coultas,^*  which  v^as  much  relied  upon  by  defendants  in  the 
argument  before  us,  the  privy  council  expressly  declined  to 
decide  that  "impact"  was  necessary.  It  is  not  to  be  taken 
that,  in  my  view,  every  nervous  shock  occasioned  by  negligence 
and  producing  physical  injury  to  the  sufferer  gives  a  cause 
of  action.  There  is,  I  think,  one  important  limitation.  The 
shock,  in  order  to  give  a  cause  of  action,  must  be  one  which 
arises  from  a  reasonable  fear  of  immediate  personal  injuries 
to  the  plaintiff.  This  limitation  was  applied  by  Bruce  and 
Wright,  JJ.,  in  the  unreported  case  of  Smith  v.  Johnson  & 
Co.,  where  a  man  was  killed  negligently  by  the  defendant  in 
the  sight  of  the  plaintiff,  and  the  plaintiff  became  ill,  not  from 
shock  produced  by  fear  of  harm  to  himself,  but  from  the  shock 
of  seeing  another  person  killed.  The  court  held  that  this  harm 
was  too  remote  a  consequence  of  the  negligence.^^  ...  It 
remains  to  consider  the  second  form  in  which  defendant's  coun- 
sel put  his  objection  to  the  right  of  the  plaintiff'  to  maintain 
this  action.     He  contends  that  the  damages  are  too  remote,  and 

shied    at    it,    kicl<ed,    and    galloped  case.      He   said:    But   I   think   that 

kicking  for  140  yards,  got  one  leg  those  cases  are  to  be  explained  on  a 

over  the  shaft,  fell  and  kicked  the  different  ground,   namely,   that   the 

driver  as  he  rolled  out  of  the  cart;  damage  which  immediately  resulted 

he  died  from  the  effects  of  the  kick.  from  the  act  of  the  passenger  or  of 

A  verdict  having  been  found  in  favor  the  horse  was  really  the  result,  not 

of  the  executor  of  the  deceased  on  of  that  act,  but  of  a  fright  which 

the    question    of    defendant's    negli-  rendered  that  act  involuntary,  and 

gence,  it  was  ruled  tliat  such  use  of  which  therefore  ought  to  be  rogard- 

the    highway    was    the     proximate  ed  as  itself  the  direct  and  immedi- 

cause  of  the  injury.     The  third  case  ate  cause  of  the  damage, 

referred   to   is   Wilkins  v.   Day,   12  32  §   23. 

Q.  B.  T).  110,  the  facts  being  similar  33  §§  21,  22. 

to  those  in  Harris  v.  Mobbs,  and  the  34  See  §  21. 

ruling     in     accordance     with     that  35  To  the  same  effect.     Cleveland, 

therein.  etc.  R.  Co.  v.  Stewart,  24  Ind.  App. 

These  cases  are  referred  to  in  Wil-  374;    The    Rigel,    [1912]    Prob.    99. 

kiiison  V.  Downton,   [1897]   2  Q.  B.  See    also,    Crawford    v.    McMickens, 

6,  by  Wright,  J.,  in  respect  to  their  —  Ala.  — ,  66  So.  712,  quoting  the 

being  inconsistent  with  the  Coultas  text. 


§  33a]  coMrENSATioN.  93 

relies  iipoi)  the  decision  of  tlie  J»rivj  council  in  Victorian  Rj. 
Commissioners  v.  Conltas.  The  principal  ground  of  their  judg- 
ment is  formulated  in  the  following  sentence :  "Damages  aris- 
ing from  mere  sudden  terror,  unaccompanied  by  any  actual 
physical  injury,  but  occasioning  a  mental  or  nervous  shock, 
cannot  under  such  circumstances,  their  lordships  think,  be  con- 
sidered a  consequence  which  in  the  ordinary  course  of  things 
would  flow  from  the  negligence  of  the  gatekeeper."  A  judg- 
ment of  the  privy  council  ought,  of  course,  to  be  treated  by 
this  court  as  entitled  to  very  great  weight  indeed ;  but  it  is  not 
binding  upon  us ;  and  in  venturing,  most  respectfully,  not  to 
follow  it  in  the  present  case  I  am  fortified  by  the  fact  that 
its  correctness  was  treated  by  Lord  Esher,  M.  R.,  in  his  judg- 
ment in  Pugh  v.  London,  etc.  E.  Co.^^  as  open  to  question; 
that  it  was  disapproved  of  in  Bell  v.  Great  ISTorthern  R.  Co. 
I  prefer  the  decisions  of  the  Irish  courts ;  they  seem 
to  me  strong  and  clear  authorities  for  the  plaintiff's  contention. 
It  is  suggested  on  the  part  of  the  defendants  that  the  applica- 
bility of  the  judgment  in  Bell  v.  Great  ISTorthern  R.  Co.  is 
impaired  by  the  fact  that  the  female  plaintiff  in  that  action 
was  a  passenger  on  the  defendants'  railway  and  as  such  had 
contractual  rights.  It  appears  to  me  that  this  fact  makes  no 
practical  difference  whatever.  There  was  no  special  contract; 
no  notice  to  the  railway  when  they  accepted  her  as  a  passenger 
that  she  was  particularly  delicate  or  liable  to  fright.^''^ 

36  [1896]    2   Q.    B.    248.      In   this  309,    ]25    Am.    St.    099,    18    L.R.A. 

case  the  plaintiff,  while  discharging  (N.S.)   949. 

his  duty  as  a  signalman  in  the  de-  In    Philadelphia,    etc.    R.    Co.    v. 

fcndant's  employment,  endeavored  to  Mitchell,    107    Md.    600,    17    L.R.A. 

prevent  an   accident   to   a  train  by  (N.S.)    974,  it  was  shown  that  the 

signaling  to  the  driver,  and  the  ex-  plaintiff  was  passing  on  a  street  un- 

citement    and    fright    arising    from  der  a  bridge  in  course  of  construc- 

tlie  danger  to  the  train  produced  a  tion ;   a  liammer  fell  tiierefrom  and 

nervous   shock   wliich    incapacitated  broke     hor     umbrella.        She     was 

liim  from  employment.     It  was  held  tlirown  back  by  the  blow  on  the  um- 

that  he  had   been   incapacitated  by  brella  and  sustained  injury  in  con- 

"accidont"  witliin  the  meaning  of  a  sequence  of  a  wrench  caused  by  the 

policy  of  accident  insurance.  fright.      There  was   a   physical   ini- 

37Dulien    v.   Wliite,    [1901]    2   K.  pact  and  therefore,  liability  for  tlie 

B.    669.      Contra,    Miller    v.    Balti-  pliysical  consequences  of  tlie  wrench 

more  &   0.   S.   R.   Co.,   78   Ohio   St.  and  of  the  fright.     Tlie  opinion  cites 


94  SUTPIEKLAND    ON    DAMAGES.  [§    23a 

Before  Dulien  v.  White  was  decided  a  different  conclusion 
from  that  reached  therein  was  arrived  at  in  Massachusetts 
upon  a  state  of  facts  less  favorable  to  the  defendant  than  existed 
in  the  English  case.  The  declared  purpose  of  the  defendant 
was  to  damage  a  house  in  which  the  plaintiff  was,  though  it 
was  not  her  house.  In  her  presence  he  threw  a  large  stone 
against  the  house,  after  which  the  plaintiff  went  into  the  front 
room  of  the  house  with  her  little  child,  and  thereafter  tlic 
defendant  wilfully  threw  a  large  stone  at  the  house  which 
passed  through  one  of  the  blinds  covering  a  window  in  that 
room  and  greatly  frightened  the  plaintiff',  who  was  not  touched 
or  struck.  The  defendant  was  not  liable  for  the  fright  or  the 
consequent  injury  to  the  plaintiff's  health  because  he  had  no 
intention  to  injure  her  or  her  property,  did  not  know  of  her 
delicate  condition,  or  that  she  was  in  that  room.^*  As  between 
these  cases  the  better  reason  lies  with  the  English  case.  The 
Massachusetts  case  seems  a  departure  from  the  established 
principle  respecting  remote  and  pruximate  cause.  A  later  case 
favors  the  right  of  a  pupil  unlawfully  excluded  from  the  public 
schools  to  recover  for  his  suffering  because  of  the  disgrace 
inflicted  upon  him.^^ 

§  24.  Same  subject;  miscellaneous  cases.  Though  denying 
the  right  of  recovery  for  mere  fright,  neither  attended  nor 
followed  by  any  other  injur}',*"  the  supreme  court  of  Texas 
has  sustained  a  recovery  where  a  miscarriage  was  caused  by  a 
mental  shock  unaccompanied  by  any  physical  violence  what- 
ever to  the  person  of  the  injured  woman,  the  defendant  having 
knowledge  of  her  conditi(jn  and  being  chargeable  with  the 
probable  result  of  his  act.'*^  Substantially  the  same  rule  has 
been  favored  elsewhere,  thouiih  there  is  disagreement  concern- 
ing  it.**^     In  a  later  Texas  case  it  was  alleged  by  the  plaintiff 

Dulien   v.   White  and  Bell  v.  Great  412,  40  Am.  St.  866;   San  Antonio, 

Northern   R.   Co.,  supra.  etc.  R.  Co.  v.  Corley,  87  Tex.  432. 

38  White  V.  Sander,  16S  Mass.  41  Hill  v.  Kimball,  76  Tex.  2J0, 
20(i,  2  Am.  Neg.  Rep.  .■)73  7  L.R.A.  618,  as  explained  in  Deni- 

39  Morrison  v.  Lawrence,  181  son,  etc.  R.  Co.  v.  Barry,  08  Tex. 
Mass.    ]27.      See   last   paragraph   of  248. 

§   22.  42  Engle  v.  Simmons,  148  Ala.  92, 

40  Gulf,  etc.  Co.  V.  Trott,  86  Tex.       121   Am.  St.  .59,  7  L.E.A.  (N.S.)   96; 


24] 


COMPENSATION. 


95 


that  as  the  result  of  a  nervous  shock  or  physical  injury,  or 
both,  caused  by  the  collision  of  two  trains  there  was  developed 
a  nervous  affection  known  as  traumatic  neurasthenia ;  as  a  mat- 
ter of  fact  the  plaintiff  was  not  physically  damaged  by  the 
collision  in  the  sense  that  he  sustained  visible  bodily  injury. 
The  conclusion  reached  was  that  where  a  physical  injury  results 
from  a  fright  or  other  mental  shock,  caused  by  the  wrongful 
act  or  omission  of  another,  the  injured  party  is  entitled  to 
recover  his  damages,  provided  the  act  or  omission  is  the  proxi- 
mate cause  of  the  injury  in  the  light  of  all  the  circumstances, 
to  have  been  foreseen  as  a  natural  and  probable  consequence 
thereof,  which  questions  are  for  the  jury.*^  Proof  that  a  woman 
was  negligently  carried  beyond  her  destination  and  thereby 
suffered  from  fright  and  want  of  food  warrants  a  finding  that 
the  occurrence  was  the  proximate  cause  of  a  sickness  which 
immediately  followed.*^  In  such  a  case  substantial  damages 
may  be  recovered  though  there  was  no  physical  injury.^^  Where 
the  defendant,  executing  what  he  thought  was  a  practical  joke, 
said  to  the  plaintiff  that  her  husband  had  met  with  an  accident, 


Stewart  v.  Arkansas  S.  R.  Co.,  112 
La.  764,  (a  sliock  preceded  the 
fright)  ;  Purcell  v.  St.  Paul  City 
R.  Co.,  48  Minn.  134,  IG  L.R.A.  203; 
Kimberly  v.  Howland,  143  N.  C. 
398,  7  L.R.A.  (N.S.)  545.  Contra, 
Morris  v.  Lackawanna,  etc.  R.  Co., 
228   Pa.   198. 

In  a  recent  case  the  Kansas  City 
Court  of  Appeals  held  that  a  fall  on 
a  defective  crossing  of  a  street  rail- 
way, followed  by  fright  because  of 
the  approach  of  a  car,  gave  the 
light  to  recover  for  the  resulting 
nervous  shock  though  no  actual 
physical  injury  resulted  from  the 
fall.  Lowe  v.  Metropolitan  St.  R. 
Co.,  145  Mo.  App.  248. 

It  is  said  in  a  recent  Georgia 
case:  'J'here,  of  course,  may  be  in- 
stances where  fright  may  be  con- 
sidered as  an  element  of  damages, 
but  they  should  be  restricted  to 
where  there  is  some  physical  injury 


attending  the  cause  of  the  fright, 
or,  in  the  absence  of  physical  injury, 
where  the  fright  is  of  such  a  char- 
acter as  to  produce  some  physical 
or  mental  impairment  dircctW  and 
naturally  resulting  from  the  wrong- 
ful act.  Under  any  other  conditions 
fright  should  be  regarded  as  a  mere 
emotion,  and  not  sufliciently  sub- 
stantive to  be  the  basis  of  a  recov- 
ery for  damages.  Williamson  v. 
Central  R.  Co.,  127  Ca.  125;  Sap- 
pington  v.  Atlanta,  etc.  R.  Co.,  127 
Ca.  178. 

43  Gulf,  etc.  R.  Co.  v.  Ilayter,  93 
Tex.  239,  47  L.R.A.  325;  Alexander 
v.  St.  Louis  S.  R.  Co.,  57  Tex.  Civ. 
App.  407. 

44  Texas  &  P.  R.  v.  Gott,  20  Tex. 
Civ.  App.  335. 

45  Pullman  Co.  v.  Lutz,  154  Ala. 
5 J 7,  14  L.R.A. (N.S.)  907,  129  Am. 
St.  67. 


96  SUTHERLAND    ON    DAMAGES.  [§24 

and  that  his  legs  were  broken,  such  ^statement  being  made  with 
intent  that  it  should  be  believed,  as  it  was,  and  the  plaintiff 
became  ill  in  consequence  of  the  resulting  nervous  shock,  and 
not  because  of  previous  ill-health,  weakness  of  constitution,  pre- 
disposition to  nervous  shock  or  any  other  idiosyncrasy,  the  in- 
jury was  not  too  remote.^®  The  rule  that  no  recovery  can  be 
had  for  injuries  due  solely  to  fright  and  excitement,  unaccom- 
panied by  actual,  immediate,  personal  injury,  does  not  apply 
to  cases  of  wilful  tort.*'^  If  the  act  or  default  which  causes  a 
nervous  shock  produces  physical  injuries  and  other  such  inju- 
ries result  from  the  nervous  shock,  there  may  be  a  recovery 
for  the  latter  as  well  as  for  the  others.*^  In  Massachusetts 
a  different  view  was  taken  where  a  passenger  upon  a  street  car 
suffered  physical  injury  from  fright  caused  by  the  removal  of 
a  drunken  man,  and  a  slight,  unintentional  battery  of  the  per- 
son resulted.  The  court  said  of  an  instruction  to  the  effect  that 
if  there  was  a  fright  which  operated  to  the  injury  of  the  plain- 
tiff in  body  or  mind  and  also  a  physical  injury,  the  jury 
might  take  all  that  happened  as  one  whole,  that  the  defend- 
ant was  not  liable  for  all  the  consequences,  but  only  for  those 
of  its  wrong,  which  began  with  the  battery,  and  the  conse- 
quences thereof  were  all  for  which  a  redovery  could  be  had. 
This  was  said  with  recognition  of  the  difficulty  of  discriminat- 
ing.'*^ Mental  suffering  is  the  natural  result  of  an  assault  and 
is  ground  for  recovery  though  no  physical  harm  w^as  sustained.^" 

46  Wilkinson  v.  Downton,  [1897]  Jaclcson,  24  Colo.  App.  225.  See 
2  Q.  B.  57.     The  case  was  admitted       §§  43,  44. 

to    be   without   precedent,   and   was  48  Rea  v.  Balmain  New  F.  Co.,  17 

distinguished    from    Victorian    Ry.  New   South   Wales    (law)    92;    Hei- 

Commissioners  v.  Coiiltas,  supra,  on  berger   v.   Missouri   &   K.   Tel.    Co., 

the  ground  that  therein  was  no  ele-  333   Mo.   App.   452;   Kirkpatrick  v. 

ment  of  wilful  wrong,  "nor  perhaps  Canadian     Pac.     R.     Co.,     35     New 

was  the  illness   so   direct  and  nat-  Bruns.    598.      See    Sullivan    v.    Old 

ural   a   consequence   of   the   defend-  Colony   St.   R.   Co.,   197   Mass.   512, 

ant's  conduct  as  in  this  cfise."  125  Am.  St.  378. 

47  Bouillon  V.  Laclede  G.  L.  Co.,  49  Spade  v.  Lynn  &  B.  R.  Co.,  172 
r48  Mo.  App.  462;  Gillespie  v.  Mass.  488,  5  Am.  Neg.  Rep.  367,  43 
Brooklyn  Heights  R.  Co.,  178  N.  Y.  L.R.A.  832 ;  Hack  v.  Dady,  134  App. 
347,  102  Am.  St.  503,  66  L.R.A.  618;  Div.  253. 

Preiser  v.   Wielandt,   48   App.   Div.  60  Lutterman  v.  Romey,  143  Iowa, 

569,  7  Am.  Neg.  Rep.  558;  Hall  v.       233. 


§    24]  COMPENSATION.  97 

A  miscarriage  resulting  from  threats  to  arrest  a  debtor  hus- 
band/^ by  the  unlawful  imprisonment  of  a  husband,*^  or  hy 
wrongfully  procuring  him  to  be  indicted,  is  not  the  reasonable 
or  natural  result  of  such  acts.^^  One  who  engages  in  a  quarrel 
with  the  husband  of  a  woman  who  is  enceinte,  the  quarrel  being 
carried  on  in  her  hearing  without  knowledge  of  her  presence 
or  condition,  is  not  liable  for  a  miscarriage.^*  A  complaint 
which  alleges  that  in  a  collision  on  the  defendant's  railroad  the 
cars  were  thrown  off  the  track  and  fell  on  the  plaintiff's  prem- 
ises and  against  her  dwelling,  whereby  plaintiff'  was  subjected  to 
great  fright,  nervous  excitement  and  distress  and  her  life  en- 
dangered, does  not  state  a  cause  of  action.^*  An  inexperienced 
youth,  M'ithout  money  through  defendant's  neglect  to  deliver 
a  message,  and  compelled  to  remain  penniless  among  strangers 
for  a  week,  cannot  recover  for  the  anxiety  and  mortification 
endured  because  of  his  belief  that  he  was  looked  upon  with 
suspicion. 

In  a  Xorth  Carolina  case  ^"^  it  was  ruled :  We  are  of  the 
opinion  that  an  action  will  lie  for  pliysical  injury  or  disease 
resulting  from  fright  or  nervous  shocks  caused  by  negligent 
acts.  From  common  experience  we  know  that  serious  conse- 
quences frequently  follow  violent  nervous  shocks  caused  by 
fright,  often  resulting  in  spells  of  sickness,  and  sometimes  in 
sudden  death.  Whether  the  physical  injury  was  the  natural 
and  proximate  result  of  the  fright  or  shock  is  a  question  to  be 
determined  by  the  jury  upon  the  evidence,  showing  the  con- 
ditions, circumstances,  occurrences,  etc.     But  it  must  also  ap- 

51  Wulstein  v.  Mahlman,  57  N.  Y.  66  So.  712,  quoting  tlie  text.  See, 
Super.  50;  Alexander  v.  St.  Louis  Cliicago  &  N.  R.  Co.  v.  Hunerberg, 
S.  R.  Co.,  57  Tex.  Civ.  App.  407.  k;  m.  App.  3S7. 

52  Ellis  V.  Cleveland,  55  Vt.  358.  55  Ewing  v.  Pittsl)urgh,  etc.  R. 
See  Huxley  v.  Berg,   1   Starkie,  98.  ^^  ^  ^^^    °^   ^^^  ^4  L.R.A.  006. 

53  Hampton    v.    Jones,    58    Iowa,  ,„ .,       ,  itt    .         tt   -t  1    /- 
^                           '                     '           56  Voegler  V.  Western  U.  Tel.  Co., 


10  Tex.  Civ.  App.  22!). 


317. 

54  Phillips  v.  Dickerson,  85  111.  11, 
28  Am.  Rep.  607;   Gaskins  v.  Run-  "  Watkins    v.    Kaolin    Mfg.    Co., 

kle,  25  Ind.  App.  584,    (though  de-       ^31   N.  C.  536,  540,  60  L.R.A.  617, 
fendant  knew  plaintiff  was  in  deli-       ^3    Am.    Neg.    Rep.    197;    Lesch    v. 
cate    health    and    easily    excited)  ;       Croat    Nortliern    R.    Co.,    97    Minn. 
Crawford  v.  McMickens,  —  Ala.  — ,       503,  7  L.R.A. (N.S.)  93. 
Suth.  Dam.  Vol.  L— 7. 


98  SUTHERLAND    ON    DAMAGES.  [§24 

pear  that  the  defendant  could  or  should  have  known  that  such 
negligent  acts  would,  with  reasonable  certainty,  cause  such 
result,  or  that  the  injury  resulted  from  gross  carelessness  or 
recklessness,  showing  utter  indifference  to  the  consequences 
when  they  should  have  been  contemplated  by  the  party  doing 
such  acts.  As  a  condition  precedent  to  recovery  in  such  cases 
it  must  appear  that  the  defendant  must  or  ought  to  have  known 
of  the  plaintiff's  perilous  position  or  condition  against  which 
he  should  have  to  exercise  care.  It  has  been  ruled  that  a  mother 
who  has  been  separated  from  her  children  because  not  allowed 
time  to  board  a  train  on  which  they  were  placed  may  recover 
for  her  mental  anguish,  and  that  such  liability  was  not  depend- 
ent upon  the  knowledge  of  the  defendant's  agent  as  to  the  degree 
of  relationship  existing  between  the  plaintiff  and  the  children, 
he  knowing  they  were  in  her  custody  and  that  she  had  bought 
tickets  for  them.^^  Mental  suffering  caused  by  unlawful  expul- 
sion from  a  union  is  ground  of  damage. ^^  In  Washington  puni- 
tive damages  are  not  recognized;  but  when  mental  suffering 
is  the  result  of  a  wrongful  act  against  the  sufferer,  though 
there  is  no  physical  injury,  it  may  be  considered  in  the  allow- 
ance of  damages,  as  where  there  is  a  violation  of  the  right 
to  be  allowed  to  remain  in  a  public  place,^°  and  where  a  land- 
lord wrongfully  enters  upon  leased  premises.^^  In  Colorado 
substantial  damages  are  not  recoverable  by  a  widow  for  mental 
suffering  against  an  undertaker  who,  through  mere  negligence, 
fails  to  prepare  the  body  of  her  husband  for  shipment  so  that 
it  will  be  in  good  condition  when  its  contemplated  destination 
is  reached.  The  court  said  it  would  be  otherwise  if  the  breach 
of  contract  were  accompanied  by  willful,  insulting  or  wanton 
conduct. ^^ 

§  25.  Anticipation  of  injury  as  to  persons;  illustrations.  It 
has  already  been  stated  that  though  consequential  damages  to 
be  recovered  must  be  the  natural  and  probable  effect  of  the  act 

58  International,  etc.  R.  Co.  v.  An-  60  Davis  v.  Tacoma  R.  &  P.  Co.,  35 
chonda    (Tex.  Civ.   App.),  OS  S.  ^V.        Wash.  209,  (Hi   L.R.A.  802. 

743.  61  Nordgren      v.      Lawrence,      74 

59  Schneider   v.   Local   Union,   HG       Wash.  305.     See  §  865. 

La.    270,    5    L.R.A.  (N.S.)    8fll,    114  62  Hall  v.  Jackson,  24  Colo.  App. 

Am.  St.  549.  225. 


§  25] 


COMPENSATION. 


99 


complained  of,  yet  it  is  not  requisite  that  the  wrong-doer  should 
be  able  to  anticipate  who  the  sufferer  will  l)c.®'  If  his  act  has 
a  tendency  to  injure  some  person,  or  many  persons,  and  finally 
does  in  the  manner  which  was  beforehand  probable  cause  such 
injury  it  is  proximate. ^^  This  is  cogently  illustrated  by  the 
case  of  a  spring  gun  set  so  as  to  be  unwittingl}^  discharged  by 
the  first  corner.^*  A  dealer  in  drugs,  for  negligently  bottling 
a  poisonous  drug  and  putting  it  in  market  labeled  as  a  harm- 
less medicine,  or  omitting  to  label  it,  is  liable  to  all  persons 
who,  without  their  fault,  are  injured  by  using  it  though  it  may 
have  been  the  subject  of  many  intermediate  sales  or  it  was 
])ut  within  the  reach  of  an  innocent  user  by  a  third  party.^® 
So  a  person  who,  knowing  another  to  be  a  retailer  of  illuminat- 
ing fluids,  and  that  naphtha  is  explosive  and  dangerous  to  life 
for  such  use,  sells  that  article  to  him  to  be  retailed  to  his  cus- 
tomers, he  being  ignorant  of  its  dangerous  properties,  is  liable 
to  any  person  buying  it  of  such  retailer  if  injured  by  its  explo- 
sion or  ignition.^^     A  manufacturer  and  vendor  of  cylinders 


L^ 


63  Bouillon  V.  Laclede  G.  L.  Co., 
148  Mo.  App.  462,  citing  the  text. 

C4  Cleveland,  etc.  R.  Co.  v.  Tauer, 
S/  176  Ind.  62],  39  L.R.A.(N.S.)  20, 
citing  the  text;  Nelson  v.  State,  32 
Ind.  App.  88,  quoting  the  text. 

65  Jay  V.  Whitfield,  4  Bing.  644; 
Bird  V.  Holbrook,  4  id.  628;  Forney 
V.  Gcldmacher,  75  Mo.  113,  1  Am. 
Neg.  Cas.  319;  The  Annie,  [1909] 
I'rob.  Div.  176.     See  §  17. 

66  Thomas  v.  Winchester,  6  N.  Y. 
;5!)7;  Langridge  v.  Levy,  2  M.  &  W. 
ill 9;  Levy  v.  Langridge,  4  id.  337; 
Norton  v.  Sewall,  106  Mass.  143; 
(icorge  v.  Skivington,  L.  R.  5  Ex.  1 ; 
iJuik  V.  Creamery  P.  Mfg.  Co.,  126 
Iowa,  730,  106  Am.  St.  377;   Darks 

/     V.  Scudder-G.  G.  Co.,  146  Mo.  App. 

/     246;  Tomlinson  v.  Armour,  75  N.  J. 

\      L.  748,  19  L.R.A.(N.S.)  923;  Kuell- 

ing  V.  Lean  Mfg.  Co.,  183  N.  Y.  78, 

J  2  L.  R.A.(N.S.)  303;  Peaslee-G   Co. 

V.  McMatli,  148  Ky.  265,  39  L.R.A. 

\        (N.S.)   465.  "^ 


67  Wellington  v.  Downer  K.  0. 
Co.,  104  Mass.  64,  8  Am.  Rep.  298. 
See  Carter  v.  Towne,  98  Mass.  567, 
96  Am.  Dec.  682,   103  Mass.  507. 

The  sale  of  an  article  in  itself 
harmless  and  which  becomes  dan- 
gerous only  by  being  used  in  combi- 
nation with  some  other  substance, 
without  any  knowledge  by  tiie  ven- 
dor that  it  is  to  be  used  in  such 
combination,  does  not  render  him 
liable  to  an  action  by  one  who  pur- 
chases the  article. from  the  original 
vendee,  and  wlio  is  injured  while 
using  it  in  a  dangerous  combination 
with  another  article,  although  by 
mistake  the  article  actually  sold  is 
different  from  that  which  was  in- 
tended to  be  sold.  Davidson  v. 
Nichols,  11  Allen,  514.  See  Loop  v. 
Litchfield,  42  N.  Y.  351,  1  Am.  Rep. 
543;  Longmeid  v.  Holliday,  6  Ex. 
761;  Langridge  v.  Levy,  Levy  v. 
Langridge,  supra. 

Persons  who  form  a  combination 


100  SUTIIEKLAND    ON    DAMAGES.  [§    25 

intended  for  storing  gases  and  liquids  mnst  answer  to  any  one 
free  from  fault  who  sustains  injuries  therefrom  proximately 
resulting  from  negligence  in  their  manufacture.^®  A  vendor 
who  delivers  an  article  with  a  concealed  defect  rendering  it 
dangerous,  without  giving  notice  thereof,  must  answer  to  any 
person  who  suffers  such  an  injury  therefrom  as  might  reason- 
iibly  have  been  anticipated.^^  But  this  measure  of  responsibility 
is  conditioned  upon  knowledge  of  the  defect  if  the  article  is 
r.ot  inherently  dangerous."'  One  who  knowingly  delivers  an 
apparently  harmless  package  containing  a  dangerous  and  explo- 
sive substance  to  a  common  carrier  for  transportation  without 
giving  him  notice  of  its  contents  is  liable  for  damages  caused 
by  its  explosion  while  the  carrier  is  transporting  it  without 
knowledge  thereof,  with  such  care  as  is  adapted  to  its  apparent 
nature.'^  The  keeping  a  large  quantity  of  gunpowder  in  a 
wooden  building  insuiBciently  secured  and  situate  near  other 
buildings,  thereby  endangering  the  lives  of  persons  in  the  vicin- 
ity, will  subject  the  person  so  doing  to  damages  for  injuries 
suffered  by  any  person  from  its  explosion  though  the  fire  which 
causes  the  explosion  is  accidental  or  results  from  the  negligence 
of  a  third  person.'^  A  carrier  who  places  a  car  containing 
explosives  in  a  position  in  its  yard  where  it  is  subject  to  impact 
from  other  cars  must  answer  for  the  death  of  a  fireman  called 
out  with  the  department  to  subdue  the  fire  caused  by  an  explo- 
sion resulting  from  such  impact.'^  A  person  who  by  public 
false   representations   causes   another   reasonably   to   act  upon 

to  enhance  the  price  of  a  commodity  69  Ward  v.  Pullman  Co.,  138  Ky. 

which    is    the    subject    of    interstate       i)54. 

commerce  must  answer  for  the  dif-  '°  Peaslee-G   Co.   v.   McMath,    148 

ference    between    the    price    a    pur-       ^^Y-  2C5,  39  L.R.A.(N.S.)   465. 

chaser  was  compelled  to  pay  and  its  '^  ^^^ston,   etc.   R.   Co.   v.   Shanly, 

107   Mass.  568;   Farrant  v.  Barnes, 
11  C.  B.   (N.  S.)  553. 

72  Myers  v.  Malcolm,  6  Hill,  292; 
Kinney   v.   Koopman,   1]6  Ala.  310, 

37  L.R.A.  497;  Rudder  v.  Koopman, 
F.  &  Pipeworks,  64  L.R.A.  721,  61       j^g   ^j^    332^  37  ^  j^ ^   ^gg 

C.  C.  A.  387.  73  Houston    B.    &    T.    R.    Co.,    v. 

68  Keep   V.   National    T.    Co.,    154       O'Leary,  (Tex.  Civ.  App.)   136  S.  W. 
Fed.  121.  601. 


reasonable  price  under  natural  com- 
petitive conditions,  regardless  of  the 
locality  in  which  the  plaintiff  did 
business.      Atlanta    v.    Chattanoojira, 


§    25]  COMPENSATION.  101 

them  as  true  in  a  matter  of  business  is  liable  to  make  good 
any  loss  the  latter  may  sustain  from  their  falsity/^  The  serv- 
ants of  a  railroad  company  ran  its  cars,  after  due  warning,  over 
a  hose  being  used  to  convey  water  to  a  burning  building,  thereby 
severing  it  and  preventing  the  extinguishment  of  the  fire.  The 
company  was  liable  though  the  hose  did  not  belong  to  the  plain- 
tiffs and  the  men  in  charge  of  it  were  not  their  servants — 
the  severing  of  the  hose  was  the  proximate  cause  of  the  loss.'* 
The  plaintiff"  engaged  with  the  defendant  to  serve  on  board  the 
latter's  vessel  as  a  common  seaman  on  a  specified  voyage ;  breach, 
that  defendant  neglected  to  supply  and  keep  on  board  a  proper 
supply  of  medicines  as  required  by  a  statute,  whereby  plaintitF's 
health  suffered;  held  a  good  cause  of  action.'^  The  sale  of  a 
saltpetre  cave  was  rescinded  on  the  ground  of  the  vendor's 
fraud ;  the  vendee  claimed  compensation  for  erections  on  the 
premises,  for  their  improvement  and  use  made  prior  to  the 
discovery  of  the  fraud.  The  court  held  that  these  expenditures 
were  not  a  loss  naturally  and  proximately  resulting  from  the 
fraud ;  they  were  not  part  of  the  contract,  but  were  made  by 
the  complainant  of  his  own  choice  in  consequence  of  the  bar- 
gain ;  that  damages  could  not  be  given  upon  the  first  conse- 

74  Morse  v.  Swits,  19  How.  Pr.  Jiosch  v.  Burlington,  etc.  R.  Co.,  44 
275;  Gerhard  v.  Bates,  2  El.  &  B.  Iowa  402,  25  Am.  Rep.  7.14.  See 
476;  Polhill  v.  Walter,  3  B.  &  Ad.  Brown  v.  Wabash,  etc.  R.  Co.,  20  Mo. 
]14;  Davidson  v.  Montgomery  Ward  App.  222;  Jackson  v.  Nashville,  etc. 
&  Co.,  171  111.  App.  355.  See  Ches-  R.  Co.,  13  Lea  491,  49  Am.  Rep.  6G3; 
ter  V.   Dickerson,   52  Barb.   349.  Railway  Co.   v.   Staley,  41  Oliio  St. 

75  Metallic,   etc.   Co.   v.   Fitchburg  J 18,  52  Am.  Rep.  754. 

R.  Co.,  109  Mass.  277,  12  Am.  Rep.  76  Coiicb  v.  Steel,  3   VA.  &    1!.  402. 

689;  Atkinson  V.  Newcastle,  etc.  Co.,  In   this  ease   it   was  contended   that 

L.   R.   6  Ex.  404;   Little  Rock  T.  &  as   the   act  of   [)arliainent    iniposinj; 

E.  Co.  V.  McCaskill,  75  Ark.  133,  112  the  duty  to  keep  a  proper  supply  of 

Am.  St.  48,  70  L.R.A.  680.     But  see  medicine  provided  a  jienalty  for  neg- 

Mott    V.    Hudson    River    R.    Co.,    1  lect  of  that  duty  and  tiiat  it  might 

Robert.  593.  he  sued  for  aiul  collected  by  a  com- 

There  is  no  connection  between  the  mon  informer,  no  action  at  common 

wrongful  occupation  of  the  bank  of  hiw  would  lie  for  damages  resulting 

a  river  and  a  fire,  although  such  oc-  fiom    the    l)reach    of    tlie    statutory 

cupation   may   render   it   impossible  duty;    but   the   court   sustained   the 

for    the    fire   department   to   obtain  action.      Rowning    v.    Goodchild,    2 

water  with  which  to  subdue  the  fire.  W.  Bl.  906 


102  SUTJIEKLAND    ON    DAMAGES.  [§    25 

quence  and  then  upon  successive  subsequent  consequences." 
]jut  it  is  obvious  that  the  expenditures  were  a  proper  item  of 
damages  for  the  fraud,  if,  as  a  fact,  they  were  expenditures 
likely  to  be  made  by  a  purchaser;  for  then  they  were  a  loss 
which  was  the  natural  and  proximate  consequence  of  the  wrong 
done.'^  In  a  case  in  Illinois  the  defendant  contracted,  with- 
out authority  as  agent,  to  sell  land  belonging  to  the  plaintiff, 
and  the  latter  was  put  to  the  expense  of  defending  an  unsuccess- 
ful suit  on  that  contract  for  specific  performance.  He  recov- 
ered as  damages  for  his  trouble  and  the  expense  in  making  such 
defense.'''^  Where  a  horse  was  driven  from  the  stable  of  its 
owner  and  passed  from  a  highway  to  a  vacant  lot  adjoining 
his  premises,  and  there  killed  one  of  a  number  of  children  at 
play  the  owner  was  liable.*" 

§  26.  Consequential  damages  in  highway  cases.  The  gen- 
eral rule  is  that  municipal  corporations  are  bound  to  keep 
their  streets  in  a  reasonably  safe  condition  for  traveh  But 
quasi-miuiici-pRl  corporations,  such  as  counties,  townships  and 
Xew  England  towns,  are  not  under  such  obligation  unless  it  is 
imposed  by  statute,*^   and  clearly  expressed  therein.*^     Such 

77  Peyton  v.  Butler,  3  Haywood,  or  statement  of  the  drawing;  and 
141.  it  appearing  that  the  person  receiv- 

78  In  Peyton  v.  Butler,  supra,  the  ing  the  letter,  availing  himself  of 
court  say:  "The  failure  of  a  post-  the  information  contained  therein, 
master  to  deliver  a  letter  giving  lib-  purchased  of  the  plaintiff,  who  was 
erty  by  a  certain  day  to  pay  for  a  a  vendor  of  lottery  tickets,  a  ticket 
lottery  ticket,  price  one  dollar,  that  had  drawn  a  prize;  the  injury 
would  make  him  liable  for  $20,000  was  held  to  be  the  immediate  conse- 
shoiild  the  ticket  afterward  turn  out  quence  of  the  unlawful  withholding 
to  be  a  prize  of  $20,000.  In  short,  of  the  letter,  and  the  proper  meas- 
the  absurdity  of  such  damages  is  „i.e  ^f  damages  the  net  amount  of 
well  elucidated  by  the  story  of  the  ^.j^^  prize. 

crockeryware   peddler  who  intended  79  Philpot  v.  Taylor,   75  111.   309, 

by  the  sale  and  profits  to  become  a       on   a,,    Tjpp   241 


80  Mills   v.    Bunke,    59    App.    Div. 
N.  Y.)   39. 


merchant   and   then   a   nobleman  of 
the   first   order,   and   afterwards   to 

marry  the  princess."     See  Bishop  v.  ,,          ^ 

Ti-ii-'                T,    TVT      Anr        1          •+  "2    Dillon,    Mun.    Corp.,    §    996; 

Williamson,    11    Me.   495,    where   it  f^    ^ 

was    held    that    a    postmaster    was  Silver  v.  Clay  County,  76  Kan.  228; 

liable  to  an  action   for  refusing  to  l^'ue  Grass  T.  Co.  v.  Grover,  135  Ky. 

deliver  a  letter  according  to  its  ad-  685,  135  Am.  St.  498. 

dress,  but  delivering  it  to  another,  82  Barnett  v.  Contra  Costa  County, 

it  containing  a  list  of  lottery  prizes  67  Cal.  77. 


26] 


COMPEXSATIOX. 


108 


statutes  are  strictly  construed  in  some  states  and  the  right  of 
recovery  is  denied,  especially  in  Maine  and  Massachusetts, 
under  circumstances  which  do  not  prevent  a  recovery  in  other 
jurisdictions.^^  This,  it  is  probable,  has  been  the  result  of 
the  language  employed  in  the  statutes  of  those  states,  which  are 
construed  to  relieve  from  liability  if  the  accident  was  not 
directly  and  solely  the  effect  of  the  insufficiency  of  the  high- 
way.*^ It  is  said  ®^  that  "^some  portion  of  the  harness  or  car- 
riage may  be  defective  and  unsafe,  and  the  accident  may  be  the 
combined  result  of  the  defect  in  the  haraess  or  carriage  and 
the  defect  in  the  way ;  in  such  case  there  is  an  efficient  co-oper- 
ating cause,  in  connection  with  the  defect  in  the  way,  that 
produces  the  injury,  and  the  town  is  not  liable.^^  The  same 
principle  applies  where  a  horse,  becoming  frightened  at  an 
object  for  which  the  town  is  not  responsible,  breaks  away 
from  his  driver  and  escapes  from  control  while  traveling  on 
the  way,  and  afterwards,  while  thus  free  from  management 
and  control,  meets  with  an  injury  through  a  defect  in  the  way.*'' 


83  The  construction  given  tlie  stat- 
utes in  those  states  is  approved  in  a 
Connecticut  case,  it  being  held  that 
the  consequence  of  the  failure  of  a 
town  to  keep  its  highway  in  repair 
is  to  impose  upon  it  the  statiitory 
penalty,  and  that  the  right  to  re- 
cover it  may  be  defeated  by  any  con- 
curring wrong  of  a  third  person  and 
a  defect  in  tlie  way.  In  such  a  case 
tlie  injury  is  not  caused  by  the  de- 
fect. Bartram  v.  Sharon,  71  Conn. 
G86,  71  Am.  St.  225,  46  L.R.A.  144. 
Contra.  Ouverson  v.  Grafton,  .5  N.  D. 
281. 

84  Marble  v.  Worcester,  4  Gray, 
395;  Aldrich  v.  Gorham,  77  Me.  287; 
Moulton  v.  Sanford,  51  Me.  127; 
Davis  v.  Dudley,  4  Allen,  557. 

Liability  is  limited  to  the  direct 
and  immediate  results  of  the  injury, 
and  the  common-law  rule  that  a  re- 
covery may  be  had  for  the  natural 
and  proximate  result  does  not  ap- 
ply. Hence  where  an  injury  result- 
ed from  a  defect  in  a  highway,  and 


the  person  injured  sustained  a  sub- 
sequent injury  by  undertaking  to 
use  tlie  limb  injured  on  the  highway, 
sucli  later  injury  could  not  be  re- 
covered for.  Raymond  v.  Haverhill, 
168  Mass.  382.  Contra.  Wieting  v. 
Millston,  77  Wis.  523.  The  Massa- 
chusetts court  refused  to  follow  this 
case,  and  it  has  been  disapproved  in 
Watters  v.  Waterloo,  126  Iowa,  1!)J). 
In  this  case  the  plaintiff  was  injured 
l)y  a  fall  on  a  defective  walk,  which 
produced  occasional  attacks  of  diz- 
ziness; later,  he  became  dizzy  and 
fell  on  the  walk  and  was  again  in- 
jured; the  latter  injury  was  not  the 
natural  and  proximate  conse(iuence 
of  the  former. 

85  Aldrich  v.  Gorham,  77  Me.  287. 

86  Contra.  Vogel  v.  West  Plains, 
73  Mo.  App.  588,  citing  P.assett  v. 
St.  Joseph,  53  Mo.  300;  Hrennan  v. 
St.  Louis,  92  Mo.  482;  Vogelgesang 
V.  Same,  139  Mo.  127. 

87  Davis  V.  Dudley,  .tuprn  :  ^loul- 
ton  V.  Sanford,  51   :Me.  127:   Marble 


104  SLTTllEBLAND    ON    DAMAGES.  [§    26 

*  "  *  But  whether  the  fright  or  misconduct  of  the  horse 
is  such  as  to  be  regarded  as  the  true  and  proximate  cause  of 
the  injury,  in  any  given  case,  is  to  be  governed  by  the  extent 
of  such  misconduct.  It  may  in  some  remote  degTee  even  bear 
upon  or  influence,  thougli  not  in  any  legal  sense  be  said  to 
cause  it.  'Everything  which  induces  or  influences  an  accident 
does  not  necessarily  and  legally  cause  it.**  And  not  only  is 
it  the  doctrine  of  the  court  in  our  own  state,  but  also  in  Massa- 
chusetts, that  if  a  horse,  well  broken  and  adapted  to  the  road, 
while  being  properly  driven,  suddenly  swerves  or  shies  from 
the  direct  course,  he  is  not  in  any  just  sense  to  be  considered 
as  escaping  from  the  control  of  the  driver  or  becoming  unman- 
ageable if  he  is  in  fact  only  momentarily  not  controlled;  and 
that  if,  while  thus  momentarily  swerving  or  shying,  he  is 
brought  in  contact  with  a  defect  in  the  road  and  an  injury  is 
thereby  sustained  such  conduct  of  the  horse  will  not  be  con- 
sidered as  the  proximate  cause  of  the  accident,  though  it  may 
be  one  of  the  agencies  or  mediums  through  which  it  was  pro- 
duced, aud  a  recovery  may  be  had  for  such  injury.''  *^  This 
is  also  the  rule  in  ^Yisconsin  ^°  and  in  other  states.^^  The  Wis- 
consin case  first  cited  appears  to  go  beyond  the  cases  in  Maine 
and  Massachusetts.     The  fright  of  the  horses  was  caused  by 

V.  Worcester,  4  Gray,  395;   Dig-man  452;   Rucker  v.  Huntington,  G6   W. 

V.   Spokane  County,  43  Wash.   419.  Va.  104,  25  L.R.A.{N.S.)  143;  Rock- 

88Spaulding   v.   Winslow,   74   Me.  ford    v.    Russell,    9    111.    App.    229; 

534.  Joliet  v.  Verley,  35  111.  58;   Denver 

89  Id.;  Titus  v.  Northbridge,  97  v.  Johnson,  8  Colo.  App.  384;  Ken- 
Mass.  258,  93  Am.  Dec.  91;  Stone  v.  nedy  v.  New  York,  73  N.  Y.  365,  29 
Hubbardston,  100  Mass.  55;  Bemis  Am.  Rep.  169;  Burns  v.  Yonkers,  83 
V.  Arlington,  114  Mass.  508;  Wright  Hun,  211  (the  horse  balked  and 
V.  Templeton,  132  Mass.  50;  Mors-  .backed  the  vehicle  off  the  highway 
man  v.  Rockland,  91  Me.  264,  6  Am.  down  a  steep  and  unguarded  bank)  ; 
Xeg.  Rep.  85.  Dillon   v.   Raleigh,   124   N.   C.   184; 

90  Olson  V.  Chippewa  Falls,  71  Chaeey  v.  Fargo,  5  N.  D.  173;  Ouver- 
Wis.  558;  Houfe  v.  Fulton,  29  Wis.  son  v.  Grafton,  5  N.  D.  281;  Cage 
296,  9  Am.  Rep.  568.  v.   Franklin,  8  Pa.   Super.  89;   Yod- 

91  Strange  v.  Bodcaw  L.  Co.,  79  ers  v.  Amwell,  172  Pa.  447,  51  Am. 
Ark.  490,  116  Am.  St.  92;  James  v.  St.  750;  Davis  v.  Snyder,  196  Pa. 
Tampa,  52  Fla.  292,  120  Am.  St.  273,  14  Am.  Neg.  Rep.  654 ;  Stone  v. 
203;  Goldstein  v.  East  Fallowfield,  Pendleton,  21  R.  I.  332;  Rohrbough 
43  Pa.  Super.  158;  Alice,  etc.  Tel.  v.  Barbour  County  Court,  39  W.  Va. 
Co.  V.  Billingsley,  33  Tex.  Civ.  App.  472,    45    Am.    St.    925;    Knouff    v. 


§    26]  COMPENSATION.  105 

something  uot  in  the  highway  and  for  which  the  authorities 
were  not  responsible.  Nevertheless  the  absence  of  a  railing 
to  a  bridge  was  held  the  proximate  cause  of  the  accident.'^ 
The  distinction  made  in  Maine  and  Massachusetts  as  to  the 
duration  of  the  loss  of  control  of  a  horse  by  its  driver  does 
not  appear  to  be  taken  in  many  states  *'  nor  in  Ontario.^*  The 
rule  in  these  jurisdictions  is  that  when  an  accident  happens 
from  a  defect  existing  in  a  highway  as  the  result  of  negligence 
the  fact  that  the  horse  was  at  the  time  uncontrollable  or  run- 
ning away  is  not  a  defense  to  an  action  to  recover  for  the  injury. 
The  Connecticut  court  say:  "The  failure  of  a  traveler  to  be 
continually  present  with  his  team  up  to  the  time  and  place 
of  injury,  when  that  failure  proceeds  from  some  cause  entirely 
beyond  his  control,  and  not  from  any  negligence  on  his  j)art, 
ought  not  to  impose  upon  him  the  loss  from  such  injury,  particu- 
larly when  the  direct  cause  of  the  same  is  the  negligence  of  some 
other  party;  the  loss  should  be  charged  upon  the  party  guilty 
of  the  first  and  only  negligence.  If  the  plaintiff  is  in  the 
exercise  of  ordinary  care  and  prudence  and  the  injurj'  is  attrib- 
utable to  the  negligence  of  the  defendants,  combined  with  some 
accidental  cause  to  which  the  plaintiff  has  not  negligently  con- 
tributed, the  defendants  are  liable."  ISTor  will  the  fact  that 
the  horse  of  the  plaintiff  was  uncontrollable  for  some  distance 

Logansport,     26     Ind.     App.     202.  man,   (58   Md.   389,   G   Am.   St.   440; 

Contra,   Brown  v.   Laurens   County,  Ring  v.  Cohoes,  77  X.  Y.  83,  33  Am. 

38  S.  C.  282.  Kep.  574;  Putman  v.  New  York,  etc. 

Where  the  plaintiff  was  driving  K.  Co.,  47  Hun,  439,  442;  Baldwin 
over  a  defective  bridge  and,  without  y.  Greenwoods  T.  Co.,  40  Conn.  238, 
his  fault,  his  horse  broke  through  k;  Am.  Rep.  33;  Hull  v.  Kansas,  54 
the  bridge  and  plaintiff,  in  trying  jyio.  598,  14  Am.  Rep.  487-  Hunt  v 
to  extricate  him,  was  injured  by  a  p^^^,^^j^  g  y^  ^j^.  ^^inship  v  En- 
blow  from  the  horse,  the  defect  was  g^j^^  ^^  X.  H.  197;  Hey  v  Phila- 
the  proximate  cause  of  the  injury.  j  ,  ,  .  ^^  -r,  .  ^  „„  «  -^ 
Page  V.  Bucksport,  64  Me.  51,  is  ^^'P^"^'  ''  ^^-  '''  ^^  ^^-  ^^^P"  ^33; 
Am.  Rep.  239;  Stickney  v.  Maid-  ^^'^^'^  ''■  ^namosa,  79  Iowa,  204; 
stone,  30  Vt.  378,  73  Am.  D^c.  312;  Manderschid  v.  Dubuque,  25  Iowa 
McKelvin  v.  Loudon,  22  Ont.  70.  ^^^'     ^^'^""^    v-    ^orth    Haven,    43 

9Z  Contra,    Nichols    v.    Pittsfield,  ^onn.   148;    Campbell  v.   Stillwater, 

209  Pa.  240.  '^2  Minn.  308. 

93Lannon  v.  Chicago,  159  111.  App.  94  Sherwood  v.  Hamilton,   37  Up 

595;  Baltimore  &  H.  T.  Co.  v.  Bate-  Can.  Q.   B.  410. 


106  SUTHERLAND    ON    DAMAGES.  [§26 

before  arriving  at  the  place  of  injury  affect  the  liability  of  the 
defendant.^*  l>iit  this  principle  is  not  to  be  extended  to  a 
case  in  which  the  horse  is  left  tied  to  a  post,  breaks  away  there- 
from and  goes  over  an  unguarded  bank  where  he  would  not 
have  been  driven  by  a  prudent  driver.^^  It  may,  however, 
apply  where  the  first  cause  leading  to  the  injury  happened 
outside  of  the  defendant's  road,  as  where  the  horse  became 
uncontrollable  through  fright  upon  a  road  for  which  the  defend- 
ants were  not  responsible  and  ran  from  there  upon  private  prop- 
erty, thence  to  the  original  road  and  finally  and  without  a 
driver  upon  the  defendants'  turnpike."  In  a  Wisconsin  case^® 
the  injured  horse  took  fright  and  escaped  from  his  driver  while 
in  a  field  and  ran  from  thence  to  the  highway,  which  was  out 
of  repair.  The  court  held  that  towns  are  not  bound  to  provide 
roads  for  runaway  horses;  but  if  the  highway  is  so  defective 
as  to  cause  a  team  to  become  frightened  the  town  is  liable.^^ 
In  Minnesota  a  municipality  is  liable  for  an  injury  sustained 
where  a  horse  becomes  frightened  at  a  structure  erected  and 
maintained  in  a  street  by  a  third  party  and  comes  in  contact 
with  a  defect  in  the  street  for  which  the  defendant  is  respon- 
sible.^ If  a  traveler,  using  due  care,  is  exposed  to  imminent 
danger  by  a  defect  in  the  highway  and  to  avoid  the  probable 
consequences  of  coming  in  contact  with  it  and  as  a  reasonable 
precaution  turns  his  horse,  whereby  his  vehicle  is  brought  into 
collision  with  another  vehicle,  which  would  not  have  happened 
if  the  horse  had  not  been  turned,  the  defect  may  be  regarded 
as  the  sole  cause  of  the  injury.^  The  restiveness  of  a  horse 
does  not  break  the  connection  between  a  hole  in  the  highway 

95  Baldwin  v.  Greenwoods  T.  Co.,  98  Jackson  v.  Bellevieu,  30  Wis. 
supra,  approved  in  Ring  v.  Cohoes,  250;  Schillinger  v.  Verona,  90  Wis. 
77  N.  Y.  83,  88,  12  Am.  Neg.  Rep.       456. 

481,  33  Am.  Rep.  574;  Joliet  v.  Shu-  99  Kelley  v.  Fond  du  Lac,  31  Wis. 

feldt,  144  111.  403,  18  L.R.A.  750,  36  179;    Hodge   v.   Bennington,   43   Vt. 

Am.  St.  453;  Judd  v.  Caledonia,  150  451;  Laporte  v.  Osborn,  43  Ind.  App. 

Mich.  480  (defendant  responsible  for  100. 

the  cause  of  the  fright  of  a  horse.)  i  McDowell  v.  Preston,  104  Minn. 

96  Moss    V.    Burlington,    60    Iowa,  263,  18  L.R.A.  (N.S.)   190. 

438,  46  Am.  Rep.  82.  2  Flagg  v.  Hudson,  142  Mass.  280, 

97  Baldwin  v.  Greenwoods  T.  Co.,  56  Am.  Rep.  674.  See  Quinlan  v. 
supra.  Philadelphia,   205  Pa.  309. 


§    27]  *  COMPENSATION.  107 

and  its  fright.^  If  there  is  negligence  in  failing  to  erect  a 
barrier  for  the  protection  of  pedestrians  one  injured  may  recover 
thongli  the  i)riniary  cause  of  his  injnry  was  the  sudden  going 
out  of  the  lights  in  the  street  lamps,*  or  the  occasion  of  his 
coming  into  contact  with  an  obstruction  was  fright  arising 
from  another  cause.^  A  traveler  who  knows  of  an  unguarded 
excavation  and  tries  to  avoid  it,  but  through  mistake  falls  into 
it,  cannot  recover.^  It  is  not  a  defense  to  a  city  that  another 
innocently  or  accidentally,  contributed,  either  before  or  after 
its  default,  or  concurrently  therewith,  in  producing  the  dam- 
age.'^ Expense  reasonably  incurred  to  effect  the  cure  of  nn 
injured  person  is  a  direct  injury.^ 

§  27.  Imputed  negligence.  It  was  formerly  the  law  in  Eng- 
land  that  the  negligence  of  the  driver  of  a  public  conveyance 
was  imputable  to  a  passenger  therein  although  the  latter  exer- 
cised no  control  over  the  former.^  This  doctrine  was  not  author- 
itatively disapproved,  although  it  was  much  commented  on  and 
shaken,  until  1888,  when  it  came  before  the  House  of  Lords  in 
Mills  V.  Armstrong  ^°  with  the  result  that  the  foundation  on 
vrhich  it  rested  was  removed.  The  theory  has  but  little  support 
in  recent  American  cases:  except  in  three  or  four  states  all 
the  recent  adjudications  which  have  come  to  notice  are  hostile 

There  appears  to  be  some  incon-  went  down  an  unguarded  slope,  tlie 

sistency  in  the  Massachusetts  cases  primary  cause  of   the   resulting  in- 

on    the    question    of    consequential  jury  was  the  detaching  of  the  tugs, 

damages  in  highway  actions.     Com-  and   not   the   absence   of   a   barrier. 

pare    Palmer    v.    Andover,    2    Cush.  Card  v.  Columbia,  191  Pa.  254. 

600,  and  Davis  v.  Dudley,  4  Allen,  5  Mayronne    v.    Keegan,    117    La. 

557;  and  see  the  discussion  of  these  661. 

and    other    Massachusetts    cases    in  6  Lyons  v.  Watt,  43  Colo.  238,  IS 

Toms  V.  Whitby,  35  Up.  Can.  Q.  B.  L.R.A.(N.S.)  1135. 

195,  7  Van  Camp  v.  Keokuk,  130  Iowa, 

3  Hubbard  v.  Montgomery  County,  716;  Louisville  v.  Hart,  143  Ky,  171, 

140  Iowa,  520.  35  L.R,A.(N.S.)  207;  Block  v.  Wor- 
kday  Centre  v.   Jevons,  2  Kan.  cester,   186  Mass.   526;    McClure  v. 

A  pp.  568.    See  Burrell  v.  Greenville,  Sparta,    84    Wis.    269,    36    Am.    St. 

133  Mich.  235.  924.     See  Hayes  v.  Hyde  Park,  153 

Where   a  team   was   being  driven  Mass.  514,  12  L.R.A.  249. 

along  a  road  and   the  tugs  became  8  Barron  v.  Watertown,  211  IMass. 

loosened   and   fell   from  the  whififle-  46. 

trees,   the   pole  fell   to   the  ground,  9  Thorogood  v.  Bryan,  8  C.  P.  115. 

the  horses  ran  away  and  the  wagon  10  13  App.  Cas.  1. 


108 


SUTHERLAND    ON    DAMAGES. 


[§   27 


to  it.^^  The  principle  deducible  from  these  decisions,  say  the 
supreme  court  of  Indiana,  is  that  one  who  sustains  an  injury 
without  any  fault  or  negligence  of  his  own,  or  of  some  one 
subject  to  his  control  or  direction,  or  with  whom  he  is  so  identi- 
fied in  a  common  enterprise  as  to  become  responsible  for  the 
consequences  of  his  negligent  conduct,  may  look  to  any  other 
person  for  compensation  whose  neglect  of  duty  occasioned  the 
injury,  even  though  the  negligence  of  some  third  person  with 
whom  the  injured  person  was  not  identified  may  have  contrib- 
uted thereto.^^  But  this  is  not  the  rule  if  the  person  who  is 
riding  witli  another  knows  of  and  acquiesces  in  the  other's 
purpose  to  conmiit  a  wrong  against  a  third  party.     In  such  a 


11  Prideaux  v.  Mineral  Point,  43 
Wis.  513;  Otis  v.  Janesville,  47  id. 
422;  Ilampel  v.  Detroit,  etc.  K.  Co., 
138  Mich.  1,  17  Am.  Neg.  Rep.  84. 
See  McKernan  v.  Detroit  Citizens' 
R.  Co.,  138  Mich.  519,  68  L.R.A.  347. 

12  Little  V.  Hackett,  116  U.  S.  366, 
29  L.  ed.  652;  Wabash,  etc.  R.  Co. 
V.  Shacklet,  105  111.  364,  11  Am. 
Neg.  Cas.  429,  44  Am.  Rep.  791; 
Carlisle  v.  Brisbane,  113  Pa.  544; 
Railway  Co.  v.  Eadie,  43  Ohio  St.  91, 
12  Am.  Neg.  Cas.  510,  54  Am.  Rep. 
802;  Philadelphia,  etc.  R.  Co.  v. 
Hogeland,  66  Md.  149,  12  Am.  Neg. 
Cas.  3,  59  Am.  Rep.  159,  6  Am.  Neg. 
Rep.  168;  New  York,  etc.  R.  Co.  v. 
Steinbrenner,  47  N.  J.  L.  161,  12  Am. 
Neg.  Cas.  258;  Nesbit  v.  Garner,  75 
Iowa,  314,  1  L.R.A.  152,  9  Am.  St. 
486;  Masterson  v.  New  York  Cent, 
etc.  R.  Co.,  84  N.  Y.  247,  12  Am. 
Neg.  Cas.  365;  Knightstown  v.  Mus- 
grove,  116  Ind.  121,  9  Am.  St.  827; 
Sheffield  v.  Central  U.  Tel.  Co.,  36 
Fed.  164;  Strauss  v.  Newburgh  E. 
R.  Co.,  6  App.  Div.  (N.  Y.)  264; 
Hennessey  v.  Brooklyn  City  R.  Co., 
6  App.  Div.  (N.  Y.)  206,  12  Am. 
Neg.  Cas.  295;  Zimmerman  v.  Union 
R.  Co.,  28  App.  Div.  (N.  Y.)  445,  4 
Am.  Neg.  Rep.  665 ;  Ouverson  v. 
Grafton,  5  N.  D.  281 ;  Faust  v.  Phil- 


adelphia &  R.  R.  Co.,  191  Pa.  420, 
6  Am.  Neg.  Rep.  11;  Bamberger  v. 
Citizens'  St.  R.  Co.,  95  Tenn.  18, 
12  Am.  Neg.  Cas.  594,  28  L.R.A, 
486,  49  Am.  St.  909;  Missouri,  etc. 
R.  Co.  V.  Rogers,  91  Tex.  52,  4  Am. 
Neg.  Rep.  82;  Ploof  v.  Burlington 
T.  Co.,  70  Vt.  509,  43  L.R.A.  108; 
Norfolk  &  W.  R.  Co.  v.  Groseclose, 
88  Va.  267,  29  Am.  St.  718;  Atlantic 
&  D.  R.  Co.  V.  Ironmonger,  95  Va. 
625;  Roth  v.  Union  D.  Co.,  13  Wash. 
525,  12  Am.  Neg.  Cas.  638,  12  Am. 
Neg.  Rep.  638,  31  L.R.A.  855;  Turn- 
pike Co.  V.  Yates,  108  Tenn.  428, 
438;  LTnion  Pac.  R.  Co.  v.  Lapsley, 
51  Fed.  174,  2  C.  C.  A.  149,  16 
L.R.A.  800;  Dudley  v.  Wabash  R. 
Co.,  171  Mo.  App.  652;  Dudley  v, 
Peoria  R.  Co.,  153  111.  App.  619; 
Bird  T.  Co.  v.  Krug,  30  Ind.  App. 
G02;  Tennien  v.  Chase,  201  Mass. 
497 ;  Mattson  v.  Minnesota,  etc. 
R.  Co.,  95  Minn.  477,  18  T^n. 
Neg.  Rep.  511,  111  Am.  St. 
483,  70  L.R.A.  503,  overruling 
Fitzgerald  v.  St.  Paul,  etc.  R.  Co., 
29  Minn.  336;  Petersen  v.  St.  Louis 
T.  Co.,  199  Mo.  331;  Sluder  v.  Same, 
189  Mo.  107,  5  L.R.A.  (N.S.)  186; 
Connor  v.  Wabash  R.  Co.,  149  Mo. 
App.  675;  Noakes  v.  New  York 
Cent.  etc.  R.  Co.,  121  App.  Div.  716; 


2Y] 


COMPENSATION. 


109 


case,  in  tlie  absence  of  exculpatory  evidence,  the  passenger  will 
be  presumed  to  be  co-operating  with  the  driver.*^  It  is  said, 
arguendo,  in  Vermont  and  is  held  in  some  states  that  the  rule 
does  not  apply  to  an  action  for  the  benefit  of  a  parent  to  recover 
for  the  death  of  a  child,  the  statute  providing  for  the  recovery 
of  such  damages  as  are  just.^*  Other  courts  hold  the  contrary 
view  where  the  action  for  the  death  of  the  child  is  brousrht 
by  his  personal  representative  ^*  and  where  the  cliild  sues  to 
recover  for  a  personal  injury  it  has  sustained."  The  Connecti- 
cut court  refused  to  apply  the  rule  in  an  action  to  recover  for 


Baker  v.  N.  &  S.  R.  Co.,  144  N.  C. 
36 ;  Duval  v.  Railroad  Co.,  134  N.  C. 
331,  65  L.R.A.  722,  101  Am.  St.  830; 
Shearer  v.  Buckley,  31  Wash.  370, 
14  Am.  Neg.  Rep.  218.  See  Lunder- 
gan  V.  New  York  Cent.  etc.  R.  Co., 
203  Mass.  460,  and  Jones  v.  Scul- 
lard,  [1898]  2  Q.  B.  565,  for  the  rule 
where  the  servant  of  one  person  is 
hired  by  another. 

13  Knightstown  v.  Musgrove,  116 
Ind.  121,  9  Am.  St.  827;  Baltimore 
v.  State,  166  Fed.  641,  92  C.  C.  A. 
335;  St.  Louis  S.  R.  Co.  v.  Cochran, 
77  Ark.  398;  St.  Louis,  etc.  R.  Co.  v. 
Colum,  72  Ark.  1,  15  Am.  Neg.  Rep. 
684;  Jacksonville  E.  Co.  v.  Adams, 
50  Fla.  429;  Southern  R.  Co.  v. 
King,  128  Ga.  383,  11  L.R.A.  (N.S.) 
829,  119  Am.  St.  390  (applying  the 
rule  in  favor  of  a  wife  injvired  while 
riding  with  her  husband)  ;  Herring- 
ton  V.  Macon,  125  Ga.  58;  New  York, 
etc.  R.  Co.  V.  Robbins,  38  Ind.  App. 
172;  Louisville  &  N.  R.  Co.  v.  Wil- 
kins,  143  Ky.  572;  Same  v.  McCar- 
thy, 129  Ky.  814,  130  Am.  St.  494, 
19  L.R.A.  (N.S.)  230;  Devis  v. 
Vanceburg  Tel.  Co.,  121  Ky.  177; 
United  R.  &  E.  Co.  v.  Biedler,  98 
Md.  564,  15  Am.  Neg.  Rep.  333;  Pea- 
body  v.  Haverhill,  etc.  R.  Co.,  200 
Mass.  277;  Chadbourne  v.  Spring- 
field St.  R.  Co.,  199  Mass.  574 ;  Cot- 
ton V,  Willmar,  etc.  R.  Co.,  99  Minn. 


366,  8  L.R.A. (N.S.)  043,  116  Am. 
St.  422;  Burleigh  v.  St.  Louis  T. 
Co.,  124  Mo.  App.  724. 

14  Brannen  v.  Kokomo,  etc.  Co., 
115  Ind.  115,  7  Am.  St.  411. 

15  Ploof  v.  Burlington  T.  Co.,  70 
Vt.  509,  43  L.R.A.  108;  Tucker  v. 
Draper,  62  Neb.  66,  54  L.R.A.  321, 
10  Am.  Neg.  Rep.  307 ;  Atlanta  k  C. 
A.  L.  R.  Co.  v.  Gravitt,  93  Ga.  369, 
26  L.R.A.  553;  St.  Louis  S.  R.  Co. 
V.  Cochran,  77  Ark.  398;  Davis  v. 
Railroad  Co.,  136  N.  C.  115;  Soberer 
v.  Schlaberg,  18  N.  D.  421,  24  L.R.A. 
(N.S.)  520;  Gress  v.  Philadolpliia 
&  R.  R.  Co.,  228  Pa.  482,  32  L.R.A. 
(N.S.)   409. 

16  Berry  v.  St.  Louis,  etc.  R.  Co., 
214  Mo.  593;  Neff  v,  Cameron,  213 
Mo.  350,  18  L.R.A.(N.S.)  320,  127 
Am.  St.  606;  Southern  R.  Co.  v. 
Shipp,  169  Ala.  ^327;  Stotler  v.  Chi- 
cago &  A.  R.  Co.,  200  Mo.  107 ;  Flali- 
erty  v.  Butte  E.  R.  Co.,  40  Mont.  454. 
135  Am.  St.  630;  Norfolk  &  W.  R. 
Co.  V.  Groseclose,  88  Va.  267,  7  Am. 
Neg.  Cas.  51,  29  Am.  St.  718;  VVy- 
more  v.  Mahaska  County,  78  Iowa, 
396,  6  L.R.A.  545,  10  Am.  St.  449; 
Love  v.  Detroit,  etc.  R.  Co.,  170 
Mich.  1  (under  the  survival  statute, 
but  not  under  the  death  act)  ;  Atchi- 
son, etc.  R.  Co.  V.  Calboun,  18  Okla. 
75. 


110  SUTHERLAND    ON    DAMAGES.  [§27 

injuries  sustained  in  consequence  of  a  defective  highway,  the 
statute  authorizing  a  recovery  by  any  person  injured  by  means 
of  a  defect  therein.  It  is  said  that  the  liability  is  penal  in 
its  nature  and  does  not  extend  to  a  case  in  which  the  injuries 
resulted  to  a  traveler  from  the  defect  and  the  culpable  negli- 
gence of  a  fellow  traveler.^'^  There  is  probably  no  dissent  from 
the  doctrine  that  one  who  is  bound  to  care  for  and  protect  a 
child  cannot  profit  because  of  the  neglect  of  his  duty/^  if  that 
was  the  proximate  cause  of  the  injury. ^^  Where  damages  when 
recovered  for  an  injury  to  the  wife  of  the  plaintiff  become 
community  property  and  they  necessarily  join  in  an  action 
therefor,  his  negligence,  if  it  proximately  contributed  to  the 
injury,  will  bar  a  recovery.^"  The  right  of  a  mother  as  a  stat- 
utory distributee  to  one-half  the  sum  recovered  for  the  death 
of  a  child  is  not  affected  by  the  contributory  negligence  of 
her  husband  in  bringing  about  such  death  though  the  action 
is  brought  by  him  alone.^^ 

§  28.  Particular  injury  need  not  be  foreseen.  It  will  appear 
from  a  perusal  of  the  cases  in  which  consequential  damages 
have  been  allowed  and  from  the  principle  on  which  they  are 
recovered,  that  at  the  time  omission  of  duty  occurs  or  the  wrong- 
ful act  is  done  it  need  not  be  certain  such  damages  will  ensue. 
It  is  only  essential  that  the  act  have  a  tendency  and  be  likely 
to  cause  such  damages,  not  that 'they  be  certain  to  follow;  iii 
this  respect  they  are  generally  contingent  and  by  possibility 
may  not  happen.'^^     If  one  remove  or  destroy  a  fence  inclosing 

i7Bartram    v.    Sharon,    71    Conn.  Richmond,  etc.  R.  Co.  v.  Martin,  102 

686,  71  Am.  St.  225,  46  L.R.A.  144.  Va.  201;  Vinnette  v.  Northern  Pac. 

See  Ouverson   v.   Grafton,   5   N.   D.  R.    Co.,    47    Wash.    320,    18    L.R.A. 

281.  (N.S.)    328.     See  Boehm  v.  Detroit, 

18  Atlanta   &   C.   A.   L.   R.   Co.  v.  ]41  Mich.  277. 

Gravit,  supra,  and  cases  cited;    St.  19  Danna  v.  Monroe,  129  La.  138. 

Louis,  etc.  R.  Co.  v.  Coliim,  72  Ark.  20  Easier  v.   Sacramento   G.   &   E. 

1,   15   Am,   Neg.   Rep.   684;    Illinois  Co.,  158  Cal.  514. 

Cent.   R.   Co.   v.   Warriner,   229   111.  21  Phillips  v.  Denver  City  T.  Co., 

91 ;  Indianapolis  St.  R.  Co.  v.  Antro-  53   Colo.  458. 

bus,  33  Ind.  App.  663 ;   Feldman  v.  22  Louisville,  etc.  R.  Co.  v.  Wood, 

Detroit  United  R.,   162   Mich.  486;  113  Ind.  544,  565,  3  Am.  Neg.  Cas. 

Mattson   v.   Minnesota,   etc.   R.   Co.,  197;   Wabash,  etc.  R.  Co.  v.  Locke, 

supra;  Pollack  v.   Pennsylvania  R.  112  Ind.  404,  2  Am.  St.  193;  Brown 

Co.,  210  Pa.  634,  105  Am.  St.  846;  v.  Chicago,  etc.  R.  Co.,  54  Wis.  342, 


§  28] 


COMPENSATION. 


Ill 


a  field,  or  open  a  gap  in  it  there  is  a  possibility  that  animals 
confined  there  may  not  escape  so  as  to  encounter  danger  out- 
side, ^^  or  subject  the  owner  to  expense  iji  recovering  them;^* 


V 


7  Am.  Neg.  Cas.  203;  Hill  v.  Winsor, 
118  Mass.  251;  Barbee  v.  Reese,  60 
Miss.  906;  Christianson  v.  Chicago, 
etc.  R.  Co.,  67  Minn.  94,  16  Am.  Neg. 
Cas.  344;  Rea  v.  Bailmain  New 
F.  Co.,  17  New  South  Wales  (law) 
92;  Henderson  v.  O'Haloran,  114  Ky. 
186,  59  L.R.A.  718;  Corona  C. 
&  I.  Co.  V.  White,  158  Ala. 
627,  20  L.R.A.  (N.8.)  958;  Moore 
V.  Lanier,  52  Fla.  353;  Davis 
V.  Mercer  L.  Co.,  164  Ind  413; 
Cincinnati,  etc.  R.  Co.  v.  Acrea.  42 
Ind.  App.  127,  citing  the  text;  Tuck- 
er &  D.  Mfg.  Co.  V.  Staley,  40  Ind. 
App.  63;  Murphy  v.  Chicago,  etc. 
R.  Co.,  140  Iowa  332;  Coleman  v. 
Perry,  28  Mont.  1  (tlio  code  so  de- 
clares) ;  Bowen  v.  King,  146  N.  C. 
385;  Kimberly  v.  Ilowland,  143  N. 
C.  398,  7  L.R.A.(N.S.)  545;  Gulf 
C.  Co.  V.  Abernathy,  54  Tex.  Civ. 
App.  137.  Compare  Rosan  v.  Big 
Muddy  C.  &  I.  Co.,  128  111.  App.  128. 
/'"The  test  is  whether  a  reasonably 
\prudent  man,  in  view  of  all  they 
/facts,  would  liave  anticipated,  not  "^ 
/necessarily  the  precise  actual  injury, 
I  but  some  like  injury."  Vicksburg, 
Utc.  R.  Co.  v.  Jackson  (Tex.  Civ. 
App.),  133  S.  W.  925;  Texas  &  P. 
R;  Co.  V.  Bigham,  90  Tex.  223. 
•  In  Sneesby  v.  Lancashire  &  Y.  R. 
Co.,  1  Q.  B.  Div.  42,  a  herd  of  plain- 
tiff's  cattle  were  being  driven  along 
sin  occupation  road  to  some  fields. 
The  road  crossed  a  siding  of  defend- 
ant's railway  on  a  level,  and  when 
the  cattle  were  crossing  the  siding 
the  defendant's  servants  negligently 
sent  some  trucks  down  the  siding 
amongst  them,  which  separated 
them  from  the  drovers  and  so  fright- 
ened them  that  a  few  rushed  away 


from  the  control  of  the  drovers,  fled 
along  the  occupation  road  to  a  gar- 
den some  distance  o(T,  got  into  the 
garden  through  a  defective  fence, 
and  thence  on  to  anotlier  track  of 
the  defendant's  railway  and  were 
killed.  The  result  was  not  too  re- 
mote. The  court  said  that  Uic  re- 
sult of  the  negligence  was  twofold : 
first,  that  tiie  trucks  separated  llic 
cattle,  and  second,  that  the  cattle 
were  frightened  and  became  infuri- 
ated and  were  driven  to  act  as  they 
would  not  have  done  in  tlieir  natur- 
al state:  that  everything  that  oc- 
curred or  was  done  after  tliat  must 
be  taken  to  have  occurred  or  been 
done  continuously;  and  tiiat  it  was 
no  answer  to  say  that  the  fence  was 
imperfect,  for  the  question  would 
have  been  the  same  had  there  been 
no  fence  there.  Compare  West  Ma- 
lianoy  v.  Watson,  116  Pa.  344,  2  Am. 
St.  604.  See  Rucker  v.  Freeman,  50 
N.  H.  420,  9  Am.  Rep.  267;  Ala- 
bama, etc.  R.  Co.  V.  Chapman,  80 
Ala.  615;  Isham  v.  Dow's  Est.,  70 
Vt.  588,  5  Am.  Neg.  Rep.  106,  45 
L.R.A.  87. 

23  Powell  v.  Salisbury,  2  Y.  &  J. 
391;  White  v.  McNett.  33  N.  Y.  371; 
Welch  V.  Piercy,  7  Ired.  365;  Hale- 
strap  V.  Gregory,  [1895]  1  Q.  B.  561. 

The  act  of  opening  a  fence  which 
incloses  a  pasture  in  which  horses 
are  kept  is  the  proximate  cause  of 
injury  to  them  if  they  escape  and 
come  in  contact  with  a  barbed-wire 
fence,  such  material  being  largely 
used  for  fencing  in  the  adjacent 
country.  West  v.  Ward,  77  Iowa, 
323,  14  Am.  St.  284. 

24  Bennett  v.  Lockwood,  20  Wend. 
223,  32  Am.  Dec.  532. 


112  SUTllEliLAND    ON    DAMAGES.  [§    28 

and  it  is  possible  that  other  cattle  will  not  trespass  upon  such 
field  to  destroy  a  crop  there,^*  or  to  do  injury  to  an  animal 
there/^  or  to  receive  injury ;  ^'  but  the  wrong  done  in  opening- 
such  inclosure  is  so  likely  to  lead  to  these  injurious  results 
that  they  are  proximate  if  they  occur.  Opening  the  fence 
does  not  cause  an  animal  to  pass  through  it ;  it  offers  the  oppor- 
tunity, exposes  to  injury  property  within  or  property  outside 
of  it,  or  both.  It  is  in  this  manner  that  the  primary  and  effi- 
cient cause  generally  produces  consequential  damages.  The 
party  injured  in  his  person  or  property  is  by  the  wrongful 
act  of  another  or  his  culpable  negligence  exposed  or  left  in 
exposure  from  some  cause  imminent  and  fairly  obvious  in  exist- 
ing circumstances  or  otherwise,  and  through  such  exposure 
the  injury  ultimately  and  proximately  reaches  him.  The  wrong- 
ful act  is  the  cause  of  the  injury  in  the  natural  and  probable 
course  of  events  by  subjecting  the  party  injured  unlawfully 
to  other  and  dependent  causes  from  which  the  injury  directly 
in-oceeds.  In  this  way  at  least  the  relation  of  cause  and  effect 
nmst  be  established  between  the  wrongful  act  and  the  injurious 
consequence.'^^  The  owner  of  a  vessel  employed  in  building 
a  sea  wall  was  given  by  the  owner  of  the  wall  the  exclusive 
right  to  its  use  as  a  place  of  safety  for  his  vessel.     The  master 

25  Scott  V.  Kenton,  81  111.  96.  R.  Co.  v.  Acrea,  42  Intl.  App.  127; 
Injury   done   by   trespassing   ani-       Atchison,   etc.   R.   Co.   v.   Parry,   67 

mals  owned  by  a  third  person  is  not  Kan.  515;  Hartzler  v.  Metropolitan 

the  direct  result  of  the  destruction  St.  R.  Co.,  140  Mo.  App.  665;  Inter- 

of  the  fence  which  inclosed  the  crops  national,   etc.   R.   Co.   v.  Russell,  48 

damaged.     Berry  v.  San  Francisco,  Tex.   Civ.  App.   155;    Ray  v.  Pecos, 

etc.  R.  Co.,  50  Cal.  435;   Durgin  v.  etc.   R.   Co.,  40  Tex.   Civ.  App.   99; 

Neal,  82  Cal.  595.  Olmsted    v.    Brown,    12    Barb.    657; 

26  Lee  V.  Riley,  18  C.  B.    (N.  S.)  Schumaker  v.  St.  Paul  &  D.  R.  Co., 
722.  46  Minn.  39,  12  L.R.A.  257;   Chris- 

27  Lawrence  v.  Jenkins,  L.  R.  8  Q.  tianson   v.   Chicago,   etc.   R.  Co.,   67 
15.  274.  Minn.  94;   Beopple  v.  Railroad,  104 

28  United  States  Exp.  Co.  v.  Tay-  Tenn.  420;   Oilman  v.  Noyes,  57  N. 
lor  (Tex.  Civ.  App.),  156  S.  W.  617;  H.   627. 

Chicago,  etc.  R.  Co.  v.  Word    (Tex.  Tlie  negligence  of   tlie   proprietor 

Civ.   App.),   158    S.   W.   561,   citing  of  a  store  in  failing  to  guard  an  ele- 

the  text;   Marsh  v.  Usk  H.  Co.,  73  vator  shaft,  and  not  the  stumbling 

Wash.  543;   Weiser  v.  Holzman,  33  of    a    customer,    is    the    proximate 

Wash.  87,  99  Am.  St.  932;   Ford  v.  cause  of  tlic  latter's  death  from  fall- 

Hine,  237   111.  463;    Cincinnati,  etc.  ing   into  the  shaft  after   stumbling 


§  29] 


COMPENSATION. 


n.". 


of  aiiot.Iicr  vessel,  without  permission,  pl.iccd  her  behind  the 
^vall  and  refused  to  move  her  when  requested,  the  former  desir- 
ing to  put  liis  there  as  a  place  of  safety  against  a  storm.  This 
vessel  was  sunk  by  the  storm  while  thus  excluded  from  that 
130sitiou.  The  sinking  was  the  proximate  consequence  of  being 
denied  the  shelter  of  the  wall.^^  It  is  not  required  that  the 
damages  be  foreseen,  as  consequential  damages  from  a  breach 
of  contract  must  be  contemplated  by  the  parties  when  they 
enter  into  it.^°  Nor,  on  the  other  hand,  will  the  wrong-doer 
be  liable  for  every  possible  damage  which  may  indirectly  ensue 
from  his  misconduct.^^ 

§  29.  The  act  complained  of  must  be  the  efficient  cause.  The 
defendant's  misconduct  must  be  the  efficient  cause  and  the 
injury  which  follows  must  be  such  as  ought  to  have  been  tore- 
seen  as  a  probable  consequence  in  the  light  of  surrounding  cir- 
cumstances.^^   There  is  generally  another  and  more  immediate 


over  a  platform  upon  which  the 
goods  he  was  inspecting  Avere  dis- 
played, they  being  neai*  the  shaft. 
Kosenbaum  v.  Shoftner,  08  Tenn. 
()24. 

One  placed  in  a  position  of  danger 
by  the  act  or  neglect  of  anotlier  be- 
comes the  primary  cause  of  a  result- 
ing injury  to  the  other  by  failing  to 
use  diligence  to  discover  the  danger 
and  avoid  it.  Louisville  &  N.  R. 
Co.  v.  Wene,  202  Fed.  887,  121  C.  C. 
A.  245. 

29  Derry  v.  Flitner,  118  Mass.  131 ; 
Tinsman  v.  Belvidere  D.  E.  Co.,  26 
N.  J.  L.  148,  69,  Am.  Dec.  56.5. 

30  Bowas  v.  Pioneer  Tow  Line,  2 
Sawyer,  21  ;  Haase  v.  Morton,  138 
Jowa,  205;  West  v.  Bristol  T.  Co., 
[]{)08]   2  K.  B.  14. 

31  Beach  v.  Ranney,  2  Hill,  314; 
Central  R.  Co.  v.  Dorsey,  116  Ga. 
719;  Snyder  v.  Colorado  Springs, 
etc.  R.  Co.,  36  Colo.  288,  118  .Am. 
St.  110,  8  L.R.A.(N.S.)   781. 

32  United  States  F.  &  G.  Co.  v. 
Des  Moines  Nat.  Bank,  74  C.  C.  A. 

Suth.  Dam.  Vol.  I.— 8. 


553;  Kansas  City  S.  R.  Co.  v.  i'run- 
ty,  66  C.  C.  A.  163;  Cole  v.  German 
S.  &  L.  Soc,  59  C.  C.  A.  593,  63 
L.R.A.  416;  Chesapeake  &  0.  R.  Co. 
v.  Wills,  111  Va.  32;  Same  v.  Paris, 
m  Va.  41,  28  L.R.A.  (N.S.)  773; 
Winfree  v.  Jones,  104  Va.  39,  1 
L.R.A.  (N.S.)  201;  Brame  v.  Light, 
etc.  Co.,  95  Miss.  26,  21  L.R.A. 
(N.S.)  468;  Haas  v.  Tough,  67  Kan. 
253;  Haley  v.  St.  Louis  T.  Co.,  179 
Mo.  30,  64  L.R.A.  295;  Bowers  v. 
East  Tennessee,  etc.  R.  Co.,  144  N. 
C.  684,  12  L.R.A. (N.S.)  446:  Clin- 
ton v.  Lyons,  [1912]  3  K.  B.  198. 
See  Parkinson  v.  Kortum,  14S  Iowa, 
217;  Wigal  v.  City  of  Parkersburg, 
74  W.  Va.  25,  52  L.R.A.  (N.S.)  465. 
The  prior  misconduct  of  the  de- 
fendant in  a  personal  injury  action 
lias  nothing  to  do  with  the  loSs  sus- 
tained by  the  plaintiff  in  conse- 
quence of  a  peculiar  nietiiod  of  doing 
business  piirsued  by  liim,  which  pre- 
vented sales  of  goods  during  his 
disability.  ^IcDonnell  v.  ^linncapo- 
lis,  etc.  R.  Co.,  17  N.  D.  604. 


114  SUTilEKLAND    ON    DAMAGES.  [§29 

cause  of  the  injury;  the  primary  cause,  to  be  deemed  respon- 
sible and  efficient  for  the  purpose  of  recovering  damages,  must 
luivc  directly  set  in  motion  an  intervening  and  more  immediate 
agency  or  be  directly  in  fault  for  the  exposure  of  the  injured 
party  to  its  injurious  iniluence.^^  The  wrongful  refusal  of  a 
corporation  to  register  among  its  members  one  who  has  pur- 
chased shares  of  its  stock  on  the  ground  that  there  was  a  debt 
due  it  from  the  original  owner  does  not  make  it  liable  to  such 
owner  for  a  decline  in  their  value  occurring  between  the  times 
when  the  transfer  ought  to  have  been  registered  and  when  in 
fact  it  was  registered,  such  decline  damaging  the  transferor 
because  of  the  terms  of  the  contract  between  him  and  the  trans- 
feree, of  which  the  company  had  no  notice.  There  is  no  con- 
nection between  the  market  price  of  the  shares  and  the  act 
of  the  corporation.^*  A  bridge  erected  over  a  slough  of  a  river 
and  a  part  of  the  highway  from  the  business  part  of  a  city 
to  a  levee  on  the  river  became  impassable  for  want  of  repairs, 
by  reason  of  which  the  owner  of  a  lot  of  wood  which  had  been 
collected  at  the  levee  for  transportation  over  the  bridge  was 
unable  to  so  transport  it.  While  lying  there  under  these  cir- 
cumstances it  was  washed  away  by  a  freshet.  The  damages 
were  too  remote  to  be  the  consequence  of  the  neglect  to  repair 
the  bridge.^^  The  defendant's  negligence  did  not  consequen- 
tially cause  the  loss  of  the  wood,  if  it  could  be  moved  to  a 
place  of  safety  in  another  direction ;  nor  was  the  loss  by  freshet 
proximate  unless,  according  to  the  general  experience,  it  was 

33  Teis   V.    Smuggler   M.    Co.,   158  us  the  cause  of  the  injury,  the  lirst 

Fed.  260,  85  C.  C.  A.  478,  15  L.R.A.  must  be  considered  as  too  remote." 

(N.S.)    893;   Louisville  &  N.  R.  Co.  Chicago  T.  &  T.  Co.  v.  Chicago,  110 

V.  Keiffer,  332  Ky.  419;  Schoultz  v.  uj    ^         ggg 

Eckardt  Mfg.  Co.,  ]12  La.  568,  104  «  n,  ,  .      <     ,         t^  , 

^  '  '  35  Dubuque,  etc.  Ass  n  V.  Dubuque, 

Am.  St.  452.  „„  ^  /.„  ^ 

o,.  r,,  ■  T        n        KT     •        T  20  Iowa,  1/6. 

34  Skinner  v.  London  Marine  Ins. 

Co.,  14  Q.  B.  Div.  882.  See  Bour-  ^°^  ^''°  negligently  injures  a 
dette  V.  Sieward,  107  La.  258,  hold-  ^""'^  ^P*^"  *«  P^^^^^  "^^  is  not  liable 
ing  a  similar  rule  where  inspection  <^o  ^  vessel  owner  whose  vessel  is 
of  corporate  books  was  denied  a  detained  outside  the  dock  while  re- 
stockholder,  pairs  are  being  made.  Anglo-Am.  S. 
"If  a  new  force  or  power  has  in-  Co.  v.  Houlder  Line,  [1908]  1  K.  B. 
tervened,  of  itself  sufficient  to  stand  659. 


29] 


COMPENSATION. 


115 


a  i)robiib]e  occurrence.  The  loss  of  an  office  as  the  result  of 
an  assault  and  battery  is  too  remote,  and  too  much  the  result 
of  other  and  independent  causes  to  be  taken  into  consideration,^" 
So  where  the  defendant  libeled  a  concert  singer  who,  in  conse- 
quence, refused  to  sing  at  the  plaintiff's  oratorio  for  fear  of 
being  badly  received,  this  damage  was  not  snlHciontly  con- 
nected with  the  act  of  the  defendant.  The  refusal  to  sing  might 
have  in-oceeded  from  groundless  apprehension  or  caprice,  or 
some  other  cause  altogether  different  than  that  alleged.^''     it 


!1G  Blown  V.  Cumraings,  7  Allen, 
507;  Boyce  v.  Bayliffe,  1  Camp.  58; 
Uoey  V.  Felton,  11  C.  B.  (N.  S.) 
142:  Burton  v.  Pinkerton,  L.  R.  2 
Kx.  340;  Smitha  v.  Gentry,  20  Ky. 
L.  Rep.  171,  42  L.R.A.  302,  citing 
llif  text. 

37  Ashley  v.  Harrison,  1  Esp.  48. 
In  Taylor  v.  Neri,  id.  386,  it  ap- 
peared that  the  defendant  beat  an 
actor  and  thereby  disabled  and  pre- 
vented him  from  performing  his  en- 
gagement with  the  plaintiff;  the  in- 
jury to  tlie  manager  was  too  remote. 

These  two  eases  came  under  criti- 
cism in  Lumley  v.  Gye.  2  El.  &  B. 
216,  which  was  an  action  by  the 
manager  of  a  theatre  against  the 
manager  of  a  rival  theatre  for  pro- 
curing a  singer  to  break  her  engage- 
ment. The  circumstance  that  the 
plaintiff  had  an  action  against  the 
singer  herself  upon  her  agreement 
was  overruled,  and  the  plaintiff  re- 
covered on  the  principle  that  the  de- 
fendant incurred  the  same  liability 
for  interfering  with  such  a  servant 
as  any  other.  Wightman,  J.,  said: 
"In  the  present  case  there  is  the 
malicious  procurement  of  Miss  W. 
to  break  her  contract,  and  the  con- 
sequent loss  to  the  plaintiff.  Why, 
then,  may  not  the  plaintiff  main- 
tain an  action  on  the  case  ?  Because, 
as  it  is  said,  the  loss  or  damage 
is  not  the  natural  or  legal  conse- 
quence of  tlie  acts  of  the  defendant. 


There  is  tlie  injurin  and  tlic  (hun- 
num;  but  it  is  contended  that 
the  damnum  is  neither  the  natural 
nor  legal  consequence  of  tlie  in- 
juria, and  that,  consequently,  tiie  ac- 
tion is  not  maintainable,  as  the 
breaking  of  her  contract  was  the 
spontaneous  act  of  Miss  VV.  herself, 
who  was  under  no  obligation  to  yield 
to  the  persuasion  or  procurement  of 
the  defendant.  Another  case  of  Vi- 
cars v.  Wilcocks,  8  East,  1,  which, 
though  it  has  been  brought  into 
question,  has  never  been  directly 
overruled,  was  relied  upon  as  an  au- 
thority upon  this  point  for  the  de- 
fendant. That  case,  however,  is 
clearly  distinguishable  from  the 
present  upon  the  ground  suggested 
by  Lord  Chief  Justice  Tindal  in 
Ward  V.  Weeks,  7  Bing.  211,  21.'), 
that  the  damage  in  that  case,  as 
well  as  in  Vicars  v.  Wilcocks,  was 
not  the  necessary  consequence  of  the 
original  slander  uttered  by  the  de- 
fendants, but  the  result  of  spon- 
taneous and  unauthorized  communi- 
cations made  by  those  to  whom  the 
words  were  uttered  by  the  defend- 
ants. The  distinction  is  taken  in 
Green  v.  Button,  2  Cr..  M.  &  R.  707. 
in  which  it  was  held  the  action  was 
maintainable  against  the  defendant 
for  maliciously  and  wrongfully  caus- 
ing certain  persons  to  refuse  to  de- 
liver goods  to  the  plaintiff  by  as- 
serting that  he  had  a  lien  upon  them 


116 


SUTHEKLAND    ON    DAMAGES. 


[§  29 


is  not  the  natural  result  of  enticing  a  minor  daughter  from  her 
home,  against  her  father's  objections,  and  employing  her  to 
work  in  defendant's  home  that  she  should  be  seduced  by  the 
latter's  son.^^  The  killing  of  the  plaintiff's  son,  without  wilful 
intent  to  injure  the  plaintiff,  does  not  give  the  latter  a  cause 
of  action  for  the  breach  of  a  contract  on  the  son's  part  to 
support  his  father.^^  There  is  no  connection  between  defama- 
tory statements  made  respecting  one  who  desires  employment 
and  is  required  to  gi'se  a  bond  to  his  employer  and  the  refusal 
of  a  company  to  give  such  bond  because  of  such  statements; 
between  the  defendant's  wrong  and  the  plaintiff's  damage  the 
voluntary  act  of  a  third  party  intervened  and  was  the  proxi- 
mate cause  of  the  loss  of  employment.*"  A  claim  of  damages 
for  goods  frozen  because  the  defendant  had  taken  a  false  and 
spurious  deed  of  land,  thereby  preventing  the  digging  of  a 
cellar  in  which  to  put  the  goods,  cannot  be  allowed.'*^  Defend- 
ant negligently  stored  oil  on  a  wooden  platform  of  its  freight 


and  ordering  these  persons  to  retain 
the  goods  until  further  orders  from 
him.  It  was  urged  for  the  defend- 
ant in  that  case  that  as  the  persons 
in  wliose  custody  the  goods  were, 
were  under  no  legal  obligation  to 
obey  the  orders  of  the  defendant  it 
was  a  mere  spontaneous  act  of  these 
persons  which  occasioned  the  dam- 
age to  the  plaintiff;  but  the  court 
held  the  action  maintainable  though 
the  defendant  did  make  the  claim 
as  of  right,  he  having  done  so  mali- 
ciously, and  without  any  reasonable 
cause,  and  the  damage  accruing 
thereby." 

The  doctrine  of  Vicars  v.  Wilcocks 
and  cases  of  that  class  does  not  ex- 
clude responsibility  when  the  dam- 
age results  to  the  party  injured 
through  the  intervention  of  the  legal 
and  innocent  acts  of  third  parties, 
for  in  such  instances  damage  is  re- 
garded as  occasioned  by  the  wrong- 
ful cause  and  not  by  those  which  are 
not  wrongful ;  as  where  one  who  de- 


sires to  make  the  customer  of  an- 
otlier  believe  that  the  work  done  for 
him  is  badly  done,  and  to  accomplish 
that  end  loosens  a  shoe  put  on  the 
customer's  horse.  In  such  case  the 
person  who  defames  tlie  horseshoer 
is  responsible  to  him  for  the  loss  of 
the  patronage  which  may  result 
from  his  act.  Hughes  v.  Mc- 
Donough,  43  N.  J.  L.  459,  3!)  Am. 
Rep.  603. 

38  Stewart  v.  Strong,  20  Ind.  App. 
44. 

39  Brink  v.  Wabash  R.  Co.,  160 
Mo.  87,  53  L.R.A.  811,  83  Am.  St. 
459;  Gregory  v.  Brooks,  35  Conn. 
437,  95  Am.  Dec.  278;  Conecticut 
Mut.  L.  Ins.  Co.  V.  New  York,  etc. 
R.  Co.,  25  Conn.  265,  65  Am.  Dec. 
571. 

40  McDonald  v.  Edwards,  20  N.  Y. 
Misc.  523;  Pickett  v.  Wilmington 
&  W.  R.  Co.,  117  N.  C.  616,  53  Am. 
St.  611,  30  L.R.A.  257. 

41  Cormier  v.  Bourque,  32  New 
Bruns.  283. 


§    30]  COMPENSATION.  117 

house  in  a  town  and  had  done  so  for  such  a  length  of  time 
that  the  platform  and  the  ground  beneath  it  had  become  satu- 
rated with  oil.  A  lire  was  caused  by  throwing  a  match  upon 
the  ground  under  the  platform  by  a  person  not  connected 
with  the  defendant,  but  who  was  rightfully  on  the  premises. 
The  defendant  was  not  liable  for  the  loss  of  buildings  near 
the  freight  house  as  the  result  of  the  fire.*^  15ut  the  rule  is 
otherwise  if  the  substance  negligently  exposed  is  liable  to  ignite 
spontaneously  and  produce  damage.*'  One  who  removes  burn- 
ing material  to  a  place  of  safety  in  order  to  save  his  own 
property  and  it  there  ignites  and  destroys  the  property  of 
another,  which  would  otherwise  not  have  been  burned,  must 
answ^er  for  its  loss  regardless  of  the  comparative  value  of  the 
property  saved  thereby  and  the  value  of  that  bunied."  A  per- 
son who  calls  a  convalescent  over  the  telephone  and  gives  infor- 
mation as  to  a  fact,  though  violent  language  is  used,  is  not 
liable  for  the  bodily  pain  and  mental  anguish  produced  there- 
by.*^ The  failure  of  a  burglar  alarm  system  to  work  on  a 
single  occasion  does  not  impose  liability  upon  the  contractor 
for  the  loss  of  goods  taken  by  burglars.*^  The  neglect  of  the 
purchaser  of  property  to  put  it  in  repair  intervenes  between 
the  negligence  of  the  builder  in  failing  to  do  so  and  an  injury 
occurring  after  its  sale.*' 

§  30.  Same  subject.  A  lease  of  a  canal  was  made  by  com- 
missioners of  navigation  under  a  statute  providing  that  if  the 
lessee  should  permit  the  work  to  be  out  of  repair  the  commis- 
sioners should  give  him  notice  to  repair,  and  on  his  neglect- 
ing to  make  the  repairs  they  might  make  them  and  pay  the 
expenses  out  of  the  tolls.  A  lock  forming  part  of  the  canal 
fell  and  detained  a  barge.  In  an  action  for  that  detention 
against  the  commissioners  for  neglecting  to  give  notice  to  the 

42  Stone  V.  Boston  &  A.  R.  Co.,  171  ^5  Kramer      v.      Kicksmeier,      159 
Mass.  536,  4  Am.  Neg.  Rep.  490,  41  Iowa,  48,  45  L.R.A.(N.S.)  928. 
L.R.A.   794;    Home   O.   &  G.   Co.   v.  46  Silverblatt  v.   Brooklyn   Tel.   & 
Dabney,  79  Kan;  820.  M,   Co.,    150   App.   Div.   268;    Nird- 

43  Vaughan  v.  Menlove,  3  Bing.  linger  v.  American  Dist.  Tel.  Co., 
(N.  C.)   468.  245  Pa.  453. 

44Latta   V.   New   Orleans,   etc.   R.  47  Omaha  v.  Armour,  196  Fed.  S85, 

Co.,  131  La.  272.  110  C.  C.  A.  447. 


118  SUTHERLAND    ON    DAMAGES.  [§    30 

lessee  to  repair  it  was  held  that  the  action  would  not  lie  be- 
cause the  detention  was  not  a  damage  naturally  flowing  from 
the  alleged  neglect,  it  not  being  shown  that  if  such  notice  had 
been  given  the  lessee  would  have  repaired  or  that  the  commis- 
sioners would  have  done  so.  Pollock,  C.  B. :  "'To  say  that 
the  damages  could  be  the  consequence  of  the  wrongful  act  or 
omission  is,  in  our  judgment,  to  assert  a  false  proposition  of 
law.  The  surmise  is, — if  the  notice  had  been  given  the  repairs 
would  have  been  done  and  the  lock  would  not  have  fallen. in, 
and  so  not  giving  notice  caused  the  lock  to  fall  in.  As  we 
have  said,  this  is  not  proved;  but  it  is  not  the  proximate,  nec- 
essary or  natural  result  of  not  giving  notice.  The  not  giving 
notice  is  not  sufficient  to  bring  about  the  result;  the  giving  of 
it  would  not  be  sufficient  to  hinder  it.-'  *^  Here  the  immediate 
cause  of  the  detention  was  the  obstruction  and  want  of  repair 
of  the  canal;  the  alleged  wrong  of  the  defendant  did  not  put 
the  canal  out  of  repair,  and  as  the  commissioners  were  not 
absolutely  required  to  do  anything  but  give  notice,  as  a  step 
towards  repair,  it  could  not  be  assumed  as  a  matter  of  law  that 
doing  so  would  have  caused  the  repair  to  be  made.  The  rela- 
tion of  cause  and  elfect  between  the  wrongful  act  and  the 
alleged  injurious  consequence  was  not  established.  It  is  indis- 
pensable that  the  plaintiff  should  show  not  only  that  he  has 
sustained  thunage,  and  that  the  defendant  has  committed  a  tort, 
but  that  the  damage  is  the  clear  and  necessary  consequence  of 
the  tort  and  that  it  can  be  clearly  defined  and  ascertained.*^ 

48  Walker  v.  Goe,  3  H.  &  N.  395.  which  starts  up  again,  is  not  severed 

49  Hadwell  v.  Eighton,  [1907]  2  by  the  nonaction  of  a  third  person 
K.  B.  245;  Lamb  v.  Stone,  11  Pick.  after  the  second  fire  starts.  Al- 
527;  Vernon  v.  Keys,  12  East,  G32:  though  such  failure  to  act  is  cul- 
Morgan  v.  Bliss,  2  Mass.  Ill;  Har-  pable,  it  neither  adds  to  the  original 
rison  v.  Redden,  53  Kan.  265,  citing  force  nor  gives  it  new  direction,  and 
the  text;  Smitha  v.  Gentry,  20  Ky.  hence  in  tracing  back  the  line  of 
L.  Rep.  17],  42  L.R.A.  302,  citing  causation  it  will  not  be  noticed  as 
the  text;  Johnson  v.  Western  U.  a  potent  agency.  Wiley  v.  West 
Tel.  Co.,  79  Miss.  58,  12  Am.  Neg.  Jersey  R.  Co.,  44  N.  J.  L.  247. 
Rep.  487.  See  Mitchell  \.  Western  An  attorney  who  neglects  to  pay 
U.  Tel.  Co.,  12  Tex.  Civ.  App.  262.  the  interest  on  a  mortgage  for  his 

The  causation  between  a  fire  neg-  client  until  after  foreclosure  pro- 
ligently  started  and  which  is  sup-  ceedings  are  begun  and  an  addition- 
posed  to  have  been  extinguished,  but       al    sum    is   demanded    by   the   mort- 


§    30]  COMl'ENSATION.  119 

Loss  of  credit  ami  of  standiiiji,'  are  not  the  iiecessarv  clVccts  of 
being  ejected  from  a  hotel  in  the  presence  of  other  persons.*" 
An  action  on  the  case  was  bronght  by  a  creditor  against  his 
debtor  and  another  for  confederating  together  to  prevent  the 
plaintiff  from  obtaining  security  for  the  payment  of  his  debt ; 
they  were  charged  with  having  accomplished  that  wrong  bv 
removing  the  del)tor\s  property  from  his  possession  to  that  of 
his  confederate,  M'ho  secured  it  or  its  proceeds  and  thus  pre- 
vented its  attachment.  The  plaintiff  had  obtained  judgment, 
and  the  debtor  had  relieved  himself  from  the  execution  against 
his  body  by  taking  the  poor  debtor's  oath,  and  the  debt  re- 
mained wholly  unpaid.  The  case  was  proved  exce])t  the  con- 
spiracy. It  was  held  that  the  action  could  not  be  maintained. 
Among  other  reasons  for  this  conclusion  was  the  uncertainty 
of  the  plaintiff's  damage.  Metcalf,  J.,  said :  ''How  could  this 
plaintiff  prove  that  he  suffered  any  damage  from  the  acts  of 
the  defendant  which  are  averred  in  the  declaration  ?  How 
could  he  prove  that  he  would  ha\e  secured  his  debt  by  attach- 
ing the  property  of  his  debtor  if  the  defendant  had  not  inter- 
meddled with  it  ?  Other  creditors  might  have  attached  it  be- 
fore him,  or  it  might  have  been  stolen  or  destroyed  while  in 
the  debtor's  possession.  The  fact  that  the  plaintiff  has  suffered 
actual  damage  from  the  defendant's  conduct  is  not  capable  of 
legal  proof,  because  it  is  not  within  the  compass  of  human 
knowledge,  and  therefore  cannot  be  shown  l)y  huiiian  testi- 
mony. It  depends  on  numberless  unknown  contingencies  and 
can  be  nothing  more  than  a  matter  of  conjecture."  ^^ 

gagee  is  not  liable  for  tlie  difference  text.      See    Stone    v.    C'rewd^oii,     14 

between   the   value   of   the   property  Wash.  691. 

and  the  price  it  brought  at  the  fore-  In  Randall  v.  llazelton,  12  Alhu, 

closure  sale,  it  not  being  shown  that  412,  a  mortgagee  voluntarily  prom- 

the  mortgagor  would  have  been  able  ised  the  mortgagor  not  to  act  under 

to    make    the    later    payments    re-  a  power  of  sale  contained  in  a  mort- 

qjiired.     Dean  v.  Radford,  141  Mich.  gage   without   a   notice  to  him;    he 

336.  was  afterwards  induced  by  the  false- 

50  McCiitcheon  v.  IMalin,  37  Tex.  hood  of  the  defendants  to  assign  the 
Civ.  App.  240.  mortgage  to  one  M.  for  tiieir  bene- 

51  Wellington  v.  Small,  3  Cush.  fit,  and  then  caused  such  foreclosure 
145;  Cain  v.  Vollmer,  19  Idaho,  163,  to  take  place  in  a  manner  to  avoid 
32    L.R.A.(N.S.)     38,    quoting    the  notice    reaching    the    plaintiff,    wlio 


120 


SUTHERLAND    ON    DAMAGiES, 


[§    ''^l 


§  31.  Same  subject.  A  demurrer  was  sustained  to  a  decla- 
ration whicli  stated  that  the  defendant  and  a  confederate  con- 
spired to  and  did  obtain  possession  of  a  portion  of  the  plaintiff's 
premises  by  falsely  pretending  that  it  was  wanted  for  a  lawful 
trade,  and  then  set  up  an  illicit  still  there;  that  by  falsely  pre- 


was  compelled  to  pay  $500  to  get  a 
deed  of  the  property.  The  case  was 
determined  on  demurrer  against  the 
plaintiff.  The  promise  of  the  mort- 
gagee was  gratuitous,  and  therefore 
neither  he  nor  an  assignee  would  do 
any  legal  wrong  by  foreclosing  ac- 
cording to  the  power  in  the  mort- 
gage. The  damage  was  held  to  re- 
sult from  the  foreclosure  and  not 
from  the  alleged  wrong.  "Dam- 
ages," say  the  court,  "can  never  be 
recovered  where  they  result  from  the 
lawful  act  of  the  defendant."  The 
benefit  of  that  gratuitous  promise 
was  not  a  matter  of  legal  riglit,  and 
though  it  would  have  been  kept  but 
for  the  defendant's  fraudulent  con- 
tract and  the  plaintiff  saved  from 
the  loss  which  resulted  from  the 
sale,  yet  that  fraud  was  not  action- 
able because  it  did  not  affect  any 
legal  right;  it  could  not  be  said  to 
be  an  invasion  of  such  a  right  "to 
deprive  the  plaintiff  even  by  false- 
hood of  the  benefit  of  this  gratuitous 
undertaking."  Tlie  court  say:  "In 
the  Tunbridge-Wells  Dippers'  case, 
2  Wils.  414,  while  the  court  remark 
that  there  was  a  real  damage  in 
depriving  the  plaintiff  of  some  gra- 
tuity, they  also  say  in  the  same  sen- 
tence that  the  injury  was  by  disturb- 
ing the  dippers  in  the  exercise  of 
their  right  or  employment,  which 
it  seems  by  some  statutes  they  were 
entitled  to."  Hutchins  v.  Hutchins, 
7  Hill,  104;  Burton  v.  Henry,  90 
Ala.  281. 

In  Bradley  v.  Fuller,  118  Mass. 
230,  the  court  stated  the  material 
allegations  of  the  declaration,  which 


uas  held,  on  demurrer,  not  to  state 
a  cause  of  action,  to  be  that  the  de- 
fendant orally  represented  to  the 
plaintiff  that  a  corporation  of  which 
he  was  treasurer  and  wliose  overdue 
note  the  plaintiff  then  held,  owed 
no  otlier  debts  and  had  no  attach- 
ments upon  its  property;  that  the 
representation  was  fraudulently  and 
falsely  made  for  the  purpose  of  in- 
ducing the  plaintiff  not  to  com- 
mence suit  upon  his  note  until  the 
corporate  property  could  be  placed 
beyond  the  reach  of  attachment  by 
the  plaintiff;  that  all  the  property 
of  the  company  was  afterwards  at- 
tached and  sold  on  execution  upon 
another  debt;  and  that  the  plaintiff, 
induced  by  the  representations  not 
to  enforce  his  claim  by  suit,  lost  his 
debt  against  the  company.  In  one 
count  tlie  plaintiff  stated  that  he 
"was  induced  to  forbear  securing 
payment  of  his  note  by  an  attach- 
ment of  said  property,  as  he  might 
and  would  have  done  but  for  said 
false  representation."  The  court 
say:  "Under  the  law  as  laid  down 
by  this  court  the  facts  stated  in 
these  counts  do  not  show  a  legal 
cause  of  action,  or  that  the  plaintiff 
lias  suffered  any  legal  damage. 
Tliere  is  no  attacliment  or  attempt 
to  attach,  on  the  part  of  the  jjlain- 
tiff,  alleged ;  it  does  not  appear  that 
by  reason  of  the  alleged  representa- 
tion he  lost  anything  which  he  ever 
had.  Taking  these  counts  in  the 
most  favorable  sense  for  the  plain- 
tiff they  simply  charge  that  the 
plaintiff,  induced  by  the  falsehood 
alleged,  refrained  from  carrying  in- 


§    ''^1]  COMPENSATION.  121 

tending,  and  bj  divers  false  and  fraudulent  means  and  devices, 
they  made  it  appear  and  lie  believed  that  it  was  the  plaintilf 
who  set  up  such  still  and  was  the  proprietor  thereof;  that 
thereby  he  was  convicted  of  keeping  illicit  stills.  The  damage 
was  not  the  natural  and  proximate  consequence  of  the  defend- 
ant's act.^^  Where  a  trespassing  horse  kicked  a  child  it  was 
held  that  the  injury  was  not  the  natural  consequence  of  the 
trespass  in  the  absence  of  evidence  that  the  defeniUmt  knew 
the  horse  was  vicious.  The  court  said  to  entitle  the  i)l;iiiitilV 
to  nuiintaiu  an  action  it  is  necessary  to  show  a  breach  of  some 
legal  duty  due  from  the  defendant  to  the  plaintiff.  And  if 
there  was  negligence  on  the  part  of  the  owner  of  the  horse 
in  permitting  him  to  be  at  large  it  did  not  appear  to  be  con- 
nected with  the  damage  of  which  the  plaintiff  complains.  "The 
owner  of  a  horse  must  be  taken  to  know  that  the  animal  will 
stray  if  not  properly  secured,  and  may  find  its  way  into  his 
neighbor's  corn  or  pasture.  For  a  trespass  of  that  kind  tlie 
owner  is,  of  course,  responsible.  But  if  the  horse  does  some- 
thing which  is  quite  contrary  to  his  ordinary  nature,  something 
which  his  owner  had  no  reason  to  expect  him  to  do,  he  has 

to  effect  an  intention  to  attach;  and  murrer,  held  it  "necessarily  uncei- 
that  another  creditor  did  attach  and  tain"'  that  this  purpose  would  be 
apply  the  company's  property  to  the  executed;  and  so  mucli  so,  that  tlie 
payment  of  his  debt.  It  must  neces-  law  will  not  accept  tiie  allegation  as 
sarily  be  uncertain  whether  the  stating  a  proval)le  fact,  and  it  is 
plaintiff  would  have  attached  the  therefore  not  admitted  by  a  de- 
property  and  applied  it  to  the  pay-  murrer.  It  certainly  cannot  he 
ment  of  his  debt  if  the  alleged  rep-  maintained,  as  a  matter  of  law,  that 
resentation  had  not  been  made."  no  damages  can  be  recovered  on  the 
It  seemed  to  the  author  of  this  basis  of  frustrating  an  intention, 
work  that  this  case  was  erroneously  ^^le  carrving  out  of  which,  in  the 
decided.      ITie    law    recognizes    the  f^j^^,^.^    (^  j^^^.^^j  ^^^  ^^.^^^^  ^^^^^^ 

value   of   the   preference   which   one  ,        ,  ,  , 

^  an    advantage    or    prevent    a    loss, 

creditor  bv  diligence  may  obtain  by  „,    ^    .,  .  j   .1     . 

"     ,  .      f   ,^  ,  Iliat  it  may  be  proved  that  an  m- 


tention    will    be   carried    out    wiiere 


a  first  attachment  of   the  property 

of  an  insolvent  debtor.    Its  practical 

value  was  illustrated  by  that  case.  ^he  party  has  the  ability  and  his  in- 

The  debtor  was  liable  to  attachment,  ''^"^^^    requires    it    to    be    executed, 

and  had  property.     The  plaintiff  al-  '«  legally  assumed  in  a  multitude  of 

leged  that  he  might  and  would  have  cases. 

attached   it   but   for  the   fraudulent  52  Barber  v.  Lesiter,  7  C.  B.    ( N. 

representations.     The  court,  on  de-  S.)    175. 


122 


SUTHERLAND    ON    DAMAGES. 


[§   31 


the  same  sort  of  protection  that  the  owner  of  a  dog  has,  and 
everybody  knows  that  it  is  not  at  all  the  ordinary  habit  of  a 
horse  to  kick  a  child  on  a  highway.  It  was  assnnied  that  the 
injury  to  the  plaintiff  was  caused  by  the  horse  having  viciously 
kicked  him,  as  a  horse  of  ordinary  temper  would  not  have 
done;  therefore  the  plaintiff  was  bound  to  show,  and  did  not, 
that  the  defendant  knew  that  the  horse  was  subject  to  that 
infirmity  of  temper."  *^  In  a  subsequent  case  a  mare  strayed 
into  the  plaintiff's  pasture  and  there,  from  some  unexplained 
cause,  kicked  the  plaintiff's  horse  and  broke  his  leg,  and  he 


Expenses  incurred  by  one  whose 
property  has  been  wrongfully  levied 
on  in  trying  to  find  buyers  for  it 
are  too  remote.  Fatheree  v.  Wil- 
liams,  13  Tex    Civ.  App.  430. 

53  Cox  V.  Burbridge,  13  C.  B.  (N. 
S.)  43D;  Jackson  v.  Smithson,  15 
M.  &  W.  563;  Hudson  v.  Roberts,  6 
Ex.  697;  Cooper  v.  Cashman  190 
Mass.  75,  3  L.R.A.(N.S.)  209;  Em- 
mons V.  Stevane,  77  N.  J.  L.  570,  24 
L.R.A.(N.S.)  458;  Corcoran  v.  Kel- 
ly, 61  N.  Y.  Misc.  323;  State  v. 
Smith,  156  N.  C.  628,  36  L.R.A. 
(N.S.)   910. 

The  test  of  liability  is  the  right- 
fulness of  the  animal  in  being  where 
he  was  when  tlie  injury  was  done. 
McClain  v.  Lewiston  Interstate  F.  & 
R.  Ass'n,  17  Idaho,  03,  25  L.R.A. 
(N.S.)  691,  following  Decker  v. 
Gammon,  44  Me.  322,  69  Am.  Dec. 
99.  It  is  otherwise  where  a  wild 
animal  does  an  injury.  Hayes  v. 
Miller,  150  Ala.  621,  11  L.R.A. 
(N.S.)    748,  124  Am.  St.  93. 

In  Dickson  v.  McCoy,  39  N.  Y. 
400,  1  Am.  Neg.  Cas.  321,  a  child 
of  ten  years  was  passing  defendant's 
stable  upon  the  sidewalk  of  a  popu- 
lous street,  when  the  defendant's 
horse  came  out  of  the  stable,  being 
loose  and  unattended,  and,  in  pass- 
ing, kicked  the  boy.  The  complaint 
alleged  that  tlie  horse  was  of  a  ma- 


licious and  mischievous  disposition 
and  accustomed  to  attack  and  in- 
jure mankind,  but  of  this  no  proof 
was  made.  It  was  held  that  this 
was  not  material,  that  "it  is  not 
necessary  that  a  horse  should  be 
vicious  to  make  the  owner  respon- 
sible for  injury  done  by  him  through 
the  owner's  negligence.  The  vice  of 
the  animal  is  an  essential  fact  only 
when,  but  for  it,  the  conduct  of  the 
owner  would  be  free  from  fault,"  as, 
for  instance,  in  the  case  of  a  horse, 
properly  fastened  in  the  highway, 
which  should  kick  or  bite  a  passer- 
by. In  such  a  case  the  owner  would 
be  liable  only  if  he  had  knowledge- 
of  tlie  vicious  disposition  of  the  ani- 
mal, but  where  a  horse  is  allowed  to 
run  in  the  streets  of  a  populous  city 
it  is  obviously  dangerous  to  the  pub- 
lic, and  the  danger  is  none  the  less 
because  the  running  and  kicking  of 
the  horse  are  done  in  a  playful  mood 
than  if  prompted  by  a  vicious  dis- 
position. Mills  V.  Bunke,  59  App. 
Div.  39. 

In  the  absence  of  the  owner  of 
land  his  wife  directed  her  child  to 
drive  otl  a  horse  trespassing  there- 
on; while  doing  so  the  horse  kicked 
the  child.  The  court  distinguished 
Cox  V.  Burbridge,  supra,  and  sus- 
tained a  recovery.  Waugh  v.  Mont- 
gomery, 8  Vict.  L.  R.   (law)  290. 


§    31]  COMPENSATION.  123 

was  necessarily  killed.  Erie,  C.J.:  "The  contest  at  the  trial 
seems  to  have  been  whether  or  nut  the  mare  was  of  a  ferocious 
or  vicious  disposition,  and  whether  the  defendant  knew  it.  But 
1  think  it  was  not  necessary  to  go  into  that  question,  because 
the  act,  which  upon  the  evidence  must  be  presumed  to  have 
caused  the  injury,  was  not  one  w^hich  was  characteristic  of  vice 
or  ferocity  in  the  mare  in  the  ordinary  sense.  The  animal 
had  strayed  from  its  own  pasture,  and  it  was  impossible  that 
her  owner  could  know  how  she  would  act  when  coming  sud- 
denly in  the  night-time  into  a  held  among  strange  horses.  That 
constitutes  the  diti'erence  between  this  case  and  those  relied 
on  by  the  defendant,  and  supports  the  summing  up  of  the  judge 
when  he  said  it  was  not  a  question  of  vice  or  scieiiler  in  the 
ordinary  sense."  The  defendant  was  responsible  for  the  tres- 
pass, the  damage  not  being  remote.^^  The  owner  of  a  domestic 
animal  which  trespasses  on  a  highway  is  not  liable  to  a  person 
injured  in  consequence  of  his  horse  being  frightened  thereby.** 
Upon  the  trial  of  an  action  for  the  enticement  •  of  servants 
from  the  employment  of  another  it  was  erroneous  to  permit 
evidence  of  consequential  damages  to  the  effect  that  the  serv- 
ants plaintiff  first  employed  had  provisions  and  those  he  sub- 
sequently emj)loyed  to  take  their  places  had  not,  by  which  he 
was  compelled  to  furnish  provisions,  and,  making  a  poor  crop, 
such  persons  were  unable  to  pay  him  for  the  provisions  fur- 
nished out  of  their  share  of  the  crop,  by  which  he  was  damaged.*^ 

54  Lee   V.   Riley,   18   C.   B.    (N.S.)  55  Anderson    v.    Nesbitt,    43    Iiul. 

722;  Barnes  v.  Chapin,  4  Allen,  444,  App.   703. 

1   Am.  Neg.  Cas.  310,  81   Am.  Dec.  56  Salter  v.  Howard,  43  (Ja.  001. 

710;    Dunckle   v.   Kocker,    11    Barb.  Under  a  statute  wliicli  makori  tlie 

387;    Lyons   v.   Merrick,    105   Mass.  person   wlio   contracts   with,   decoys 

71;    Harvey   v.   Buchanan,    121   Ga.  or  entices  away   any   person   in  the 

384.  employ  of  another  who  was  entitled 

Though  the  language  of  a  statute  to  the  services  of  the  person  enticed 
imposing  liability  on  the  owner  of  liable  for  all  such  damages  as  the 
a  dog  wliieh  injures  a  person  is  im-  original  employer  may  reasonably 
qualified,  one  who  wilfully,  per-  sustain  by  the  loss  of  the  labor  of 
sistently  and  knowingly  misticats  a  such  employee,  it  is  competent  to 
dog  may  not  recover  for  injuries  consider  the  reasonable  cost  of  pro- 
resulting  from  its  misconduct.  Kel-  curing  other  labor,  tlie  damages  re- 
ley  V.  Killourey,  81  Conn.  320,  129  suiting  to  crops  from  delay  in  plant- 
Am.  St.  220.  ing,  or,   if  planted,  from  failure  to 


124  SUTHERLAND    ON    DAMAGES,  [§    32 

§  32.  Breach  of  statutory  duties.  Whenever  an  action  is 
brought  for  breach  of  duty  imposed  by  statute  the  party  bring- 
ing it  must  show  that  he  had  an  interest  in  the  performance 
of  the  duty  and  that  the  duty  was  imposed  for  his  benefit. 
But  where  the  duty  was  created  or  imposed  for  the  benefit  of 
another  and  the  advantage  to  be  derived  to  the  party  complain- 
ing of  its  breach  from  its  performance  is  merely  incidental  and 
no  part  of  the  design  of  the  statute,  no  such  right  is  created 
as  forms  the  subject  of  an  action."  A  private  person  might 
make  a  profit  by  the  performance  of  the  duty,  but  the  breach  of 
that  duty,  while  it  would  naturally  deprive  him  of  that  benefit, 
is  not  a  wrong  to  him.  The  loss  of  such  a  benefit  is  not  in  a 
legal  sense  an  injury.  Though  the  actual,  it  is  not  the  legal, 
consequence  of  the  delinquency.^®  Thus,  a  postmaster  bound 
by  statute  to  advertise  uncalled-for  letters  in  a  newspaper  of  a 
particular  description  commits  no  legal  wrong  to  the  proprietor 
of  such  paper  when  he  omits  such  publication  or  gives  the  busi- 
ness to  a  paper  of  a  different  description.^^  The  conductor  of  a 
place  of  public  amusement  who,  in  violation  of  a  statute,  ex- 
work  them,  and  such  kindred  dam-  were  so  enticed,  or  for  that  part  of 
ages  as  plaintiff  could  not  have  pre-  the  day  on  which  they  absented 
vented  by  reasonable  diligence  and  themselves  from  his  service,  but  he 
which  are  attributable  to  the  de-  is  entitled  to  recover  damages  for 
fendant's  act.  McCutcliin  v.  Taylor,  the  loss  he  sustained  at  that  critical 
11  Lea,  259.  period.      It    appears,    too,   that   the 

The  damages  which  may  be  recov-  defendants  combined  to  allure  tliem 
ered  for  enticing  away  the  servant  from  his  service,  and  I  do  not  think 
of  another  include  the  profits  of  the  the  court  ought  now  to  infer  that 
servant's  labor  and  the  loss  sus-  two  years'  profit  is  too  much  for 
tained  by  the  plaintiff's  inability  to  the  plaintiff  to  recover, 
improve  his  jiroperty  in  consequence.  57  Atkinson  v.  Newcastle,  L.  R.  2 

Smith   V.  Goodman,   75  Ga.   198.  Ex.     Div.    441;     Everett    v.    Great 

In  Gunter  v.  Astor,  4  Moore,  ]2,  Northern  R.  Co.,  100  Minn.  309, 
16  E.  C.  L.  357,  21  Rev.  Rep.  733  9  L.R.A.(N.S.)  703;  Wickenburg  v. 
(1819) ,  one  of  the  judges  said:  This  Minneapolis,  etc.  R.  Co.,  94  Minn, 
is  an  action  for  seducing  and  entic-       276. 

ing    away    the    plaintiff's    servants.  58  See  Mairs  v.  Baltimore  &  0.  R. 

The  measure  of  damages  he  is  en-       Co.,  ]75  N.  Y.  409. 
titled   to   recover   from   the   defend-  59  Strong    v.    Campbell,    11    Barb, 

ants  is  not  necessarily  to  be  con-  135.  See  Rosan  v.  Big  Muddy  C.  & 
fined  to  those  servants  he  might  I.  Co.,  128  111.  App.  128;  Marsli  v. 
have  in  his  employ  at  the  time  tliey       Koons,  78  Ohio  68,  125  Am.  St.  688. 


l^ 


§    32]  COMPENSATION.  125 

eludes  a  person  therefrom  is  not  answerable  for  a  resulting; 
injury  to  his  business;  the  pUiiiitifT's  riglit  was  in  one  common 
with  the  public  and  did  not  cover  the  right  to  conduct  his  busi- 
ness in  such  place. ^°  If  the  non-performance  of  a  duty  results 
in  injury  to  a  third  person  the  delinquent  party  is  responsible 
to  him.^^  Thus,  where  the  owner  of  a  water  channel  or  cut, 
made  pursuant  to  authority  and  open  for  the  use  of  all  vessels 
whose  owners  complied  with  the  prescribed  conditions,  refused 
to  allow  a  tug,  necessarily  employed  to  tow  a  vessel  through  it, 
access  to  the  vessel,  he  was  responsible  to  her  owner  for  dam- 
ages resulting  from  the  discharge  of  her  cargo  by  lighters.^'^ 
It  is  the  natural  result  of  locating  a  pest-house  within  a  for- 
bidden distance  of  a  residence  that  the  disease  affecting  patients 
in  the  pest-house  will  be  communicated  to  persons  living  or 
visiting  in  the  neighborhood.®^  "Whenever  an  act  is  enjoined 
or  prohibited  by  law  and  the  violation  of  the  statute  is.  made  a 
misdemeanor  any  injury  to  the  person  of  another  caused  by 
such  violation  is  the  subject  of  an  action ;  and  it  is  sufficient  ^ 
to  allege  the  violation  of  the  law  as  the  basis  of  the  right  to 
recover  and  as  constituting  the  negligence  complained  of."  ®* 
One  who  violates  a  statute  by  carrying  a  revolver  is  liable  to  any 

eOGreenberg  v.  Western  T.  Ass'n,  64.  26  L.R.A.(N.S.)  278;  ileslibresh- 

J40  Cal.  357.  er  v.  Channellene  0.  &  Mfg.  Co.,  107 

61  Tucker  &  D.  Mfg.  Co.  v.  Staley,  Minn.  104,  131  Am.  St.  441;  Fitz- 
40  Ind.  App.  63.  gerald    v.    International    F.   T.    Co., 

62  Buffalo  Bayou  Ship  C.  Co.  v.  104  Minn.  138;  Anderson  v.  Setter- 
Milby,  63  Tex.  402,  51  Am.  Kep.  gren,  100  Minn.  294;  Perry  v.  To/or, 
068.  00  Minn.  431,  101  Am.  St.  416;  llli- 

63  Henderson  v.  O'llaloran,  114  nois  Cent.  R.  Co.  v.  Armstrong,  1)3 
Ky.  186;  Claytoii  v.  Henderson,  44  Miss.  583;  Yazoo,  etc.  R.  Co.  v, 
L.R.A.  474;  Henderson  v.  Clayton.  Roberts,  88  Miss.  80;  Leathers  v. 
53  L.R.A.  145  (Ky.).  See  McKay  v.  Blackwell  D.  T.  Co.,  144  N.  C.  330, 
Henderson,  71  S.  W.  625    (Ky.).  9    L.R.A.  (N.S.)     349;     IxMiahan    v. 

64  Messenger  v.  Pate,  42  Iowa,  443.  Pittston  C.  M.  Co.,  218  Pa.  311,  12  |/ 
14  Am.  Neg.  Cas.  591;  Stein  v.  L.R.A. (N.S.)  461,  120  Am.  St.  885; 
United  R.,  159  Cal.  368;  Farrow  v.  Adams  v.  Cumberland  Co.,  117  Tenn. 
Hoffecker,  7  Penne.  (Del.)  223;  St.  470;  Louisville  &  N.  R.  Co.  v.  Mar- 
Louis,  etc.  R.  Co.  V.  McWhirter,  145  tin,  113  Tenn.  266;  Willcttc  v. 
Ky.  427;  Sterling  v.  Union  C.  Co.,  Rhinelander  P.  Co.,  145  Wis.  537; 
142   Mich.  284;   Thomas  v.  Chicago  Sharon   v.   Winnebago   F.   Mfg.   Co., 

G.  W.  R.  Co.,  112  Minn.  360;  Evans       141    Wis.    185;    Cleveland,    etc.    R. 
V.  Chicago  &  N.  R.   Co.,  109  Minn.       Co.  v.  Tauer,  176  Ind.  621,  39  L.R.A. /^ 


12G  SUTHERLAND    ON    DAMAGES.  [§    32 

person  injured  by  him  therewith,  though  such  person  consented 
to  the  other's  carrying  and  use  of  the  revolver.^*  The  defendant 
while  violently  beating  a  horse  slipped  and  unintentionally  in- 
jured the  plaintiff.  Because  the  beating  was  contrary  to  a 
statute  forbidding  cruelty  to  animals  there  was  liability  to  the 
plaintiif.®^  There  may  be  a  recovery  for  illness  caused  by  ex- 
posure to  the  weather  in  consequence  of  the  failure  of  a  carrier 
to  comply  with  a  statute  requiring  it  to  furnish  adequate  and 
suitable  shelter  for  the  accommodation  of  passengers.^'' 

§  33.  Injury  through  third  person.  Where  the  plaintiff  is 
injured  by  the  defendant's  conduct  to  a  third  person  it  is  too 
remote  if  he  sustains  no  other  than  a  contract  relation  to  such 
third  person,  or  is  under  contract  obligation  on  his  account, 
and  the  injury  consists  only  in  impairing  the  ability  or  inclina- 
tion of  such  third  person  to  perform  his  part,  or  in  increasing 
the  plaintiff's  expense  or  labor  of  fulfilling  such  contract,  unless 
the  wrongful  act  is  wilful  for  that  purpose.^®  A.,  Avho  had 
agreed  with  a  town  to  support  for  a  specific  time  and  for  a  fixed 
sum  all  the  town  paupers,  in  sickness  and  in  health,  had  no 
cause  of  action  against  S.  for  assaulting  and  beating  one  of  the 
paupers,  whereby  A.  was  put  to  increased  expense.  The  dam- 
age was  too  remote  and  indirect.^^  A  stockholder  in  a  bank 
cannot  maintain  an  action  against  its  directors  for  their  negli- 

(N.S.)   20,  96  N.  E.  758;  St.  Louis,  65  Evans   v.    Waite,   83    Wis.   286. 

etc.  R.  Co.  V.  Piburn,  30  Okla.  262;  66  Osborne  v.  Van  Dyke,  ]]3  Iowa, 

Gately  v.  Taylor,  211  Mass.  60,  39  557,  54  L.R.A.  367. 

L.R.A.  (N.S.)  472;  Morgan  v.  Bross,  67  Morrison  v.  Pere  Marquette  R. 

64  Ore.  63;   Ward  v.  Ely-W.  D.  G.  Co.,  28  Ont.  L.  R.  319,  27   id.  551, 

Co.,   248  Mo.   348,   45  L.R.A.  (N.S.)  affirming  s.   c.,  id.  271. 

550;    Fox    v.    Barekman,    178    Ind.  68  Brink    v.    Wabash    R.    Co.,    160 

572.     See  §  4.  Mo.  87,  53  L.R.A.  811,  83  Am.  St. 

It   has   been    said   that   the   non-  459;    Gregory   v.   Brooks,    35   Conn, 

observance   of   the   statute   raises   a  437,   95    Am.   Dec.    278;    Lumley   v. 

presumption  that  the  injury  was  the  Gye,    2    El.    &   Bl.    216;    McKay   v. 

result    thereof.      Brown    v.    Kansas  Henderson,    71    S.    W.    625     (Ky.)  ; 

City,  etc.  R.  Co.,  166  Mo.  App.  255.  Minreman    v.    Fox,    43    Wash.    43; 

Expense     and    inconvenience    are  Thompson  v.  Seaboard  Air  Line  R. 

elements  of  damage  for  the  neglect  Co.,  165  N.  C.  377,  52  L.R.A.  (N.S.) 

lo  put  in  farm  crossings.     Price  v.  97,  quoting  the  text. 

St.  Louis,  etc.  R.  Co.,  133  Mo.  App.  69  Anthony     v.     Slaid,     11     Mete. 

653.  (Mass.)   290. 


§    33]  COMPENSATION.  127 

genee  in  so  conducting  its  affairs  that  its  whole  capital  stock 
is  lost  and  the  shares  rendered  worthless,  nor  for  the  malfeasance 
of  the  directors  in  delegating  the  whole  control  of  the  affairs 
of  the  bank  to  the  president  and  cashier,  who  wasted  and  lost  the 
whole  capital.^'*  The  direct  injury  is  to  the  corporation,  and 
only  remotely  to  the  stockholders.  The  latter  have  a  remedy, 
in  theory,  though  often  inade(iuate,  in  the  power  of  the  corpora- 
tion as  such  to  obtain  redress  for  injuries  done  to  the  common 
]iroperty  by  the  recovery  of  damages."^^  A  party  who  by  con- 
tract was,  he  furnishing  the  raw  material,  to  have  all  the  articles 
to  be  manufactured  by  a  corporation,  was  not  entitled  to  main- 
tain an  action  against  a  wrong-doer  who  by  trespass  stopped  the 
machinery  so  that  it  was  prevented  from  furnishing  manu- 
factured goods  to  so  great  an  extent  as  it  otherwise  would  have 
done.'^  A  creditor  can  maintain  no  action  against  one  who  has 
forged  a  note  by  which  the  dividends  from  an  estate  were 
diminished.'''^  An  insurance  company  cannot  recover  from  a 
wrong-doer  who  causes  the  loss  insured  against  the  money  paid 
to  satisfy  such  loss.'^  A  man  drafted  into  the  military  service 
deserted  and  another  who  had  been  drawn  as  an  alternate  to 
serve  in  such  a  contingency,  and  was  consequently  obliged  to 
and  did  serve,  had  no  legal  claim  against  the  deserter  for  the 
loss  and  injury  of  doing  so.'*  A  vendor  of  intoxicating  liquors 
does  not  cause  or  contribute  to  the  injury  of  a  person  who  uses 
liquors  sold  by  the  former  to  a  third  person  without  the  original 
seller's  knowledge  or  consent.'''^  Sanitary  officers  who  acted 
under  a  statute  were  not  responsible  for  injury  to  the  business 
of  one  proceeded  against,  caused  by  the  publication  of  the  fact 
that  he  had  been  prosecuted.'^''     But  where  a  tradesman  or  me- 

70  Smith  V.  Hurd,  12  Mete.  (Mass.)  74  Rockingham  Ins.  Co.  v.  Boshcr, 
371,  46  Am.  Dec.  690.  See  Bloom  v.  39  Mo.  2.")3,  63  Am.  Dec.  018;  Con- 
National  United  B.  S.  &  L.  Co.,  ^^y2  necticut,  etc.  Ins.  Co.  v.  New  York, 
N.   Y.  114.  etc.   R.   Co.,   25   Conn.  26;").   65   Am. 

71  Id.  See  Niles  v.  New  York  Dec.  571.  See  Pacific  P.  L.  Co.  v. 
Cent.,    etc.    R.    Co.,    176    N.    Y.    119.  Western   V.   Tel.   Co.. '123   Cul.   42S. 

72  Dale  V.  Grant,  34  N.  J.  L.  142.  75  Jem  mi  son     v.    Cray,    29     lowii. 

73  Cunningliam  v.   Brown,   18  Vt.  537. 

123,   46   Am.   Dec.   140.      See  Mairs  76  West    v.    Leiphart.    169    .Mich. 

V.  Baltimore  &  O.  R.  Co.,  175  N.  Y.       354. 

409.  77  In     re    Smith    &    Belfast    Co., 


128  SUTHERLAND    ON    DAMAGES.  [§    33 

chanic  is  defamed  in  his  business  or  avocation  by  a  false  and 
fraudulent  device  practiced  upon  one  of  his  customers  the  per- 
son who  is  guilty  of  such  fraud  is  responsible  for  a  loss  of 
patronage  flowing  therefrom,  although  the  customer  was  also 
wronged.'^  The  exception  indicated  in  the  opening  sentenc^ 
of  the  section  is  illustrated  by  a  case  in  which  the  defendant 
falsely  claimed  and  represented  himself  to  be  a  superintendent 
of  wharves  and  harbor-master,  and  as  such  to  have  issued  an 
order  directing  the  captain  of  a  vessel  moored  at  the  plaintiff's 
wharf  to  remove  therefrom.  At  the  time  the  order  was  given 
the  captain  was  discharging,  and  the  plaintiff  was  receiving,  a 
cargo  from  the  vessel.  The  plaintiff  owned  and  kept  such  wharf 
for  the  purpose  of  letting  it  for  hire.  By  means  of  such  acts 
the  captain  was  induced  to  remove  from  the  plaintiff's  wharf 
and  discharge  his  cargo  at  another  wharf.  The  right  to  recover 
was  adjudged  if  the  defendant  acted  with  a  malicious  and 
fraudulent  design  to  injure  the  plaintiff'.'^ 

§  34.  Liability  as  affected  by  extraordinary  circumstances. 
There  must  not  only  be  a  legal  connection  between  the  injury 
and  the  act  complained  of,  but  such  nearness  in  the  order  of 
events  and  closeness  in  the  relation  of  cause  and  effect  that  the 
influence  of  the  injurious  act  may  predominate  over  that  of 
other  causes  and  concur  to  produce  the  consequence  or  be  traced 
to  those  causes.*"  To  a  sound  judgment  must  be  left  each  par- 
ticular case.  The  connection  is  usually,  but  not  always,  en- 
feebled and  the  influence  of  the  injurious  act  controlled  where 
the  wrongful  act  of  a  third  person  intervenes,  or  where  any 
new  agent,  introduced  by  accident  or  design,  becomes  more 
powerful  in  producing  the  consequence  than  the  first  injurious 
act.  The  requirement  that  the  consequences  to  be  answered 
for  should  be  natural  and  proximate  is  not  that  they  should 
be  such  as  upon  a  calculation  of  chances  would  be  found  likely 
to  occur,  nor  such  as  extreme  prudence  would  anticij)ate,  but 

[1910]    2   Irish,   285;    Fitzgerald   v.  v.  Neal,  61  W.  Va.  57,  123  Am.  St. 

Leonard,  32  Irish  L.  G75.  972. 

78Hughes  V.  McDonough,  43  N.  J.  80  f'oyle    v.    Baum,    3    Okla.    69r), 

L.  459,  39  Am.  Rep.  603.  716,    quoting    the    text;     Pittsburg 

79  Gregory    v.    Brooks,    35    Conn.  Reduction    Co.   v.    Horton,    87    Ark. 

437,  95  Am.  Dee.  278.     See  Weaver  576,   18   L.R.A.(N.S.)    905. 


34] 


COMPENSATION. 


129 


only  that  they  be  such  as  have  actually  ensued  one  from  another 
without  the  occurrence  of  any  such  extraordinary  conjuncture 
of  circumstances  or  the  intervention  of  such  an  extraordinary 
result  as  that  the  usual  course  of  nature  should  seem  to  have 
been  departed  from."  The  general  rule  is  that  a  defendant  is 
not  answerable  for  anything  beyond  the  natural,  ordinary  and 
reasonable  consequences  of  his  conduct.^''  We  are  not  to  link 
together  as  cause  and  effect  events  having  no  probal)le  connec- 
tion in  the  mind  and  which  could  not,  by  prudent  circumspection 
and  ordinary  thoughtfulness,  be  foreseen  as  likely  to  happen 
in  consequence  of  the  act  in  which  we  are  engaged.  It  may  be 
true  that  the  injury  would  not  have  occurred  without  the  con- 
currence of  our  act  with  the  event  which  immediately  caused 
the  injury,  but  we  are  not  justly  called  to  suffer  for  it  unless 
the  other  event  was  the  effect  of-  our  act  or  was  within  the 
probable  range  of  ordinary  circumspection.  If  one's  fault  hap- 
pens to  concur  with  something  extraordinary  and  therefore  not 
likely  to  be  foreseen  he  will  not  be  answerable  for  such  unex- 
pected result.®^     On  the  other  hand,  if  damage  ensues  directly 


81  Harrison  v.  Berkley,  1  Strobh. 
525,  549,  47  Am.  Dec.  578.  This 
case  is  criticised  in  a  note  on  p. 
830,  36  Am.  St.,  which  criticism  is 
approved  in  Meyer  v.  King,  72  Miss, 
1,  12,  35  L.R.A.  474.  See  Lnm  Ah 
Lee  V.  Ah  Soong,  16  Hawaii,  163. 

82Dalton  V.  Moore,  141  Fed.  311, 
72  C.  C.  A.  459 ;  Neely  v.  Ft.  Worth, 
etc.  R.  Co.,  96  Tex.  274,  14  Am.  Neg. 
Rep.  659 ;  Bennett  v.  LockAvood,  20 
Wend.  223,  32  Am.  Dec.  532;  Grain 
V.  Petrie,  6  Hill,  523,  41  Am.  Dec. 
765;  McGrew  v.  Stone,  53  Pa.  436; 
Big  Goose  &  B.  D.  Co.  v.  Morrow, 
8  Wyo.  537,  547,  80*  Am.  St.  955, 
citing  the  text. 

83  Stone  V.  Boston  &  A.  R.  Co., 
171  Mass.  536,  4  Am.  Neg,  Rep.  490, 
41  L.R.A.  794;  Meyer  v.  King,  72 
Miss.  1,  8,  35  L.R.A.  474,  citing  the 
text;  Roach  v.  Kelly,  194  Pa.  24, 
75  Am.  St.  685;  McGrew  v.  Stone, 
53  Pa.  436;  Fairbanks  v.  Kerr,  70 
Suth,  Dam.  Vol.  I.— 9. 


Pa.  86,  10  Am,  Rep,  664;  People  v. 
Mayor,  5  Lans,  524;  Lee  v,  Burling- 
ton, 113  Iowa,  356,  86  Am.  St,  379 ; 
Nelson  v.  Crawford,  122  IMich.  466, 
80  Am.  St.  577;  Deisenrieter  v, 
Kraus-M.  M,  Co.,  97  Wis.  279,  286; 
Milwaukee,  etc.  R,  Co.  v.  Kellogg, 
94  U.  S,  469,  475,  24  L,  ed,  2.56, 
259;  Consolidated  E,  L.  &  P.  Co. 
V.  Koepp,  64  Kan,  735.  1 1  Am.  Nog. 
Rep,  404;  Mobile  &  O,  R.  Co.  v. 
Moerlein  B.  Co.,  146  Ala.  404;  Sey- 
mour V.  Union  S.  Y.  &  T.  Co.,  224 
Til.  579;  Glassey  v.  Worcester  Con. 
St.  R.  Co.,  185  ]Mass.  315;  16  Am. 
Neg.  Rep.  86;  Wadasco  v.  Poopk-fl, 
13  Pa.  Dist,  333;  Southern  Kansas 
R.  Co.  V.  Emmett,  (Tex.  Civ.  App.) 
139  S.  W.  44:  :Mcl)oawall  v.  Great 
Western  R.  Co..  [1903]  2  K.  B.  331. 
A  defendant  is  not  chargeable 
with  the  consequences  of  the  mali- 
cious or  wanton  act  of  a  third  per- 
son   if   it   was  so   uiu'\pect<>d  or  ex- 


130  SUTHERLAND    ON"    DAMAGES.  [§    35 

from  the  wrong  done,  and  not  wholly  from  an  independent  cause, 
there  may  be  liability  for  the  original  neglect  or  act.** 

§  35.  Illustrations  of  the  doctrine  of  the  preceding  section. 
An  injury  by  negligence  was  done  to  wool  by  wetting  it,  render- 
ing it  necessary  to  take  it  out  of  the  original  packages  in  which 
it  had  been  imported.  A  few  weeks  afterwards  an  act  of  con- 
gress was  ])assed  under  which,  if  the  wool  had  remained  in  such 
packages,  the  plaintilf  would  have  been  entitled  to  a  return  of 
duties.  The  loss  of  the  right  to  claim  a  return  thereof  was  not 
recoverable  as  a  proximate  consequence  of  the  negligence.  It 
was  remarked  that  if  the  market  value  of  the  wool  in  the  original 
packages  had  been  higher  by  reason  of  its  being  entitled  to 
debenture  under  the  laws  existing  at  the  time  when  the  injury 
was  done  the  plaintiff  would  have  had  a  right  to  an  increase  of 
damages  in  consequence  of  being  obliged  to  break  the  packages ; 
so  if  the  market  value  had  been  enhanced  at  that  time  by  reason 
of  a  general  expectation  that  a  statute  would  be  passed  allowing 
a  return  of  duties.®^  In  trespass  for  taking  two  horses,  a  wagon 
and  double  harness  the  declaration  stated  as  special  damage 
that  when  it  occurred  the  plaintiff  was  moving  with  his  family 
and  household  goods  to  another  state,  and  was  employing  his 
horses,  wngou  and  harness  for  that  purpose;  that  he  was  thereby 
prevented  from  pursuing  his  journey  and  put  to  great  expense 
for  the  support  of  himself  and  family;  that  when  the  property 
was  taken  the  roads  were  frozen  and  the  traveling  good ;  but 
while  it  was  detained  the  frost  left  the  ground  and  the  roads 
became  so  muddy  that  it  was  quite  impossible  for  the  plaintilf 
to  prosecute  his  journey,  by  reason  whereof  he  was  detained 
with  his  family  and  prevented  from  putting  in  his  crops  in  the 
state  to  which  he  was  moving.  It  was  erroneous  to  admit  evi- 
dence of  these  various  circumstances.  The  court  recognized  the 
rule  that  to  be  recovered  the  damages  must  l)e  the  natural  and 

tiaordinary  tliat  lio  could  not  or  or  nervous  shock  do  ao  on  tlie 
ought  not  to  have  anticiimtod  it.  ground  that  tlie  injury  is  too  re- 
Watson  V.  Kentucky  &  I.  &  R.  Co.,  ,         „        oo    ti      .. 

mote.     See   §§   21   et  sen. 

337   Kv.   010.  **                     ^ 

Some  of  the  cases  which  deny  the  **  '^'''^  Normannia,   02   Fed.   400. 

right  to  recover  for  mental  suffering  85  , stone  v.  Codman,  15  Pick.  297. 


§    35]  COMPENSATION.  131 

pruxiniutu  i;uiisequc'iK'c  uf  the  act  (.•(juiplained  of;  but  it  was 
said  "no  case  can  be  found  where  a  more  accident  or  event  not 
resulting  naturally  from  the  act  done  by  the  defendant  has 
been  held  sufficient  to  constitute  a  valid  claim  for  damages."  ^° 
The  law  is  correctly  stated,  but  in  other  eases  there  has  been 
recovery  for  some  of  the  damages  here  denied.  Jn  the  phiintiff's 
predicament  increased  expenses  and  loss  of  time  were  necessary 
results  of  the  taking  of  the  property.  In  an  English  case  "  the 
j^laintiff  took  passage  to  Australia  in  the  defendant's  vessel,  hut 
was  not  allowed  to  sail  on  account  of  a  mistaken  belief  that  ho 
had  not  paid  his  entire  fare.  The  error  was  found  out  im- 
mediately and  he  was  offered  a  passage  in  a  shi])  which  sailed 
a  week  after  the  first.  Instead  of  going  by  it,  however,  he 
remained  in  England  to  a  later  time  to  sue  the  defendant.  It 
was  held  that  the  expense  of  his  keep  till  trial  could  not  be  al- 
lowed as  damages,  since  he  might  have  gone  earlier  if  he  had 
wished.  The  suicide  of  one  who  was  injured  on  a  railway  train 
eight  months  after  the  injuries  were  sustained,  though  they  dis- 
ordered his  mind  and  body,  is  not  a  result  which  might  naturally 
and  reasonably  be  expected  to  follow.  The  court  say :  ''The  argu- 
ment is  not  sound  which  seeks  to  trace  this  immediate  cause  of 
the  death  through  the  previous  stages  of  mental  aberration, 
physical  suffering  and  eight  months'  disease  and  medical  treat- 
ment to  the  original  accident  on  the  railroad.  Such  a  course 
of  possible  or  even  logical  argument  would  lead  back  to  that 
'great  first  cause  least  understood'  in  which  the  train  of  all 
causation  ends."  ^*  The  fact  that  a  passenger  train  three-fourths 
of  an  hour  behind  its  schedule  time  was  blown  over  by  a  wind- 

86Vedder  v.  Jlildretli,  2  Wis.  427.  >S.   249,   2G   L.   cd.    JOTO;    Daiiii-ls   v. 

If   the   owner   of   horses   illegally  Xew    York,   etc.    ]{.   Co.,    1S;J    .Mass. 

seized    is   unable    to    procure    other  393,  fj2  L.K.A.  751;  Allison  v.  Frod- 

mcans  to  cultivate  his  crop  and  in  ericksburjj,   112  \'a.  243.     See  §  3G. 

consequence  it  is  damaged  in  e.xcess  If    the    injury    wliich    a    deceased 

of  the  value  of  the  horses,  he  may  person  received  precipitated  a  mal- 

recover  for  the   injury  to  the  crop.  ady  and  he  would  not  have  had  it 

Steel   V.   Metcalf,   4   Tex.   Civ.   App.  l)ut  for  the  wrong  done  liim  the  jury 

313.  may   determine   wlu^tlier   the    injury 

87Ansett    V.    Marshall,    22    !..    J.  was   the   pro.vimale   cause  of   death. 

(Q.  B.)   lis.  riuiiir  V.  Nassau  El.  R.  Co.,  41  App. 

SSSchefifer  v.  Railroad  Co.,  105  U.  Div.    (X.  Y.)   213. 


132  SUTHERLAND    ON    DAMAGES.  [§    35 

storm  which  struck  a  portion  of  the  track  ou  which  the  train 
would  not  have  been  but  for  the  delay  does  not  make  the  com- 
pany liable  for  an  injury  thereby  sustained  by  a  passenger.^^ 

A  convict,  aged  thirty-seven  years,  had  been  in  the  peniten- 
tiary twelve  years,  and  had  escaped  therefrom  five  times.  He 
was  in  vigorous  health,  immoral,  of  vicious  habits,  violent  pas- 
sions and  prone  to  desire  for  sexual  intercourse,  all  of  which 
facts  his  custodians  knew.  While  at  large,  through  their  fault, 
the  convict  committed  rape.  Such  act,  it  was  ruled,  was  not 
one  which  the  custodians  ought  to  have  foreseen  as  reasonably 
probable,  and  they  were  not  liable  for  it.^°  Because  of  the  icy 
condition  of  a  chute  used  for  loading  stock  an  animal  thereon 
slipped  and  fell,  knocking  down  a  second,  which  fell  upon  and 
injured  the  plaintiff.  It  was  no  defense  that  this  connected 
series  of  causes  produced  the  injury.^^  Though  a  snow  storm 
causes  animals  to  travel  toward  and  into  a  dangerous  excavation, 
the  existence  of  the  latter  and  the  neglect  of  the  person  respon- 
sible therefor  are  the  proximate  cause  of  the  loss  of  the  animals.^^ 
Making  an  assault  on  a  woman  waiting  in  a  railroad  station  at 
night  in  consequence  of  which  her  child  of  seven  years  becomes 
frightened,  runs  out  on  the  tracks  and  is  killed  by  a  train  is  the 
proximate  cause  of  the  death. ^^  While  standing  on  a  platform 
waiting  for  a  train  the  plaintiff  was  injured  by  being  struck 
by  the  dead  body  of  a  person  who  was  killed  while  attempting 
to  cross  the  tracks  of  the  railroad  near  where  the  plaintiff  was. 
Assuming  that  negligence  on  the  part  of  the  railroad  company 
was  shown,  there  was  no  liability.^*    The  Georgia  court  reached 

89  MfClary  v.  Sioux  City  &  P.  R.  riage  because  of  the  eirort  made  to 
Co.,  3  Neb.  44,  19  Am.  Rep.  (531.  reach  a  place  of  safety  may  recover 

90  Henderson  v.  Dade  C.  Co.,  100  for  tlie  physical  pain  and  medical 
Ga.  568,  3  Am.  Neg.  Rep.  133,  40  expenses  resulting  though  the  per- 
L.R.A.  95:  Hullinger  v.  Worrell,  83  son  who  threatened  the  assault  was 
111.    220.  not   within   striking   distance.      Du- 

91  Kincaid  v.  Kansas  City,  etc.  R.  mee  v.  Regal,  17  Pa.  Dist.  1012. 
Co.,   62  Mo.  App.   305.  94  Wood    v.    Pennsylvania    R.    Co., 

92  Big  Goose  &  R.  D.  Co.  v.  Mor-  177  Pa.  30G,  10  Am.  Neg.  Cas.  103, 
row,  8  Wyo.  537,  80  Am.  St.  955.  35  L.R.A.  199,  55  Am.  St.  728,  fol- 

93  McGehee  v.  McCarley,  33  C.  C.  lowed  in  Evansville,  etc.  R.  Co.  v. 
A.  29,  91  Fed.  462.     See  §  36.  Welch,  25  Ind.  App.  308,  8  Am.  Neg. 

A  woman   who  suffers  a  miscar-      Rep.  383. 


§    3G]  COMPENSATION.  133 

ii  different  conclusion  where  the  company's  engineer  acted  reck- 
lessly and  vvantonly.^^ 

§  36.  Liability  of  carriers  for  consequential  damages;  ex- 
traordinary circumstances.  Oue  of  the  leading  American  cases 
on  the  liability  of  carriers  of  passengers  for  conseiiuential  dam- 
ages was  decided  in  1882.^^  Although  the  decision  was  not 
unanimous  it  has  had  a  noticeable  influence  in  courts  which  have 
since  been  called  upon  to  consider  similar  questions.  The  prin- 
cipal facts  involved  are  not  essentially  different  from  those  in 
an  English  case  decided  in  1875,^"^  but  the  rules  of  law  applied 
are  in  stroYig  contrast.  This  is  in  part  accounted  for  by  the 
fact  that  in  the  former  case  the  action  was  held  to  be  in  tort, 
while  the  English  case  was  considered  as  one  for  breach  of  the 
contract.  In  the  former  the  plaintiffs  were  husband  and  wife. 
They  had  been  the  defendant's  passengers,  and  were  directed 
to  leave  its  train  at  a  point  three  miles  from  M.,  their  destina- 
tion, being  told  that  that  place  was  reached.  When  they  dis- 
embarked it  was  dark ;  a  freight  train  stood  on  a  side-track ; 
there  were  no  lights  visible  and  no  platform  on  which  to  alight. 
There  was  a  station-house  near,  but  it  was  hid  from  view  by 
the  freight  train.  The  plaintiff's  did  not  know  their  location, 
but  supposed  that  they  were  one  mile  nearer  M.  than  they  were; 
they  started  thither  expecting  to  find  a  house  in  which  they 
might  remain,  but  did  not  find  one  until  they  were  within  one 
mile  of  M.,  when  they  concluded  to  go  on  rather  than  to  seek 
shelter  at  the  house,  it  being  a  considerable  distance  from  the 
track.  It  was  late  at  night  when  they  reached  M.  and  ^Irs.  1>. 
was  quite  exhausted.  She  was  pregnant  at  the  time,  and  during 
that  night  suffered  severe  pains  which  continued  for  more  than 
two  months,  Avhen  a  miscarriage  resulted  and  inllniiiiiiatioii  set 
in.  The  jury  found  that  her  sickness  was  caused  by  the  walk, 
that  the  plaintiff's  were  not  negligent  in  taking  that  walk,  but 
were  compelled  to  take  it  as  the  result  of  the  defendant's  wrong- 
ful act.     The  first  question  detei'mincd  was  that  the  action  was 

95  Western  &  R.  Co.  v.  Bailey,  105  54  Wis.  342,  7  Am.  Ne<^.  Cas.  203. 
Ga.  100.  S'Hobbs  v.  London,  etc.  R.  Co.,  L. 

96  Brown   v.  Chicago,  etc.  R.   Co.,       R.   10  Q.  B.  111. 


134  SUTllKia^AND    ON    JJAMAGES.  [§    36 

in  tort  for  the  iiegligeuce  and  not  upon  the  contract  to  carry, 
notwithstanding  the  complaint  recited  that  the  relation  between 
the  parties  was  a  contract  relation,  and  that  the  defendant 
''wholly  disregarded  its  duty  in  the  premises,  and  its  contract 
and  obligations  to  and  with  the  plaintiffs."  ®*  The  court,  Tay- 
lor, J.,  writing  the  opinion,  said  that  the  doctrine  is  clearly 
established  that  one  who  commits  a  trespass  or  other  wrong  is 
liable  for  all  the  damage  which  legitimately  flows  directly  there- 
from, wdiether  such  damages  might  have  been  foreseen  by  the 
wrong-doer  or  not.  Had  the  defendant  wrongfully  placed  the 
plaintiffs  off  the  train  in  the  open  country,  where  there  was  no 
shelter,  in  a  cold  and  stormy  night,  and  on  account  of  the  state 
of  their  health,  in  their  attempts  to  find  shelter,  they  had 
become  exhausted  and  perished  it  would  seem  quite  clear  that 
the  defendant  ought  to  be  liable.  Its  wrongful  act  would  be 
the  natural  and  direct  cause  of  their  deaths,  and  it  would  be 
a  lame  excuse  for  the  defendant  that  if  the  plaintiffs  had  been 
of  more  robust  health  they  would  not  have  perished  or  have 
suffered  any  material  injury.  It  was  no  excuse  that  the  female 
plaintiff's  condition  was  not  known  to  the  railroad  employees.^^ 

98  Tliis  view  of  the  nature  of  the  liarmony   with   Sloane    v.    Soutliern 

action  is  different  from  that  enter-  California   R.    Co.,    Ill   Cal.   668,   8 

tained  in  Hobbs  v.  I^ondon,  etc.   R.  Am.   Ne<T.   Cas.   76,   32   L.R.A    Ift.*?: 

Co.,   L.   R.    10   Q.   B.   Ill    (compare  Head    v.    Georgia,    etc.    R.    Co.,    79 

McMahon    v.    Field,    7    Q.    B.    Div.  Ga.  538,  4  Am.  Neg.  Rep.  39,  11  Am. 

591),    where    it    was    hold    that    an  St.  454;   Seals  v.  Augusta  Southern 

action    resting    on    facts    quite    like  R.    Co.,    102    Ga.    817,    3   Am.    Neg. 

those  in  the  principal  case  was  upon  Rep.  784 ;  Carsten  v.  Northern  Pac. 

contract,   and  that  damages  result-  R.   Co.,   44   Minn.   454,   8   Am.   Neg. 

ing    from    the    walk    taken    by    the  Cas.  444,  20  Am.  St.  589,  9  L.R.A. 

plaintiff  to  reach  his  home  and  sick-  688;  Coy  v.  Indianapolis  G.  Co.,  146 

ness  consequent  thereupon  could  not  Ind.  655,   1  Am.  Neg.  Rep.  222,  36 

be  recovered.     The  case  referred  to  L.R.A.  535;   Chicago,  etc.  R.  Co.  v. 

is  disapproved  in  Evans  v.  St.  Louis,  Spirk,  51  Neb.  167,  2  Am.  Neg.  Rep. 

etc.  R.  Co.,   11   Mo.  App.  463,  472;  400;    L.   &  N.  R.  Co.  v.   Storms,   15 

Cincinnati,    etc.    R.     Co.   v.   Eaton,  Ky.  L.  Rep.  333    (Ky.  Super.  Ct.)  ; 

94  Ind.  474,  48  Am.  Rep.  179:  Trout  Alabama  &  V.  R.  Co.  v.  Hanes,  69 

V.    Watkins   L.   &   U.    Co.,    148    :Mo.  Miss.  160;   Toronto  R.  Co.  v.  Grin- 

App  621;   Texas  M.   R.  Co.  v.  Ger-  sted,  24  Can.  Sup.  Ct.  570. 

aldon,  54  Tex.  Civ.  App.  71.  99  Sloane    v.    Southern    California 

The    rule    of    the   Wisconsin    case  R.  Co.,  supra;  Mann  v.  Boudoir  C. 

as  to  the  form  of  the  action   is  in  Co.,  4  C.  C.  A.  540,  54  Fed.  646,  21 


g  36] 


COMPEXSATTOX, 


IS.-) 


By  wrongfnllj'  placing  the  parties  in  the  position  in  which  they 
were  the  defendant  was  also  liable  for  the  resnlting  injury, 
whether  it  was  the  immediate  result  of  its  act  or  of  theirs  in 
endeavoring  to  escape  therefrom.  Tho  case  was  within  the  rule 
that  where  an  efficient  adequate  cause  is  found  it  must  be  con- 
sidered the  true  cause  unless  some  other  cause  independent  of 
it  is  shown  to  have  intervened  between  it  and  the  result.^  In 
strong  contrast  with  the  case  stated  is  one  decided  in  1873,^ 
in  which  it  is  held  that  a  female  passenger  who  suffers  injuries 


L.R.A.  289;  East  Tennessee,  etc.  R. 
Co.  V.  Lockhart,  79  Ala.  315;  Ros- 
well  V.  Davenport,  14  N.  il.  91, 
citing  the  text. 

1  Brown  v.  Chicago,  etc.  R.  Co.,  54 
Wis.  342,  7  Am.  Neg.  Cas.  203,  has 
been  approved  as  to  the  substantial 
point  in  it  in  Sloane  v.  Southern 
California  R.  Co.,  Ill  Cal.  668,  8 
Am.  Neg.  Cas.  76,  32  L.R.A.  193; 
Coy  V.  Indianapolis  G.  Co.,  146  Ind. 
655,  1  Am.  Neg.  Rep.  222,  36  L.R.A. 
535 ;  Chicago,  etc.  R.  Co.  v.  Spirk, 
51  Neb.  167,  2  Am.  Neg.  Rep. 
400;  Terre  Haute  &  I.  R.  Co.  v. 
Buck,  96  Ind.  346,  49  Am.  Rep. 
168,  3  Am.  Neg.  Cas.  148;  Cin- 
cinnati, etc.  R.  Co.  v.  Eaton,  94 
Ind.  474,  48  Am.  Rep.  179;  Same 
V.  Acrea,  42  Ind.  App.  127.  To  the 
same  effect  are  Winkler  v.  St.  Louis, 
etc.  R.  Co.,  21  Mo.  App.  99,  9  Am. 
Neg.  Cas.  497:  Augusta  &  S.  R.  Co. 
V.  Randall,  79  Ga.  304;  Evans  v.  St. 
Louis,  etc.  R.  Co.,  11  Mo.  App.  463; 
Fitzpatrick  v.  Great  Western  R.  Co., 
12  LTp.  Can.  Q.  B.  645;  Baltimore 
City  P.  R.  V.  Kemp.  6]  Md.  74,  3 
Am.  Neg.  Cas.  655;  Davis  v.  Stand- 
ard Nat.  Bank,  50  App.  Div.  210; 
Ehrgott  V.  Mayor,  96  N.  Y.  264. 
48  Am.  Rep.  622;  Toronto  R.  Co.  v. 
Grinsted,  24  Can.  Sup.  Ct.  570: 
Yazoo,  etc.  R.  Co.  v,  Aden,  77  Miss. 
382:  Truel  v.  Missouri,  etc.  R.  Co., 
143   Mo.   App.   380;    Dye  v.  Chicago 


&  A.  R.  Co.,  135  id.  254;  Western 
U.  Tel.  Co.  V.  Powell,  54  Te.x.  Civ. 
App.  466,  21  Am.  Neg.  Rep.  21; 
Texas  M.  R.  Co.  v.  Geraldon,  id.  71; 
St.  Louis  S.  R.  Co.  v.  Foster,  46  id. 
517;  St.  Louis,  etc.  R.  Co.  v.  Davis, 
37  Okla.  340;  Denver  v.  Hyatt,  28 
Colo.  129;  Georgia  R.  &  E.  Co.  v. 
McAllister,  126  Ga.  447,  7  L.R.A. 
(N.S.)  1177;  Reimard  v.  Blooms- 
burg  &  S.  R.  Co.,  228  Pa.  384;  St. 
Louis  S.  R.  Co.  V.  Franks,  52  Tex. 
Civ.  App.  614;  Louisiana  &  R.  Co. 
V.  Rider,  103  Ark.  558.  See  Smith 
V.  British,  etc.  Co.,  86  N.  Y.  408,  0 
Am.  Neg.  Cas.  585;  Putnam  v.  New 
York,  etc.  R.  Co.,  47  Hun,  4.i:»; 
§§  48,  49.  In  opposition  are  Ray- 
mond V.  Haverhill,  168  .Mass.  382: 
Snow  V.  New  York,  etc.  R.  Co.,  185 
Mass,   321,    17   Am.   Neg.   Rep.   261. 

An  agent  wlio  wrongly  informs 
a  passenger  that  a  train  she  is 
about  to  take  will  make  close  con- 
nections with  the  train  of  another 
road  at  a  designated  place  is  not 
bound  to  foresee  that  she  would 
procure  a  conveyance  and,  in  the 
face  of  a  storm,  in  a  delicate  state 
of  healtli.  drive  over  a  rough  road 
to  lier  fatlier's  house,  and  thai  a 
miscarriage  would  result.  Fowlkes 
v.  Southern  R.  Co.,  96  Va.  742. 

2  Pullman  P.  C.  Co.  v.  l?arker.  4 
Colo.  344.  9  Am.  Neg.  Cas.  131.  34 
Am.  IN'i).  S9. 


136  SUTHERLAND    ON    DAMAGES.  [§    36 

through  a  carrier's  negligence  cannot  recover  for  such  as  are 
the  result  of  the  physical  condition  she  is  in,  as  where  illness 
follows  arrested  menstruation,  although  the  negligence  produces 
that  condition.  It  has  been  well  observed  concerning  this  case 
that  it  is  unsustained  by  avithority  and  is  supported  by  neither 
the  principles  of  law  nor  humanity.^  It  is  most  satisfactory  to 
know  that  is  not  now  recognized  as  authority  in  the  court 
which  decided  it.*  If  a  passenger  wrongfully  put  off  a  train  at 
a  flag-station,  when  it  is  dark  and  a  storm  is  raging,  and  at  a 
great  distance  from  his  starting  point  and  destination,  is  injured 
by  falling  through  a  cattle-guard  while  on  his  way  to  the  nearest 
station  the  jury  may  decide  whether  the  result  is  attributable 
to  such  wrong.^  If  the  temperature  of  a  waiting  room  produces 
pneumonia  the  carrier  is  liable  for  the  consequences.^  If  a 
shock  or  injury  to  the  nervous  system  is  occasioned  by  the  wrong- 
ful ejection  of  a  passenger  from  a  car  or  a  person  who  expects 
to  become  a  passenger  from  the  carrier's  waiting  room  it  will 
be  regarded  as  a  physical  injury,  and  the  act  which  caused  the 
shock  will  be  taken  to  be  the  proximate  cause  of  the  injury  if 
bodily  suffering  is  the  result  of  the  shock.'''  If  a  passenger  who 
informs  a  conductor  when  she  boards  his  train  that  friends  will 
meet  her  at  her  destination  is  carried  beyond  it  and  obliged  to 
sit  up  all  night  in  a  car  into  which  cold  is  admitted,  and  to 
change  cars  during  the  night  and  leave  the  train  at  an  early 
hour  in  the  morning  the  jury  may  well  find  that  the  carrier  is 
responsible  for  her  subsequent  sickness.®    One  who  has  bought 

3  Brown  v.  Chicago,  etc.  R.  Co.,  Lewis  v.  Flint,  etc.  R.  Co.,  54  Mich. 
Terre  Haute  &  I.  R.  Co.  v.  Buck,  55,  9  Am.  Neg.  Cas.  465;  McLane  v. 
3  Am.  Neg.  Cas.  148,  Ehrgott  v.  Botsford  E.  Co.,  136  Mich.  664,  16 
Mayor,  supra;  Brackett  v.  Southern  Am.  Neg.  Rep.  300. 

R.  Co.,  88   S.  C.  447.  est.  Louis,   etc.   R.   Co.  v.  Hook, 

4  Denver   v.    Hyatt,   supra;    Colo-       83   Ark.   584. 

rado  Springs  &  I.  R.  Co.  v.  Nichols,  7  Sloane  v.  California  Southern  R. 

41   Colo.  272,  20  L.R.A.(N.S.)    215.  Co.,    Ill    Cal.   668,    32   L.R.A.    193; 

5  Evans  v.  St.  Louis,  etc.  R.  Co.,  Texas  M.  R.  Co.  v.  Geraldon,  54  Tex. 
11   Mo.  App.  463,  8  Am.  Neg.  Cas.  Civ.  App.  71. 

486;  Winkler  v.  Same,  21  id.  99,  9  8  Missouri,  etc.  R.  Co.  v.  Hen- 
Am.  Neg.  Cas.  497.  See  Patten  v.  nesey,  20  Tex.  Civ.  App.  316;  Grim- 
Chicago  &  N.  R.  Co.,  32  Wis.  524,  sted  v.  Toronto  R.  Co.,  21  Ont.  App. 
7  Am.  Neg.  Cas.  191;   and  compare  578. 


§    3G]  COMPENSATlOiN.  '  137 

a  ticket  and  is  waiting  in  a  station  to  tiikc  a  train  is  a  passenger,® 
and  if  the  carrier's  gateman,  knowing  such  person  is  ill,  is  so 
waiting,  and  has  bought  liis  ticket,  fails  to  comply  with  his  re- 
quest to  notify  him  of  the  arrival  of  his  train  and  after  the  train 
has  gone  directs  a  policeman  to  eject  such  person  from  the 
station,  saying  that  "he  was  not  in  a  condition  of  mind  to  go  on 
any  train,"  and  such  person,  after  being  ejected,  and  while 
wandering  about  the  tracks  near  the  station,  is  nin  over  by  a 
train  and  killed  the  carrier  is  responsible.^"  If  the  agent  of  an 
express  company  receives  a  package  for  transportation  witli 
notice  that  it  contains  medicine  for  a  sick  person  and  that  it  is 
important  it  be  sent  at  once,  the  carrier  is  liable  for  the  physical 
and  mental  injury  which  its  delay  in  forwarding  the  medicine 
may  occasion  to  the  sick  person ;  but  not  for  the  mental  sutter- 
ing  of  the  husband  on  account  of  his  wife's  condition.^^  Where 
a  carrier  left  a  locked  car  marked  "powder"  near  its  warehouse, 
in  which  a  fire  broke  out,  and  the  city  fire  department  refrained 
from  making  efforts  to  put  out  the  fire  through  reasonable  fear 
of  the  explosion  of  the  powder  supposed  to  be  in  the  car,  not- 
withstanding it  was  empty,  the  negligence  in  so  leaving  the  car 
is  the  proximate  cause  of  the  loss  of  property  in  the  warehouse, 
it  being  reasonably  certain  the  fire  would  have  been  controlled 
but  for  the  apprehension  of  the  firemen. ^^  On  the  other  hand, 
a  carrier  is  not  presumed  to  contemplate  that  an  accident  may 
produce  insanity  in  one  of  its  passengers,  no  bodily  harm  l)eing 
sustained.^^  The  loss  of  the  sei'vices  and  companionship  of  a 
wife,  resulting  from  her  husband's  being  carried  beyond  his 
destination,  and  expenses  incurred  in  effecting  her  cure  are  not 
recoverable.^*    To  recover  consequential  damages  resulting  from 

9  Grimes  v.  Pennsylvania   Co.,   3G       Co.,  39  L.R.A.  300,  27  C.  C.  A.  407, 
Fed.  72,  7  Am.  Neg.  Cas.  631;  War-       83  Fed.  88. 

ren   v.    Fitcliburg    R.   Co.,    8   Allen,  13  Halle  v..  Texas  &  P.  R.  Co.,  9 

227;   Wells  v.  New  York  Cent.  etc.  C.  C.  A.  134,  60  Fed.  557,  23  L.R.A. 

R.   Co.,   25  App.   Div.   365.  774;    Scheffer  v.   Railroad   Co.,   105 

10  Wells  V.  R.  Co.,  supra;  Macon,  U.  S.  249,  26  L.  ed.  1070;  St.  Louis, 
etc.  R.  Co.  V.  Moore,  125  Ga.  810.  etc.  R.   Co.  v.   Bragg,  69   Ark.  402, 

11  Pacific    Exp.    Co.    v.    Black,    8  86  Am.  St.  206. 

Tex.  Civ.  App.  363.  14  Sappington   v.  Atlanta,   etc.   R. 

12  Hardman  v.  Montana  Union  R.       Co.,  127  Ga.  178. 


138  SUTilEliLAJMD    OiM    DAMAGES.  [^    ^^ 

being  ejected  from  a  train  the  plaintiff  must  show  that  his  subse- 
quent conduct  in  attempting  to  reach  his  destination  was  reason- 
able.^^ The  failure  to  stop  a  train  at  a  proper  place  does  not 
justify  a  passenger  in  leaping  off  unless  he  is  invited  to  do  so 
by  the  carrier's  agent  and  the  attempt  was  not  obviously  danger- 
ous.^^ In  the  absence  of  notice  that  a  passenger  whom  a  con- 
ductor has  promised  to  awaken  was  to  be  met  at  a  station  on 
another  road  by  her  father  and  carried  thence  to  her  sister's, 
where  her  sick  child  would  receive  medical  treatment,  there  is 
no  liability  for  her  mental  suffering  caused  by  failure  to  meet 
her  father  and  anxiety  respecting  the  child  though  the  conductor 
failed  to  keep  his  promise." 

If  the  negligence  of  a  carrier  results  in  an  injury  to  a  pas- 
senger by  which  his  system  is  rendered  susceptible  to  disease 
and  less  able  to  resist  it  when  he  is  attacked  by  it  and  death 
results,  the  injury  is  the  proximate  cause  thereof,  although  the 
disease  is  to  be  regarded  as  an  intervening  agency  and  the 
malady  which  attacked  him  was  prevalent  in  the  conimunity.^^ 
The  court  observe  that  if  it  'Svere  to  undertake  to  declare  any 
other  rule  we  should  be  involved  in  inextricable  confusion,  for 
it  is  clear  that  the  passenger  who  suffers  injuries  of  a  serious 
character  is  entitled  to  some  damages,  and  it  is  impossible  for 
any  one  to  pronounce,  as  a  matter  of  law,  at  what  point  the 
injury  flowing  from  the  wrong  terminated.  The  only  possible 
practicable  rule  is  that  the  wrong-doer  whose  act  is  the  mediate 
cause  of  the  injury  shall  be  held  liable  for  all  the  resulting 
damages,  and  that  the  question  of  whether  his  wrong  was  the 
mediate  cause  is  one  for  the  jury."  ^^ 

15  Chicago,  etc.  R.  Co.  v.  Spirk,  51  14G  Ind.  655,  067,  36  L.R.A.  535, 
Neb.  167,  2  Am.  Neg.  Rep.  400.  quoting  the  text. 

16  Burgin  v.  Richmond  &  D.  R.  19  Bradshaw  v.  Lancashire,  etc.  R. 
Co.,  115  N.  C.  673,  6  Am.  Neg.  Cas.  Co.,  L.  R.  10  C.  P.  109;  Baltimore 
125.  r.  R.  Co.  V.  Kemp,  61  Md.  619,  48 

17  Chicago,  etc.  R.  Co.  v.  Boyles,  Am.  Rep.  134;  Oliver  v.  La  Valle, 
11  Tex.  Civ.  App.  522,  10  Am.  Neg.  36  Wis.  592;  Sloan  v.  Edwards,  61 
Cas.  296.  This  case  is  of  doubtful  Md.  89;  Delie  v.  Chicago,  etc.  R. 
authority.  Compare  it  with  ]\lis-  Co.,  51  Wis.  400;  Beauchamp  v. 
souri,  etc.  R.  Co.  v.  Hennesey,  20  Saginaw  M.  Co.,  50  Mich.  163,  45 
Tex.   Civ.  App.   316.  Am.    Rep.    30;    Baltimore    &    P.    R. 

18  McCoy   v.  Indianapolis  G.   Co.,  Co.  v.  Reaney,  42  Md.  117;   Lyons 


1 


CO:\rPF:NSATTON. 


139 


§  ?>1.  Intervening  cause.  Goods  carried  in  a  canal  boat  were 
injured  by  the  wrecking  of  the  boat,  caused  by  an  extraordinary 
flood  which  would  not  have  been  encountered  but  for  a  retarded 
passage  in  consequence  of  the  carrier  employing  a  hiine  horse. 
This  fact  was  so  unlikely  to  conduce  to  such  an  event  that  the 
defendant  was  not  liable.^**  A  carrier  was  guilty  of  a  negligent 
delay  of  six  days  in  transporting  wool  which,  while  in  his  depot 
at  the  place  of  destination  a  few  days  after,  was  s\ibnierged  by 
a  sudden  and  violent  flood.  The  flood  was  the  proximate  cause 
of  the  injury  and  the  delay  the  remote  cause.^^  The  same  rule 
has  been  applied  where  there  was  negligent  delay  in  dispatching 
or  delivering  goods  and  they  were  lost  while  in  the  carrier's 
hands  by  flood,  sudden  storm  or  other  inmiediate  cause,  and 
where  the  carrier  justifiably  deviated  from  the  usual  route  in 
transporting  goods ;  the  damage  occurring  without  his  fault,  he 
was  not  responsible.^^  In  similar  cases  in  Xew  York  and  other 
states  a  different  conclusion  has  been  reached.     In  one  it  was 


V.  Second  Ave.  R.  Co.,  89  Hun,  374, 
12  Am.  Neg.  Cas.  391,  affirmed  with- 
out opinion,  115  N.  Y.  654;  Purcell 
V.  Lauer,  14  App.  Div.  (N.  Y.)  33, 
12  Am.  Neg.  Rep.  57;  Keegan  v. 
Minneapolis,  etc.  R.  Co.,  76  Minn. 
90;  Terre  Haute  &  I.  R.  Co.  v.  Buck, 
96  Ind.  346,  49  Am.  Rep.  168.  The 
opinion  in  the  last  case  reviews  a 
large  number  of  cases,  including 
Ginna  V.  Second  Ave.  R.  Co.,  8  Hun, 
494,  9  Am.  Neg.  Cas.  623,  affirmed 
67  N.  Y.  596;  Brown  v.  Chicago, 
etc.  R.  Co.,  54  Wis.  342,  7  Am.  Neg. 
Cas.  203;  Sauter  v.  New  York,  etc. 
R.  Co.,  66  N.  Y.  50,  6  Am.  Neg.  Cas. 
208,  23  Am.  Rep.  18.  Compare 
Sclieffer  v.  Railroad  Co.,  105  U.  S. 
249,  26  L.  ed.  1070,  and  other  cases 
cited   in    n.    8,   supra. 

20  Morrison  v.  Davis,  20  Pa.  171; 
McCIary  v.  Sioux  City  &  P.  R.  Co  , 
3  Neb.  44,  19  Am.  Rep.  631. 

21  Denny  v.  New  York  Cent.  R. 
Co.,  13  Gray,  481,  74  Am.  Dec.  645; 
French  v.  Merchants'  &  M's.  T.  Co., 


199     Mass.     433,     19     L.R.A.(X.S.) 
1006. 

22  Railroad  Co.  v.  Reeves,  10  Wall. 
176,  19  L.  ed.  909;  Daniels  v.  Ball- 
entine,  23  Ohio  St.  532,  13  Am.  Rep. 
264;  Hoadley  v.  Northern  T.  Co., 
115  Mass.  .304,  15  Am.  Rep.  106; 
Empire  State  C.  Co.  v.  Atchison, 
etc.  R.  Co.,  210  U.  S.  1,"  52  L.  ed. 
931,  135  Fed.  135,  citing  federal 
cases;  Atchison,  etc.  R.  Co.  v.  Hen- 
ry, 78  Kan.  490,  18  L.R.A.(N.S. 
177;  Rogers  v.  Missouri  Pac.  R.  Co., 
75  Kan.  222,  121  Am.  St.  410,  10 
L.R.A.(N.S.)  658;  McLane  v.  Bots- 
ford  E.  Co.,  136  Midi.  664,  16  Am. 
Neg.  Rep.  300;  Wertlieimer  S.  Co. 
V.  Missouri  Pac.  R.  Co.,  147  Mo. 
App.  489;  Lightfoot  v.  St.  Louis, 
etc.  R.  Co.,  126  id.  532;  Moffatt  C. 
Co.  v.  Union  Pac.  R.  Co.,  113  id. 
544;  Fentiman  v.  Atchison,  etc.  R. 
Co.,  44  Tex.  Civ.  App.  455,  citing 
local  cases;  Herring  v.  Chesapeake 
&  W.  R.  Co.,  101  Va.  778.  l.!  Am. 
Neg.  Rop.  365. 


140 


SUTHEBIiAND    ON    DAMAGES. 


[§  37 


held  that  when  a  carrier  is  intrusted  with  goods  for  transporta- 
tion and  thej  are  injured  or  lost  in  transit  the  law  holds  him 
responsible.  He  is  only  exempted  by  showing  that  the  injury 
was  caused  by  an  act  of  God  or  the  public  enemy ;  and  to  avail 
himself  of  such  exemption  he  must  show  he  was  free  from  fault. 
If  he  departs  from  the  line  of  his  duty  and  violates  his  contract, 
and  while  thus  in  fault,  and  in  consequence  of  that  fault,  the 
goods  are  injured  by  the  act  of  God,  which  would  not  otherwise 
have  caused  the  injury,  he  is  not  protected. ^^  There  was  un- 
reasonable delay  on  the  part  of  the  carrier  in  forwarding  goods, 
and  while  they  were  in  a  railroad  depot  at  an  intermediate  point 
they  were  injured  by  an  extraordinary  flood;  the  carrier  was 
liable  because  the  goods  were  exposed  to  the  flood  by  his  fault.^* 
These  cases  relating  to  carriers  or  others  held  to  an  absolute 
responsibility,  except  as  relieved  by  showing  that  the  injury  was 


23  Cumberland  P.  L.  Co.  v.  Stam- 
baugh,  137  Ky.  528,  31  L.R.A. 
(N.S.)  1131.  See  Voudrie  v.  South- 
ern R.  Co.,  155  111.  App.  279;  Mc- 
Alister  v.  Chicago,  etc.  R.  Co.,  74 
Mo.  351. 

24  Greene  v.  Louisville  &  N.  R. 
Co.,  163  Ala.  138,  136  Am.  St.  67; 
Alabama  G.  S.  R.  Co.  v.  Quarles,  145 
Ala.  436,  5  L.R.A. (N.S.)  867,  117 
Am.  St.  54.  (The  opinion  collects 
the  cases  favoring  this  view  and 
those  following  the  rule  of  Morrison 
v.  Davis,  20  Pa.  171)  ;  Choctaw,  etc. 
R.  Co.  V.  Rolfe,  76  Ark.  220,  citing 
the  text;  Providence  W.  Ins.  Co.  v. 
Western  U.  Tel.  Co.,  153  111.  App. 
118;  Green- W.  S.  Co.  v.  Chicago, 
etc.  R.  Co.,  139  Iowa,  123,  5  L.R.A. 
(N.S.)  882,  (reviewing  numerous 
cases)  ;  Sutton  v.  Western  U.  Tel. 
Co.,  129  Ky.  166;  Bibb  Broom  C. 
Co.  v.  Atchison,  etc.  R.  Co.,  94 
Minn.  269,  17  Am.  Neg.  Rep.  590, 
69  L.R.A.  509,  110  Am.  St.  361; 
Alabama  G.  S.  R.  Co.  v.  Elliott,  150 
Ala.  381,  9  L.R.A. (N.S.)  1264,  124 
Am.  St.  72,  and  local  cases  cited; 
Read  v.  Spaulding,  30  N.  Y.  630,  86 


Am.  Dec.  426;  Wald  v.  Pittsburg, 
etc.  R.  Co.,  162  111.  545,  53  Am.  St. 
332,  35  L.R.A.  356,  citing  McGraw 
v.  Baltimore  &  0.  R.  Co.,  18  W.  Va. 
361,  41  Am.  Rep.  696;  Dening  v. 
Grand  Trunk  R.  Co.,  48  N.  H.  455, 
2  Am.  Rep.  267;  Read  v.  St.  Louis, 
etc.  R.  Co.,  60  Mo.  199;  Williams 
V.  Grant,  1  Conn.  487,  7  Am.  Dec. 
235;  Davis  v.  Garrett,  6  Bing.  617; 
Crosby  v.  Fitch,  12  Conn.  410,  31 
Am.  Dec.  745;  Rodgers  v.  Central 
Pac.  R.  Co.,  67  Cal.  606,  13  Am. 
Neg.  Cas.  346;  Higgins  v.  Dewey, 
107  Mass.  494,  9  Am.  Rep.  63; 
Philadelphia  &  R.  R.  Co.  v.  Ander- 
son, 94  Pa.  360. 

The  authorities  are  not  at  vari- 
ance where  the  property  damaged  is 
perishable  or  inherently  susceptible 
to  damage  from  climatic  influences, 
as  sudden  changes  in  the  weather. 
These  the  carrier  must  anticipate, 
and  for  injuries  resulting  to  such 
property  from  such  causes  is  liable 
where  negligent  delay  in  forwarding 
them  contributes  to  cause  the  in- 
jury. Bibb  Broom  C.  Co.  v.  R.  Co. 
supra. 


37] 


COMPENSATION. 


141 


caused  l)y  the  act  of  God,  are  not  wholly  controlled  by  the  con- 
sideration of  the  nearness  of  the  injury  to  the  fault.  Davies,  J., 
said:  "It  is  to  be  observed  that  the  foundation  of  this  exemp- 
tion is  that  the  party  claiming  the  benefit  and  application  of  it 
must  be  without  fault  on  his  part,"  referring  to  several  cases.** 
"These  cases,"  he  continues,  "clearly  establish  the  rule  that  the 
carrier  cannot  avail  himself  of  the  exception  to  his  liabilitv 
which  the  law  has  created  unless  he  has  been  free  from  negli- 
gence or  fault  himself.  The  policy  of  the  law  is  to  hold  him  to  a 
strict  liability ;  and  this  policy,  for  wise  and  just  purposes,  ought 
not  to  be  departed  from.  But  when  the  injury  occurs  from  a 
cause  which  the  carrier  could  not  guard  against  nor  protect  him- 
self from,  from  such  an  event  the  law  excuses  him,  but  it  only 
does  it  when  he  himself  is  not  in  fault  and  is  free  from  all  negli- 
gence." ^^     It  has  been  held  that  if  an  administrator  deposits 


25  Davis  V.  Garrett,  6  Bing.  716. 
In  this  case  the  plaintiff  put  on 
board  the  defendant's  barge  lime  to 
be  conveyed  from  M.  to  L.  The 
master  of  the  barge  deviated  unnec- 
essarily from  the  usual  course,  and 
during  the  deviation  a  tempest  wet- 
ted the  lime,  and  the  barge  thereby 
taking  fire  the  whole  was  lost;  he 
was  liable.  Tindal,  C.  J.,  observed 
that  no  wrongdoer  can  be  allowed 
to  apportion  or  qualify  his  own 
wrong,  and  that  as  a  loss  had  actu- 
ally happened  whilst  his  wrongful 
act  was  in  operation  and  force,  and 
which  was  attributable  to  such  act, 
he  could  not  set  up  as  an  answer  to 
the  action  the  bare  possibility  of  a 
loss  if  the  act  had  never  been  done. 
It  might  admit  of  a  different  con- 
struction if  he  could  show  not  only 
that  the  same  loss  might  have  hap- 
pened, but  that  it  must  have 
happened,  if  the  act  complained  of 
had  not  been  done.  Charleston  S.  Co. 
V.  Bason,  1  Harp.  262;  Campbell  v. 
Morse,  id.  468;  Bell  v.  Reed,  4  Bin. 
127,  5  Am.  Dec.  398;  Plart  v.  Allen, 
2    Watts,   114;    Hand   v.   Baynes,   4 


Whart.  204;  Williams  v.  Grant, 
Crosby  v.  Fitch,  supra. 

26  In  Read  v.  Spaulding,  30  X. 
Y.  630,  86  Am.  Dec.  426.  In 
accord:  Alabama  G.  >S.  R.  Co. 
V.  Quarles,  145  Ala.  436,  5  L.R.A. 
(N.S.)  867,  117  Am.  St.  54;  Same 
V.  Elliott,  150  Ala.  381,  9  L.R.A. 
(N.S.)  1264,  124  Am.  St.  72;  Sandy 
V.  Lake  St.  R.  Co.,  235  111.  194; 
Jones  V.  Minneapolis,  etc.  R.  Co., 
91  Minn.  229,  15  Am.  Neg.  Rep.  355. 

See  last  section.  In  Parmalee  v. 
Wilks,  22  Barb.  539,  the  plaintiff, 
the  owner  of  a  raft  of  saw  logs 
lying  at  Port  ]\laitland,  Canada, 
made  a  contract  with  tlic  defend- 
ants, the  owners  of  a  steamboat,  by 
which  it  was  agreed  that  they  would 
come  to  Port  Maitland  on  the  next 
Tuesday  morning  with  the  steam- 
boat, and  proceed  up  the  river  about 
five  miles  to  D.,  and  there  land  lier 
passengers,  and  immediately  return 
to  Port  Maitland  and  take  the 
plaintiff's  raft  in  tow,  and  tow  it  to 
Black  Rock,  a  distance  of  about 
forty  miles,  which  the  steamboat 
could    traverse    in    about    fourteen 


142 


SUTHERLAND    ON"    DAMAGES. 


[§  37 


money  of  an  estate  in  a  l3ank  and  allows  it  to  remain  after  the 
time  when  it  should,  by  punctual  performance  of  his  duty,  have 
been  distributed  and  in  the  hands  of  those  entitled  to  it,  and 
the  bank  fails  and  the  money  is  lost  he  and  his  sureties  are  liable 
therefor,  and  the  sum  so  lost  is  the  measure  of  damages.^' 

It  is  immaterial  what  is  the  intermediate  cause  between  the 
act  complained  of  and  the  injurious  consequence,  if  such  act 
is  the  efficient  and  proximate  cause  and  the  consequence  was 
the  probable  result.^®  There  may  be  intervening  operations  of 
natiire,^^  acts  produced  by  the  volition  of  animals  or  of  human 
beings,  innocent  acts  of  the  injured  party  or  of  third  persons. 


hours  witli  the  raft  in  tow.  The 
usual  time  for  the  arrival  of  the 
steamboat  at  Port  Maitland,  upon 
her  trip  up,  was  3  o'clock  in  the 
morning,  and  it  generally  took  about 
two  hours  to  proceed  to  D.,  land  her 
passengers  and  return  to  Port  Mait- 
land. On  Tuesday  morning  the 
weather  was  fair  and  the  lake  and 
river  were  calm,  and  so  continued 
through  the  day.  But  the  boat 
failed  to  call  for  the  raft  according 
to  the  agreement.  In  tlie  evening, 
al)out  sunset,  she  returned  and  took 
the  raft  in  tow  for  Black  Rock. 
During  the  night  a  storn  arose  and 
the  raft  went  to  pieces  and  was 
scattered  along  the  shore.  Held, 
that  had  the  defendants  entered  up- 
on the  performance  of  the  contract 
at  the  time  specified  and  used  prop- 
er diligence  in  attempting  to  per- 
form it  the  plaintiff  would  have 
taken  all  the  risk  of  storms  or  other 
casualties.  But  as  they  delayed  for 
some  fourteen  hours  to  enter  upon 
its  performance,  and  as  such  delay 
resulted  in  the  raft  being  overtaken 
by  the  storm,  they  were  responsible 
for  the  consequences;  that  when 
they  took  the  raft  in  tow  in  the 
evening  instead  of  the  morning,  as 
agreed,  they  took  the  risk  of  any 
storm  that  should  arise  after  a  .suffi- 


cient time  had  elapsed  for  towing 
the  raft  to  Black  Rock,  if  they  had 
commenced  the  towing  in  the  morn- 
ing. The  plaintiff  had  a  right  to 
fix  the  time  in  the  contract,  and 
make  it  an  essential  part  of  it,  con- 
sidering the  dangers  of  navigation 
upon  the  lake,  and  the  peculiar  na- 
ture and  condition  of  his  property; 
lie  might  determine  when  tlie  voyage 
sliould  commence  and  make  a  spe- 
cial agreement  to  that  effect.  And 
upon  the  nonperformance  of  the 
agreement,  at  the  time  specified, 
the  party  in  default  was  liable  for 
the  damages  resulting  from  causes 
which  would  not  have  arisen  had 
the  agreement  been  performed. 
Michaels  v.  New  York  Cent.  R.  Co., 
30  N.  Y.  564,  86  Am.  Dec.  415; 
Maghee  v.  Camden  &  A.  R.  Co.,  45 
N.  Y.  514,  6  Am.  Rep.  124;  Condiet 
V.  Orand  Trunk  R.  Co.,  54  N.  Y. 
500;  Rawson  v.  Holland,  59  N.  Y. 
611,  17  Am.  Rep.  394. 

27McNabb  v.  Wixom,  7  Nev.  163. 

28  Smith  V.  Northern  Pac.  Ry. 
Co.,   79   Wash.  448. 

29  Benedict  P.  Co.  v.  Atlantic  C. 
L.  R.  Co.,  55  Fla.  514,  20  L.R.A. 
(N.S.)  92;  Pacific  Union  Club  v. 
Commercial  Union  Assur.  Co.,  10 
Cal.  App.  203,  (destruction  of  water 
mains  by  an  earthquake  preventing 


§  ^7] 


0OAli'i:.NSATlUA'. 


113 


and  even  tortious  acts  of  the  latter,  and  tlic  chain  of  canse  and 
effect  not  be  necessarily  broken  or  the  resnlt  rendered  remote. 
The  test  is  not  to  be  found  in  any  arbitrary  nundjer  of  inter- 
vening events  or  agents,  but  in  their  character  and  in  tlie  natural 
and  probable  connection  between  the  wrong  done  and  the  in- 
jury. ^°  In  entering  a  slip  a  ferryboat,  through  negligence, 
struck  the  side  of  the  rack  wdth  such  violence  as  to  cause  the 


the  extiiiguisliment  of  tire;  fire  was 
proximate  cause  of  loss  of  property 
lliat  bvn-ned,  and  insurer  was  liable 
tliougli  its  i)olicy  excepted  loss 
caiiaod  l)y  eartliquake) . 

SOCiioctaw,  etc.  R.  Co.  v.  IIollo- 
way,  191  U.  S.  334,  48  L.  ed.  207, 
15  -Am.  Neg.  Rep.  235:  Merrill  v. 
Los  Angeles  G.  &  E.  Co.,  158  Cal. 
499,  31  L.R.A.(N.S.)  559;  Albany 
&  N.  R.  Co.  V.  Wheeler,  G  Ga.  App. 
270;  Ballentine  v.  Illinois  Cent. 
R.  Co.,  157  111.  App.  295;  Davis 
V.  Mercer  L.  Co.,  164  Ind.  413, 
18  Am.  Neg.  Rep.  485;  Cleveland, 
etc.  R.  Co.  V.  Patterson,  37  Ind. 
App.  617;  Peru  H.  Co.  v.  Lenhart, 
48  Ind.  App.  319;  Evansville  &  I. 
R.  Co.  v.  Allen,  34  Ind.  App.  636: 
Central  U.  Tel.  Co.  v.  Sokola,  id. 
429;  Beckler  v.  Mcrringer,  131 
Iowa,  614;  Kansas  City  v.  Siese, 
71  Kan.  283;  St.  Louis,  etc.  R. 
Co.  V.  League,  id.  79,  18  Am. 
Neg.  Rep.  86 ;  Louisville  &  N.  R.  Co. 
V.  Eckman,  137  Ky.  331 ;  Claussen 
v.  Cumberland  Tel.  &  T.  Co.,  126  La. 
1087;  McDonald  v.  Snelling,  14  Al- 
len, 296;  Vandenburgh  v.  Truax,  4 
Denio,  464;  Kellogg  v.  Chicago,  etc. 
R.  Co.,  26  Wis.  223,  7  Am.  Rep.  69 ; 
Murdock  v.  Walker,  43  111.  App. 
590;  Northern  Pac.  R.  Co.  v.  Lewis, 
2  C.  C.  A.  446,  51  Fed.  658;  Marsh 
V.  Great  Northern  P.  Co.,  101  Me. 
489 ;  Turner  v  Page,  186  Mass.  600 ; 
Corley  v.  Board  of  Levee  Com'rs,  95 
Miss.  6l7;  Jones  v.  Kansas  City, 
etc.  R.  Co.,  178  Mo.  528,  20  Am. 
Neg.    Rep.    674,    101   Am.    St.   434; 


Troll  V.  St.  Louis  P.  C.  Co.,  160  .Mo. 
App.  501;  Soutli  Side  R.  Co.  v.  St. 
Louis,  etc.  R.  Co.,  154  Mu.  App. 
364;  Alurrell  v.  Smith,  152  id.  !».->; 
Parker  v.  St.  Louis  T.  Co.,  108  id. 
465,  17  Am.  Neg.  Rep.  263;  Mize 
v.  Rocky  Mt.  Bell  Tel.  Co.,  38  Mont. 
521,  129  Am.  St.  659:  Ililligas  v. 
Kuns,  86  Neb.  US,  26  L.U.A.(N.S.) 
284;  Collins  v.  West  Jersey  Exp. 
Co.,  72  N.  J.  L.  231,  5  L.R.A.(N.S.) 
373.  19  Am.  Neg.  Rep.  393;  Cohen 
V.  Rittimann,  (Tex.  Civ.  App.)  139 
S.  W.  59;  Houston  B.  &  T.  R.  Co. 
V.  O'Lcary,  (Tex.  Civ.  App.)  136  S. 
W.  601;  Atchison,  etc.  R.  Co.  v. 
Mills,  53  Tex.  Civ.  App.  359;  West- 
ern U.  Tel.  Co.  V.  Auslet,  id.  264; 
Same  v.  Gulick,  48  id.  78;  St.  Louis 
S.  R.  Co.  V.  Bryant,  46  id.  601; 
Gulf,  etc.  R.  Co.  V.  Boyce,  39  id. 
195,  20  Am.  Neg.  Rep.  689;  Stand- 
ard L.  &  P.  Co.  V.  Muncey,  33  id. 
416;  Stone  v.  Union  Pac.  R.  Co.,  32 
Utah,  185;  Lincoln  v.  Central  Ver- 
mont R.  Co.,  82  Vt.  187,  137  Am. 
St.  998;  Richmond  v.  Gay,  103  Va. 
320;  Standard  O.  Co.  v.  Wakefield, 
102  Va.  824.  17  Am.  Neg.  Rep.  259, 
(ifi  L.R.A.  792;  Williams  v.  Ballard 
L.  Co.,  41  Wa.sh.  3,38;  Shearc  v. 
Buckley,  31  Wash.  370;  Soutliern 
R.  Co.  V.  Daughdrili,  11  Ga.  App. 
603:  Creaser  v.  Creaser,  41  Nova 
Scotia,  480;  Helena  G.  Co.  v.  Rog- 
ers, 104  Ark.  59;  Strayer  v.  Quincy, 
etc.  R.  Co.,  170  Mo.  App.  514.; 
Brown  v.  Oregon-W.  R.  &  N.  Co., 
63  Ore.  396:  Reiser  v.  Cincinnati, 
etc.  R.  Co.,  152  Ky.  522. 


144  SU'rilEKI.AJSU    ON    DAMAGES.  [§    37 

passengers  to  sway,  in  consequence  of  which  one  of  their  number 
fell  and  was  injured.  The  producing  cause  was  negligence, 
and  there  was  no  interruption  thereof  by  what  the  injured  j)er- 
son  did  after  his  fall.^^  One  who  builds  a  back  fire  to  save 
his  property  from  a  hre  negligently  caused  by  another  does  only 
Avhat  he  ought  to  do,  and  if  the  fire  he  started  ruins  the  property 
it  was  designed  to  save  there  is  no  break  in  the  chain  of  cause 
iuid  effect  as  to  the  wrong-doer,  if  it  is  clear  the  property  would 
have  been  burned  had  the  second  fire  not  been  set.^^  Allowing 
a  long  ladder  to  rest  outside  a  sidewalk  in  a  street  and  against 
a  building  was  the  proximate  cause  of  an  injury  sustained  by  a 
])asser-by  through  its  fall  in  consequence  of  an  unusual  wind.^^ 
§  38.  Same  subject.  The  primary  cause  may  be  the  proxi- 
mate cause  of  a  disaster  though  it  may  operate  through  succes- 
sive instruments,  as  an  article  at  the  end  of  a  chain  may  be 
moved  by  a  force  applied  at  the  other  end,  that  force  being  the 
proximate  cause  of  the  movement.  The  question  always  is, 
was  there  an  unbroken  connection  between  the  wrongful  act 
and  the  injury,  a  continuous  operation  ?  Did  the  facts  constitute 
a  continuous  succession  of  events,  so  linked  together  as  to  make 
a  natural  whole ;  or  was  there  some  new  and  independent  cause, 
disconnected  from  the  primary  fault  and  self-operating,  which 
produced  the  injury  '(  The  inquiry  must  be  answered  in  accord- 
ance with  common   understanding.^^     The   act  of  furnishing 

31  Cash  V.  New  York  Cent.  etc.  R.  Mo.  App.  110;  Lawrence  v.  Heid- 
Co.,  56  App.  Div.  473.  breder  I.  Co.,  119  id.  316;  Mayrant 

32  McKenna  v.  Baesslcr,  S6  Iowa,  v.  Columbia,  77  S.  C.  281,  10  L.R.A. 
1!)7,  17  L.R.A.  310;  Owen  v.  Cook,  (N.S.)  1094;  Reynolds  v.  Galveston, 
9  N.  D.  134,  47  L.R.A.  646.  etc.   R.   Co.,   101   Tex.   2;    Cohen   v. 

33  Moore  v.  Townsend,  76  Minn.  Rittiniann  (Tex.  Civ.  App.),  139 
04,  6  Am.  Neg.  Rep.  95.  See  Par-  8.  W.  59;  Driscoll  v.  Allis-C.  Co., 
menter  v.  Marion,  113  Iowa,  297;  144  Wis.  451.  See  Gulf  &  C.  II.  Co. 
Trapp    V.   McClellan,   68    App.   Div.  v.  Sneed,  84  Miss.  252. 

3(52.  The  owner  of  an  elevator  is  not 

34  Milwaukee,  etc.  R.  Co.  v.  Kel-  liable  for  tlie  act  of  a  stranger  who 
lowg,  94  U.  S.  469,  24  L.  ed.  256;  operates  it  during  the  temporary 
Miller  v.  Kelly  C.  Co.,  239  111.  626,  absence  of  the  person  who  had 
21  Am.  Neg.  Rep.  664,  130  Am  St.  charge  of  it.  Board  of  Trade  B.  Co. 
245;  Georgetown  Tel.  Co.  v.  Mc-  v.  Cralle,  109  Va.  246,  22  L.R.A. 
Cullough,  118  Ky.  182,  111  Am.  St.  (N.S.)  297,  123  Am.  St.  917. 
294;    Hull   v.  Thomson   T.   Co.,   135  In  Lowery  v.  Manhattan  R.   Co., 


58] 


COMPENSATION. 


145 


liquor  to  a  man  in  a  stupidly  drunken  condition,  ^vlth  knuwl- 
cd'-v  thereof,  no  duress,  deception  or  persuasion  being  used, 
although  a  statutory  misdemeanor,  is  only  the  remote  cause  ot 
-  his  death  ;  his  act  in  drinkin^.  it  is  the  proximate  and  intervening 
cause  ''  The  voluntary  intoxication  of  a  person  who  has  at- 
tained the  age  of  discretion,  but  for  which  the  injury  resulting 
from  the  sale  of  chloroform  to  him  in  violation  of  law^w<mld 
not  have  happened,  breaks  the  chain  of  cause  and  eflect.        1  lie 


!)i)   M.   Y.   ]58,   52  Am.   Rep.   12,   12 
Daly   431,  fire   fell  from   a   locomo- 
tive   on    an    elevated    road   upon   a 
horse    and    its    driver.      The    horse 
ran    and,    resisting    an    attempt   to 
get    him    against   a    curbstone,    ran 
over    it    and    injured    the   plaintiflf, 
who  was  on  the  sidewalk.    The  driv- 
er's effort  to  stop  the  horse  by  turn- 
ing  him    from    the    course    he   was 
taking  was,  whether  prudent  or  not, 
a  continuation  of  the  result  of  the 
defendant's  negligence  and  its  nat- 
ural  and    probable   consequence,   as 
was   the   injury    inflicted   upon   the 

plaintiff". 

A  fire  started  by  defendant's  neg- 
ligence,   after    spreading    one    mile 
and  a  quarter  to  the  northeast,  near 
the   plaintiff's   property,  met  a  fire 
having  no  responsible  origin,  coming 
from  the  northwest.  After  the  union, 
fire  swept  on  from  the  northwest  to 
and  into  plaintiff's  property  causing 
its  destruction.     Either  fire,  if  the 
other   had  not  existed,  would  have 
reached  the  property  and  caused  its 
destruction  at  the  same  time.    Held, 
that  the  rule  of  liability  in  case  of 
joint    wrongdoers    does   not    apply; 
that  the  independent  fire  from  the 
northwest     became     a     supersedmg 
cause,  so  that  the  destruction  of  the 
propertv  could  not,  with  reasonable 
certaiutv,  be  attributed  in  whole  or 
in    part    to    the    fire   having   a    re- 
sponsible origin;   that  the  chain  of 
responsible  causation  was  so  broken 
Suth.  Dam.  Vol.  I.— 10. 


by  the  fill'  from  the  northwest  that 
tiie  negligent  (ire,  if  it  reached  tlie 
property  at  all,  was  a  remote  and 
not  the  pro.vimate  cause  of  tlie  loss. 
After  tlie  fire  swept  every  tiling  of  a 
combustible  character  clean  on  both 
sides   of   defendant's   right  of   way, 
plaintiff's  horses,  that  were  running 
at    large,    went    upon    tlie    railway 
track  and  were  killed  by  a  passing 
train    without     negligence    on    the 
part  of  the  train  men.    The  right  of 
way   had   never   been   fenced   as   re- 
quired by  law.     Held,  that  the  rule 
of  absolute  liability,  under  the  stat- 
ute requiring  railway  companies  to 
fence     their     tracks,    applies    only 
where  the  loss  is  produced,  in  whole 
or  in  part,  by  reason  of  the  failure 
to  fence;  that  in  the  circumstances 
stated  the  chain  of  causation  reach- 
ing from    the    failure  to  fence    was 
broken   by   the   fire  that  would  un- 
questionably    have     destroyed     the 
fence  if  it  had  existed,  so  that  the 
failure  to    fence    cannot  be    said  to 
have  contributed  to  the  entry  of  the 
horses     upon     the     railway     track. 
Cook  V.  Minneapolis,  etc.  R.  Co.,  98 
Wis.  624,  40  L.R.A.  457    (as  stated 
in  the  syllabus  by  Marshall,  J.). 

35  See  McCue  v.  Klein,  GO  Tex. 
168,  48  Am.  Eep.  260. 

36  King  V.  Henkie,  80  Ala.  505.  60 
Am.  Rep.  119.  See  Triggs  v.  Mc- 
Intyre,  215  HI.  369. 

37  Meyer  v.  King,  72  Miss.  1,  35 
L.R.A.  474. 


14(3  SUTliEKLAiND    ON    DAMAGES.  [§    oS 

sale  of  poison  without  the  label  required  by  statute  does  not 
make  the  vendor  liable  for  the  death  of  a  man  who  took  it  while 
intoxicated.  His  acts  in  buying  and  taking  it  were  the  proxi- 
nuite  cause  of  his  death;  they  were  independent  acts,  which 
intervened  and  broke  all  connection  between  the  omission  to 
label  and  the  death.^®  The  owner  of  a  ferryboat  must  foresee 
that  horses  thereon  may  take  fright  at  the  sound  of  whistles 
from  other  boats  and  guard  against  such  horses  backing  into  the 
water,  and  if  he  fails  to  provide  a  sufficient  rail  to  prevent  that 
result  his  neglect  is  the  efficient  cause  of  the  loss  of  the  horses.^^ 
One  whose  private  way  over  the  land  of  another  is  obstructed  by 
a  fence  built  under  a  claim  of  right  and  who  proceeds  to  have 
such  way  laid  out  as  a  public  way  cannot  recover  the  expense 
of  so  doing  in  a  suit  for  the  obstruction  of  the  way."  Any 
wrongful  act  which  exposes  one  to  injury  from  rain,  heat,  frost, 
fire,  water,  disease,  the  instinctive  or  known  vicious  disposition 
or  habits  of  animals,  or  any  other  natural  cause  under  circum- 
stances which  render  it  probable  that  such  an  injury  will  occur 
is  a  primary,  efficient  and  proximate  cause  if  harm  ensues.*^ 
Many  such  cases  have  been  referred  to  in  the  preceding  pages. 
Persons  who  dam  water-courses  are  presumed  to  have  knowl- 
edge of  the  fact  that  natural  causes  operate  to  fill  up  their  beds 

38Konker    v.    St.    John,    21    Ohio  kins,   IPC  N.  Y.   482:    Watcrs-P.   O. 

C.  C.  39.  Co.  V.  Deselms,  18  Okla.  107;   Dan- 

39  Sturgis  V.  Kountz,  165  Pa.  358,  nenhower  v.  Western  U.  Tel.  Co.,  218 

27    L.R.A.   390.  Pa.    216;    Cameron    v.    Citizen's    T. 

M  Holmes   v.   Fuller,   68   Vt.   207.  Co.,  216  Pa.   191;   Houston,  etc.   R. 

« Western  &  A.  R.  Co.  V.  Bailey,  Co.    v.    Gerald     (Tex.    Civ.    App.), 

105  Ga.   100;   Alabama,  etc.  R.  Co.  123  S.   W.  166;   Ft,  Worth,  etc.  R. 

V.  Chapman,  83  Ala.  453 ;  Vogel  v.  ^^   ^  Morris,  45  Tex.  Civ.  App.  596 ; 

McAuliffe,  18  R.  I.  79;   Pulaski  G.  eiiicago,   etc.   R.   Co.   v.   Groner,   43 

L.  Co.  v.  McClintock,  97   Ark.  576,  -^   ^64 


The  sale  of  railway  tickets  by  an 


32  L.R.A.  (N.S.)    825;    St.  Louis   S. 

R.    Co.    v.    Mackey,    95    Ark.    297;  .     m-  .   ,      •„  „  . 

^    „  ,T.       nA  agent  atnicted   witli  small  pox  to  a 

Louisiana   &   A.   R.   Co.   v.   Nix,   94  ^  .,     .    ,, 

Ark.  270;  National  F.  Co.  v.  Green,  h"^^^"'^  ^^^  ^""^^^^^  ^"^  ''''^'  '^  ^^'^ 

50    Colo.   307;    Nelson   v.   State,   32  Proximate  cause  of  the  communica- 

Ind.    App.    88,    17    Am.    Neg.    Rep.  ^i^"  ^^  ^^'^  disease  from  the  husband 

257 ;  Ward  v.  Aetna  L.  Ins.  Co.,  82  to    her.      Missouri,    etc.    R.    Co.    v. 

Neb.    499;    McCahill   v.    New    York  Raney,     44     Tex.     Civ,     App.     517; 

T.  Co.,  201  N.  Y.  221;  Sweet  v.  Per-  Smith  v.  Baker,  20  Fed.   709. 


§  39] 


COMPENSATION. 


147 


and  cause  water  to  overflow  adjacent  lands;  they  cannot  avoid 
liability  for  the  resultant  consequences  because  of  such  fact.*^ 
If  a  positive  tort  is  committed  by  unnecessarily  leaving  an 
obstruction  in  the  bed  of  a  natural  water-course  the  parties  who 
commit  the  wrong  must  take  notice  of  the  violence  of  rainfalls 
in  that  locality.*^ 

§  39.  Acts  of  injured  party;  fraud  and  exposure  to  peril. 
The  act  of  the  injured  party  may  be  the  more  immediate  cause 
of  his  injury;  yet,  if  that  be  an  act  which  was  as  to  him  reason- 
ably induced  by  the  j)rior  miscondiu't  of  the  defendant  and 
without  concurring  fault  of  the  sufferer,  that  misconduct  will 
be  treated  as  the  responsible  and  efficient  cause  of  the  damage.** 
Cases  of  fraud  where,  by  some  artifice  or  false  representation, 
the  plaintiff'  has  been  induced  to  incur  obligations,  part  with  his 
property  or  place  himself  in  any  predicament  by  which  he 
suffers  loss  are  apt  illustrations.  The  act  by  which  he  binds 
himself,  pays  money  or  alters  his  situation  is  his  own,  but 
superinduced  by  the  superior  vicious  will  of  the  defrauding 


42  Mississippi  &  T.  R.  Co.  v.  Ar- 
chibald, 67  Miss.  38;  Elder  v.  Ly- 
kens  Valley  C.  Co.,  157  Pa.  490,  37 
Am.  St.  742. 

43  Brink  v.  Kansas  City,  etc.  R. 
Co.,  17  Mo.  App.  177,  202. 

44  Southern  Pac.  R.  Co.  v.  Svend- 
sen,  13  Ariz.  Ill;  Temple  E.  Co.  v. 
Halliburton  (Tex.  Civ.  App.),  136 
S.  W.  584 ;  Collins  v.  Waterbury  Co.. 
144  App.  Div.  (N.  Y.)  670;  Gulf, 
etc.  R.  Co.  V.  Tullis,  41  Tex.  Civ.  App. 
219;  Denison  &  S.  R.  Co.  v.  Free- 
man, 38  id.  152;  Adamson  v.  Nor- 
folk &  P.  T.  Co.,  Ill  Va.  556;  Herdt 
v.  Koenig,  137  Mo.  App.  589;  Hull 
v.  Thomson  T.  Co.,  135  id.  119; 
Lawrence  v.  Heidbreder  I.  Co.,  119 
id.  316;  Western  U.  Tel.  Co.  v. 
Wells,  50  Fla.  474,  2  L.R.A.(N.S.) 
1072,  in  Am.  St.  129;  Burger  v. 
Omaha,  etc.  St.  R.  Co.,  139  Iowa 
645,  130  Am.  St.  343;  Navailles  v. 
Dielman,  124  La.  422;  Steverman  v. 
Boston    R.   R.   Co.,   205   Mass.   508; 


Cameron  v.  New  England  Tel.  &  T. 
Co.,  182  Mass.  310,  13  Am.  Neg. 
Rep.  86;  Howell  v.  Lansing  City  E. 
R.  Co.,  136  Mich.  432;  Smith  v. 
Ciiioago  City  R.  Co.,  169  111.  App. 
570;  Hackett  v.  Chicago,  etc.  R.  Co.. 
170  id.  140,  4  N.  C.  C.  A.  183;  Oak 
Leaf  M.  Co.  v.  Littleton,  105  Ark. 
392;  Cincinnati,  etc.  R.  Co.  v. 
Spears,  152  Ky!  200;  Evans  v.  Clii- 
cago  &  N.  R.  Cb.,  109  Minn.  64, 
26  L.R.A.(N.S.)  278;  West  v.  St. 
Louis  S.  R.  Co.,  187  Mo.  .351 ;  Cher- 
buliez  v.  Parsons,  59  N.  Y.  Misc. 
613;  Bremisholtz  v.  Pennsylvania 
R.  Co.,  229  Pa.  88;  Colin  v.  May, 
210  Pa.  615,  69  L.R.A.  800,  105 
Am.  St.  840;  James  v.  Fountain 
Inn  Mfg.  Co.,  80  S.  C.  232. 

In  §  671  are  given  several  illus- 
trations of  the  rule  as  between  vend- 
or and  vendee  where  injuries  have 
resulted  from  the  pr()|)er  use  of 
property  sold  because  of  (let'ccts  in 
it.     See  also,   §  25. 


148  SUTHEELAND    ON    DAMAGES.  [§    39 

party ;  and  the  latter  is  responsible  for  all  the  loss  which  ensues. 
A  single  instance  will  suffice.  W.  obtained  goods  from  the 
plaintiff  on  credit  upon  the  representation  of  R.  that  W.  was 
responsible  and  worthy  of  credit  and  owed  very  little  if  any- 
thing. At  the  time  of  the  sale  and  delivery  of  the  goods  W.  was 
insolvent  and  R.  knew  it.  R.  himself  had  a  judgment  against 
W.  for  a  considerable  amount  docketed  only  a  month  previous 
to  the  sale.  On  this  judgment  R.  caused  an  execution  to  be 
issued  and  levied  upon  the  goods  so  obtained  from  the  plaintiff 
before  they  reached  W.  For  these  representations  R.  was  liable 
to  the  plaintiff  for  the  value  of  the  goods  sold  to  W.*^ 

If  the  plaintiff  is  placed  in  a  situation  of  danger  to  person 
or  property  by  the  defendant's  misconduct  and  is  injured  in 
a  reasonable  endeavor  to  extricate  himself,  such  misconduct  is 
the  proximate  cause  of  the  injury  though  it  proceed  more  im- 
mediately, and  it  may  be  exclusively,  from  the  plaintiff's  own 
act.  Thus,  if  through  the  default  of  a  coach  proprietor  in 
neglecting  to  provide  proper  means  of  conveyance  a  passenger 
be  placed  in  so  perilous  a  situation  as  to  render  it  prudent  for 
him  to  leap  from  the  coach,  whereby  his  leg  is  broken,  the 
proprietor  will  be  responsible  in  damages,  although  the  coach 
was  not  actually  overturned.'*^  The  same  principle  applies  where 

45  Bean  v.  Wells,  28  Barb.  466;  Wis.  592;  TAvomley  v.  Central,  etc. 
Connally  v.  Saunders  (Tex.  Civ.  R.  Co.,  69  N.  Y.  158,  6  Am.  Neg. 
App),  142  S.  W.  975,  quoting  the  Cas.  217;  Filer  v.  New  York  Cent, 
text.  R.  Co.,  49  N.  Y.  47,  5  Am.  Neg.  Cas. 

46  Jones  V.  Boyce,  1  Stark.  493;  151,  10  Am.  Rep.  327;  Smith  v. 
Ingalls  V.  Bills,  9  Mete.  (Mass.)  1,  St.  Paul,  etc.  R.  Co.,  30  Minn.  169, 
9  Am. -Neg.  Cas.  426;  McKinney  v.  4  Am.  Neg.  Cas.  218;  Dimmitt  v. 
Neil,  1  McLean  540,  7  Am.  Neg.  Hannibal,  etc.  R.  Co.,  40  Mo.  App. 
Cas.  612 ;  Frink  v.  Potter,  17  111.  654,  9  Am.  Neg.  Cas.  505 ;  Knowlton 
406,  9  Am.  Neg.  Cas.  200;  Buel  v.  v.  Milwaukee  City  R.  Co.,  59  Wis. 
New  York,  etc.  R.  Co.,  31  N.  Y.  314,  278 ;  Knapp  v.  Sioux  City  &  P.  R. 
5  Am.  Neg.  Cas.  87,  88  Am.  Dec.  271;  Co.,  65  Iowa  91,  14  Am.  Neg.  Cas. 
McPeak  V,  Missouri  Pac.  R.  Co.,  128  647,  54  Am.  Rep.  1,  71  Iowa  41; 
Mo.  617,  4  Am.  Neg.  Cas.  806;  Ep-  Schumaker  v.  St.  Paul  &  D.  R.  Co., 
land  V.  Same,  57  Mo.  App.  147,  4  46  Minn.  39,  12  L.R.A.  257;  Budd 
Am.  Neg.  Cas.  440 ;  Southwestern  v.  United  C.  Co.,  25  Ore.  314,  6  Am. 
R.  Co.  V.  Paulk,  24  Ga.  356;  Wilson  Neg.  Cas.  216,  27  L.R.A.  279; 
V.  Northern  Pac.  R.  Co.,  26  Minn.  Nicholsburg  v.  Second  Ave.  R.  Co., 
278,  4  Am.  Neg.  Cas.  209,  37  Am.  11  N.  Y.  Misc.  432;  Baker  v.  North 
Rep.    410;    Oliver    v.    La   Valle,   36  East  Borough,  151  Pa.  234;  Hookey 


39] 


COMPENSATION. 


149 


one  person  is  injured  in  an  attempt  to  save  the  life  of  another 
which  was  imperilled  by  the  fault  of  the  defendant.*''  Nor  is 
a  person  chargeable  with  contributory  negligence — that  is,  with 
making  his  own  act  in  part  the  efficient  cause — for  acting  erro- 
neously in  a  position  of  sudden  danger  in  which  he  is  placed 
by  the  negligence  or  fault  of  another.  If,  therefore,  a  stage- 
coach is  upset  by  the  negligence  of  the  driver  and  a  passenger 


V.  Oakdale,  5  Pa.  Super.  404;  Vallo 
V.  United  States  Exp.  Co.,  147  Pa. 
404,  14  L.R.A.  743,  30  Am.  St.  741 ; 
Quinn  V.  Shamokin,  etc.  R.  Co.,  7 
Pa.  Super.  19;  Washington,  etc.  R. 
Co.  V.  Hickey,  5  D.  C.  App.  Cas.  436, 
9  Am.  Neg.  Cas.  173;  South  Cov- 
ington &  C.  R.  Co.  V.  Ware,  84  Ky. 
267,  9  Am.  Neg.  Cas.  381;  Cody  v. 
New  York,  etc.  R.  Co.,  151  Mass. 
462,  9  Am.  Neg.  Cas.  464,  7  L.R.A. 
843;  Connell  v.  Prescott,  20  Out. 
App.  49 ;  Ellick  v.  Wilson,  58  Neb. 
584,  6  Am.  Neg.  Rep.  305;  Galves- 
ton, etc.  R.  Co.  V.  Zantzinger,  92 
Tex.  365,  44  L.R.A.  553;  Postal  Tel. 
C.  Co.  V.  Hulsey,  132  Ala.  444,  453, 
13  Am.  Neg.  Rep.  450;  Texas  &  P. 
R.  Co.  V.  Watkins  (Tex.  Civ.  App.), 
26  S.  W.  760;  Colusa  Parrot  M. 
&  S.  Co.  V.  Monahan,  162  Fed. 
276,  89  C.  C.  A.  256 ;  Omaha  W.  Co. 
V.  Schamel,  147  Fed.  502,  78  C.  C. 
A.  68;  Southern  R.  Co.  v.  Reeder, 
152  Ala.  227,  126  Am.  St.  23;  Jen- 
nings V.  Philadelphia,  etc.  R.  Co., 
29  App.  D.  C.  219;  Wilson  v.  Cen- 
tral R.  Co.,  132  Ga.  215;  Western 
&  A.  R.  Co.  v.  Bryant,  123  Ga.  77; 
Illinois  Cent.  R.  Co.  v.  Haecker,  110 
111.  App.  102;  Mclntyre  v.  Orner, 
166  Ind.  57,  4  L.R.A.  (N.S.)  1130, 
117  Am.  St.  359;  Chicago,  etc.  R. 
Co.  V.  Martin,  31  Ind.  App.  308; 
Murphy  v.  Chicago  G.  W.  R.  Co., 
140  Iowa  332;  Kansas  City  L.  R. 
Co.  V.  Langley,  70  Kan.  453;  St. 
Louis,  etc.  R.  Co.  v.  Brock,  69  Kan. 
448 ;  Palmer  T.  Co.  v.  Long,  140  Ky. 


Ill;  South  Covington  &  C.  St.  R. 
Co.  V.  Crutcher,  J  35  Ky.  698;  Coa- 
sitt  V.  St.  Louis  &  S.  R.  Co.,  224  Mo. 
97;  Williamson  v.  St.  Louis  T.  Co., 
202  Mo.  345;  Garrett  v.  Wabash  R. 
Co.,  159  Mo.  App.  63;  Blyston- 
Spencer  v.  United  R.  Co.,  152  JNIo. 
App.  118;  Wood  V  New  York  Cent, 
etc.  R.  Co.,  83  App.  Div.  604,  17 
Am.  Neg.  Rep.  276;  Ruudler  Slate 
Belt  E.  St.  R.  Co.,  33  Pa.  Super. 
233;  Gaviray  Davila  v.  American  R. 
Co.,  1  Porto  Rico  Fed.  8];  Thomp- 
son V.  Seaboard  A.  L.  R.,  81  S.  C. 
333,  20  L.R.A. (N.S.)  426;  Williams 
V.  Galveston,  etc.  R.  Co.,  34  Tex. 
Civ.  App.  145;  Wilson  v.  Newport 
D.  Co.,  L.  R.  1  Ex.  177;  Deegan  v. 
Gutta  Percha  &  R.  Mfg.  Co.,  131 
App.  Div.  101;  Burnett  v.  Atlantic 
C.  L.  R.  Co.,  132  N.  C.  261 ;  Serafina 
V.  Galveston,  etc.  R.  Co.  (Tex.  Civ. 
App.),  42  S.  W.  142;  Interstate  C. 
Co.  V.  Love,  153  Ky.  323,  4  N.  C. 
C.  A.  456. 

47  Dixon  V.  New  York,  etc.  R. 
Co.,  207  Mass.  126;  Mobile  &  0.  R. 
Co.  V.  Ridley,  114  Tenn.  727,  and 
cases  cited;  Citizens'  R.  Co.  v.  Grif- 
fin, 49  Tex.  Civ.  App.  569.  Before 
a  person  can  claim  exemption  from 
the  effects  of  his  conduct  in  taking 
a  position  of  peril  to  rescue  anotlier 
it  must  appear  that  such  other  was 
in  imminent  danger  because  of  the 
defendant's  negligence.  Wriglit  v. 
Atlantic  C.  L.  R.  Co.,  110  Va.  670, 
25  L.R.A.  (N.S.)   972. 


150  SUTHERLAND    ON    DAMAGES.  [§39 

therein,  under  the  impulse  of  fear,  acts  in  a  manner  which 
results  in  an  injury  to  himself,  where,  had  he  remained  calm 
and  kept  his  place,  he  would  have  escaped  harm,  he  will  not 
thereby  l>e  precluded  from  recovering  damages  of  the  carrier.*' 
A  case  arose  in  Massachusetts  in  which  the  immediate  cause  of 
the  injury  was  the  act  of  the  plaintiff,  and  yet  a  defect  in  a 
highway  was  the  proximate  and  efficient  cause  thereof,  though 
other  circumstances  contributed.  The  alleged  defect  was  a 
culvert  extending  across  the  highway  and  a  hole  at  one  end  of 
the  culvert.  As  the  plaintiffs  (husband  and  wife)  were  driving 
together  in  their  wagon  along  the  traveled  part  of  the  highway 
between  the  hours  of  eight  and  nine  in  the  evening  a  band  of 
musicians,  a  little  way  in  advance,  commenced  to  play,  by  which 
the  horse  was  alarmed ;  this  happened  near  the  defect  in  the 
highway.  In  the  course  of  the  incident  the  wife  was  taken  up 
from  the  ground  at  or  near  the  culvert,  seriously  injured;  but 
the  precise  manner  in  which  she  came  to  the  ground,  whether  by 
being  forcibly  thrown  from  the  wagon,  by  leaping  from  it,  or  by 
the  two  actions  concurring,  and  whether  the  wagon  did  or  did 
not  come  into  contact  with  the  hole  were  questions  of  fact. 
There  was  a  variance  between  the  proof  and  the  declaration  for 
which  the  judgment  was  reversed,  but  this  instruction  was 
approved :  "When  a  party  is  traveling  on  a  highway  and  there 
is  a  defect  in  it  and  the  party,  under  apprehensions  of  an  im- 
minent peril,  by  the  near  approach  of  his  carriage  to  the  defect 
in  the  highway,  but  without  or  previous  to  actual  contact  with 
the  defect,  leaps  from  his  carriage  and  is  injured  thereby,  then 
the  rule  of  law  is  this:  it  is  an  element  of  reasonable  care  on  the 
part  of  the  plaintiff.  If  the  plaintiff  be  placed,  by  reason  of 
the  defect  in  the  highway  and  his  approach  thereto,  in  such  a 
situation  as  obliges  him  to  adopt  the  alternative  of  a  dangerous 
leap,  or  to  remain  at  a  certain  peril,  and  he  leaps  and  is  injured, 
then,  all  the  conditions  of  liability  being  fulfilled,  he  may  re- 
cover darfiages  of  the  party  responsible  for  the  repair  of  the 

48  Cases  in  two  last  preceding  207;  Feddeck  v.  St.  Louis  C.  Co.,  12.') 
notes;  Stokes  v.  Saltonstall,  13  Pet.  Mo.  !App.  24;  Palmer  v.  Warren  St. 
181,  10  L.  ed.  n.T,  7  Am.  Neg.  Cas.       R.  Co.,  206  Pa.  574,  fi.3  L.R.A.  507. 


39] 


OOMI'ENSATION. 


151 


hio-hway  "  "'    A  lad  aged  ten  years  was  forcibly  put  on  a  ti-c.glit 
train  and  carried  five  miles.     After  being  released  he  ran  n,„st 
of  the  distance  to  his  lunne,  was  afterward  taken  sick  and  becun.e 
permanently  crippled.    The  jury  found  that  this  was  the  resu  t 
of  the  trespass;  a  majority  of  the  court  refused  to  >Mtertcre  w>th 
the  verdict.'"     It  is  a  rule  of  general  application  that  the  cu- 
currence  of  an  infant  plaintirt's  natural  indiscretion  with  the 
defendant's  negligence  will  not  relieve  the  latter  from  resp.in- 
sibility  for  an  act  which  results  in  injury  to  the  former.        It 
in  consequence  of  an  injury  a  wife  becomes  nervous  and  there- 
after becomes  pregnant,  and  as  a  result  of  her  nervous  stae 
suiters  a  miscarriage  the  wrongful  act  of  the  defendant  is  the 
proximate  cause  thereof.     "The  perpetuation  of   the  hmna  i 
race  cannot  be  termed  a  voluntary  act,  but  it  rests  u,»n  mstin^s 
and  desires  which  are  fundamentally  imperative.  Ihough 

the  plaintiff's  violation  of  an  ordinance  may  prevent  his  rc^ 
covery  if  the  injury  was  sustained  in  consequence  thereof, 
that  Lilt  may  not  follow  if  such  vio  at.on  had  ---1  ;;^- 
the  injury  was  done  though  but  tor  it  he  might  not  have  been 


49  Lund  V.  Tyngsboro,  11  Cush. 
563;  Flagg  v.  Hudson,  142  Mass. 
280,'  56  Am.  Rep.  674.     See  §  26. 

50  Drake  v.  Kiely,  93  Pa.  492. 
See  Emmons  v.  Quade,  176  Mo.  22; 
Chicago  &  E.  I.  R.  Co.  V.  Mitchell, 
56  Ind.  App.  354. 

51  Fishburn  v.  Burlington  &  :N.  K. 
Co.,  127  Iowa,  483,  17  Am.  Neg. 
Rep  270,  stated  in  note  to  §  19; 
Brown  v.  C.  &  O.  R.  Co.,  135  Ky. 
798,  21  Am.  Neg.  Rep.  305,  25  L.R.A. 

(NS)  717;  Merschel  v.  Louisville 
&  N  'e  Co.,  121  Ky.  620;  Mattson 
V.  Minnesota,  etc.  R.  Co.,  95  Minn. 

477,18  Am.  Neg.  Rep.  511,  70  L.R.A. 

503,  111  Am.  St.  483:   Temple  Mc- 

Comb  City  E.  L.  &  P.  Co.,  89  Miss. 

1    11L.R.A.(N.S.)  449,119  Am.  St. 

608;    Buttron    v.    Bridell,    228    Mo. 

6'>2  •  Berry  v.  St.  Louis,  etc.  R.  Co., 

214  Mo.   593:    Straub  v.   St.  T^uis, 

17")  Mo   413,  14  Am.  Neg.  Rep.  384; 

Lynchburg  Tel.   Co.   v.   Booker,   103 


Va.    594,    19    Am.    Neg.    Rep.    514; 
Olson  V.  Gill  Home  I.  Co.,  58  Wash. 
151,  27   L.R.A.  (N.S.)    884:   Akin   v. 
Bradley  E.  &  M.  Co.,  48  Wash.  97, 
14  LR.A.(N.S.)  586;  Pittsburg,  etc. 
R    Co.  V.  Caldwell,  74  Pa.  421.  10 
Am.  Neg.  Cas.   122;    East   Saginaw 
City  R.  Co.  V.  Bohn,  27  Mich.  503, 
9  Am.  Neg.  Cas.  474;  Holly  v.  Bos- 
ton G.  Co.,  8  Gray  123,  69  Am.  Dec- 
233;    Stillson   v.    Hannibal,   etc.    K. 
Co.,   67   Mo.  671;    Lane  v.   Atlantic 
Works,  111  Mass.  136;   Sheridan  v. 
Brooklyn  &  N.  R.  Co.,  30  N.  Y.  39, 
9  Am.  Neg.  Cas.  619,  93   Am.  Dec. 
490     See  Singleton  v.  Eastern  Coun- 
ties R.  Co.,  7   C.  B.    (N.  S.)    287: 
Hughes  V.  Macfie,  2  H.  &   C.  744; 
Nangan    v.    Atterton,    L.    R.    1    Ex. 
239:    Lynch   v.   N\udin.   1   Q.   R-  29. 
^52  Sullivan   v.   Old   Colony   St.   R. 
Co.   197  Mass.  512. 

53Newcomb  v.  Boston  P.  Depart- 
ment, 146  Mass.  596,  4  Am.  St.  354. 


152 


SUTIIEBLAND    ON    DAMAGES. 


[§  39 


where  lie  was  wlieu  injiired.^^  A  persou  who  is  injured  in 
endeavoring  to  protect  his  property  from  fire  may  recover  from 
him  who  caused  the  fire.^^ 

§  40.  Act  of  third  person.  The  innocent  or  culpable  act  of  a 
third  person  may  be  the  immediate  cause  of  the  injury  and  still 
an  earlier  wrongful  act  may  have  contributed  so  effectually  to 
it  as  to  be  regarded  in  law  as  the  efficient,  or  at  least  con- 
current and  responsible,  cause. ^^     The  noted  squib  case  is  an 


54  Jaehnig  v.  Ferguson,  197  Mass. 
3G4. 

55  Illinois  Cent.  R.  Co.  v.  Siler, 
229  111.  390,  15  L.E.A.(N.S.)  819; 
Wilson  V.  Central  R.  Co.,  132  Ga. 
215.      See   §    37. 

56  Wells  Fargo  &  Co.  v.  Zimmer, 
186  Fed.  130,  108  C.  C.  A.  242; 
Chicago  V.  Troy  L.  Mach.  Co.,  162 
Fed.  678,  89  C.  C.  A.  470;  The  J. 
G.  Lindauer,  158  Fed.  449;  Klein- 
peter  V.  Castro,  11  Cal.  App.  83; 
Moore  v.  Lanier,  52  Fla.  353;  Cen- 
tral R.  Co.  V.  Owen,  121  Ga.  220; 
Yeates  v.  Illinois  Cent.  R.  Co.,  241 
111.  205 ;  Garibaldi  v.  O'Connor,  210 
111.  284,  66  L.R.A.  73;  New  York, 
etc.  R.  Co.  V.  Hamlin,  170  Ind.  20; 
Cincinnati,  etc.  R.  Co.  v.  Acrea,  42 
Ind.  App.  127  ;  Baltimore,  etc.  R.  Co. 
V.  Kleespies,  39  Ind.  App.  151: 
Huntington  L.  &  F.  Co.  v.  Beaver, 
37  id.  4;  Gardner  v.  Waterloo  C.  S. 
Co.,  134  Iowa  6;  Huggard  v.  Glu- 
cose S'.  R.  Co.,  132  Iowa,  724;  Burk 
V.  Creamery  P.  Mfg.  Co.,  126  Iowa, 
730,  106  Am.  St.  377;  Phinney  v. 
Illinois  Cent.  R.  Co.,  122  Iowa,  488, 
17  Am.  Neg.  Rep.  303;  Brower  v. 
Western  U.  Tel.  Co.,  81  Kan.  109; 
Watson  V.  Kentucky  &  I.  B.  &  R. 
Co.,  137  Ky.  619 ;  Louisville  &  N.  R. 
Co.  V  Lyncli,  137  Ky.  696 ;  Brown  v. 
C.  &  O.  R.  Co.,  135  Ky.  798,  25 
L.R.A. (N.S.)  717  (act  of  third  per- 
son in  putting  unlocked  turntable 
in  motion  whereby  injury  to  a  child 
resulted)  ;  Louisville  Home  Tel.  Co. 


V.  Gasper,  123  Ky.  128,  9  L.R.A. 
(N.S.)  548;  Sydnor  v.  Arnold,  122 
Ky.  557;  Lee  v.  Powell,  126  La.  51; 
O'Brien  v.  White,  105  Me.  308; 
Lockwood  V.  Boston  E.  R.  Co.,  200 
Mass.  537,  22  L.R.A.  (N.S.)  488; 
Hollidge  V.  Duncan,  199  Mass.  121, 
17  L.R.A.  (N.S.)  982;  Cunningham 
V.  Atlas  T.  Co.,  187  Mass.  51;  Fott- 
ler  V.  Moseley,  185  Mass.  563;  Skinn 
V.  Reutter,  135  Mich.  57,  15  Am. 
Neg.  Rep.  86,  106  Am.  St.  384,  63 
L.R.A.  743;  Anderson  v.  Smith,  104 
Minn.  40 ;  Obermeyer  v.  Logeman  C. 
Mfg.  Co.,  229  Mo.  97;  Smith  v.  For- 
dyce,  190  Mo.  1;  O'Hara  v.  Laclede 
G,  L.  Co.,  131  Mo.  App.  428;  Estes 
V.  Missouri  Pac.  R.  Co.,  110  id.  725; 
Knaish  v.  Joline,  138  App.  Div.  (N. 
Y.)  854;  Atchison,  etc.  R.  Co.  v. 
Seeger  (Tex.  Civ.  App.),  126  S.  W. 
1170;  French  P.  &  O.  Co.  v.  Phelps, 
47  Tex.  Civ.  App.  385;  Sipes  v. 
Puget  Sound  E.  R.,  54  Wash.  47; 
Wooding  V.  Jacobino,  id.  504;  Akin 
v.  Bradley  E.  &  M.  Co.,  48  Wash. 
97,  14  L.R.A. (N.S.)  .586;  United 
States  N.  G.  Co.  v.  Hicks,  134  Ky. 
12,  23  L.R.A.  (N.S.)  249,  135  Am. 
St.  407;  Freeman  v.  Missouri  &  K. 
Tel.  Co.,  160  Mo.  App.  271;  Webber 
V.  Barry,  66  Mich.  127,  11  Am.  St. 
466;  Sumner  v.  Kinney  (Tex.  Civ. 
App.),  136  S.  W.  1192  (effects  of 
medical  treatment  upon  person  in- 
jured) ;  Burrows  v.  March,  etc.  G. 
Co.,  L.  R.  5  Ex.  67;  Lannen  v.  Al- 
bany G.   Co.,  44  N.  Y.  459;   Guille 


40] 


COMPENSATION. 


153 


example."  The  defendant  threw  a  squib  into  the  market-house 
where  it  first  fell;  a  person,  to  save  himself,  threw  it  off,  and 
where  it  then  fell  it  was  again  thrown  for  like  reason  and  struck 
and  injured  the  plaintiff.  The  defendant's  act  so  directly  caused 
the  injury  that  trespass  would  lie.  A  defendant  stopped  his 
team  and  negligently  left  it  in  a  business  street  without  being 
hitched  or  otherwise  secured.  "It  started  and  ran  violently  along 
the  street  and  collided  with  another  team,  which,  though  proper- 
ly hitched,  was  frightened,  broke  from  its  fastenings  and  ran 
across  the  street  against  a  horse  and  sleigh  belonging  to  the 
plaintiff,  injuring  the  horse.     It  appeared  that  while  the  de- 


V.    Swan,    19    Johns.    381,    10    Am. 
Dec    234;   Scholes  v.  North  London 
R.  Co.,  21- L.  T.    (N.  S.)    835;  Pas- 
tene  v.  Adams,  49  Cal.  87;  Vanden- 
burgh   V.    Truax,    4   Denio    464,    47 
Am.   Dec.   268;    Lowery  v.  Manhat- 
tan R.  Co.,  99  N.  Y.  158,  52  Am. 
Rep.    12,    12    Daly    431;    Lewis    v. 
Terry,  111  Cal.  39,  52  Am.  St.  146, 
31   L.R.A.    220;    Grimes   v.   Bower- 
man,  92  Mich.  258,  quoting  the  text; 
Chicago  City  R.  Co!  v.  Cooney,  95 
111.  App.  471;  Postal  Tel.  C.  Co.  v. 
Zopfi,   93   Tenn.   369,   Choctaw,   etc. 
R.   Co.   V.  Halloway,   114   Fed.  458, 
15  Am.  Neg.  Rep.  230,  52  C.  C.  A. 
260,    and   cases    cited;    Coleman    v. 
Bennett,  141  Tenn.  70,5;  Lothian  v. 
Rickards,  12  Aust.  Com.  L.  R.  165; 
Reid  V.   Friendly   Societies'   H.   Co., 
NewZeal.  L.  R.  3C.  A.  238;  South- 
western   Tel.    &   T.    Co.    V.    Shirley 
(Tex.  Civ.  App.),5N.  C.  C.  A.  784, 
155   S.  W.   663;   Goldsmith  v.  Chi- 
cago, etc.  R.  Co.,  176  111.  App.  336; 
Atkeson  v.  Jackson  Est.,  72  (Wash.) 
233,   5   N.   C.   C.   A.   519,   130   Pac. 
102;  Campbell  v.  United  R.  Co.,  243 
Mo.  141;  Thoreson  v.  St.  Paul  T.  & 
L.   Co.,   73  Wasli.   99;    Louisville  & 
N.  R.  Co.  V.  Woodford,  152  Ky.  398. 
Tlie   connection   between   the  sale 
of  unlabeled  poison  and  the  death  of 
a  child  who  takes  it  is  not  broken 


because  its  mother  left  the  poison 
within  the  infant's  reach,  slie  not 
knowing  it  to  be  poison,  nor  by  the 
infant's  act  in  taking  it.  Wise  v. 
Morgan,  101  Tenn.  273,  44  L.R.A. 
548. 

In  Slieridan  v.  Brooklyn  &  N.  R. 
Co.,  36  N.  Y.  39,  9  Am.  Neg.  Cas. 
619,  93  Am.  Dec.  490,  a  child  was 
on  the  platform  of  a  car  by  direc- 
tion of  the  conductor.  By  the  rush- 
ing of  another  passenger  for  the  pur- 
pose of  getting  off  the  car  the  child 
was  pushed  therefrom.  Such  con- 
duct was  not  a  justification  to  the 
defendant  for  its  negligence  in  plac- 
ing the  child  on  the  platform. 

In  Macer  v.  Third  Ave.  R.  Co.,  47 
N.  Y.  Super.  461,  5  Am.  Neg.  Cas. 
731,  the  plaintiff's  injuries  were 
increased  by  an  effort  made  by  the 
defendant's  servant  to  prevent  them. 
The  original  negligence  was  the 
proximate  cause. 

A  workman  who  is  injurid  by  a 
defective  instrument  used  by  a  fel- 
low-workman lias  a  cause  of  action 
against  the  master.  Uyan  v.  Milb'r, 
12  Daly  177. 

57  Scott  v.  Shepherd.  2  W.  Bl.  892. 
7  Am.  Neg.  Rep.  582;  Owen  v.  Cook. 
9  N.  D.  1.34.  47  L.R.A.  046:  Bradley 
v  Andrews,  51  Vt.  530:  I^e  Struve 
V    Mc(iuire,  25  Ont.  L.  R.  87,  401. 


154  SUTHERLAND    ON    DAMAGES.  [§40 

fendant's  horses  were  running  and  before  they  had  collided 
with  the  other  horses  a  crowd  of  persons  came  into  the  street, 
hallooed  and  raised  their  hats  for  the  purpose  of  stopping  the 
horses,  which  caused  them  to  swerve  from  the  course  they  were 
taking,  and  in  this  manner  they  came  in  contact  with  the  second 
team.  The  law  was  said  to  be  well  settled  that  when  the  plaintiff 
lias  l)een  injured  in  his  person  or 'property  by  the  wrongful  act 
or  omission  of  the  defendant  or  through  his  culpable  negligence 
the  fact  that  a  third  party  by  his  wrong  or  negligence  con- 
tributed to  the  injury  does  not  relieve  him  from  liability.  Re- 
ferring to  the  facts,  it  was  observed :  "The  running  away,  from 
the  starting  of  the  defendant's  team  till  the  collision,  was  a 
single  transaction ;  and  whatever  influence  the  interposition  of 
the  crowd  had  in  occasioning  the  collision,  it  was  not  the  sole 
cause ;  the  running  away,  which  occurred  through  the  defend- 
ant's negligence,  was,  in  part  at  least,  the  occasion  of  it ;  both 
causes,  therefore,  in  the  most  favorable  view  for  the  defendant, 
must  have  contributed  to  it ;  and  as  the  defendant  is  responsible 
through  his  negligence  for  one  of  the  agencies  through  which 
the  collision  occurred,  under  the  rule  we  have  stated,  he  is 
liable,"  Again :  "All  the  consequences  which  actually  resulted 
in  this  case  from  the  running  away  of  the  defendant's  team 
might,  we  think,  reasonably  have  been  expected  to  occur  from 
the  running  away  of  any  team  under  similar  circumstances  in 
the  principal  business  street  of  a  town ;  and  the  running  away 
of  the  defendant's  team  was  the  efficient  cause  of  the  injury  to 
the  plaintiff's  horse  because  it  put  in  operation  the  force  which 
was  the  immediate  and  direct  cause  of  the  injury."  ®*  In 
another  case  a  team  of  horses,  attached  to  a  truck  and  unattended 
in  a  street,  were  stopped,  after  going  a  few  yards,  by  a  stranger, 
who,  in  trying  to  drive  them  to  where  they  had  been  left,  drove 
the  truck  against  a  push  cart  standing  in  the  street,  overturned 
the  cart  and  injured  the  plaintiff'.  The  negligence  of  the  person 
wlio  had  charge  of  the  horses  was  the  proximate  cause  of  the 

58  Griggs  V.  Fleckenstein,  14  Minn.  230;   McDonald  v.   Snelling,   14  Al. 

81,   1   Am.  Nog.  Cas.  311,   100  Am.  len  292;  McCahill  v.  Kipp,  2  E.  D. 

Dec.   199;    Billman   v.   Indianapolis,  Smith    413;    Pearl    v.    Macauley,    6 

etc,  R.  Co.,  7G  Ind.  TOR,  40  Am.  Eop.  App.  Div.    (N.  Y.)    70. 


§  m 


COMPENSATION.  ^^^* 


injury.  They  should  not  have  been  left  in  the  nii.i.lK'  o(  the  ear- 
riage  way  obstructing  travel,  besides  subjecting  other  trav- 
elers to  danger.  The  condition  which  authorized  tiie  bystander 
to  stop  the  horses  also  authorized  him  to  drive  theui  to  a  positi.ui 
where  they  would  cease  to  be  an  obstruction  au<l  a  menace  to 
travel.  A  danger  to  be  fairly  anticipated  from  leaving  horses 
unattended  in  a  public  street  is  that,  if  they  start  to  run  off,  the 
persons  who  attempt  to  stop  them  may  be  careless  or  ignorant 
of  the  management  of  horses  and  thus  jeopardize  the  .afety  of 
people  on  the  highway.  In  such  cases  so  leaving  the  horses  is 
the  proximate  cause  of  the  accident.^^ 

x\n  assessor  altered  an  assessment  after  it  had  been  perlected 
■uid  lodged  with  another  officer  and  after  his  power  over  it  had 
ceased-  he  altered  it  in  such  a  manner  that  the  property  of  the 
plaintiff  was  rated  at  a  higher  sum.     The  selectmen  made  out 
a  rate-bill  by  which  the  plaintiif  was  charged  with  an  increased 
amount  and  procured  a  tax  warrant  which  they  placed  in  the 
hands  of  the  collector.     The  plaintiif  refusing  to  pay  the  i  legal 
portion  of  the  tax,  the  selectmen,  with  knowledge  ot  all  the 
facts,  directed  the  collector  to  levy  and  collect  it.      The  levy 
was  made,  the  plaintiff  paid  the  tax  and  afterwards  brought  an 
action  on  the  case  against  the  assessor  for  the  injury.    Ihe  jury 
were  rightly  instructed  that  the  action   of  the  selectmen   in 
directing  the  levy,  although  it  might  make  them  liable    would 
not  affect  the  right  of  the  plaintiff  to  recover  against  the  defend- 
ant for  the  wrongful  alteration  and  he  was  entitled  to  recover 
for  the  injury  resulting  from  the  levy.-     An  officer  who  makes 
a  false  return  of  non  est  to  a  summons  is  not  relieved  from 
liability  because  an  order  for  service  by  publication  intervened 
between  his  act  and  a  judgment  by  defaidt.    ^^'^  --;;;;; 
the  natural  result  of  such  return,  and  the  further  action  of  the 
ourt  wa.  the  legitimate  consequence  of  it."     It  is  neg hgence 
to  leave  a  railroad  turntable  in  such  condition  that  it  may  be 
revolved  by  children,^^  and  the  negligence  continues  so  as  to 
5S  Williams   V.    Koehler,   41    App.  e^  Stat.  v.  Finn,  S7  Mo.  310. 

Div.    (N.  Y.)    426.  62Kuons  v.  St.  Ixm.s.  etc.  R.  Co., 

60  Bristol  Mfg.  Co.  V.  Gridley,  28  l^"0"9 

Conn.  201,  27  id.  221,  71  Am.  Dec.  ^^  ^^^    ^^^^ 
56. 


156  SUTHERLAND    ON    DAMAGES.  [§40 

render  the  owner  liable  for  an  injury  caused  to  a  child  by  the 
revolving  of  the  table  by  other  children.^^  A  person  who  has 
the  management  and  control  of  a  public  place  of  amusement 
to  which  he  invites  the  public,  on  payment  of  an  admission  fee, 
to  attend  and  at  which  he  sells  to  his  customers  intoxicating  liq- 
uors, who  sells  to  one  in  attendance  there  liquor  in  such  quantity 
as  to  make  him  drunk  and  disorderly,  well  knowing  that  when 
in  that  condition  he  is  likely  to  commit  assaults  upon  others 
without  provocation  or  cause,  is  bound  to  exercise  reasonable 
care  to  protect  his  other  patrons  from  the  assaults  and  insults 
of  such  person,  and  for  a  failure  to  so  do  is  liable  to  a  person 
assaulted  by  him.^*  It  is  a  probable  consequence  of  an  arrest  that 
the  fact  may  be  published  in  a  newspaper,  and  that  the  plain- 
tiff may  show  in  an  action  for  false  imprisonment.^^ 

§  41.  Same  subject.  The  subject  under  consideration  is  well 
illustrated  by  those  cases  in  which  a  party  has  suffered  a  special 
injury  at  the  hands  of  third  persons  in  consequence  of  the 
speaking  of  slanderous  words.  Where  the  injurious  act  of  the 
third  person  is  shown  with  the  requisite  certainty  to  have  been 
the  consequence  of  the  defendant's  speaking  such  words  the 
action  has  been  sustained.^^  In  case  for  slanderous  words  by 
reason  of  which  the  plaintiff  was  turned  out  of  her  lodgings 
and  employment  it  appeared  that  the  defendant  complained  to 
E.,  the  mistress  of  the  house  and  his  tenant,  that  her  lodgers, 
of  whom  the  plaintiff  was  one,  behaved  improperly  at  the 
windows ;  and  he  added  that  no  moral  person  would  like  to  have 
such  people  in  his  house.  E.  stated  in  her  evidence  that  she 
dismissed  the  plaintiff'  in  consequence  of  the  words,  not  because 
she  believed  them,  but  because  she  was  afraid  it  would  offend  her 

63  Nagel  V.  Missouri  Pac.  R.  Co.,  65  Grimes  v.  Greenblatt,  47   Colo. 

75  Mo.  653;  Boggs  v.  Same,  18  Mo.  495. 

App.  274 ;  Morrison  v.  Kansas  City,  66  Sunley  v.  Metropolitan  L.  Ins. 

etc.   R.   Co.,   27   id,   438;    Gulf,   etc.  Co.,  132  Iowa  123 ;  Fuller  v.  Fenner, 

R.   Co.  V.  McWhirter,   77   Tex.   356,  -^q  g^rb.   333;    Hallock  v.  Miller,  2 

19  Am.   St.   755,   12  Am.  Neg.   Cas.  ^^^^,^    gg^.   ^^^^^^  ^.    g^j^^^.^  g  ^ow. 


351;   Ward  v.  Weeks,  7  Bing.  211; 


623. 

64  Mastad  v.  Swedish  Brethren,  83 
Minn.  40,  53  L.R.A.  803;  Romnel  Bateman  v.  Lyall,  7  C.  B.  (N.  S.) 
V.  Schambacher,  120  Pa.  579;  Moone  638;  Williams  v.  Hill,  19  Wend. 
V.  Smith,  6  Ga.  App.  649.  305. 


41] 


COMPENSATION.  l^T 


landlord  if  the  plaintitt'  remained.     The  action  was  held  main- 
tainable, the  special  damages,  which  were  its  gist,  being  the 
consequence  of  the  slanderous  words  used.     The  witness'  state- 
ment that  she  did  not  dismiss  the  plaintilf  because  she  believed 
the  words  spoken  was  not  allowed  to  defeat  the  action.     Lord 
Denman,  C.  J.,  said:     "It  would  be  speculating  too  hnely  on 
motives,  and  such  a  disposition  in  the  court  would  too  often  put 
it  in  the  power  of  the  unwilling  witness  to  determine  a  cause 
against  the  plaintiff.    The  proper  question  is  whether  the  injury 
was  sustained  in  consequence  of  the  slanderous  words  having 
been  used  by  the  defendant."  ''     But  the  injury  must  be  the 
natural  and  proximate  consequence.     Damage  caused  by  the 
repetition  of  the  words  by  a  third  person  who  heard  them  uttered 
by  the  defendant  is  too  remote,^^  unless  the  latter  authorized  or 
suggested  their  repetition,  or  there  was  some  duty  on  the  hearer 
to  repeat  them.'"     Such  a  spontaneous  and  unauthorized  com- 
munication, it  is  said,  cannot  be  considered  as  the  necessary 
consequence  of  the  original  uttering  of  the  words. 

If  the  injury  inilicted  is  not  the  reasonable  and  natural  result 
of  a  wrongful  act  of  the  defendant,  but  was  caused  by  such 
act  of  a  third  person,  though  it  was  remotely  induced  by  defend- 
ant's conduct,  he  is  not  liable.^^     Thus,  in  an  action  by  one 

67  Knight  V.  GibbB,  1  Ad.  &  E.  43.  v.  Harrison    1  Esp.  48 ;   I'il"--  - 

68  Ward  V.  Weeks,  7  Bing.  211 ;  Hood,  5  Bmg.  N.  C.  97;  AUsop 
Sch  Jdt  V.  Mitchell,  84  111.  195,  25  v.  Allsop,  5  ^-^N  534 ;  Bentley  . 
,  '  ..f.  Reynolds,  1  McMuU.  16,  30  Am. 
'".r^Lfv.  KeUy,  Ry.  .  Moo.  Def  251 .  UndCiU  v.  Welto,..  .. 
157  ■  Parkes  v.  Prescott,  L.  K.  4  Ex.  Vt.  40 ;  ch.  24. 

:  ^"ndillon   V.   Maltby,   Oar.  ^  "Ward  v.  Weeks    ,B,ng.  ^U. 

TT      ji        ic  T     T  Ipnn  nffs    V     Davis,    18/     i-'ca.    i^o, 

M    402-   Derrv  v.  Handley,  16  L.  i.  Jennings    v.    ^a,      ' 

m.  4UZ,,  xjKi^iy                    J'     ri  (V  ^  mo  r    r,    \    451;  Beckham  v.  Sea- 

(N.   S.)    263;    Schoeptlm   v.   Coffey,  109  C.  C.  A.  '^^^' 

162  N   Y.  12,  and  cases  cited;  Hast-  board    A.    I.    R.    127    Ga.    ooO     1. 

Lgs  ;.  Stet;on,  126  Mass.  329,  30  L-RA.(N  S.)     476;    Se^th    v.    Com^ 

Am    Rep    683;  Elmer  v.  Fessenden,  monwealth  E.  ^o-,  -41  in.  -o  , 

T^^mZ"   359    5  LR  ^-  724;  Haehl  L.R.A.(N.S.)  978,  132  Am.  St.  204 

151  Mass    359    5  L.K^A^7  ^  ^   ^   ^^   ^   Prze/dxianski. 

'■    JiT    Cole     :'   Gevman?\,   L.  170  Ind.  1,  14  L.R.A.(N.S.)  972.  ,27 

Soc       24  Fel    113    59  C.  C.  A.  593,  Am.  St.  352;   Claypool  v.  VMgniou., 

6?!     R     a'  410       See    Riding    v.  34    Ind.    App.    35;     St«Phenson    v. 

f  -l'   f'FxDiv  91-  Kelly  V.  Part-  Corder,  71  Kan.  475,   114  Am.  St. 

Smith,  1  Ex.  'I'^f'f^!^^^^.^  ^  500,  66  L.R.A.  246;   Logan  v.  Cin- 

mgton,  5  B.  &  Ad.   b4t) ,    moriia  .        .•       +       i?     Pn      130    Kv     202; 

Langdale,   2    B.   &   P.   284;    Ashley  ciiinati,   etc.   R.   Co.,   139   Kv. 


158  SUTJIEIJLAND    ON    DAMAGES.  [§    41 

engaged  in  the  business  of  butchering  for  selling  diseased  sheep 
as  sound  and  healthy  it  appeared  that  the  plaintiff  had  engaged 
one  G.  to  take  some  of  the  mutton  which  might  be  on  hand  and 
sell  it;  but  in  consequence  of  a  report  that  the  plaintiff  had 
purchased  the  defendant's  diseased  sheep  G.  refused  to  perform 
his  contract.  The  defendant  was  not  liable  for  G.'s  refusal, 
nor  for  damages  suffered  by  the  plaintiff  in  consequence  of  his 
customers  refusing  to  deal  with  him  by  reason  of  that  reportJ^ 
In  an  action  against  several  persons,  some  of  whom  had  sold 
the  plaintiff's  husband  liquors  on  the  day  of  his  death  and  others 
of  whom  had  done  so  previously,  and  were  charged  with  having 
caused  him  to  become  an  habitual  drunkard,  death  was  held  to 
be  the  result  of  the  sales  last  made  and  the  fact  that  the  liquor 
last  obtained  was  drank  because  he  was  an  habitual  drunkard 
did  not  make  those  who  had  antecedently  sold  him  liquor  jointly 
liable  with  the  other  defendants,  because  the  latter's  intervening 
acts  were  independent  and  the  proximate  cause  of  the  wrong. '^ 
This  principle  does  not  apply  where  the  intervening  act  of  a 
third  person  is  not  direct,  wilful  or  criminal,  as  where  a  person 
who  is  intoxicated  is  run  over  by  a  train  while  lying  on  a  track 
situated  between  his  home  and  the  place  where  he  procured  the 
liquor  which   produced  that  condition.'*     If  there  intervenes 

Bellino  v.  Columbus  C.  Co.,  188  Mass.  habitual  drunkard  of  the  plaintiff's 

430 ;  McVay  V.  Brooklyn,  etc.  R.  Co.,  husband.      Earp    v.    Lilly,    217    111. 

113  App.  Div.   (N.  Y.)   724;  Fanizzi  582. 

V.  New  York,  etc.  R.   Co.,  id.  440;  74  Schroeder  v.   Crawford,   94   111. 

Penny  v.  Atlantic  C.  L.  R.  Co.,  153  357:    Emory  v.  Addis,   71    111.  273; 

N.    C     296,   32   L.R.A.fN.S.)    1209;  Currier  v.  McKee,  99  Me.  364    (in- 

Baker   v.    Thompson,   228   Pa.   543;  toxicated  person  injured  in  self-de- 

Marsh    v.    Giles,    211    Pa.    17;    Chi-  fgnse  by  person  whom  he  assaulted 

cago,  etc.  R.  Co.  v.  Jackson,  40  Tex.  „.i,j,e  intoxicated). 

Civ.  App.  273.     See  Adler  v.  Pruitt,  ,j-^^^    Indiana    court    announced   a 

169  Ala.  213,  32  L.R.A.(N.S.)    889;  ,  ,  ^.     ^.^    4-   ^t  *■  a   ■     4\  „ 

'  ^  '  rule  contrary  to  that  stated  m  the 

_„  ^  ■   .  „      .  „.,,        ^     ,,        text   in  Krach  v.  Heilman,  53  Ind. 


517;    Collier  v.  Early,   54  Ind.   559. 
But  these  cases  are  much  restricted 


72  Grain  v.  Petrie,  6  Hill,  522,  41 
Am.  Dee.  765;  Butler  v.  Kent,  19 
Johns.  223,  10  Am.  Dec.  219. 

73Tetzner  v.  Naughton,  12  111.  '^^'  '^""^"P  ''■  Wagner,  85  Ind.  529, 
App.  148.  See  Shugart  v.  Egan.  S3  44  Am.  Rep.  42,  and  are  in  effect 
J]]    5(3  overruled  by  Terre  Haute  &  I.  R.  Co. 

The  rule  is  otherwise  if  the  wrong  v.  Buck,  96  Ind.  346,  355,  3  Am. 
"omplained  of  is  the  making  of  an       Neg.  Gas.  48,  49  Am.  Rep.  168. 


§  42] 


COMPENSATION.  1  ^^^ 


between  the  defendant's  act  or  omission  a  wilful,  nialicions  and 
criminal  act  committed  by  a  third  person,  which  act  defendant 
had  no  reason  to  apprehend,  the  connection  botwoon  the  original 
wrong  and  the  result  is  broken.''^ 

§  42.  Same  subject.     Where  the  immediate  cause  of  the  in- 
jury is  the  wrongful  act  of  a  third  person  the  injured  party 
has,  of  course,  an  action  against  him;  and  this,  in  some  early 
cases,  was  thought  to  bar  an  action  against  any  antecedent  actor 
more  remotely  responsible;  but  it  now  seems  to  l)e  settled  that 
the  liability  of  the  more  immediate  i)arty  does  not  relieve  any 
other  party  whose  act  can  properly  be  treated  as  the  efficient 
and  proximate  or  concurrent  cause.    A  vendor  of  property,  who 
had  been  paid  for  it,  was  induced  by  the  defendant's  false  and 
malicious  representation  that  he  had  a  lien  on  it  and  was  en- 
titled to  control  its  custody,  to  refuse  to  deliver  it,  whereby 
the  purchaser  suffered  injury;  he  was  entitled  to  his  action 
although  he  had  a  remedy  on  his  contract  against  the  vendor. 
Ivnowhigly  making  a  false  claim  of  lien  was  the  gravamen  of 
the  action  and  the  special  damage  alleged,  namely,  the  non- 
delivery of  the  property,  was  sufficiently  connected  with  the 
wrongful  act  to  support  the  action.'^    In  one  case  it  appeared 
that  the  defendant,  being  about  to  sell  a  public  house,  falsely 
represented  to  11,  who  had  agreed  to  purchase  it,  that  the  re- 
ceipts were  £180  a  month;  V>.  having,  to  the  knowledge  of  the 
defendant,  communicated  this  representation  to  the  plaintift", 
who  became  the  purchaser  instead  of  B.,  an  action  was  main- 
tainable for  the  circuitous  deceit  practiced.''^ 

A  stage-coach  by  the  negligence  of  the  driver  was  precipitated 
into  a  dry  canal;  the  lock-keeper  thereafter  negligently  (.pcnod 

75  Soutliwestern  P.  C.  Co.  v.  Reitz-  This   was   .Ion.-   without   tlw   knowi- 

er   (Tex.  Civ.  App.),  135  S.  W.  237;  edge  of  \V. 

Shugart  v.  Egan,  83  111.  56;   Mars  veCrccn  v.  r.iitton.  2  Cv.  M.  &   U. 

V.   Delaware  &   H.   C.   Co.,   54   Hun  707. 

625;    Roach    v.   Kelly,    104    Pa.   24,  77  pilmorc  v.  Hood.  •">  P.ing.  \.  C 

75    Am.    St.    685,    stated    in    §    16;  ,^_       ^^^   La„g,idg,.   v.    Levy.   2    M. 

White  V  Conly,  14  Lea   51     In  the  ^  ^^.    .^^^     ^  _^^   ^.    ,  .,„„,.i,ij,^._  4  i,i. 

last  case  W.  and  C  quarreled  and  /  j       ;,.,,^,;,,   ^.     „,„„..   s   C.   IV 

fought:    during   the   fight   W.'s   son  ■^■^' ■    ^"^' 

stabbed    C.    and    caused    his    death.  (N-  S.)  6;,.,:  §  11.0. 


160  SUTHERLAND    ON    DAMAGES.  [§    42 

the  gates  of  the  canal  and  a  passenger  was  drowned  therein. 
Under  Lord  Campbell's  act  '*  the  Irish  court  of  qneen's  bench 
held  that  the  death  of  the  passenger  was  "caused"  by  the  negli- 
gence of  the  driver.  O'Brien,  J.,  said :  "The  precipitation  of  the 
omnibus  into  the  lock  was  certainly  one  cause  of  her  death,  inas- 
much as  she  would  not  have  drowned  but  for  such  precipitation. 
It  is  true  that  the  subsequent  letting  of  the  water  into  the  lock 
was  the  other  and  more  proximate  cause  of  her  death,  and  that 
she  would  not  have  lost  her  life  but  for  such  subsequent  act, 
which  was  not  the  necessary  consequence  of  the  previous  pre- 
cipitation by  the  negligence  of  the  defendant's  servant.  But  in 
my  opinion  the  defendant  is  not  relieved  from  liability  for  his 
primary  neglect  by  showing  that  but  for  such  subsequent  act  the 
death  would  not  have  ensued."  '^  A  railroad  company  placed 
a  push-car  in  the  hands  of  a  foreman  to  be  used  for  specific  pur- 
poses ;  he  loaned  it  for  another  purpose,  and  while  the  borrower 
was  using  it  the  plaintiff  was  injured  through  the  negligence  of 
the  borrower.  The  company  was  liable  though  such  injury 
occurred  at  a  time  when  there  was  no  relation  between  it  and  the 
man  who  ran  the  car.^°  A  railroad  company  must  answer  for 
an  injury  to  a  passenger  caused  by  an  obstacle  left  on  its  depot 
platform  by  its  licensee. ^^ 

Cases  may  be  stated  where  the  wrongful  conduct  of  one  person 
affords  the  opportunity  or  occasion  for  the  illegal  acts  of  another 
or  for  an  injury  from  other  causes;  as  where  a  street-car  driver 
permits  boys  to  ride  on  the  platform  without  paying  fare  and 
on  their  being  ordered  to  get  off  one  of  them  pushes  another, 
who  is  injured.     In  such  cases  the  injury  is  too  remote,^^  unless 

78  9  and  10  Vict.,  ch.  93.  81  Irwin  v.  Missouri  Pac.  R.  Co., 

79  Byrne  v.  Wilson,  15  Irish  C.  L.  81  Kan.  649,  26  L.R.A.(]Sr.S.)  739. 
(N.S.)  332-342;  Eaton  v.  Boston,  82  Lott  v.  New  Orleans,  etc.  R. 
etc.  R.  Co.,  11  Allen  500,  87  Am.  Co.,  37  La.  Ann.  337,  55  Am.  Rep. 
Dec.  730;  Spooner  v.  Brooklyn  City  500;  Cuff  v.  Newark,  etc.  R.  Co., 
R.  Co.,  r,i  N.  Y.  230,  13  Am.  Rep.  16  Am.  Neg.  Cas.  668,  35  N.  J.  L. 
570,  9  Am.  Neg.  Cas.  587;  Noe  v.  .30,  10  Am.  Rep.  205;  Scholes  v. 
Rapid  R.  Co.,  133  Mich.  152.  North  London  R.  Co.,  21  L.  T.   (N. 

80  Erie  R.  Co.  v.  Salisbury,  66  N.  S.)  835;  Marks  v.  Rochester  R.  Co., 
J.  L.  233,  55  L.R.A.  578,  10  Am.  41  App.  Div.  66.  See  McGhoe  v. 
Neg.  Rep.  584.  The  court  divided,  Norfolk  &  S.  R.  Co.,  147  N.  C.  142, 
6  to  5.  24  L.R.A. (N.S.)    119. 


42] 


COMPENSATION. 


161 


it  was  such  as  would  probably  result ;  and  the  same  rule  applies 
where  inaction  offers  an  opportunity  for  injury.  The  neglect 
of  duty  by  bailees  and  agents  renders  them  liable  for  losses 
resulting,  in  co-operation  with  such  neglect  by  the  torts  of 
third  persons.*^  The  cases  collected  in  the  note  following  will 
give  the  reader  an  insight  into  various  branches  of  the  subject 
of  consequential  damages.^* 


83  Norcross  v.  Norcross,  53  Me. 
1G3;  Mason  v.  Tliumpson,  9  Pick. 
280,  20  Am.  Dec.  471;  Shaw  v. 
Berry,  31  Me.  478,  52  Am.  Dec.  G28 ; 
Sibley  v.  Aldrich,  33  N,  H.  553,  66 
Am.  Dec.  745;  Sasseen  v.  Clark,  37 
Ga.  242;  Clute  v.  Wiggins,  14  Johns. 
175;  McDaniels  v.  Robinson,  26  Vt. 
316. 

84  Quinette  v.  Bisso,  5  L.R.A. 
(N.S.)  303,  136  Fed.  825,  69  C.  C. 
A.  503;  Smith  v.  Maginnis,  75  Ark. 
472;  Florida  East  Coast  R.  Co.  v. 
Wade,  53  Fla.  620;  Chicago  &  E.  R. 
Co.  V.  Dinius,  170  Ind.  222;  Dobyns 
V.  Yazoo,  etc.  R.  Co.,  119  La.  72; 
King  V.  Pittsburgh,  etc.  R.  Co.,  13 
Ohio  N.  P.  (N.  S.)  201;  Campbell 
V.  Railway  T.  Co.,  95  Minn.  375; 
Luehrmann  v.  Laclede  G.  L.  Co., 
127  Mo.  App.  213;  Adams  v.  Lan- 
cashire, etc.  R.  Co.,  L.  R.  4  C.  P. 
739;  Smith  v.  Dobson,  3  M.  &  Gr. 
59;  Rigby  v.  Hewitt,  5  Ex.  240; 
Greenland  v.  Chaplin,  id.  243; 
Barnes  v.  Ward,  9  C.  B.  392;  Col- 
lins V.  Middle  L.  Com'rs,  L.  R.  4 
C.  P.  279;  Harrison  v.  Great  North- 
ern R.  Co.,  3  H.  &  C.  231;  Butter- 
field  V.  Forrester,  11  East  60; 
Martin  v.  Great  Northern  R.  Co., 
16  C.  B.  179;  General  Steam  Nav. 
Co.  V.  Mann,  14  C.  B.  127;  Holden 
V.  Liverpool  G.  Co.,  3  C.  B.  1 ;  Cot- 
ton V.  Wood,  8  C.  B.  (N.  S.)  568; 
Flower  v.  Adam,  2  Taunt.  314; 
Ellis   V.   London,   etc.   R.   Co.,   2   H. 

6  N.  424;   Singleton  v.  Williamson, 

7  H.  &  N.  410;   Skelton  v.  London, 
etc.    R.    Cfo.,    L.    R.    2    C.    P.    631; 

Suth.  Dam.  Vol.  L— 11. 


Tiiompaon  v.  Nortlieastern  H.  Co., 
2  15.  &  S.  106;  Bridge  v.  Grand 
Junction  R.  Co.,  3  .M.  c'v:  \V.  244; 
Glover  v.  London,  etc.  K.  Co.,  3 
Q.  B.  25;  The  Flying  Fish.  34  L.  J. 
(Adm.)  113;  Everard  v.  Hopkins,  1 
Bulst.  332;  Hughes  v.  Quentin,  8  C. 
&  P.  703;  Peacock  v.  Young,  21  L. 
T.  (N.  S.)  527;  Priestley  v.  Mac- 
lean, 2  F.  &  F.  288;  Sneesby  v. 
Lancashire  R.  Co.,  L.  R.  9  Q.  B. 
263;  Smith  v.  Condry,  1  How.  35, 
11  L.  ed.  37;  Loker  v.  Damon,  17 
Pick.  284;  State  v.  Thomas,  19  Mo. 
613;  Oil  Creek,  etc.  R.  Co.  v.  Keigli- 
ron,  74  Pa.  316;  Tarleton  v.  Mc- 
Gawley,  Peake  270;  Carrington  v. 
Taylor,  11  East,  571;  Keeble  v, 
fHckeringill,  id.  574;  Herring  v. 
Skaggs,  62  Ala.  180,  34  Am.  Rep. 
4;  Hanover  R.  Co.  v.  Coyle,  55  Pa. 
396;  Baldwin  v.  United  States  Tel. 
Co.,  45  N.  Y,  744,  6  Am.  Rep.  165; 
Bartlett  v.  Hooksett,  48  N.  H.  18; 
Ayer  v.  Norwich,  39  Conn.  376,  12 
Am.  Rep.  396;  Dimock  v.  Suffield, 
30  Conn.  129;  Foshay  v.  Glen  Ha- 
ven, 25  Wis.  288.  3  Am.  Rep.  73; 
Morse  v.  Richmond,  41  Vt.  435.  98 
Am.  Dec.  600;  Howard  v.  Nortli 
Bridgewater,  16  Pick.  189;  Kings- 
bury v.  Dedham,  13  Allen,  186,  90 
Am.  Dec.  101;  Tisdale  v.  Norton,  S 
Mete.  (Mass.)  388;  Page  v.  Bucks- 
port,  64  Me.  51,  18  Am.  Rep.  2.39,  1 
Am.  Neg.  Cas.  289;  Bigolow  v.  Reod, 
51  Mc.  325.  15  Am.  Neg.  Cas.  304; 
Lake  v.  Milliken,  62  Mo.  240,  16  Am. 
Rep.  456:  Cobb  v.  Standish.  14  Me. 
198;    Merrill    v.    Hampden,    26    Me. 


162 


SUTHEKLAITD    ON    DAMAGES. 


[§  43 


§  43.  Wilful  or  malicious  injuries.  The  authorities  are  not 
agreed  as  to  whether,  in  cases  of  wilful  or  malicious  injuries, 
injuries  caused  by  reckless  or  illegal  acts  or  by  positive  fraud, 
the  damages  are  so  strictly  coniined  to  proximate  consequences 
as  when  none  of  these  elements  is  present.  On  principle,  at 
least  \vhere  exemplary  damages  are  allowed,  it  is  not  readily 
seen  why  the  doctrine  of  proximate  cause  should  be  varied 
because  of  the  presence  or  absence  of  facts  which  characterize 
the  wrong.  In  Indiana  the  existence  of  any  such  reason  is 
denied.^^  In  Arkansas  a  series  of  cases  establish  the  rule  that 
mental  suffering,  unaccompanied  by  j^hysical  injury  or  any 
other  element  of  recoverable  damages,  cannot  be  made  the  sub- 


234 ;  Lawrence  v.  Mt.  Vernon,  35  Me. 
100;  Davis  v.  Bangor,  42  Me.  .522; 
Jewett  V.  Gage,  55  Me.  538,  92  Am. 
Dec.  615;  Cook  v.  Charlestown,  98 
Mass.  80;  Card  v.  Ellsworth,  05  Me. 
547,  20  Am.  Rep.  722;  Chicago  v. 
Hoy,  75  111.  530:  Pittsburgh,  etc. 
R.  Co.  V.  Iddings,  28  Ind.  App.  504; 
Wallin  V.  Eastern  R.  Co.,  83  Minn. 
149,  54  L.R.A.  481;  Butler-R.  Co. 
V.  Williams,  84  Minn.  447;  Fezler 
V.  Willmar,  etc.  R.  Co.,  85  Minn, 
252,  11  Am.  Neg.  Rep,  397;  Schrei- 
ner  v.  Great  Northern  R.  Co.,  86 
:\Iinn.  245,  58  L.R.A.  75,  12  Am. 
Neg.  Rep.  568;  Illinois  Cent.  R.  Co. 
V.  Seamans,  70  ]\Iiss.  100,  12  Am. 
Neg.  Rep.  478;  Leeds  v.  New  York 
Tel.  Co.,  64  App.  Div.  (N.  Y.)  484; 
Harrison  v.  Weir,  71  id.  248;  Koch 
V.  Fox,  id.  288 ;  Chambers  v.  Carroll, 
199  Pa.  371,  16  Am.  Neg.  Rep.  419; 
Forrow  v.  Arnold,  22  R.  I.  305; 
Butts  V.  Cleveland,  etc.  R.  Co.,  110 
Fed.  329,  49  C.  C.  A,  69,  10  Am. 
Neg.  Rep.  455 ;  Reynolds  v.  Pierson, 
29  Ind.  App.  273;  Simonson  v.  Min- 
neapolis, etc.  R,  Co.,  88  Minn.  89. 

85  "There  is,  in  truth,  no  case  that 
has  been  recognized  as  sound  that 
holds  that  the  rule  as  to  the  respon- 
sibility of  the  wrongdoer  is  different 
in    cases    of    actionable    negligence 


from  that  which  prevails  in  cases  of 
wilful  or  malicious  torts.  There  is 
a  difference  as  to  the  measure  of 
damages,  for  where  the  tort  is  ma- 
licious, exemplary  damages  may  be 
recovered,  but  such  damages  can- 
not be  recovered  in  cases  of  negli- 
gence. This  consideration  has,  how- 
ever, no  influence  upon  the  question 
of  a  negligent  wrongdoer's  responsi- 
bility for  the  consequences  resulting 
from  his  act."  Indianapolis,  etc,  R, 
Co.  v.  Pitzer,  109  Ind.  179,  189,  58 
Am.  Rep.  387,  8  Am.  Neg.  Cas.  233; 
Russell  V.  State,  32  Ind.  App.  243; 
Burnap  v.  Wight,  14  111.  301.  Com- 
pare Kline  v.  Kline,  158  Ind.  602,  58 
L.R.A.  397.  See  Gatzow  v.  Buening, 
106  Wis.  1,  49  L.R.A.  475,  80  Am. 
St.  17 ;  note  to  Gilson  v.  Delaware, 
etc.  C.  Co.,  36  Am.  St.  821,  in  which 
numerous  cases  are  summarized  and 
the  conclusion  reached  that  tliere  is 
no  essential  difference  between  the 
measure  of  liability  for  wilful  and 
negligent  torts,  and  that  in  both 
cases  the  injury  complained  of  must 
be  a  natural  and  direct  result,  the 
only  exceptions  being  where  a  wil- 
ful tort  consists  in  the  unlawful  as- 
sumption of  dominion  over  another's 
property  and  where  a  carrier  devi- 
ates from  its  route.     See  Lutterman 


§  43]  coMPEJNS-vnoN.  163 

ject  of  an  independent  action  for  damages  even  where  the  act 
or  neglect  was  wilfuL^^  And  if  there  1x3  another  gronnd  for  the 
recovery  of  damages  in  order  that  mental  sulVering  may  he 
recovered  for  it  must  be  connected  therewith  thongh  such  suffer- 
ing be  caused  wilfully ;  the  necessary  connection  does  not  exist 
between  the  insulting  conduct  of  an  employee  and  the  loss  sus- 
tained by  a  passenger  by  having  his  baggage  carried  IxTond  his 
destination.*'  In  some  other  states,  as  will  be  seen  in  the  next 
section,  such  distinction  is  recognized.  The  elements  stated  arc 
aggravations  which  juries  are  apt  to  regard  in  determining  their 
verdicts  and  which  courts  consider  in  passing  on  them,*'  It 
was  said  by  IJaklwin,  -I.:*^  "When  a  trespass  is  connuitted  in 
a  wanton,  rude  and  aggravated  manner,  indicating  malice  or  a 
desire  to  injure,  the  jury  ought  to  be  liberal  in  compensating 
the  party  injured  in  all  he  has  lost  in  property,  in  expenses  for 
the  assertion  of  his  rights,  in  feeling  or  reputation,"  and  t<» 
superadd  to  such  compensation  a  sum  for  punishment.  In  a 
case  of  wilful  negligence  the  trial  court  instnu-ted  the  jury 
that  they  might  take  into  consideration  all  the  circumstances 
and  see  whether  there  was  anything  to  satisfy  them  that  the 
defendant  had  behaved  in  an  improper  and  unjustifiable  man- 
ner; and  if  so,  they  need  not  give  damages  strictly,  but  might 
give  them  with  a  liberal  hand.  This  instruction  was  approved. 
Pollock,  C.  B.,  said:  "It  is  universally  felt  by  all  persons  who 
have  had  occasion  to  consider  the  question  of  compensation  that 
there  is  a  ditl'erence  between  an  injury  which  is  the  mere  result 
of  such  negligence  as  amounts  to  little  uioi'e  than  an  accident, 

V.  Romey,  143  Iowa,  233.  87Cliieago,    etc.    R.    Co.    v.    Moss, 

The  intent  of  a  defendant  is  ma-  supra. 
terial  only  where  the  act  wliich  oc-  88  Merest  v.  Ilarvoy,  5  Taunt.  442; 
casions  the  injury  is  not  unlawful  Wright  v.  Cfray,  2  Bay  4G4;  Mc- 
or  where  it  affects  the  amount  of  the  Daniel  v.  P^manuol,  2  Rich.  455;  De- 
recovery.  Walbridge  v.  Walbridge,  troit  Daily  Post  v.  McArthur,  10 
80  Kan.  567.  Mich.  447;   West  v.  Forrest,  22  Mo. 

86  St.  Louis,  etc.  R.  Co.  v.  Taylor,  344;  lluckle  v.  Money,  2  Wils.  205; 

84   Ark.    42,    13    L.R.A.(N.S.)     150;  McAfee    v.    Croffonl,    13    How.    447, 

Chicago,  etc.  R.  Co.  v.  Moss,  SO  Ark.  14  L.  ed.  217. 

187;  Pierce  v.  St.  Louis,  etc.  R,  Co.,  89  Pacific  Ins.  Co.  v.  Conard   Baid- 

04  Ark.  480.  vvin  142. 


164  SUTJlEliLAND    ON    DAMAGES.  [§    ^3 

and  an  injury,  wilful  or  negligent,  which  is  accompanied  with 
expressions  of  insolence.  I  do  not  say  that  in  actions  of  negli- 
gence there  should  be  vindictive  damages,  such  as  are  sometimes 
given  in  actions  of  trespass ;  but  the  measure  of  damage  should 
be  different  according  to  the  nature  of  the  injury  and  the  cir- 
cumstances with  which  it  is  accompanied.  .  ,  .  The  courts 
have  always  recognized  the  distinction  between  damages  given 
with  a  liberal  and  a  sparing  hand."  ^°  For  this  reason  all  the 
circumstances  of  the  injurious  act  are  provable  and  to  be  con- 
sidered by  the  jury.^^  In  an  action  of  tort  for  a  wilful  injury 
to  the  person  the  manner  and  manifest  motive  of  the  wrongful 
act  may  be  proved  as  affecting  the  damages ;  for  when  the  mere 
physical  injury  is  the  same  it  may  be  more  aggravated  in  its 
effects  upon  the  mind  if  it  is  done  in  wanton  disregard  of  the 
rights  and  feelings  of  the  plaintiff  than  if  it  is  the  result  of 
mere  carelessness.^^  The  same  view  is  expressed  by  another 
court:  ^^'The  common  sense  of  mankind  has  never  failed  to  see 
that  the  damage  done  by  a  wilful  wrong  to  person  or  reputation 
and,  in  some  cases,  to  property,  is  not  measured  hy  the  conse- 
quent loss  of  money.  A  person  assaulted  may  not  be  disabled 
or  even  disturbed  in  his  business,  and  may  not  be  put  to  any 
outlay  in  repairs  or  medical  services.  He  may  not  be  made 
poorer  in  money  directly  or  consequentially.  He  may  incur  no 
pecuniary  damages  whatever.  .  .  .  When  the  law  gives  an 
action  for  a  wilful  v.-rong  it  does  it  on  the  ground  that  the 
injured  person  ought  to  receive  pecuniary  amends  from  the 
wrong-doer.  It  assumes  that  every  such  wrong  brings  damage 
upon  the  sufferer,  and  that  the  principal  damage  is  mental  and 
not  physical.  And  it  assumes  further,  that  this  is  actual  and 
not  metaphysical  damage,  and  deserves  compensation.  When 
this  is  once  recognized  it  is  just  as  clear  that  the  wilfulness  and 
wickedness  of  the  act  must  constitute  an  important  element  in 
the  computation  for  the  plain  reason  that  we  all  feel  our  indig- 

90  Emblen  v.  Myers,  6  H.  &  N.  54 ;        Churchill  v.  Watson,  5  Day  140,  5 
Bixby  V.  Dunlap,  56  N.  H.  462.  Am.  Dec.   130;   Post  v.  Mumi,  4  N. 

91  Bracegirdle  v.   Orford,   2   M.  &       J.  L.  61,  7  Am.  Dec.  570. 

S.  79;  Snively  V.  Fahnestock,  18  Md.  92  Hawes   v.    Knowles,   114   Mass. 

391;  Treat  v.  Barber,  7  Conn.  279;       518,    19   Am.   Rep.    383;    Booker   v. 
Edwards    v.     Beach,     3     Day     447;       Trainer  (Mo.  App.),  157  S.  W.  848. 


§    44]  COMPENSATION.  165 

nation   excited    in    direct    j)r()portic)n    with    the    niiilicc   of    the 
offender,  and  that  the  wrong  is  aggravated  h_v  it.^^ 

§  44.  Same  subject.  There  are,  however,  authorities  which 
go  to  the  extent  of  hokling  that  where  a  wrong  is  done  wilfully 
and  with  knowledge  of  all  the  facts  which  make  th(>  doing  of  it 
an  aggravation  the  scope  of  the  natural  and  proximate  conse- 
quence of  such  wrong  is  thereby  enlarged. °*  Where  a  tenant, 
whose  wife  was  sick  at  the  expiration  of  the  lease  was  denied 
a  reasonable  time  in  which  to  vacate  the  premises  without  un- 
necessary risk  to  her,  and  the  landlord,  knowing  she  was  preg- 
nant and  confined  to  her  bed  by  heart  disease,  began  tearing 
down  the  house,  thereby  making  a  noise  and  causing  a  dust, 
which  aggravated  the  wife's  illness,  who,  though  removed  from 
the  premises  the  next  day,  died  a  week  later,  after  having  had 
a  miscarriage,  it  was  decided  that  the  rule  of  the  court  of  fiiuil 
appeal  ^^  denying  a  recovery  for  injuries  due  solely  to  fright 
and  excitement,  unaccompanied  by  actual,  immediate,  personal 
injury  had  no  application.  "In  this  case,  however,  the  act  of 
the  defendants  was  in  itself  wrongful.  It  was  a  wilful  and 
violent  trespass  upon  the  plaintiff's  house  for  which  an  action 
will  lie;  and  if  the  death  of  the  plaintift''s  wife  can  be  clearly 
and  directly  traced  to  it  as  a  natural  and  necessary  consequence 
which  they  might,  or  should,  have  reasonably  anticipated  the 

93  May  V.  Western  U.  Tel.  Co.,  Am.  St.  987;  Gulf,  etc.  R.  Co.  v. 
157  N.  C.  416.  37  L.R.A.{N.S.)  912;  Luther,  40  Tex.  Civ.  App.  017; 
Krehbiel  v.  Henkle,  152  Iowa  604;  Bouillon  v.  Laclede  C.  L.  Co.,  148 
Welch  V.  Ware,  32  Mich.  77;  Davis  Mo.  App.  462,  citing  the  text  (de- 
V.  Standard  Nat.  Bank,  50  App.  Div.  fendant's  agent  unlawfully  entered 
(N.  Y.)  210;  De  Leon  v.  McKernan,  the  plaintiff's  house  and  used  vio- 
25  N.  Y.  Misc.  182;  Rigney  v.  Mon-  lent  language  to  her  nurse,  wliich 
ette,  47  La.  Ann.  648;  Taylor  v.  resulted  in  a  miscarriage  hy  Die 
Howard,  110  Ala.  468;  Railway  Co.  plaintiff:  defendaiil  was  iiahle 
V.  Beard,  56  Ark.  309;  Watson  v.  thougli  its  agent  liiid  no  knowledge 
Dilts,  116  Iowa  249,  57  L.R.A.  559.  of  the  plaintiff's  condition).  See 
See    §§    1028,    1029.  Huskie  v.  Griffin,  75  N.  II.  34."i.  27 

94  Louisville  &  N.  R.  Co.  v.  Ohio  L.R.A.(N.S.)  966,  139"  Am.  St.  718, 
Valley  Tie  Co.,  161  Ky.  212;  St.  and  cases  cited;  Lurman  v.  .Tarvie, 
Louis  S.  R.  Co.  V.  Alexander    (Tex.  82  App.  Div.    (N.  Y.)    :57. 

Civ.  App.),  141  S.  W.  135;   Wilson  95  Mitchell    v.    Rochester    R.    Co., 

v.   St.   Louis,   etc.   R.   Co.,   160   Mo.  151  N.  Y.  107,  1  Am.  Neg.  Rep.  21, 

App.  649;   Prescott  v.  Robinson,  74  56  Am.  St.  604,  34  L.R.A.  781.     See 

N.  H.  460,  17  L.R.A.(N.S.)  594,  124  §§    21-24. 


166 


SUTHEKLAND    ON    DAMAGES. 


[§    44 


defendants  are  liable  even  altlioiigli  no  actual  blow  was  struck 
in  the  course  of  the  destruction  of  the  building.  The  defendants 
knew  her  condition  and  the  risk  which  was  involved  in  their 
contemplated  act,  and  it  would  be  ridiculous  to  say  that,  without 
the  shadow  of  a  I'ight,  they  could  tear  the  house  down  from  over 
her  head  with  no  liability  for  the  consequences  unless  she 
chanced  to  be  hit  by  a  falling  beam."  ^®  Substantially  the  same 
rule  was  applied  where  the  defendant,  intending  to  have  a 
practical  joke,  represented  to  a  married  woman,  who  was  in  an 
ordinary  state  of  health  and  mind,  that  her  husband  had  met 
with  a  fearful  accident ;  the  statement  was  made  with  intent 
that  it  should  be  believed,  and  was  believed;  in  consequence  a 
violent  nervous  shock  was  produced  which  rendered  the  plaintiff 
ill.  Her  right  to  maintain  an  action  was  vindicated,  and  judg- 
ment rendered  on  a  verdict  for  £100  on  account  of  the  injury 
caused  by  the  shock,®'''  In  an  action  for  maliciously  and  wilfully 
making  false  statements  respecting  the  plaintiff  in  his  capacity 
as  an  apprentice  to  the  defendant,  and  which  had  the  effect  to 


96  Preiser  v.  Wielandt,  48  App. 
Div.  (N.  Y.)  569,  7  Am.  Neg.  Rep. 
558;  Williams  v.  Underhill,  63  id. 
223;  See  quotation  from  Spade  v. 
Lynn  &  B.  R.  Co.,  168  Mass.  285,  38 
L.R.A.  512,  5  Am.  Neg.  Rep.  367,  in 
note  to  §  21. 

In  Garrison  v.  Sun  P.  &  P.  Ass'n, 
207  N.  Y.  1,  45  L.R.A.  (N.S.)  766, 
(stated  in  §  1221)  it  is  said:  The 
rule  must  be  regarded  as  well  recog- 
nized that  in  an  action  brought  for 
the  redress  of  a  wrong  intentional- 
ly, willfully  and  maliciously  com- 
mitted the  wrongdoer  will  be  held 
responsible  for  the  injuries  which 
he  has  directly  caused,  even  though 
they  lie  beyond  the  limit  of  natural 
and  apprehended  results  as  estab- 
lished in  cases  where  the  injury  was 
unintentional. 

97  Wilkinson  v.  Downton,  [1897] 
2  Q.  B.  57.  After  referring  to  cases 
which  are  discussed  in  §§  21-?4,  and 
admitting  that  the  case  was  with- 


out precedent,  the  court  said:  A 
more  serious  difficulty  is  the  de- 
cision in  Allsop  V.  Allsop,  5  H.  &  N. 
534,  which  was  approved  by  the 
House  of  Lords  i  Lynch  v.  Knight, 
9  H.  of  L.  Cas.  577.  In  that  case 
it  was  held  by  Pollock,  C.  B.,  Mar- 
tin, Bramwell,  and  Wilde,  BB.,  that 
illness  caused  by  a  slanderous  im- 
putation of  unchastity  in  the  case 
of  a  married  woman  did  not  con- 
stitute such  special  damages  as 
would  sustain  an  action  for  such 
slander.  That  case,  however,  ap- 
pears to  have  been  decided  on  the 
ground  that  in  all  the  innumerable 
actions  for  slander  there  were  no 
precedents  for  alleging  illness  to  be 
sufficient  special  damage  and  that  it 
would  be  of  evil  conseqvionce  to  treat 
it  as  sufficient,  because  such  a  rule 
might  lead  to  an  infinity  of  trump- 
ery or  groundless  actions.  Neither 
of  these  reasons  is  applicable  to  the 
present  case.    Nor  could  such  a  rule 


§    44]  COMPIJNSATTON.  167 

deprive  the  plaintiff  of  the  employment  on  which  he  relletl  for 
snpport,  there  was  a  recovery  for  injury  to  the  feelings.  Such 
an  accusation  would  naturally  cause  the  plaintiff  mental  suffer- 
ing and  anxiety  in  reference  not  only  to  the  estimation  in  which 
he  would  be  likely  to  be  held  by  his  employer,  or  by  others  to 
whom  the  fact  of  his  discharge  might  become  known,  l)ut  also 
as  to  its  effect  upon  his  income  through  the  loss  of  his  situation. ^^ 
Mental  suffering  and  humiliation  are  elements  of  damage  for 
unlawful  expulsion  from  a  labor  union  and  the  publication  of 
the  fact  of  expulsion  in  its  organ.®^  And  such  suffering  may  1)C 
recovered  for  against  the  members  of  a  union  causing  the  dis- 
charge of  a  workman  from  successive  employments  by  threaten- 
ing strikes  and  inflicting  penalties,  these  things  being  done 
maliciously  and  oppressively  and  being  accompanied  by  threats 
of  personal  violence.^  And  so  where  malice  and  insult  are 
shown  and  physical  inconvenience  has  followed.^  A  false  accu- 
sation of  dishonesty  is  a  ground  upon  which  recovery  for  mental 
suffering  may  be  rested,  and  may  be  had  in  an  action  for  an 
assault.^  One  who  makes  an  excavation  which  causes  surface 
M^ater  to  flood  land,  knowing  that  result  will  follow,  cannot 
escape  liability  for  the  damage  done  by  an  unprecedented  flood.* 
In  Vermont  it  is  not  necessary  that  an  act  be  wanton  in  order 
that  liability  .may  attach  for  all  the  injurious  consequences  which 
result  from  it.  If  it  is  voluntary  and  not  obligatory  it  is 
enough.  Thus  where  the  defendant  shot  at  a  fox  that  the  plain- 
be  adopted  as  of  general  application  98  Lombard  v.  liennox,  155  Mass, 
without  results  which  it  would  be  70,  .31  Am.  St.  .i2S;  Lopes  v.  Con- 
difficult  or  impossible  to  defend.  nolly,  210  Mass.  487,  38  L.R.A. 
Suppose  that  a  person  is  in  a  preca-  (N.S.)  986.  See  London  Guarantee 
rious  and  dangerous  condition,  and  &  Ace.  Co.  v.  Horn,  20G  111.  403, 
another  person  tells  him  that  his  90  Am.  St.  185,  101  111.  App.  355. 
physician  has  said  that  he  has  but  a  99  St.  Louis  S.  R.  Co.  v.  Thompson, 
day  to  live.    In  such  a  case,  if  death       102   Tex.   89. 

ensued  from  the  shock  caused  by  the  1  Carter   v.   Ostor.    134    Mo.   Aj)]). 

false  statement,  I  cannot  doubt  that       146. 

at  this  day  the  case  might  be  one  2  Voss  v.  Bolzenius.  147  :Mo.  App. 

of   criminal  homicide,   or   that   if   a       375. 

serious  aggravation  of  illness  ensued  3  Lonergan  v.  Small,  Si    Kan.  48. 

damages   might   be   recovered.      See       25  L.R.A. (N.S.)    076. 
Nelson  v.  Crawford,  122  Mich.  466.  4  Southern   R.   Co.   v.   Lewis,    165 

80  Am.  St.  577.  Ala.  55.5,  138  Am.  St.  77. 


168  SUTHERLAND    ON    DAMAGES.  [§    44 

tiff's  dog  had  driven  to  cover  and  accidentally  hit  the  dog,  he 
was  liable.^  Where  a  dog  was  wantonly  and  maliciously  shot 
at,  with  intent  to  kill  it,  and  was  set  wildly  in  motion  and  that 
motion  continued,  without  the  interruption  of  any  other  agency, 
until  the  dog  got  into  its  owner's  house  and  there  knocked  down 
and  injured  his  wife  the  defendant  was  liable  for  her  injury.^ 
In  a  case  in  which  recovery  for  injury  to  business  was  sought 
the  court  said:  The  defendant's  conduct  was  so  lawless  and 
malicious  that  on  that  ground  alone  he  might  properly  be  held 
responsible  for  damages  more  indefinite  than  in  ordinary  in- 
stances where  elements  of  malice  and  oppression  are  lacking.' 
In  another  case  it  was  observed :  We  have  no  doubt  that  where 
the  act  charged  was  wilfully,  wantonly  or  maliciously  done,  and 
especially  where  its  obvious  purpose  was  to  wound,  humiliate 
or  oppress  another,  substantial  damages  may  be  given  for  the 
mental  suffering  it  entailed.®  The  wilful  maintenance  of  a 
nuisance  is  attended  with  enlarged  liability.^  And  where  a 
trespass  upon  property  is  committed  other  acts  which  may  not 
constitute  an  actionable  wrong  may  be  considered  in  aggravation 
of  damages — as  where  loud,  profane  and  lewd  language  is  used 
in  the  hearing  of  a  woman  in  a  delicate  condition,  though  the 
defendant  is  ignorant  of  her  condition.^"  A  passenger  wrong- 
fully and  intentionally  ejected  from  a  car  may  recover  for 
mental  suffering  and  fright  and  terror  if  they  naturally  ensue. ^^ 
The  effect  of  fraud  in  causing  a  loss  on  the  amount  recover- 
able beyond  the  measure  of  damages  in  analogous  cases  of  breach 
of  contract  and  tort  is  manifest  in  many  particulars.     A  differ- 

5  Wright  V.  Clark,  50  Vt.  130,  28  Tel.  Co.,  2  Ga.  App.  845;  Davidson 
Am.  Rep.  496.  v.  Lee   (Tex.  Civ.  App.),  139  S.  W. 

6  Isham  V.  Dow,  70  Vt.  588,  67  904.  See  Yazoo,  etc.  R.  Co.  v.  May, 
Am.  St.  601,  5  Am.  Neg.  Rep.  106,  104  i^^gg  422,  44  L.R.A.(N.S.)  1138. 
45  L.R.A.  87.  9  Lawtoii    v.    Herrick,    83    Conn. 

7  Gildersleeve  v.  Overstolz,  90  Mo.  .  j- 

App    518,  .530  10  May  v.  Western  U.  Tel.  Co.,  157 

SHickey  V.  Welch,  91  Mo.  App.  4,       ,,   ^ 

-,.       n  rr      ,  •  -nZ  \x         ^.  C.  416,  37  L.R.A.  (N.S.)   912. 

14;    Cooper   v.   Hopkins,   70   N.   if.  '  ^  ' 

271,  279:  Kimball  v.  Holmes,  60  N.  "Cincinnati  N.  T.  Co.  v.    Kosna- 

H.  163;  Kline  V.Kline,  158  Ind.  602,       gle,   84   Oliio   310,    35   L.R..A.  (  N.S.) 
58  L.R.A.  397;  Dunn  v.  Western  U.       1030. 


§    44]  COMPENSATION.  169 

ence  is  made  on  this  ground  M'lien  there  is  a  breach  of  the  con- 
tract to  sell  and  convey  lands  and  where  there  is  a  confusion  of 
goods.  Where  one  sells  a  chattel  and  delivers  possession,  so 
that  he  is  taken  to  have  warranted  the  title,  his  vendee  cannot 
recover  damages  until  he  is  dispossessed  by  the  owner;  but  if 
he  sells  property  with  a  false  and  fraudulent  representation  of 
ownership  his  vendee  may  recover  damages  for  the  deceit  before 
he  is  disturlied  in  his  possession  and  according  to  the  measure 
of  damages  applicable  to  a  breach  of  warranty.^'^  It  was  held 
by  Lord  Kenyon  that  an  action  lay  for  firing  on  negroes  on  the 
coast  of  Africa  and  thereby  deterring  them  from  trading  with 
the  plaintiff,  and  that  damages  might  be  recovered  for  loss  of 
their  trade. ^^  Where  a  dealer  in  drugs  and  medicines  carelessly 
labels  a  deadly  poison  and  sends  it  so  labeled  into  market  he 
will  be  liable  to  all  persons  who,  without  fault,  are  injured  by 
using  it  as  such  medicine  as  it  purports  to  be."  So  a  party  who 
fraudulently  sold  a  gun  falsely  representing  it  to  have  been 
made  by  a  particular  maker  and  to  be  well  made  was  liable  to 
the  purchaser  whose  son  was  injured  by  its  explosion.^*  Without 
regard  to  the  question  of  warranty  a  vendor  of  a  disinfectant 
powder  put  up  in  a  tin  can  who  knows  that  it  was  likely  to  cause 
injury  to  a  person  who  might  open  it,  unless  special  care  is 
taken  in  doing  so,  the  danger  not  being  such  as  presumably 
would  be  known  to  or  appreciable  by  the  purchaser  unless 
warned  of  it,  is  bound  to  give  such  warning  or  answer  for  the 
consequences  of  his  neglect  to  the  purchaser. ■'^  A  person  ^vho 
puts  up  and  sells  canned  food  to  a  dealer  is  liable  to  a  consumer 
for  the  consequences  of  eating  it."  In  several  states  the  ex- 
penses of  the  suit,  a])ove  taxable  costs,  to  obtain  redress  for 

12  Case  V.  Hall^24  Wend.  102,  35       519;    Levy  v.  i.angridge,   4   id.  .337. 

Am.  Dec.  605.  See   Rose  v.   Beattie,   2  N.   &   McC. 

l3Tarleton    v.    McGawley,    Peake       gg^.    pultz  v.   Wycoff,  25  Ind.  321. 

''?4  Thomas  v.  Winchester,  6  N.  Y.  ^  '' ^^^^'^^    '■    ^"^"^^    ^    ^^    ^^^P- 

397;    Waters-P.   0.   Co.   v.   Deselms,  ^^'■'  fl^^^^  ^  '^-  ^-  ^''■ 
212  U.  S.  159,  53  L.  ed.  453.  "  Tomlinson    v.    Armour.    75    N 

ISLangridge  v.  Levy,  2  M.  &  W.  J.  L.  748,  19  L.R.A.{N.S.)  923. 


170 


SUTllEllLAND    ON    DAMAGES. 


[§   45 


such  wrongs,  are  allowed  to  be  considered  by  the  jury ;  "  but 
in  some  states  it  is  otherwise.^^ 

Section  4. 


CONSEQUENTIAL    DAMAGES    FOR   BEEACH    OF    CONTRACT. 

§  45.  Recoverable  only  when  contemplated  by  the  parties. 

In  an  action  founded  upon  n  contract  only  such  damages  can 
be  recovered  as  are  the  natural  and  proximate  consequence  of 
its  breach;  such  as  the  law  supposes  the  parties  to  it  would 
have  apprehended  as  following  from  its  violation  if  at  the 
time  they  made  it  they  had  bestowed  proper  attention  upon 
the  subject  and  had  full  knowledge  of  all  the  facts.^°  As  other- 
wise expressed,  the  damages  which  are  recoverable  must  be 
incidental  to  the  contract  and  be  caused  by  its  breach;  such 
as  may  reasonably  be  supposed  to  have  been  in  the  contempla- 
tion of  the  parties  at  the  time  the  contract  was  entered  into.^^ 
Direct  damages  are  always  recoverable,  and  consequential  losses 


18  Dibble  v.  Morris,  26  Conn.  416; 
Roberts  v.  Mason,  10  Ohio  St.  278: 
Seeman  v.  Feeney,  19  Minn.  79; 
Titus  V.  Corkins,  21  Kan.  722; 
Marshall  v.  Betner,  17  Ala.  832; 
Thompson  v.  Powning,  15  Nev.  210; 
New  Orleans,  etc.  R.  Co.  v.  Albrit- 
ton,  38  Miss.  243,  12  Am.  Neg.  Cas. 
186,  75  Am.  Dec.  98;  Stovall  v. 
Caverly,  139  Ga.  243,  (statute). 
,  iSEarle  v.  Tupper,  45  Vt.  274; 
Howell  V.  Scoggins,  48  Cal.  355. 

20  Gourley  v.  American  Hard- 
wood Lumber  Co.,  185  Mo.  App.  360 ; 
Davis  V.  New  England  Cotton  Yarn 
Co.,  77  N.  H.  403:  Cassell's  Mill  v. 
Strater  G.  Co.,  166  Ala.  274;  St. 
Louis,  etc.  R.  Co.  v.  Sanders,  91 
Ark.  153;  Leonard  v.  New  York, 
etc.  Tel.  Co.,  41  N.  Y.  544,  567,  1 
Am.  Rep.  446;  Meyer  v.  Haven,  70 
App.  Div.  (N.  Y.)  529:  Smith  v. 
Western  U.  Tel.  Co.,  83  Ky.  104. 

A  party  to  a  contract  is  charge- 
able with  knowledge  of  what  he  ob- 
serves before  entering  upon  the  per- 


formance of  his  contract,  though  the 
latter  was  previously  made.  Trout 
V.  Watkins  L.  &  U.  Co.,  148  Mo. 
App.  621. 

Notice  of  the  consequences  of 
failure  to  deliver  to  a  connecting 
carrier  is  in  time  if  given  after  per- 
formance of  the  contract  of  carriage. 
See  Southern  R.  Co.  v.  Lewis,  165 
Ala.  451. 

21  Williams  v.  Barton,  13  La.  404; 
Jones  V.  George,  61  Tex.  345,  354,  48 
Am.  Rep.  280;  Howe  v.  North,  69 
Mich.  272,  281;  Globe  R.  Co.  v. 
Landa  C.  0.  Co.,  190  U.  S.  540,  47 
L.  ed.  1171;  Owen  v.  United  States, 
44  Ct.  of  Cls.  440,  citing  the  text; 
Dickerson  v.  Finley,  158  Ala.  149, 
citing  the  text;  Alabama  C.  Co.  v. 
Geiss,  143  Ala.  591,  citing  the  text; 
Hooks  S.  Co.  V.  Planters'  C.  Co., 
72  Ark.  275;  Erie  City  T.  Works  v. 
Tatum,  1  Cal.  App.  286:  Howard  v. 
Central  R.  Co..  9  Ga.  App.  617, 
1017;  Hlinois  Cent.  R.  Co.  v.  Hop- 
kinsville  C.  Co.,  132  Kv.  578;   Mil- 


§  45] 


COMPENSATION. 


171 


must  be  compensated  if  it  can  be  determined  that  tlie  parties 
contracted  with  them  in  view.^^  It  is  not  in  the  least  essential 
to  the  existence  of  this  liability  that  an  actual  breach  of  the 
agreement  should  have  been  iu  the  minds  of  the  i)arties  or 
either  of  them.  For  anything  which  amounts  to  a  breach  of 
contract,  whether  foreseen  or  unforeseen,  the  party  who  is 
responsil)le  therefor  must  answer.^^  Here  an  important  dis- 
tinction is  to  be  noticed  between  the  extent  of  responsibility 
for  a  tort  and  that  for  breach  of  contract.  The  wrong-doer  is 
answerable  for  all  the  injurious  consequences  of  his  tortious 
act  which,  according  to  the  usual  course  of  events  and  general 
experience,  were  likely  to  ensue  and  which,  therefore,  when 
the  act  was  committed,  he  may  reasonably  be  supposed  to 
have  foreseen  and  anticipated.^*  But  for  breaches  of  contracts 
the  parties  are  not  chargeable  with  damages  on  this  principle. 
Whatever  foresight,  at  the  time  of  the  breach,  the  defaulting 
party  may  have  of  the  probable  consequences  he  is  not  gener- 


ford  V.  Bangor  R.  &  E.  Co.,  104  Me'. 
233,  30  L.R.A.(N.S.)  531;  Brown  v. 
Cowles,  72  Neb.  896;  Birdsinger  v. 
McCormick  H.  Mach.  Co.,  183  N.  Y. 
487,  3  L.R.A.(N.S.)  1047;  Spears  v. 
Fields,  72  S.  C.  395;  Sweeney  v. 
Lewis  C.  Co.,  60  Wash.  490,  quoting 
the  text.  Mastoras  v.  Chicago,  M. 
&  St.  P.  Ry.  Co.,  217  Fed.  153; 
McFadden  v.  Shanley,  IG  Ariz.  91; 
J.  B.  Carr  Co.  v.  Southern  Ry.  Co., 
]2  Ga.  App.  830;  Dice's  Adm'r  v. 
Zweigart's  Adm'r,  161  Ky.  646; 
Erie  City  Iron  Works  v.  Cush- 
noc  Paper  Co.,  113  Me.  229; 
Pipolo  V.  Fred  T.  Ley  &  Co.,  216 
Mass.  246;  C.  W.  Kettering  Mer- 
cantile Co.  V.  Sheppard,  —  N.  M.  — , 
142  Pac.  1128;  Detmer-Wallen 
Co.  V.  Delaware,  L.  &  W.  R.  Co.,  89 
Misc.  (N.  Y.)  252;  Cornelius  v. 
Lytle,  246  Pa.  205;  Lanston  Mono 
type  Mach.  Co.  v.  Times-Dispatch 
Co.,  115  Va.  797.- 

22  Givens  v.  North  Augusta  E.  & 
I.  Co.,  91  S.  C.  417 ;  Manufacturers' 


A.  S.  Co.  V.  Galbraith,  196  Fed.  472; 
Johnson  v.  Wild  Rice  B.  Co.,  116 
Minn.  246;  Rhodes  v.  Baird,  16 
Ohio  St.  581;  Brayton  v.  Chase,  3 
Wis.  456;  Bridges  v.  Stickney,  38 
Me.  361;  Paducah  L.  Co.  v.  Paducah 
W.  S.  Co.,  89  Ky,  340,  25  Am.  St. 
536,  7  L.R.A.  77;  Meyer  v.  Haven, 
70  App.  Div.  (N.  Y.)  529;  Fi-land 
V.  Berry,  130  Ky.  328;  New  York 
Market  G.'s  Ass'n  v.  Adams  D. 
G.  Co.,  115  App.  Div.  (N.  Y.)  42; 
Western  U.  Tel.  Co.  v.  Crawford, 
29  Okla.  143,  35  L.R.A.  (N.S.)  930; 
Hoskins  v.  Scott,  .''>2  Ore.  271;  Har- 
ris V.  Columbia  W.  &  L.  Co..  ]14 
Tenn.  328. 

23  Wilson  V.  Dunville,  6  L.  R.  Ire. 
210;  Hamilton  v.  Magill,  12  id.  lS(i, 
202. 

24  Grimes  v.  Bowerman,  92  Mich. 
258,  quoting  tlie  text;  Western  U. 
Tel.  Co.  V.  Ford,  8  Ga.  App.  514; 
Hillsdale  C.  &  C.  Co.  v.  Pennsyl- 
vania R.  Co.,  229  Pa.  Gl. 


172 


SUTHEELAND    ON    DAMAGES. 


[§   45 


ally  held  for  that  reason  to  any  greater  responsibility;  he  is 
liable  only  for  the  direct  consequences  of  the  breach,  such  as 
usually  occur  from  the  infraction  of  like  contracts  and  were 
within  the  contemplation  of  the  parties  when  the  contract  was 
entered  into   as   likely   to  result  from  its  non-performance.^* 


25  Hadley  v.  Baxendale,  9  Ex.  341, 
2  Am.  Neg.  Kep.  400;  Candee  v. 
Western  U.  Tel.  Co.,  34  Wis.  479, 
17  Am.  Rep.  452;  Pacific  Exp,  Co. 
V.  Darnell,  62  Tex.  639 ;  Thomas,  etc. 
Mfg.  Co.  V.  Wabash,  etc.  R.  Co.,  62 
Wis.  642,  51  Am.  Rep.  725;  Jones 
V.  Nathrop,  7  Colo.  1;  Smith  v. 
Oaborn,  143  Mass.  185;  Frohreich  v. 
Gammon,  28  Minn.  476;  Western 
U.  Tel.  Co.  V.  Hall,  124  U.  S.  444, 
31  L.  ed.  479;  Detroit  W.  L.  Works 
V.  Knaszak,  13  N.  Y.  Misc.  619; 
Simpson  Brick-Press  Co.  v.  Mar- 
shall, 5  S.  D.  528,  citing  the  text; 
Guetzkow  V.  Andrews,  92  Wis.  214, 
52  L.R.A.  209,  53  Am.  St.  909; 
Dwyer  v.  Administrators,  47  La. 
Ann.  1232;  Carnegie  v.  Holt,  99 
Mich.  606;  North  v.  Johnson,  58 
Minn.  242;  Sloggy  v.  Crescent  C. 
Co.,  72  Minn.  316;  McConaghy  v. 
Pemberton,  168  Pa.  121;  Rockefel- 
ler V.  Merritt,  22  C.  C.  A.  617,  76 
Fed.  909,  35  L.R.A.  633;  Central  T. 
Co.  V.  Clark,  34  C.  C.  A.  354,  93 
Fed.  293;  Krebs  Mfg.  Co.  v.  Brown, 
108  Ala.  508,  54  Am.  St.  188 
Slaughter  v.  Denmead,  88  Va.  1019 
Skirm  v.  Hilliker,  66  N.  J.  L.  410 
Witherbee  v.  Meyer,  155  N.  Y.  449 
De  Ford  v.  Maryland  S.  Co.,  113 
Fed.  72,  51  C.  C.  A.  59;  Lynn  v. 
Seley,  29  N.  D.  420;  Freeman  v. 
Clark,  —  Tex.  Civ.  App.  — ,  177 
S.  W.  1188;  Birmingham  W.  W.  Co. 
V.  Ferguson,  164  Ala.  494,  citing  the 
text;  Same  v.  Vinter,  164  Ala.  490; 
Western  U.  Tel.  Co.  v.  Westermore- 
land,  151  Ala.  319;  Nichols  v.  Rasch. 
]38  Ala.  372;  Crutcher  v.  Choctaw, 
etc.   R.   Co.,   74  Ark.   358;    Hunt  v. 


San  Lorenzo  W.  Co.,  150  Cal.  51, 
7  L.R.A.  (N.S.)  913,  citing  the  text; 
Williams  v.  Atlantic  C.  L.  R.  Co., 
56  Fla.  735,  24  L.R.A.  (N.S.)  134, 131 
Am.  St.  169;  Ryan  C.  Co.  v.  Gard- 
ner, 154  111.  App.  565;  McRae  v. 
Hill,  126  id.  349;  Union  F.  Works 
V.  Columbia  I.  &  S.  Co.,  112  id. 
183;  Bennett  v.  Dyer,  102  Me.  361; 
Hetherington  v.  Firth  Co.,  210  Mass. 
8 ;  Sargent  v.  Mason,  101  Minn.  319, 
quoting  the  text;  American  Exp. 
Co.  V.  Jennings,  86  Miss.  329,  109 
Am.  St.  708,  citing  the  text;  Fria- 
ble V.  Fidelity  C.  Co.,  133  Mo.  App. 
30;  Hubbard  v.  Gould,  74  N.  H.  25; 
Morton  V.  Witte,  147  App.  Div.  94; 
Peyser  v.  Lund,  89  id.  195;  New- 
some  V.  Western  U.  Tel.  Co.,  153  N. 
C.  153;  Illinois  Cent.  R.  Co.  v.  John- 
son, 116  Tenn,  624;  Hurxthal  v. 
Boom  Co.,  53  W.  Va.  87,  97  Am.  St. 
954;  Foss  V.  Hineman,  144  Wis. 
146;  St.  Louis  S.  R.  Co.  v.  May 
(Tex.  Civ.  App.),  44  S.  W.  408; 
Lamon  v.  Speer  H.  Co,  198  Fed. 
53,  119  C.  C.  A.  1;  Kopczynski  v. 
Bolcom-V.  L.  Co.,  71  Wash.  93. 

The  rule  was  strictly  applied  in 
a  case  in  which  it  was  held  that 
the  vendor  of  diseased  sheep  who 
sold  them  without  knowledge  of 
their  condition  was  not  responsible 
for  damages  resulting  to  the  vendee 
from  their  being  placed  with  cattle, 
the  vendor  not  being  informed  this 
would  be  done.  Weaver  v.  Penny, 
17  111.  App.  628.  The  last  reason 
given  is  of  doubtful  cogency.  See 
Packard  v.  Slack,  32  Vt.  9;  Smith 
V.  Green,  1  C.  P.  Div.  92,  where 
it  is  said  that  one  who  sells  diseased 


45] 


COMPENSATION. 


173 


Those  damages  which  arise  upon  the  direct,  necessary  and  im- 
mediate effects   are  always  recoverable  because  every  person 


sheep  may  be  charged  witli  knowl- 
edge that  the  purchaser  intends,  or 
is  almost  certain,  to  put  them  with 
other  sheep.     See  also,  ch.  14. 

An  employee  who  quits  the  serv- 
ice of  his  employer  in  violation  of 
his  contract  is  not  liable  for  the 
loss  of  property  following  his  act 
through  the  inability  of  the  master 
to  procure  other  help.  Riech  v. 
Bolch,  68  Iowa  526. 

A  carrier  who  has  not  contracted 
to  transport  cattle  received  from  a 
connecting  carrier  in  the  cars  in 
which  they  came  to  his  care  and  who 
has  no  notice  that  they  are  of  a  kind 
which  it  is  unlawful  to  imload  in 
the  state  in  which  they  are  received 
is  not  liable  to  the  shipper  because 
they  were  seized  and  sold  to  pay  a 
line  for  such  unloading,  although 
the  shipper  protested  against  it. 
McAlister  v.  Chicago,  etc.  R.  Co.,  74 
Mo.  351. 

Barges  were  not  returned  to  their 
owner  at  the  time  agreed,  and  on  ac- 
count of  the  delay  were  swept  from 
their  moorings  by  an  extraordinary 
ice  gorge  and  lost.  "All  that  the 
defendants  cbuld  foresee  by  ordinary 
forecast  as  a  result  of  the  breach  of 
their  contract  to  return  the  boats 
would  be  the  expense  to  the  plaintiff 
in  taking  them  himself.  They  are 
liable  for  damages,  the  primary  and 
immediate  result  of  the  breach  of 
their  contract,  and  not  for  those 
which  arise  from  a  conjunction  of 
this  fault  with  other  circumstances 
that  are  of  an  extraordinary  na- 
ture." Jones  v.  Gilmore,  91  Pa.  310, 
1  Am.  Neg.  Cas.  929.  See  Parmalee 
V.  Wilks,  22  Barb.  539,  stated  in 
§  37. 

For  the  breach  of  a  contract  to 
repair  a  tool,  the  loss  of  the  material 


on  hand  when  it  ought  to  have  been 
repaired  may  be  recovered  for;  but 
not  the  profits  which  might  have 
been  made  by  working  up  such  ma- 
terial with  the  tool,  they  being  un- 
usual, considering  the  value  of  the 
implement,  and  notice  not  having 
been  given  him  who  was  to  repair  it. 
Sitton  V.  Macdonald,  25  S.  C.  08. 

The  immediate  result  of  the 
breach  of  a  contract  not  to  engage 
in  the  hotel  business  witiiin  a  desig- 
nated city  during  the  time  the  plain- 
tiff was  the  proprietor  of  a  certain 
hotel  therein,  the  agreement  being 
part  of  the  consideration  for  its 
purchase,  is  the  diversion  of  pa- 
tronage therefrom ;  depreciation  in 
the  value  of  the  hotel  property  is 
secondary ;  this  last  cannot  be  re- 
covered for  unless  specially  claimed. 
Lashus  V.  Chamberlain,  5  Utah,  140. 
Compare  Burckhardt  v.  Burckhardt, 
42  Ohio  St.  474,  51  Am.  Rep.  842, 
in  which  it  was  held  that  one  who 
purcliased  the  real  estate,  personal 
property,  firm  name  and  good -will 
of  a  partnership  business  might 
prove  as  an  element  of  his  damage 
the  value  of  the  property  with  and 
without  the  good  will  and  trade- 
mark, and  the  difference  in  such 
value  might,  in  the  absence  of  more 
specific  proof,  be  taken  as  the  meas- 
ure of  damages.  The  Utah  coiirt 
remark  of  this  case  that  it  appears 
to  stand  alone. 

The  code  of  Georgia,  expressing 
the  rule  deduced  from  the  decisions 
of  the  court  therein  (Coweta  Falls 
Mfg.  Co.  V.  Rogers,  19  Ga.  417,  65 
Am.  Dec.  602;  Cooper  v.  Young,  22 
Ga.  269,  68  Am.  Dec.  502;  Red  v. 
Augusta,  25  Ga.  386),  provides  that 
"remote  or  consequential  damages 
are  not  allowed  unless  they  can  be 


h 


174 


SUTHERLAND    ON    DAMAGES. 


[§  45 


is  supposed  to  foresee  aud  intend  the  direct  and  natural  results 
of  his  acts ;  those  which  ensue  in  the  ordinary  course  of  things, 


traced  solely  to  the  breach  of  the 
contract  or  are  capable  of  exact  com- 
putation, sucli  as  the  profits  which 
are  the  immediate  fruit  of  the  con- 
tract and  are  independent  of  any 
collateral  enterprise  entered  into  in 
contemplation  of  the  contract."  Sec. 
2944.  Under  this  provision  it  has 
been  held  that  the  purchaser  of  a 
sawmill  and  outfit  cannot  recover 
against  his  vendor,  who  furnished 
madiinery  of  a  quality  inferior  to 
that  called  for  by  the  contract,  dam- 
ages sustained  from  abandoning  the 
business  in  which  he  had  been  en- 
gaged and  in  getting  ready  to  use 
the  mill,  improvements  made  to  car- 
ry on  the  business  of  running  the 
mill  loss  of  profits,  purchase  of  ma- 
terial, payments  made  for  help,  nor 
for  his  personal  services.  The  meas- 
ure of  his  damages  was  tlie  differ- 
ence between  the  value  of  the  ma- 
chinery contracted  for  and  the  value 
of  that  delivered  at  the  time  of  de- 
livery, or  such  difference  as  ascer- 
tained by  a  resale  within  a  reason- 
able time  tliereafter.  Willingham 
v.  Hooven,  74  Oa.  233,  248,  58  Am. 
Rep.  435. 

Damages  from  injury  to  grain  be- 
cause of  the  failure  of  a  warranted 
machine  to  work  to  the  capacity 
specified,  and  which  was  sold  with 
the  understanding  that  it  was  to  be 
iised  in  securing  a  large  crop,  were 
held  not  recoverable;  they  could  not 
be  fairly  considered  such  as  would 
naturally  arise  from  the  breach  of 
the  contract  or  to  have  been  contem- 
plated by  the  parties  as  a  probable 
result.  Wilson  v.  Reedy,  32  Minn. 
256;  Osborne  v.  Poket,  33  Minn.  10, 
Brayton  v.  Chase,  3  Wis.  456.  These 
cases  carry  the  rule  to  the  extreme. 
The  Wisconsin  case  is  probably  over- 


ruled by  cases  referred  to  in  Thom- 
as, etc.  Mfg,  Co.  V.  Wabash,  etc.  R. 
Co.,  62  Wis.  642,  650,  51  Am.  Rep. 
725.  Contra  Smeed  v.  Foord,  1  K. 
&  E.  602.     See  ch.  14. 

The  breach  of  a  contract  to  fur- 
nish articles  to  be  used  in  complet- 
ing a  building  does  not  make  the 
contractor  liable  for  the  loss  of  the 
rent,  no  extrinsic  facts  being  al- 
leged. Liljengren  F.  &  L.  Co.  v. 
Mead,   42   Minn.  420. 

Though  the  breach  of  a  contract 
to  furnish  guards  for  the  shops  and 
work-houses  in  a  prison  enables  an 
incendiary  to  set  fire  to  the  building, 
and  the  loss  resulting  is  the  direct 
and  immediate  consequence  of  the 
fire,  it  was  not,  in  legal  contempla- 
tion, of  the  failure  to  provide  a 
watch.  Tennessee  v.  Ward,  9  Heisk. 
100,  133.  This  ruling  is  open  to 
question.  The  agreement  to  main- 
tain a  guard,  considered  as  a  pre- 
caution contracted  for  to  insure  the 
safety  of  the  plaintiff's  property, 
was  such  as  was  apparently  intended 
to  prevent,  among  other  things,  the 
loss  whicli  occurred,  and  hence  that 
loss  may  properly  be  considered  as 
witliin  the  contemplation  of  the 
parties  when  they  contracted  as  a 
consequence  of  a  breach.  Paducah 
L.  Co.  v.  Paducah  W.  S.  Co.,  89  Ky. 
340,  25  Am.  St.  536,  7  L.R.A.  77. 
See  §  672. 

A  warehouseman  wlio  agrees  to 
store  goods  at  a  particular  place  is 
liable  to  the  bailor  for  the  loss  of 
those  intrusted  to  him  and  which 
are  stored  in  another  place  and  de- 
stroyed by  fire,  the  latter  having  in- 
sured them  at  the  place  where  the 
contract  provided  they  were  to  be 
stored.  If  the  destruction  of  the 
goods   must   have    inevitably    taken 


§  45] 


COMriiNSATlON. 


17{ 


considering  the  particular  nature  and  subject-matter  of  the 
contract.^®  It  is  conclusively  presumed  that  a  partv  viohitiui-- 
his  contract  contemplates  the  damages  whicli  directly  ensue 
from  the  breach.^^  There  are  iixed  rules  for  measuring  dam- 
ages of  a  pecuniary  nature  which  apply  to  all  persons  without 


place  ill  the  t'Vent  tlit-y  liad  hocn 
stored  as  agreed  the  bailee  miylit 
have  been  released.  Lilley  v.  Dou- 
bleday,  7  Q.  B.  Uiv.  510.  To  tlie 
same  ell'ect:  Mortimer  v.  Otto,  200 
N.  Y.  8'J.  Compare  Mcllae  v.  Hill, 
126   111.   App.   349. 

A  w  at  ehouseman  who  neglects  to 
ship  one  bale  of  cotton  out  of  u 
larger  quantity  is  not  liable  for  the 
cost  of  insurance  for  one  day  on  the 
whole  lot  nor  for  interest  on  money 
which  was  borrowed  because  of  his 
refusal  to  so  do,  no  notice  having 
bean  given  him  of  the  liability  of 
the  owner  for  these  expenses.  Swift 
V.  Eastern  W.  Co.,  86  Ala.  294. 

Injury  to  health,  feelings  or  repu- 
tation is  not  to  be  considered  in 
awarding  compensation  for  a  wrong- 
ful discharge  from  emijloyment. 
Westwater  v.  Grace  Churcii,  140 
Cal.  339. 

26  Booth  v.  Spuyten  Duyvil  R.  M. 
Co.,  CO  N.  Y.  487 ;  Iladley  v.  Baxen- 
dale,  9  Ex.  341;  Mott  v.  Chew,  137 
Fed.  197;  Occidental  C.  M.  Co.  v. 
Comstock  T.  Co.,  125  Fed.  244;  San- 
itary Dist.  V.  McMahon,  110  111. 
App.  516;  Candler  v.  Washoe  Lake 
R.  etc.  Co.,  28  Nev.  151;  Dunning  v. 
Reid,  76  N.  J.  L.  384;  Smith  v. 
Hicks,  14  N.  M.  560,  19  L.R.A. 
(N.S.)   938.       See  §  663. 

One  who  agrees  to  procure  an  as- 
signment of  a  mortgage  being  fore- 
closed and  then  to  forbear  for  a 
speciiied  time  to  enable  the  promisee 
to  enforce  it,  and  who,  after  procur- 
ing such  assignment,  sells  it  to  one 
who  immediately  proceeds  to  a  sale 
and  thereby  extinguishes  the  prom- 


isee's interest  in  tlic  mortgaged 
premises  before  the  expiration  of  the 
agreed  period  of  forbearance  is  lia- 
ble for  tlie  net  value  of  tiie  prom- 
isee's interest.  Oallup  v.  Miller,  25 
Hun  298. 

Recovery  may  be  liad  for  mental 
anguish  resulting  from  l)reacli  of 
contract  to  properly  embalm  a  ixidy 
whereby  decomposition  sets  in  be- 
fore burial.  Lay  v.  Reid,  11  Ala. 
App.  231,  05  So.  855. 

27  Birmingham  \\".  \V.  Co.  v.  Fer- 
guson, 164  Ala.  494,  quoting  the 
three  preceding  propositions. 

Whether  the  parties  who  entered 
into  a  contract  had  in  mind  the 
damages  which  might  follow  its 
breach  or  not  does  not  in  the  least 
vary  the  question  of  their  liability 
or  the  measure  of  recovery  under  or- 
dinary circumstances;  this  is  gov- 
erned by  the  injury  proximately  re- 
sulting. Collins  V.  Stephens,  58  Ala. 
543;  Dougherty  v.  American  U.  Tel. 
Co.,  75  Ala.  168,  177,  51  Am.  Rep. 
435:  Colin  v.  Norton,  57  Conn.  4S0, 
492,  5  L.R.A.  572;  Belt  v.  Washing- 
ton W.  P.  Co.,  24  Wash.  387:  Farm- 
ers' L.  &  T.  Co.  v.  Eaton,  114  Fed. 
14,  51  C.  C.  A.  040;  Eckington  & 
S.  H.  R.  Co.  v.  McDevitt,  18  D.  C. 
App.  Cas.  497. 

A  railroad  company  which  vio- 
lates its  contract  to  fence  its  track 
laid  through  a  farm  is  supposed  to 
have  contemplated  that  animals  on 
the  farm  would  be  exposed  to  injury 
from  its  trains:  that  damage  would 
be  done  by  trespassing  animals  and 
pasturage  injured.  Louisville,  etc. 
R.  Co.  V.   Sumner,   106  Ind.  55,  55 


176  SUTllEltLANB    ON    DAMAGES.  [§    -iO 

regard   to   their   actual   foresight   of   the   particular   elements. 
And  this  is  also  true  of  the  direct  damages  from  torts.^^ 

§  46.  Illustrations  of  liability  under  the  rule.  In  an  action 
to  recover  damages  for  the  breach  of  a  contract  to  harvest  oats, 
where  the  petition  stated  that  by  reason  of  such  breach  the 
oats  were  entirely  lost,  the  verdict  given  for  their  value  was 
retained,  the  court  having  refused  to  instruct  the  jury  that 
they  were  to  be  guided  by  the  general  rule  of  damages,  namely, 
the  difference  between  the  contract  price  and  what  the  labor 
would  have  cost,  and  having  instructed  that  the  plaintiff  was 
entitled  to  recover  the  value  if  he  took  all  reasonable  precau- 
tion to  prevent  such  loss.^^  Where  ^^  a  party  contracted  with 
a  manufacturer  of  bar  iron  to  furnish  pig  iron  in  prescribed 
quantities  at  specified  times,  and  made  default,  in  consequence 
of  w^iich  the  manufacturer  was  obliged  to  get  and  use  an  inferior 
quality  of  iron  in  order  to  carry  on  his  business,  and  thereby 
suffered  loss,  it  was  said:  "When  the  vendor  fails  to  comply 
with  his  contract  the  general  rule  for  the  measure  of  damages 
undoubtedly  is  the  difference  between  the  contract  and  the 
market  price  of  the  article  at  the  time  of  the  breach.^^  This 
is  for  the  evident  reason  that  the  vendee  can  go  into  the  market 
and  obtain  the  article  contracted  for  at  that  price.  But  when 
the  circumstances  of  the  case  are  such  that  the  vendee  cannot 
thus  supply  himself  the  rule  does  not  apply,  for  the  reason  of 
it  ceases.^^  ...  If  an  article  of  the  same  quality  cannot 
be  procured  in  the  market  its  market  price  cannot  be  ascer- 

Am.  Rep.  719;   Same  v.  Power,  119  service  is  too  remote  under  ordinary 

Ind.   269;    Lake   Erie  &   W.   R.   Co.  circumstances.     Tlie  text  is  cited  in 

V.    Power,    15    Ind.    App.    179;    Mc-  Anderson  Elec.  Co.  v.  Cleburne  W.  I. 

Daniel   v.   United   R.    Co.,    165    Mo.  &  L.  Co.,  23  Tex.  Civ.  App.  328,  337. 

App.  678.  30  McHose  v.  Fulmer,  73  Pa.  365. 

28Eten  V.  Luyster,  60  N.  Y.  252;  31  Browning    v.    Simons,    17    Ind. 

Lowenstein    v.    Chappell,    30    Barb.  App.  45,  citing  tlie  text. 

241 ;  Horner  v.  Wood,  16  Barb.  389 ;  32  Bank    v.    Reese,    26    Pa.    143 ; 

§  13.  Laporte   I.    Co.   v.    Brock,   99    Iowa 

29Houser  v.  Pearce,  13  Kan.  104.  485,  61  Am.  St.  245,  citing  the  text; 

See  Prosser  v.  Jones,  41  Iowa  674;  Chalice  v.   Witte,   81   Mo.  App.   84, 

Usher  v.  Hiatt,   18   Kan.   195,  both  citing  the  text;  Southern  I.  &  E.  Co. 

favoring    the    view    that    the    loss  v.  Holmes  L.  Co.,  164  Ala.  517,  cit- 

of  crops  in  consequence  of  the  loss  of  ing  the  text. 


§    46]  COMi>EJNSATlUN.  177 

tained  and  we  are  without  the  necessary  dala  for  the  applica- 
tion of  the  general  rule.  This  is  a  contingency  which  must 
be  considered  to  have  been  within  the  contemplation  of  the 
parties,  for  they  must  be  presumed  to  know  whether  such 
articles  are  of  limited  production  or  not.  In  such  a  case  the 
true  measure  is  the  actual  loss  which  the  vendee  sustains  in 
his  own  manufacture  by  having  to  use  an  inferior  article,  or 
not  receiving  the  advance  on  his  contract  price  upon  any  con- 
tracts which  he  himself  had  made  in  reliance  upon  the  fulfill- 
ment of  the  contract  by  the  vendor.  We  do  not  mean  to  say 
that  if  he  undertakes  to  fill  his  own  contracts  with  an  inferior 
article,  and,  in  consequence,  such  article  is  returned  on  his 
hands,  he  can  recover  of  his  vendor,  besides  the  loss  sustained 
on  his  contracts,  all  the  extraordinary  loss  incurred  by  his 
attempting  what  was  clearly  an  unwarrantable  experiment.  His 
legitimate  loss  is  the  difference  between  the  contract  price  he 
was  to  pay  his  vendor  and  the  price  lie  was  to  receive.  This 
is  a  loss  which  springs  directly  from  the  non-fulfillment  of  the 
contract." 

The  rule  under  consideration  was  comprehensively  stated  in 
an  early  case.^^  In  general  the  delinquent  party  is  holden  to 
make  good  the  loss  occasioned  by  his  delinquency.  His  lia- 
bility is  limited  to  direct  damages,  which,  according  to  the 
nature  of  the  subject,  may  be  contemplated  or  presumed  to 
result  from  his  failure.  Remote  or  speculative  damages,  al- 
though susceptible  of  proof  and  deducible  from  the  non-per- 
formance, are  not  allowed.  It  was  agreed  between  the  owner 
of  a  rice  mill  and  a  planter  that  if  the  latter  would  bring  his 
rice  to  the  former's  mill  it  should  have  priority  in  being  beaten. 
Rice  so  brought  was  not  so  beaten,  but  was  kept  to  await  an- 
other turn,  and  before  it  was  beaten  the  mill  and  the  rice 
were  consumed  by  an  accidental  fire.  It  was  held  that  dam- 
ages for  the  loss  could  not  be  assessed  as  the  consequence  of 
the  breach  of  the  contract.^*    The  damages  for  a  breach  of  con- 

33  Miller   v.    Mariner's   Church,    7  The  breaeli  of  a  contract  to  store 
Me.  55,  20  Am.  Dec.  341.  elTects    in    a    particular    room    and 

34  Ashe    V.    De    Rossett,    5    Jones  their  removal  to  another  room  does 
299,  72  Am.  Dec.  552.  not  make  the  party  who  broke  the 

Suth.  Dam.  Vol.  I.— 12. 


178  SUTHERLAND    ON    DAMAGES.  [§    46 

tract  must  be  such  as  the  party  suffers  in  respect  to  the  par- 
ticular thing-  which  is  the  subject  of  the  .contract,  and  not 
such  as  has  been  accidentally  occasioned  or  supposed  to  be 
occasioned  in  his  business  or  affairs.^^  The  defendant  agreed 
to  rent  to  the  plaintiff  a  store  for  a  year,  to  commence  some 
weeks  in  the  future.  Kelying  upon  this  agreement  the  plain- 
tiff sold  his  lease  of  a  store  he  then  occupied  to  M.,  agreeing  to 
give  possession  about  the  time  he  would  be  entitled  to  occupy 
the  store  rented  of  the  defendant,  M.  allowing  the  plaintiff 
to  occupy  a  part  of  the  store  in  the  meantime.  The  defend- 
ant refused  to  give  the  lease  in  accordance  with  his  agreement. 
The  plaintift"'s  goods  were  packed  by  him  to  put  them  in  the 
space  they  were  permitted  to  occupy  in  M.'s  store,  and  suffered 
some  damage  therefrom.  It  was  held  that  this  damage  was 
not  the  result  of  the  defendant's  breach  of  contract;  nor  was 
he  entitled  to  interest  on  the  value  of  his  stock  of  goods,  which, 
by  the  defendant's  refusal  to  fulfill  his  contract,  the  plaintiff 
had  been  obliged  to  keep  elsewhere  and  was  prevented  from  ex- 
posing for  sale  for  the  period  of  fifteen  days,  as  the  defendant's 
act  did  not  necessarily  prevent  a  sale  of  the  stock  for  that  length 
of  timc.^^  In  a  similar  case  the  lessor  was  not  liable  to  the 
lessee  for  money  paid  for  clerk  hire  nor  for  losses  resulting 
from  the  purchase  of  goods.  While  the  former  may  have  sup- 
posed that  the  latter  would  nuike  ])reparations  to  occupy  the 
store  he  could  not  know  what  it  would  be  necessary  for  him  to 
do.^'     One  merchant  agreed  with  another  that  he  would  not 

contract  liable  for  their  loss  l)y  lire  Johnson   v.   Matthews,  5  Kan.   118; 

in  the  room  to  which  they  were  re-  Doud  v.  Duluth  M.  Co.,  55  Minn.  53; 

moved,    though    like    goods    in    the  Florida  Cent.  &  P.  1{.  Co.  v.  Buck!, 

otlier    room    were    but    slightly    in-  iq  c_  q    j^    42,  G8  Fed.  864. 

jured.     McRae  V.  Hill,  126  111.  App.  36  Lowenstein      v.      Chappell,      30 

349.     Contra    Lilley    v.    Doubleday,  ^^^.j^   241. 

7  Q.  B.  Div.  510.  37Cohn  v.  Norton,  57   Conn.  480, 

35  Coppola  V.  Kraushaar,  102  App.  ^    t  r,  a      (=-o  t?  ■  ai     a 

^.        ,i^    ,-  V     »^n      -r,  i^  X    TA  492,    5    L.R.A.    5/2;  Fnedland    v. 

Div.      N.    Y.)     306;    Batchelder    v.  ' 

•       o    r^     1      oni      Ti     A^r.    .r        Myers,  139  N.  Y.  432. 
Sturgis,    3    Cush.    201;    Hayden   v.  •'       ' 

Cabot,     17     Mass.     169;     State     v.  Loss  of   profits   is   too   remote  to 

Thomas,   19   Mo.   613,   61   Am.   Dec.  l^e  considered  for  the  breach  of  such 

580 ;    Webster  v.  Woolford,   81   Md.  a  contract.    Alexander  v.  Bishop,  59 

329;    Clark   v.  Moore,   3   Mich.   55;  Iowa  572. 


§  46] 


COMPEiNSATlON. 


179 


enter  judgment  on  u  bond  given  liim  except  on  a  contingency 
named.  The  contract  was  violated,  and  as  a  result  the  fact 
that  judgment  was  entered  was  published  in  a  commercial 
journal  known  as  the  "Jilaek  List,"  with  the  cii"ec-t  of  injuring 
the  plaintiff's  credit.  Such  puhlicalion  was  an  event  the  parties 
could  have  foreseen.^® 

A  case  of  first  impression  came  before  one  of  the  appclhite 
courts  of  Illinois  not  long  since.     The  vendor  of  a  safe  war- 
ranted it  to  be  burglar  proof  if  directions  given  for  locking  it 
were  observed ;  these  were  incomplete  and  the  safe  was  o))encd 
by  burglars  without  the  use  of  force  and  money  therein  was 
taken.    It  was  said :  It  seems  to  be  no  undvie  stretch  of  the  well- 
established  rule  that  if  the  damages  suffered  be  such  as  may 
reasonably  be  supposed  to  have  been  in  the  contemplation  of 
both  parties  at  the  time  of  the  contract  as  the  probable  result 
of  its  breach,  to  hold  that  the  very  intervention  of  the  burglar 
was  the   essential   element  that  both  parties  contemplated  as 
being  the  thing  to  be  guarded  agaiust  and  concerning  which 
the  warranty  was  interposed.     If  so,  then  the  consequence  that 
followed  was  the  natural  and  proximate  result  of  the  breach, 
and  the  recovery  was  right.^^    A  late  case  in  the  English  Court 
of  Appeal  is  in  harmony  with  the  view  that  the  intervention 
of  a  criminal  act  of  a  third  party  does  not  limit  the  liability  of 
the  defendant.*"     A  vendor  of  powder  broke  his  contract  to 

38  Blair   V.   Kinch,   10   L.   R.   Ire.       B.  483.    The  defendant  undertook  to 

give  financial  advice,   and  was  ap- 
'39Deane  v.   Michigan   S.   Co.,   09       plied  to   by   the   plaintiff  therefor 

111    A    )    106  ^^^  *^^^   ^°''  ^^^'^  "''^™^'  °^  ^  '^ 

A  contrary  view  has  been  ex-  stockbroker."  A  person  not  a  mem- 
pressed  by  a  divisional  court  in  On-  ber  of  the  exchange  was  recomnuMul- 
Lio  on  the  ground  that  the  de-  ed.  The  defendan  knew  of  h.s  non- 
fects  in  the  warranted  door  of  a  membership,  but  did  not  kno^^  lliat 
vault  were  not  the  reason  the  bur-  the  person  recommemle.l  was  an  un- 
Mars  broke  it  open,  as  the  same  re-  discharged  bankrupt,  a  fact  which 
:ult  would  have  followed  if  those  might  have  been  easily  a-ertained^ 
defects  were  nonexistent.  Dennison  The  plaintiff  furnished  the  broker 
V  Taylor,  G  Ont.  L.  R.  93.  See  money  for  investment,  whu  ,  ho  im- 
Tennessee  v.  Ward,  stated  and  criti-  mediately  n;i--ppropruit..d.  u- 
.  .  4.  R  Ar,  connection  between  the  breacli  of  the 
"  «  d"'  ZZ!  V    Pearson.  [1»08,  clof^danf,  contract  an.,  .„o  ,.,.s  ,,. 

ai      •        rion7i    1    7C        tlio  monev   was  sunuicntlv   close  U> 
1  K.  B.  280,  affirming  [19(»7J    1  iS-       i'"*^    muut.y 


180  SUTHERLAND    ON    DAMAGES.  [§    46 

furnish  the  plaintiff  with  the  papers  necessary  to  lawfully  land 
the  powder,  knowing  that  the  failure  to  do  so  would  make  plain- 
tiff' liahle  for  the  violation  of  law  in  attempting  to  import  an 
interdicted  article.  The  defendant  was  liable  for  the  fine  paid 
by  the  plaintiff".*^  A  corporation  which  deducts  a  part  of  the 
wages  of  an  employee  to  pay  a  physician  employed  under  a 
contract  to  provide  competent  medical  service  to  him  and  his 
family  is  liable  for  the  death  of  the  child  of  the  employee 
caused  by  the  breach  of  the  contract.*^  Where  there  was  a 
delay  of  four  months  in  delivering  a  wheel  and  pinion  to  a 
street  railway  company,  in  consequence  of  which  its  earning 
power  was  largely  reduced,  the  defendant,  not  having  been 
apprised  of  the  facts,  was  not  liable  for  the  losses.*^  The 
breach  of  a  contract  between  two  railroad  companies  which 
confers  a  license  upon  one  of  them  to  run  its  trains  over  the 
track  of  the  other  does  not  make  the  party  guilty  thereof 
liable  to  the  other  for  damage  sustained  to  property  which  it 
was  unable  to  carry  because  of  such  violation  and  which  it  was 
obliged  to  unload  from  its  cars  at  a  place  where  it  was  exposed 
to  rain  and  mud.**  The  damages  resulting  from  the  fore- 
closure of  a  mortgage  are  not  proximately  caused  by  the  breach 
of  a  contract  to  loan  the  mortgagor  money. *^  The  lessor  of 
personalty  must  deliver  it  in  a  condition  for  its  safe  use  by 
the  lessee ;  failing  to  do  so,  he  is  liable  for  any  damages  result- 
ing from  defects  therein.*®  It  is  the  proximate  cause  of  the 
refusal  of  the  purchaser  of  shares  of  stock  to  accept  the  same 

impose   liability   for   all  the   funds  an  employer  liable  to  an  employee 

misappropriated,    though    they    ex-  for  the  malpractice  of  its  hospital 

ceeded    the    sum    specified    by    the  surgeon,  money  being  deducted  from 

plaintiff    in    his    communication    to  the  wages  of  employees  for  the  sup- 

the  defendant.    On  the  last  question  p^j.^  ^f  the  hospital, 
the    judges    were    in    some    doubt,  43  Central  T.   Co.  v.  Clark,  34  C. 

which,  however,  they  resolved  in  the  q    ^    g^^    g^   Yed.  293. 

plaintiff's  favor.  44  Railway   Co.   v.   Neel,   5G   Ark. 

4iHecla  P.   Co.   v.   Sigua  I.   Co.,  ^^^ 

157  N.  Y.  437 ;  Sutton  V.  Wanamak-  ,' „     .          „     , 

,-KT  ,r   TVT-      X    nc  o          coK  45  Savings   Bank    v.   Asbury,    117 

er  (N.  Y.  Misc.),  95  Supp.  525.  ^                                 -" 

42  American  T.-P.  Co.  v.  Guy,  25       ^al.  96. 
Ind.  App.  558,  following  Wabash  R.  ^^  Moriarty    v.    Porter,    22   N.   Y. 

Co.  V.  Kelly,  153  Ind,  119,  holding       Misc.  536. 


§    46]  COMPENSATION.  181 

that  the  vendor  shall  become  liable  for  assessments  thereon." 
If  poor  seed  is  sold  in  lieu  of  good,  a  crop  of  inferior  quality 
and  of  less  value  is  the  natural  result.** 

Where  the  defendant  contracted  to  make  and  deliver  dies 
to  be  used  in  the  manufacture  of  lanterns,  in  which  business 
the  plaintiff's  assignor  proposed  to  engage  when,  so  far  as  ap- 
peared, the  dies  were  furnished,  it  was  not  contemplated  that 
he  would  rent  premises  and  employ  men  in  preparation  for 
carrying  on  the  business  to  be  established,  the  natural  and 
obvious  consequence  of  the  breach  would  be  to  compel  him  to 
obtain  dies  elsewhere;  the  assignee  of  the  contract,  of  whose 
connection  with  it  the  defendant  had  no  notice,  could  only 
recover  such  damages  as  were  contemplated  when  the  contract 
was  made.*^  Pursuant  to  a  contract  of  bailment  the  defendant 
delivered  to  the  plaintiff,  without  warranty,  seed  which  he 
believed  to  be  clean,  which  was  to  be  sown  on  the  plaintiff's 
land,  the  produce  thereof  to  be  returned  and  delivered  to  and 
paid  for  by  the  defendant  at  a  fixed  price.  Such  seed  was  not 
pure,  and  the  plants  grown  from  the  foreign  seed,  having  be- 
come scattered  on  the  ground  during  the  harvesting,  came  up 
the  following  year.  The  damage  thus  caused  was  too  remote.^" 
But  it  is  otherwise  where  there  is  a  breach  by  a  landlord  of 
his  contract  to  furnish  his  tenant  with  fertilizer.^^  The  scope 
of  the  liability  of  the  party  in  default  will  vary  with  the  known 
objects  of  the  parties  to  the  contract.  On  the  breach  of  a  con- 
tract to  furnish  a  side  track  for  use  for  the  shipment  of  goods 
which  justifies  the  manufacturer  in  abandoning  the  enterprise 
undertaken  in  reliance  thereon  he  may  recover  the  expense 
incurred  on  the  faith  of  the  performance  of  the  contract  and 

47  Gay  V.  Dare,  103  Cal.  454;  Ilud-  was  impure  by  reason  of  the  pres- 
sor! V.  Seeley  S.  Co.,  19  Cal.  App.  enee  of  the  seed  of  noxious  weeds, 
213.  was    liable   to   a    farmer    to   whom 

48  Hoopes  V.  East,  19  Tex.  Civ  lie  sold  such  seed  for  the  damage 
App.  53.  done    his    farm    by    reason    of    tlie 

49  Rochester  L.  Co.  v.  Stiles  &  P.  growth  of  such  weeds,  though  the 
P.  Co.,  135  N.  Y.  209.  crop     raised      from     the     seed     of 

50  Stewart  v.  Sculthorp,  25  Ont.  the  grain  was  not  injured.  See  § 
544.  670   et  seq. 

But  in  McMullen  v.  Free,  13  Ont.  61  Herring  v.  Armwood.  13(1  N.  C. 

57,  the  vendor  of  seed  grain,  which       177,  57  L.R.A.  958, 


182  SUTHERLAND  ON  DAMAGES.  [§  4G 

losses  in  the  removal  of  the  plant  to  the  place  where  the  facil- 
ities were  to  be  furnished,  its  rental  value  during  the  period 
of  removal  and  re-establishment,  and  the  cost  of  transporting 
the  goods  made  there  to  the  nearest  shipping  point.^^  The  fail- 
ure to  prosecute  a  writ  of  ne  exeat  to  effect  as  provided  in  a 
bond  does  not  involve  liability  for  injury  to  credit  or  reputa- 
tion, or  interruption  or  hinderance  in  business,  or  pain  of 
body  or  mind;  the  direct  effects  of  the  breach  are  the  costs 
and  expenses  incurred  in  defense  of  the  suit,  in  procuring 
release  from  arrest,  the  loss  of  labor  while  detained  and  the 
cost  of  support.^^ 

§  47.  Liability  not  affected  by  collateral  ventures  or  financial 
condition  of  a  party.  Parties,  when  they  enter  into  contracts, 
may  well  be  presumed  to  contemplate  the  ordinary  and  natural 
incidents  and  consequences  of  performance  or  non-performance ; 
but  they  are  not  supposed  to  know  the  condition  of  each  other's 
affairs,  nor  to  take  into  consideration  any  existing  or  contem- 
jjlated  transactions,  not  communicated  nor  known,  with  other 
persons.^^  Few  persons  would  enter  into  contracts  of  any 
considerable  extent  as  to  subject-matter  or  time  if  they  should 
thereby  incidentally  assume  the  responsibility  of  carrying  out, 
or  be  held  legally  affected  by,  other  arrangements  over  which 
they  have  no  control  and  the  existence  of  which  are  unknown 
to  them.  In  awarding  damages  for  the  non-performance  of  an 
existing  contract  the  gains  or  profits  of  collateral  enterprises 
in  which  the  party  claiming  them  has  been  induced  to  engage 
by  relying  upon  the  performance  of  such  a  contract,  and  of 
which  no  notice  has  l)een  given  the  other  party,  cannot  be 
included.     In  an  action  for  breach  of  a  warranty  of  a  horse 

52  Martin  v.  Seaboard  A.  L.  R.,  70  381 ;  Horner  v.  Wood,  16  Barb.  380  i 
S.  C.  8.  Cuddy  v.  Major,  12  Mich.  3G8;  Mas- 

53  Burnap  v.  Wight,  14  111.  300.  terton  v.   Mayor,   7   Hill   61 ;    Story 

54  Cuscachs  V.  Sewerage  &  W.  v.  New  York  R.  Co.,  6  N.  Y.  85 ; 
Board,  116  La.  510;  Winslow  &  M.  Bridges  v.  Stickney,  38  Me.  361; 
Co.  V.  Hoffman,  107  Md.  621,  17  Barnard  v.  Poor,  21  Pick.  378;  Fox 
L.R.A.(N.S.)  1130;  Postal  Tel.  &  T.  v.  Harding,  7  Gush.  516;  Brauer  v. 
Co.  V.  Sunset  C.  Co.,  102  Tex.  148 ;  Oceanic  S.  N.  Co.,  34  N.  Y.  Misc. 
Foss  V.  Heineman,  144  Wis.  146;  127 ;  Hay  v.  Williams,  8  Ky.  L.  Rep. 
Maluey  v.  Hatten  L.  Co.,  140  Wis.  434    (Ky.  Super.  Ct.). 


48] 


COMPENSATION. 


183 


the  plaintilf  cannot  recover  as  special  damage  tlie  loss  of  a 
bargain  for  its  resale  at  a  protit,  though  the  contract  for  such 
resale  had  actually  been  completed  before  the  unsoundness  was 
discovered.^^  The  principle  that  there  cannot  be  a  recovery 
of  losses  sustained  because  of  the  hnaiicial.  condition  of  the 
party   to   a  broken   contract    is   of  general    api)licatioii.*® 

§  48.  Distinction  between  consequential  liability  in  tort  and 
on  contract.  The  distinction  between  the  liability  for  conse- 
quential damages  resulting  from  a  tort  and  the  damages  re- 
coverable for  a  breach  of  contract  is  forcibly  illustrated  l)y 
comparing  an  English  case"  with  two  Wisconsin  cases.*^  In 
the  first  case  a  carrier  negligently  induced  the  i)hiintitf  and  iiis 
wife   and   child   to   leave  the  train   in  the  uieht   at   a   wrou"- 

o 

station ;  no  conveyance  could  be  had,  and  they  were  obliged 
to  take  a  long  walk  through  the  rain  to  reach  their  destination. 


55  Cooper  V.  National  F.  Co.,  132 
Ga.  529;  Waynesville  W.  Mfg.  Co. 
V.  Berlin  M.  Works,  144  N.  C.  689; 
Fraser  v.  Bentel,  161  Cal.  390,  quot- 
ing the  text:  Clare  v.  Maynard,  6 
Ad,  &  El.  519 ;  Walker  v.  Moore,  10 
B.  &  C.  416;  Lawrence  v.  Wardwell, 
6  Barb.  423;  Williams  v.  Reynolds, 
6  B.  &  S.  495;  Harper  v.  Miller,  27 
Ind.  277;  Jones  v.  National  P.  Co., 
13  Daly,  92;  Detroit  W.  L.  Works 
V.  Knazak,  13  N.  Y.  Misc.  619; 
Scaramanga  v.  English,  1  Com.  Gas. 
99 ;  Brauer  v.  Oceanic  S.  N.  Co.,  66 
App.  Div.  (N.  Y.)  605;  Witherbee 
V.  Meyer,  155  N.  Y.  446;  Dean  P. 
Works  V.  Astoria  I.  Works,  40  Ore. 
83. 

The  text  is  quoted  with  approval 
in  Mitchell  v.  Clarke,  71  Gal.  163, 
60  Am.  Rep.  529,  an  action  for  the 
breach  of  a  contract  to  pay  the 
plaintiff's  creditor  a  sum  of  money 
intrusted  to  the  defendant  for  that 
purpose.  Damages  resulting  to  the 
plaintiff  by  reason  of  his  creditor's 
attaching  and  selling  his  property 
were  not  the  natural  consequence 
of  the  breach.     To  the  same  effect 


are  Wallace  v.  Ah  Sam,  71  Cal.  197, 
60  Am.  Rep.  534;  Cohn  v.  Norton, 
57  Conn.  480,  493,  5  L.U.A.  572; 
Wetmore  v.  Pattison,  45  Mich.  439: 
Hunt  V.  Oregon  Pae.  R.  Co.,  36  Fed. 
481,  1  L.R.A.  842;  Illinois  Cent.  R, 
Co.  V.  United  States,  10  Ct.  of  ('Is. 
312,  334;  Gates  v.  Sparkman,  73 
Tex.  019;  HoustoUj  etc.  R.  Co.  v. 
Hill,  63  Tex.  384,  51  Am.  Rep.  042 
(allowing  a  recovery  of  profits  on 
sales  made  before  tlie  ijrcacb,  i)ut 
denying  tliem  on  sales  which  might 
have  Ijeen  made) . 

56  Smith  V.  O'Doiineli,  8  Lea  40S; 
Travis  v.  Duffau,  20  To.\.  49:  Deyo 
V.  Waggoner,  19  .Jolins.  241. 

57  Flobbs  v.  London,  etc.  R.  Co.,  L. 
R.  10  Q.  B.  111. 

58W'alsh  v.  Chicago,  etc.  K.  Co., 
42  Wis.  23,  24  Am.  Rep.  37(i:  P.rown 
V.  Same,  54  Wis.  342,  7  Am.  Neg. 
Gas.  203.  The  Walsh  case  is  cited 
approvingly  in  Nortli  German 
Lloyd  S.  Co.  V.  Wood,  18  Pa.  Super. 
488,  493.  See  Milford  v.  Bangor  R. 
&  E.  Co.,  104  Me.  233,  30  L.R.A. 
(N.S.)   531. 


184  SUTHERLAND    ON    DAMAGES.  [§    48 

In  consequence  of  the  exposure  and  fatigue  the  wife  was  taken 
sick.     The  action  to  recover  damages  was  considered  as  being 
brought  on  the  contract  for  carriage,  and  they  were  held  too 
remote.     In  the  earlier  of  the  Wisconsin  cases  the  action  was 
upon  a  contract  to  convey  the  plaintiff  and  about  eighty  others 
from  one  station  to  a  given  place  and  back  on  a  named  day 
by  a  special  train,  which  was  to  leave  on  the  return  trip  at  a 
stated  hour.     It  was  alleged  that  they  were  conveyed  to  the 
place  designated,  ])ut  no  cars  were  furnished  to  convey  them 
back,  and  the  breach  was  charged  to  be  wilful  and  fraudulent ; 
that  by  reason  thereof  the  plaintiff"  was  greatly  injured  in  bodily 
health,  suffered  great  pain  and  anxiety  of  mind,  lost  much  time 
from  business  and  was  subjected  to  indignities  and  insults  from 
employees  of  the  carrier.     It  was  held,  the  action  being  upon 
contract,  that  the  trial  court  erred  in  charging  that,  if  the  de- 
fendant's conduct  was  wilful  and  malicious,  the  jury  might 
award  full  compensatory,  though  not  punitive,  damages,  "em- 
bracing such  loss  of  time,  such  injury  to  health,  such  annoy- 
ance and  vexation  of  mind,  and  such  mental  distress  and  sense 
of  wrong  as  the  jury  might  find  was  the  immediate  result  of 
the  defendant's  misconduct,  and  must  necessarily  and  reason- 
a])ly  have  been  expected  to  arise  therefrom  to  the  plaintiff." 
Such  damages  were  too  remote;  they  could  not  have  been  in 
contemplation  when  the  contract  was  made.     The  court  quoted 
and  adopted  the  reasoning  of  the  several  judges  in  the  English 
case.     The  other  Wisconsin  case  was  an  action  for  negligence, 
and  the  facts  were  nearly  like  those  in  the  Hobbs  case.    Recov- 
ery was  allowed  for  the  sickness  caused  by  the  necessary  walk 
of  the  female  plaintiff  to  her  destination.^^ 

§  49.  Same  subject;  criticism  of  the  Hobbs  case.  The  doc- 
trine of  the  Hobbs  case  which  is  stated  in  the  preceding  sec- 
tion made  some  impression  upon  the  law  in  similar  cases  in  a 
few  states;  its  influence  is  most  seen  in  cases  ruled  soon  after 
the  opinions  of  the  judges  who  decided  it  were  received  in  this 
country.^"     As  has  been  stated  elsewhere  ^^  the  tendency  of 

59  This  case  is  discussed  in  §  36,  Co.,  42  Wis.  23,  24  Am.  Rep.  376; 
where  other  cases  on  the  subject  are  Indianapolis,  etc.  R.  Co.  v.  Birney, 
collected.  71  111.  391. 

60  See  Walsh  v.  Chicago,   etc.   R.  61  §  36. 


§49]  COMPENSATION.  185 

American  authority  is  in  opposition  to  the  view  promulgated 
therein.^^  In  addition  to  the  eases  cited  in  the  previous  dis- 
cussion attention  is  directed  to  a  Texas  decision  in  whicli  the 
English  case  and  those  which  have  followed  it  are  said  to  Ik; 
rested  upon  too  narrow  gTOund  ^^  and  which  holds  that  a  rail- 
way company  which  has  violated  its  contract  hy  carrying  a 
passenger  beyond  his  destination  is  liable  to  him  for  the  dis- 
comfort, inconvenience,  sickness,  expenses,  costs  and  charges 
which  are  the  direct,  natural  and  proximate  result,  and  to 
another  case  in  that  state  which  ruled  that  a  carrier  must 
answer  in  an  action  for  the  breach  of  its  contract  to  a  passen- 
ger for  personal  injuries  resulting  from  the  derailment  of  the 
train  in  which  he  was  being  carried.^*  The  Hobbs  case  stands 
but  little  better  in  England  than  it  does  in  this  country;  in- 
deed, it  is  practically  overruled  there.  The  court  of  appeal, 
queen's  bench  division,  has  unanimously  held  that  it  is  a  prob- 
able result  of  turning  horses  which  have  been  transported  on 
a  railway  out  of  a  stable  in  which  it  had  been  contracted  they 
should  be  sheltered  that  some  of  them* would  tahe  coid  Avhiln 
their  owner  was  finding  room  for  them  elsewhere,  and  that 
damages  resulting  might  be  recovered.®^  The  question  has 
also  been  passed  upon  in  Canada,  and  the  view  there  taken 
is  rested  on  a  basis  which  is  entirely  satisfactory.  In  tluit 
case  a  passenger  was  ejected  from  a  street  car  after  an  alterca- 
tion with  the  conductor  which  put  him  in  a  state  of  perspira- 
tion; he  took  cold  and  suffered  from  rheumatism  and  bronchitis. 
The  defendant  contended  that  the  right  interfered  with  was 

62  Massachusetts  may  be  an  excep-  lowed.     Murdock  v.  Boston  &  A.   W. 

tion  to  the  rule,  it  being  held  there  Co.,   133   Mass.   15. 

that  in  an  action  for  the  breach  of  63  1.  &  G.  M.   R.  Co.  v.  Terry,  (J- 

a   contract   to   carry   on   a   railroad  j^^^    ^gQ 

there  is  no  connection   between  the  g*  El  Paso  &  N.  R.  Co.  v.  Sawy.T, 

agreement    and    the    arrest    of    the  54  ^ex.  civ.  App.  387.     See  §  !)34. 

passenger   by  the   conductor   of  the  „,  ,^  ,r  ,             t^-  ,j    ^  /^   t.    t^- 

^    .         ,                       ,.         rf              ,  65  McMalion  v.  Field,  7  Q.  B.  Div. 

train,  who  was  a  ponce  oHicer  and  ^^     ,, 

,                  .  „          c       ■,   J.     „    „-,„  i")!)!:    Pounder    v.    Northeastern    H.. 
who   wrongfully    refused   to   receive 

the    ticket    tendered    and    delivered  [18«2]   1  Q.  B.  385,  seems  to  be  in 

the  passenger  to  another  police  of-  harmony  witli  tbe  Hol.bs'  case.     Put 

ficer  by  whom  he  was  confined  in  a  see     Cobb     v.     (Ireat     Western     U., 

cell  with  the  result  that  illness  fol-  [1S!)4|   Ai)p.  Caa.  4in. 


186  SUTHERLAND    ON    DAMAGES.  [§    49 

one  of  contract,  and  that,  as  the  ilhiess  was  not  reasonably 
contenii)lated  at  the  time  the  contract  was  made,  there  was  no 
liability  on  account  of  it.  The  recovery  on  account  of  the  ill- 
ness was  sustained  by  the  divisional  court  and  the  court  of 
appeal.  It  was  said  in  the  opinion  of  the  supreme  court  that 
when  one,  whether  in  performance  of  a  contract  or  not,  takes 
charge  of  the  person  or  property  of  another  there  arises  a 
duty  of  reasonable  care;  and  if  by  his  own  act  he  creates  cir- 
cumstances of  danger  and  subjects  the  person  or  property  to 
risk  without  exercising  reasonable  care  to  guard  against  injury 
or  damage,  he  is  responsible  for  such  injury  and  damage  as 
arises  as  the  direct  or  natural  and  probable  consequence  of  the 
wrongful  act.^^ 

§  50.  Liability  under  special  circumstances;  Hadley  v.  Bax- 
endale.  The  leading  English  case  ^'  on  the  scope  of  recovery 
for  the  breach  of  a  contract  established  two  propositions  which 
have  been  very  generally  accepted :  ''Where  two  parties  have 
made  a  contract  which  one  of  them  has  broken,  the  damages 
which  the  other  ougliti  to  receive  in  respect  to  such  breach 
of  contract  should  be  such  as  may  fairly  and  reasonably  be 
considered  either  as  arising  naturally — that  is,  according  to 
the  usual  course  of  things — from  such  breach  of  contract  it- 
self, or  such  as  may  reasonably  be  supposed  to  have  been  in  the 
contemplation  of  both  parties  at  the  time  they  made  the  con- 
tract as  the  probable  result  of  a  breach  of  it.  ]^ow,  if  the 
special  circumstances  under  which  the  contract  was  actually 
nuide  were  communicated  by  the  plaintiff  to  the  defendant, 
and  thus  known  to  both  parties,  the  damages  resulting  from 
the  breach  of  such  contract,  which  they  would  reasonably  contem- 
plate, would  be  the  amount  of  injury  which  would  ordinarily 
follow  from  a  breach  of  contract  under  the  special  circum- 
stances so  known  and  communicated.  But,  on  the  other  hand, 
if  these  special  circumstances  were  wholly  unknown  to  the 
party  breaking  the  contract  he,  at  the  most,  could  only  be 
supposed  to  have  had  in  contemplation  the  amount  of  injury 
which   would   arise  generally,   and  in  the  great  multitude  of 

66  Toronto  R.  Co.  v.  Grinsted,  24  67  Hadley  v.  Baxendale,  9  Ex.  353, 

Can.  Sup.  Ct.  570.  2  Am.  Neg.  Rep.  400. 


50] 


COMPENSATION. 


187 


cases,  not  affected  by  any  specitil  circiiiiistiiiiccs;  fn»iii  siidi  a 
breach  of  contract."  ^^  'Fhe  first  of  these  rules  has  been  consid- 
ered in  the  preceding  sections.  It  is  to  be  renicnil)ered  that 
there  is  no  relaxation  of  the  rnle  confining  the  recovery  to  the 
damages  naturally  and  proximately  I'csultiui;'  iVoni  the  breach 
in  cases  where  there  are  such  known  .special  circumstances. 
Indeed,  the  same  strictness  exists  to  confine  the  recovery  to 
the  immediate  consequences.  The  general  principle  of  coui- 
pensation  is  that  it  should  be  equal  to  the  injury.  It  is  a  rule 
based  on  that  principle  that  the  amount  of  the  benefit  which  a 
party  to  a  contract  would  derive  from  its  performance  is  the 


68  Griffin  v.  Colver,  16  N.  Y.  489; 
Rocliester  L.  Co.  v.  Stiles  &  P.  P. 
Co.,  135  N.  y.  209;  Faber  L.  Co.  v. 
O'Neal,  160  Fed.  596,  87  C.  C.  A, 
498;  Cassells'  Mill  v.  Strater  G.  Co., 
160  Ala.  274,  citing  the  text;  Cape 
Girardeau  &  C.  R.  Co.  v.  Wingerter, 
124  Mo.  App.  426,  citing  the  text; 
Clark  Mfg.  Co.  v.  Western  U.  Tel. 
Co.,  152  N.  C.  157,  27  L.R.A.(N.S.) 
643,  citing  the  text;  Fowles  v.  At- 
lantic C.  L.  R.  Co.,  83  S.  C.  501; 
Southwestern  Tel.  &  T.  Co.  v.  Solo- 
mon, 54  Tex.  Civ.  App.  ,306;  Tirry 
V.  Hogan,  —  Mo.  App.  — ,  163  S.  W. 
873;  Mankes  v.  Fishman,  163  App. 
Div.  (N.  Y.)  789;  Merritt  v.  Adams 
County  Land  &  Investment  Co.,  29 
N.  D.  496;  Missouri,  K.  &  T.  Ry. 
Co.  V.  Foote,  —  Okla.  — ,  149  Pac. 
223. 

Criticisms  upon  the  language 
used  in  the  extract  quoted  in  the 
text  have  been  made  by  various 
judges  and  writers;  but  the  prin- 
ciples enunciated  therein  have  re- 
ceived general  approval.  Occasion- 
ally a  judge  intimates  that  the  con- 
ditions of  business  have  so  changed 
since  that  case  was  decided  that  it 
is  no  longer  applicable  in  its  en- 
tirety. See  Daugherty  v.  Ameri- 
can U.  Tel.  Co.,  75  Ala.  168,  178,  51 
Am.   Rep.   435;    Wilson  v.  Newport 


D.   Co.,  L.  R.   1   Ex.   177;    Soutli.Tii 
R.  Co.  V.  Lewis,  165  Ala.  451. 

Some  of  the  criticisms  relate  to 
the  time  notice  of  'the  special  cir- 
cumstances must  be  given.  In  some 
cases  the  rule  of  the  principal  case 
is  varied.  Bourlaiid  v.  (  lioctaw, 
etc.  R.  Co.,  99  Tex.  407,  3  L.R.A. 
(N.S.)  1111,  122  Am.  St.  647.  See 
§§  45,  902.  It  has  been  held  that 
notice  thereof  is  timely  if  it  is  giv- 
en so  that  the  damage  resulting 
from  the  breach  may  be  averted  by 
compliance  with  the  contract.  Bak- 
er Mfg.  Co.  V.  Clayton,  46  Tex,  Civ. 
App.  384.  It  is  said  in  Harper  F. 
Co.  V.  Southern  Exp.  Co.,  148  N.  C. 
87,  30  L.R.A.  (N.S.)  48,3,  128  Am. 
St.  588,  that  Hadley  v.  Raxendale 
is  important  rather  as  laying  down 
general  princijjles  than  as  a  decision 
on  the  particular  facts.  In  evidence 
of  this  it  may  be  noted  that  as  a 
matter  of  fact  the  proof  showed 
that  the  defendant's  clerk  was  noti- 
fied that  the  plaintiff's  mill  would 
be  stopped  while  the  shaft  was  be- 
ing repaired.  Just  why  this  fact 
was  ignored  in  the  opinion  of  tlie 
judges  does  not  appear,  possibly  be- 
cause the  notice  was  given  the  day 
before  the  shaft  was  delivered,  which 
is  not,  it  seems,  a  very  satisfactory 
explanation.     And  in  another  case: 


188  SUTHERLAND   ON    DAMAGES.  [§    50 

measure  of  his  damages  if  it  be  broken.^^  It  is  a  rule  of  inter- 
pretation, too,  that  the  intention  of  the  parties  is  to  be  ascer- 
tained from  the  whole  contract,  considered  in  connection  with 
the  surrounding  circumstances  known  to  them.  If  it  appear 
by  such  circumstances  that  the  contract  was  entered  into, 
and  known  by  both  parties  to  be  entered  into,  to  enable  one  of 
them  to  sei-ve  or  accomplish  a  particular  purpose,  whether  to 
secure  a  special  gain  or  to  avoid  an  anticipated  loss,  the  lia- 
bility of  the  other  for  its  violation  will  be  determined  and  the 
amount  of  damages  fixed  with  reference  to  the  effect  of  the 
breach  in  hindering  or  defeating  that  object.  The  proof  of 
such  circumstances  makes  it  manifest  that  such  damages  were 
within  the  contemplation  of  the  parties.  Looking  alone  at  a 
contract  of  this  character,  silent  as  to  the  circumstances  which 
were  in  view,  such  damages  are  consequential  and  sometimes 
appear  to  arise  very  remotely  and  collaterally  to  the  imder- 
taking  violated.  But  when  the  contract  is  considered  in  con- 
nection with  the  extrinsic  facts  there  is  established  a  natural 
and  proximate  relation  of  cause  and  effect  between  its  breach 
and  the  injury  to  be  compensated.''^*'  If  all  such  facts  as  are 
admissible  to  justify  the  proof  of  consequential  damages  were 
recited  in  the  contract  as  the  law  connects  them  with  it  when 

We  are  gratified  to  note  that  the  Burnes  B.  Mfg.  Co.,  100  Minn.  178; 
modern  tendency  of  judicial  de-  Mudge  v.  Adams,  37  Tex.  Civ.  App. 
cisions  is  to  break  away  from  and  386;  Alder  v.  Keighley,  15  M.  &  W. 
leave  behind  the  strictness  of  what  117;  Guetzkow  v.  Andrews,  92  \\'i8. 
was  once  supposed  by  some  courts  214,  52  L.R.A.  209,  53  Am.  St.  909; 
to  be  the  doctrine  of  Hadley  v.  Bax-  Blagen  v.  Thompson,  23  Ore.  239,  18 
endale.  To  the  mind  of  the  writer  L.R.A.  315;  Myers  v.  Bender,  46 
it  has  never  seemed  to  be  entirely  ^lont.  497,  citing  the  text, 
right  and  just  to  permit  a  wrong-  70  Nelson  v.  Wilson,  157  Iowa  80, 
doer  to  say  that  he  ought  not  to  be  (breach  of  contract  to  maintain  a 
held  liable  because  he  did  not  know  division  fence  is  cause  for  the  re- 
or  suppose  that  his  wrongful  con-  covery  for  injury  to  animals  result- 
duct  would  cause  the  other  party  ing  from  their  over-eating  the  de- 
as  much  injury  as  it  did.  Key,  C.  fendant's  corn,  to  which  they  got 
J.,  in  Western  U.  Tel.  Co.  v.  Gold-  access  through  an  insufficient 
wire  (Tex.  Civ.  App.),  152  S.  W.  fence)  ;  Neal  v.  Jefferson,  212  Mass. 
503,  stated  in  §  969.  517;  Johnson  v.  Wild  Rice  B.  Co., 
69  Atlanta,  etc.  R.  Co.  v.  Thomas,  118  Minn.  24;  Berghuis  v.  Scliultz, 
60  Fla.  412;  Albany  P.  Co.  v.  Hug-  119  Minn.  87;  Mead  v.  Kalberg,  70 
ger,    4    Ga.    App.    771;    Crowley   v.  Wash.    517;    Machine   Co.   v.    Com- 


§  50] 


COMPENSATION. 


ISO 


known,  or  if  the  legal  obligation  which  the  law  imposes  by 
reason  of  them  had  been  expressed  in  words  by  tlie  parties, 
such  damages  would  be  direct  and  not  consequential. 

In  a  case  in  Wisconsin  the  plaintiff  was  a  butcher,  iind  the 
defendant  agreed  to  furnish  him  with  what  ice  he  might  re- 
quire for  a  season,  knowing  that  the  plaintiff  needed  it  to  pre- 
sei^e  fresh  meat.  About  the  last  of  July  the  defendant  stojjped 
supplying  ice  and  refused  to  furnish  any  more,  in  consequence 
of  which  plaintiff  lost  considerable  meat.  This  loss  the  plain- 
tiff" recovered.  The  court  say:  ''As  the  defendant  was  ac- 
quainted with  all  the  special  circumstances  in  respect  to  this 
contract — knew  for  what  purpose  the  ice  agreed  to  be  fur- 
nished by  him  was  to  be  used, — he  should  fully  indemnify  the 
plaintiff  for  the  loss  he  sustained  by  the  non-delivery  of  the  ice ; 
and  he  was  therefore  justly  chargeable  in  damages  for  the 
meat  spoiled  in  consequence  of  the  inability  of  the  plaintiff  to 
j)rocure  ice  elsewhere."  ^^  This  case  was  not  one  of  simple 
contract  of  sale.      The  special  circumstances,  known   to  both 


press  Co.,  105  Tenn.  187,  204,  53 
L.R.A.  482,  quoting  the  text;  Choc- 
taw, etc.  R.  Co.  V.  Rolfe,  7()  Ark. 
220;  Skinner  v.  Gibson,  86  Kan. 
431;  Tygart  v.  Albritton,  5  Ga.  App. 
412;  Gagnon  v.  Sperry,  206  Mass. 
547;  Crowley  v.  Burnes  B.  Mfg.  Co., 
100  Minn.  178;  Trout  v.  Watkins 
L.  &  U.  Co.,  148  Mo.  App.  621; 
Hedden  v.  Sclmeblin,  126  id.  478, 
citing  text;  Wall  v.  St.  Joseph  A.  I. 
&  C.  S.  Co.,  112  id.  659;  Harper  F. 
Co.  V.  Southern  Exp.  Co.,  148  N.  C. 
87,  30  L.R.A.  (N.S.)  483,  128  Am.  St. 
588;  Chislom  &  M.  Mfg.  Co.  v. 
United  States  C.  Co.,  Ill  Tenn.  202, 
quoting  the  text.     See  §  913. 

Where  the  article  sliipped  is  of 
such  a  character  that  the  parties 
may  be  fairly  supposed  to  have  had 
in  contemplation  at  the  time  of  con- 
tracting the  special  purpose  in  ship- 
ping it  or  its  present  use  in  a  given 
way,    damages    may    be    recovered 


with  reference  thereto.  Story  L.  Co. 
V.  Southern  R.  Co.,  151  N.  C.  23. 

In  Fox  V.  Everson,  27  Hun  335, 
the  defendant  sold  the  plaintiff 
clover  seed  with  which  was  mixed 
plaintain  seed.  A  recoverj^  was  al- 
lowed for  the  difference  between  the 
value  of  pure  seed  and  that  actually 
sown  and  for  the  depreciation  in 
value  of  the  farm  on  account  of  the 
plaintain  seed.  It  was  contended 
tliat  there  was  no  liability  for  the 
last  item  because  it  was  not  proven 
that  the  defendant  knew  the  seed 
was  bought  for  tlie  purpose  of  being 
sown.  The  contention  was  over- 
ruled because  that  is  the  purpose 
for  which  such  seed  is  usually  pur- 
chased. But  the  vendor  was  not 
apprised  of  the  fact  that  the  seed 
sold  was  to  be  mixed  with  iimothj' 
seed,  and  hence  was  not  liable  for 
tlie  loss  of  llic  latter. 

71  Hammer  v.  Schoenfeklor,  47 
Wis.    455.      See   Manning   v.   Fitch, 


190 


SUTHEKLAND    ON    DAMAGES. 


[§    SO 


parties,  made  it  more  than  that  in  its  aims  and  consequences, 
although  the  terms  in  which  it  was  made,  considered  alone, 
imported  only  a  contract  of  sale.  The  vendor,  knowing  the 
purpose  for  which  the  ice  was  wanted,  was  held,  by.  implica- 
tion, to  undertake  to  deliver  it  as  agreed  in  order  that  the 
vendee  should  not  suffer  loss  on  his  fresh  meat  from  his  inabil- 
ity to  preserve  it  for  want  of  ice.     Such  being  the  contract, 


]38  Mass.  273;  Beeman  v.  Banta, 
118  N.  Y.  538,  16  Am.  St.  779;  Sar- 
gent V.  Mason,  101  Minn.  319,  citing 
the  text. 

The  text  is  cited  in  New  Orleans, 
etc.  R.  Co.  V.  Meridian  W.-W.  Co., 
18  C.  C.  A.  519,  72  Fed.  227,  where 
it  was  alleged  that  the  defendant 
had  failed  to  perform  its  contract 
to  furnish  at  the  plaintiff's  shops 
the  required  pressure  of  water, 
wliich  it  had  contracted  to  furnish 
for  all  purposes  for  which  it  might 
be  desired  or  used;  that  one  of  such 
purposes  was  the  extinguishment  of 
fires  in  the  plaintiff's  shops,  of 
which  the  defendant  had  knowl- 
edge; that  at  the  time  the  fire 
which  burned  the  shops  broke  out 
there  was  less  than  half  the  re- 
quired pressure,  and  that,  in  conse- 
quence, the  shops  were  burned.  A 
good  cause  of  action  was  stated. 

In  Jones  v.  George,  61  Tex.  345, 
48  Am.  Rep.  280  (see  s.  c,  56  Tex. 
149,  42  Am.  Rep.  689),  the  plaintiff 
applied  to  the  defendant,  a  drug- 
gist, for  a  quantity  of  Paris  green; 
by  mistake  he  was  supplied  with 
chrome  green,  a  substance  similar 
in  appearance  but  not  possessing  the 
same  properties.  The  vendor  knew 
tliat  the  article  called  for  was  de- 
sired to  prevent  the  destruction  of 
the  plaintiff's  cotton  crop  by  the 
cotton  worm,  which  had  for  years 
been  very  destructive.  Without 
knowing  the  mistake  the  chrome 
green  was  applied  to  the  cotton,  and 
failed  to  produce  the  desired  result. 


Evidence  was  given  to  show  that 
Paris  green  would  have  had  a 
beneficial  effect.  It  was  ruled  tliat 
there  was  not  a  technical  warranty 
that  Paris  green  was  delivered,  but 
an  implied  contract  that  such  was 
the  fact.  In  answer  to  the  conten- 
tion that  it  is  not  enough  to  entitle 
a  party  to  recover  damages  for 
breach  of  contract  to  show  that 
without  the  breach  relied  on  tlie 
injury  would  not  have  been  received 
when  it  results  from  an  unforeseen 
or  unexpected  cause,  or  from  a  cause 
which  no  reasonable  human  exertion 
could  counteract,  the  court  observed, 
"but  if  it  appears  that  the  contract 
was  made  for  the  express  purpose 
of  avoiding  a  loss  likely  to  occur 
from  a  known  natural  cause,  which 
could  be  controlled  and  avoided; 
that  this  was  known  to  the  con- 
tracting parties,  and  that  compli- 
ance with  the  contract  would  have 
prevented  the  injury  by  destroying 
the  thing  which  immediately  in- 
flicts it,  then  it  is  believed  that  the 
breach  of  such  a  contract  must  be 
said,  within  the  meaning  of  the  law, 
to  be  the  direct  cause  of  the  injury. 
In  such  case  there  is  'an  immediate 
and  natural  relation  between  tlie 
act  complained  of  and  the  injury 
without  the  intervention  of  otlier 
and  independent  cause;'  for  a  cause 
which  is  subject  to  control  and  con- 
templated by  the  parties  to  a  con- 
tract, looking  to  its  avoidance  or 
control,  cannot  be  said  to  be  an  'in- 
dependent  cause.'  " 


§    50]  COMPENSATION,  101 

the  loss  which  occurred  from  its  breach  was  the  direct  conse- 
quence thereof.  It  is  to  be  observed  that  the  inii)lication  from 
the  vendor's  knowledge  of  the  special  circunistances  recjuirod 
the  performance  of  no  additional  act  to  fulfill  the  contract.  It 
merely  enjoined  on  him  the  duty  to  perform  it  in  view  of  more 
serious  consequences  than  those  which  usually  follow  a  ven- 
dor's default.  The  principle  that  the  injured  party  is  entitled 
to  compensation  proportioned  to  the  actual  injury  is  |i;ii';i- 
mount,  and  overrides  any  rule  not  adapted  to  measure  comjx'nsa- 
tion  in  such  a  special  case.  The  vendor  is  thus  admonished 
that  if  he  fails  to  deliver  the  property  as  agreed  he  can- 
not satisfy  the  injury  to  the  vendee  by  paying  the  difference 
of  a  higher  market  price  unless  the  article  can  be  obtained  in 
market ;  that  the  loss  will  be  the  value  of  the  property  which 
the  ice  was  needed  to  preserve.'''^  Where  a  vendor  broke  his 
contract  to  supply  ice  to  a  local  dealer  for  the  entire  season  at 
a  fixed  price,  the  latter  recovered  the  increased  price  he  was 
obliged  to  pay  for  ice  bought  from  otlier  parties  and  for  the 
loss  of  profits  he  would  have  realized  from  his  business  fi'oni 
the  time  he  was  compelled  to  suspend  the  same  because  of  in- 
ability to  procure  ice  from  any  source.'^ 

72  The  contract  in  suit  provided  '3  Border  City  I.  &  C.  Co.  v. 
that  the  manufacturer  should  fur-  Adams,  (19  Ark.  219. 
nisli,  deliver  and  put  in  running  or-  In  a  late  case  in  one  of  the  Texas 
dcr  by  a  specified  day  machinery  courts  of  civil  appeals  the  ucni'ial 
tor  a  cotton-seed  oil  mill.  By  rea-  rule  was  applied  because  tlic  coiiit 
son  of  a  breach  a  quantity  of  seed  was  bound  by  the  rulings  of  tlio  su- 
purchased  for  grinding  was  dam-  preme  court.  It  was  said,  however, 
aged.  Parol  evidence  was  received  tliat,  so  far  as  the  carrier  is  con- 
to  show  that  time  was  of  the  essence  cerned,  it  could  not  have  declined  to 
of  the  contract,  and  that  the  pur-  accept  the  shipment;  it  could  not 
chase  of  seed  in  advance  of  the  peri-  have  enforced  a  sti])ulation  against 
od  fixed  or  the  completion  of  the  mill  its  negligence,  nor  have  cliarged 
was  within  the  contemplation  of  the  more  nor  less  than  the  lixeil  rate, 
parties.  Van  Winkle  v.  Wilkins,  "The  notice  given  after  the  freight 
81  Ga.  9.3,  12  Am.  St.  299;  Dennis  was  shipped  and  before  it  was  de- 
V.  Stoughton,  55  Vt.  371;  Goodloe  v.  livered  did  not  im]K)Se  an  additional 
Rogers,  10  La.  Ann.  631;  Lobdell  v.  contract  upon  it.  It  re<iuired  it  to 
Parker,  3  La.  328.  Compare  Bray-  do  no  more  than  it  had  ))reviously 
ton  V.  Chase,  3  Wis.  456,  which  is  contracted  to  do,  and  that  was  to 
inconsistent  with  Hammer  v.  Schoen-  forward  the  freight  with  reasonal)le 
felder,  47  id.  455,  stated  supra.  promptness,  and  notice  of  tli.'  >pc.i:il 


192  SUTHERLAND    ON    DAMAGES.  [§    51 

§  51.  Same  subject;  illustrations  and  discussion  of  the  rule. 

In  a  case  '*  in  which  the  plaintiff  had  contracted  to  sell  a 
large  quantity  of  bullets  of  a  certain  quality  and  at  a  fixed 
price,  he  made  a  contract  with  the  defendant  by  which  the 
latter  agreed  to  manufacture  and  deliver  to  him  the  same 
quantity  and  quality  of  bullets;  at  the  time  of  making  it  he 
informed  the  defendant  of  his  arrangement  and  that  he  was 
contracting  with  him  for  the  bullets  in  order  to  fulfill  that 
agreement.  The  contract  between  these  parties  was  in  writ- 
ing, but  did  not  contain  any  allusion  to  the  special  object  of 
making  it.  It  was  held,  notwithstanding,  that  it  was  compe- 
tent to  prove  such  antecedent  contract  and  parol  proof  was 
admissible  to  establish  that  the  defendant  was  informed  that 
the  plaintiff'  made  the  contract  in  question  with  a  view  to 
performing  the  other;  and  that  the  proper  measure  of  dam- 
ages was  the  difference  between  the  price  at  which  the  defend- 
ant was  to  furnish  the  bullets  and  that  the  plaintiff  was  to 
receive.  It  appeared  that  the  market  price  advanced  so  that 
the  bullets  could  not  be  obtained  below  the  latter  price;  the 
market  price  was  considerably  higher,  but  the  recovery  was 
limited  as  above  stated,  for  that  gave  the  plaintiff  compensa- 
tion for  his  actual  loss,  and  that  was  in  contemplation  by  the 
parties  when  the  contract  was  made.  Where  the  contract  relates 
to  commodities  commonly  purchasable  in  the  market  the  pur- 
chaser is  made  whole  when  he  recovers  the  difference  between 
the  contract  price  and  the  value  of  the  article  in  the  market 
at  the  time  and  place  of  delivery,  because  he  can  supply  him- 
self with  this  article  by  going  into  market  and  making  his 

damages  that  would  accrue  to  the  just  as  much  within  the  contempla- 
consignee  by  reason  of  continued  de-  tion  of  the  party  breacliing  said  con- 
lay  in  such  shipment,  given  after  tract  as  if  such  notice  had  been 
tlie  shipment  had  begun,  would  just  given  at  or  before  tlie  contract  was 
as  effectually  enable  the  railway  J^^^^l^.^  ^^here  no  additional  contrac- 
company  to   guard   against   furtlier  ^^,.^j    o,,iig..^tio„g    ^re    sought    to    be 

breach  of  its  contract  as  would  such       .  .   ,  ^         i        x-      » 

imposed   by  reason  oi   such  notice, 
notice  given   at   the   time   the   con- 

,       ,      ^         AT  •   A    A„^        Ilassler  v.   Gulf,   etc.   R.   Co.,    (Tex. 

tract  was  made.    To  our  minds  dam-  ' 

ages  arising  from  the  breach   of  a       ^'^^-  -^VP-)  142  S.  \Y.  G2!). 

contract,    after    notice    is    given    of  '*  Messmore  v.  New  York  S.  &  L. 

the  consequences  of  such  breach,  are       Co.,  40  N.  Y.  422. 


k 


§    51]  COMPENSATION.  193 

purchase  at  such  price,  and  these  are  all  the  damages  he  is 
ordinarily  entitled  to  recover,  for  nothing  beyond  this  was 
within  the  contemplation  of  the  parties  when  they  contracted.'* 
If,  however,  the  vendor  knows  that  the  purchaser  has  an  exist- 
ing contract  for  a  resale  at  an  advanced  price  and  that  the 
purchase  is  made  to  fulfill  such  a  contract  the  profits  on  such 
resale  are  those  contemplated  by  the  parties.  In  other  words, 
on  the  ordinary  contract  of  sale  the  damages  contemplated  are 
those  which  would  result  with  reference  to  market  value  if  the 
subject  of  the  contract  have  such  a  value;  otherwise,  on  the 
basis  of  its  actual  value  as  it  may  be  ascertained  by  proof  or 
for  the  use  to  which  the  property  is  commonly  applied,  whether 
known  or  not.'''®  But  if  the  contract  of  purchase  is  made  with 
a  view  to  a  known  resale  already  contracted  or  any  known 
special  use  the  damages  which  are  contemplated  to  result  from 
the  vendor's  breach  are  those  w^hich  would  naturally  follow  on 
the  basis  of  the  contract  for  resale  or  other  special  use,  known 
to  the  vendor  when  the  contract  was  made.  The  contemplation 
of  damages  will  include  such  as  ordinarily  arise  according  to 
the  intrinsic  nature  of  the  contract  and  the  surrounding  facts 
and  circumstances  made  known  to  the  parties  at  the  making  of 
it.'' 

75  Wiggins  V.  Jackson,  31  Okla.  509;  Illinois  Cent.  R.  Co.  v.  Cobb, 
292,  quoting  the  text.  See  §  651  64  111.  128;  Winne  v.  Kelley,  34 
et  seq.  Iowa,  339;   Van  Arsdale  v.  Rundel, 

76  Rhodes  V.  Baird,  16  Ohio  St.  82  111.  63;  Rogers  v.  Bemus,  69  Pa. 
573;  Borries  v.  Hutchinson,  IS  C.  B.  432;  Hinckley  v.  Beckwith.  13  Wis. 
(N.S.)  465;  Coles  v.  Standard  L.  31;  Leonard  v.  New  York,  etc.  Tel. 
Co.,  150  N.  C.  183.  Co.,  41  N.  Y.  544,  1  Am.  Rep.  446; 

77  Lillard  v.  Kentucky  D.  &  W.  Hexter  v.  Knox,  63  N.  Y.  561 ;  True 
Co.,  134  Fed.  168,  67  C.  C.  A.  74  v.  International  Tel.  Co.,  60  :\Ie.  0; 
Lazier  G.  E.  Co.  v.  Dubois,  130  Fed.  Fletcher  v.  Tayleur,  17  C.  B.  21: 
834,  65  C.  C.  A.  172;  Ramsey  v.  Squire  v.  Western  U.  Tol.  Co.,  98 
Capshaw,  71  Ark.  408;  Pulaski  S.  Mass.  232,  93  Am.  Dec.  157:  Cory 
Co.  V.  Miller's  Creek  L.  Co..  138  v.  Thames  I.  Works  Co.,  L.  R.  3  Q. 
Ky.  372;  Carlson  V.  Stone-O.-W.  Co.,  B.  181;  Borradaile  v.  Brunton,  8 
40  Mont.  434;  Shurter  v.  Butler,  43  Taunt.  535:  In  re  Trent  &  H.  Co.. 
Tex.  Civ.  App.  353;  Tulane  Educa-  L.  R.  6  Eq.  396:  Dobbins  v.  Duquid, 
tional  Fund's  Adm'rs  V.  Baccich,  129  65  111.  464;  Richardson  v.  Chyno- 
La.  469 ;  Davis  V.  Talcott,  14  Barb.  weth,  26  Wis.  656;  Wolcott  v. 
611;  Cobb  v.L  C.  R.  Co.,  38  Iowa  Mount,  36  N.  J.  L.  262,  13  Am.  Rep. 
601;    Haven    v.    Wakefield,    39    111.  438;    Benton    v.    Fay,    64    111.    417; 

Suth.  Dam.  Vol.  I.— 13. 


194: 


SUTHERLAND    ON    DAMAGES. 


[§  51 


This  may  be  illustrated  by  several  cases.  Plaintiff  was  a 
coal  merchant  and  had  contracted  to  snpply  coal  to  steamers; 
he  had  also  contracted  for  coal  with  the  defendant,  who  knew 
the  purpose  for  which  the  coal  was  wanted.  The  defendant 
broke  its  contract  by  failing  to  furnish  coal  as  fast  as  it  was 
needed;  in  consequence  a  steamer  was  delayed,  a  claim  made 
on  the  plaintiff"  for  damages  and  a  suit  brought  to  enforce 
that  claim.  The  defendant  refused  to  defend  such  suit,  which 
was  defended  by  the  plaintiff,  who  satisfied  the  judgment  there- 
in and  then  sued  the  defendant  for  reimbursement.  His  right 
to  recover  was  held  to  be  within  the  rule  of  ITadley  v.  Baxen- 
dale.'^  In  another  case  '^  the  defendant  supplied  a  defective 
chain  to  a  firm  of  stevedores  for  use  in  discharging  a  cargo 
from  a  vessel  owned  by  a  third  party.  He  was  taken  to  have 
known  that  such  firm  would  employ  men  to  do  the  unloading, 
and  was  liable  for  the  injury  received  by  a  man  so  employed 
through  a  defect  in  the  chain,  notwithstanding  such  defect 
might  have  been  discovered  by  the  employer  in  the  exercise 


Grindle  v.  Eastern  Exp.  Co.,  67  Me. 
317,  24  Am.  Rep.  31;  Hamilton  v. 
Magill,  12  L.  R.  Ire.  186,  204:  Kra- 
mer V.  Messner,  101  Iowa  88; 
Giietzkow  V.  Andrews,  92  Wis.  214, 
52  L.R.A.  209,  53  Am.  St.  909; 
Agius  V.  Great  Western  C.  Co., 
[1897]  1  Q.  B.  413;  Chalice  v.  Witte, 
81  Mo.  App.  84;  Uhlig  v.  Barnum, 
43  Neb.  584;  Waco  Artesian  W.  Co. 
V.  Cauble,  19  Tex.  Civ.  App.  417; 
Drug  Co.  V.  Byrd,  92  Fed.  290,  34 
C.  C.  A.  351;  Central  T.  Co.  v. 
Clark,  id.  354,  92  Fed.  293;  Liman 
V.  Pennsylvania  R.  Co.,  4  N.  Y.  Misc. 
539,  citing  the  text;  Blagen  v. 
Thompson,  23  Ore.  239,  18  L.R.A. 
.>15;  Machine  Co.  v.  Compress  Co., 
105  Tenn.  187,  53  L.R.A.  482; 
M'Neil  V.  Richards,  [1899]  1  Ire. 
79;  Hirsehhorn  v.  Bradley,  117 
Iowa  130;  Trigg  v.  Clay,  88  Va. 
330,  335,  29  Am.  St.  723.  See  §  695 
and  §  86],  in  which  Lepla  v.  Rogers, 
[1893]   1  Q.  B.  31,  is  fully  stated; 


also  United  States  T.  Co.  v.  O'Brien, 
U3  N.  Y.  284,  stated  in  §  861. 

The  failure  to  deliver  as  agreed 
an  article  not  obtainable  in  the  mar- 
ket may  be  cause  for  imposing  lia- 
bility for  the  loss  of  profits  on  a 
resale  and  also  for  increased  expense 
on  accoiuit  of  freight  and  insurance 
because  of  the  delay.  There  cannot 
be  a  recovery  for  the  loss  sustained 
by  the  purchaser  on  account  of  a 
subsale  unless  the  vendor  had  notice 
of  it.  Borries  v.  Hutchinson,  18  C. 
B.  (N.S.)  445;  Hinde  v.  Liddell,  L. 
R.  10  Q.  B.  265. 

78  Aguis  V.  Great  Western  C.  Co., 
[1899]  1  Q.  B.  413,  approving  Ham- 
mond V.  Bussey,  20  Q.  B.  Div.  79, 
and  doubting  Baxendale  v.  London, 
etc.  R.  Co.,  L.  R.  10  Ex.  35,  and 
Fisher  v.  Val  de  Travers  A.  Co.,  1  C. 
P.  Div.  511;  Scott  v.  Foley,  5  Com. 
Cas.  53. 

79  Mowbray  v.  Merry^veather, 
[1895]  1  Q.  B.  857,  [1895]  2  id.  640. 


§    51]  COMPJONSATION.  195 

of  reasonable  care.  Sueli  injury  was  the  ii;itiii-al  conseqiienco 
of  the  defect.  The  defendant's  ag:ent  guaranteed  that  a  the- 
ater trouj^e  to  whom  he  sold  tickets  should  arrive  at  their 
destination  by  a  stated  time,  which  they  did  not  do.  A  recov- 
ery was  allowed  of  the  damages  sustained  by  missing  engage- 
ments on  account  of  the  dela}^,  but  not  for  missing  other  en- 
gagements because  of  the  breaking  up  of  the  troupe  through 
failure  to  pay  its  members,  which  failure  resulted  from  the  loss 
of  the  money  which  would  have  been  received  from  keeping 
the  first-mentioned  engagements;  that  result  could  have  been 
avoided  by  a  like  sum  of  money  realized  from  any  other 
source.^"  The  defendant  contracted  with  the  owner  of  a  vessel 
to  tow  her  to  a  designated  point,  where  she  was  to  be  loaded, 
and  to  keep  a  tug  there  for  the  removal  of  the  vessel.  jSTo  tug 
was  kept  there  in  pursuance  of  the  contract,  and  none  was 
available  for  service  there.  The  defendant  failed  to  move  the 
\'essel  to  a  place  of  safety,  and  in  consecpience  of  a  storm  she 
was  greatly  damaged  and  was  sunk.  The  liability  of  the  de- 
fendant was  co-extensive  with  the  loss  suffered  by  the  plaintiff.*^ 
And  the  same  measure  of  liability  attends  the  breach  of  a 
contract  to  admit  a  ship  into  a  dock  at  a  given  time,  if  she 
is  lost  in  consequence  of  being  left  in  a  position  of  danger.** 
The  breach  of  a  contract  for  building  a  motor  railway,  entered 
into  for  the  purpose  of  securing  by  performance  the  enhance- 
ment of  the  value  of  land,  renders  the  party  in  default  liable 
for  the  loss  of  the  profits  the  purchaser  of  such  land  would 
have  made  if  the  road  had  been  built.*^  But  this  rule  does  not 
apply  as  a  defense  to  an  action  by  a  railroad  company  upon  a 
subsidy  contract. ^^  One  who  has  broken  his  contract  with  the 
stockholders  of  a  corporation  to  loan  it  money  is  not  bound  to 
foresee  that  they  would  give  their  notes  to  another  as  a  bonus 

80  Foster  v.  Cleveland,  etc.  R.  Co.,  83  Blagen    v.    'Jlionipson,    23    Ore. 

.56  Fed.  434.     See  note  to  §  52.  03.)   j^^  l.r.a.  315:  Belt  v.  Washing- 
Si  Loud  L.  Co.  V.   Peter,  20  Oliio  ,        „-    n    r<       oi    w     i      00-      e 
'  ton   \\ .  P.  Co.,  24   Wasli.  38/.     See 

C.  C.  73 ;  Boutin  v.  Rudd,  27  C.  C.  A.  ^  _ 

526,  82  Fed.  685.  ^ 

82  Wilson  V.   Newport   D.   Co.,   L.  84  Coos  Bay  R.  Co.   v.  Nosier,  .30 

E.  1  Ex.  177.  Ore.   547. 


196  SUTHERLAND    ON    DAMAGES.  [§    52 

to  obtain  a  loan,  and  is  not  liable  for  the  value  of  their 
shares.*^ 

§  52.  Market  value;  resale;  special  circumstances.     Where 

an  article  without  market  value  was  bargained  for  for  a  par- 
ticular and  exceptional  purpose,  unknown  to  the  seller,  the 
vendor  was  liable  for  the  damages  which  would  have  been 
sustained  if  it  had  been  used  for  the  purpose  for  which  he 
supposed  it  would  be  used.^®  If  the  vendor  has  notice  that 
his  vendees  have  contracted  to  resell  the  article  he  will  be 
liable  for  the  loss  of  profits  by  such  resale  if  he  fails  to  fulfill 
his  contract,  though  he  was  not  informed  of  the  price  in  the 
contract  to  resell,  unless  there  is  a  market  value  for  the  article 
or  the  reselling  price  is  of  an  unusual  or  exceptional  char- 
acter.*''' Since  the  decision  of  Hadley  v.  Baxendale  **  the  rule 
first  stated  in  that  case  for  ascertaining  damages  which  are 
recoverable  for  breach  of  contract,  namely,  that  they  be  such 
as  arise  ^'naturally,  i.  e.,  according  to  the  usual  course  of  things 
from  such  breach  of  contract  itself,"  has  been  generally  assented 
to;  as  also  what  is  said  in  the  opinion  of  Alderson,  B.,  to  the 
effect  that  if  a  contract  be  made  under  special  circumstances, 
which  are  unknown  to  the  party  breaking  it,  they  cannot  be 
taken  into  consideration  for  the  purpose  of  enhancing  the  dam- 
ages ;  that  such  a  defaulting  party,  at  the  most,  can  only  be 
supposed  to  have  had  in  his  contemplation  the  amount  of  in- 
jury which  would  arise  from  such  a  breach  generally  in  the  great 
multitude  of  cases  unaffected  by  special  circumstances.®^     His 

85  Kelly  V.  Falinioy,  38  C.  C.  A.  Western  U.  Tel.  Co.  v.  Graham,  1 
103,  97  Fed.  176.  Colo.  230;  Sanders  v.  Stuart,  1  C.  P. 

86  Cory  V.  Thames  I.  Works  Co.,  Div.  326;  Great  Western  R.  Co.  v. 
L.  R.   3  Q.  B.   181.  Redmayne,  L.  R.  1  C.  P.  329;  Mas- 

87  Booth  V.  Spuyten  Duyvil  R.  M.  terton  v.  Mayor,  7  Hill  61;  Cuddy 
Co.,  60  N.  Y.  487;  Home  v.  Mid-  v.  Major,  12  Mich.  368;  Johnson  v. 
land  R.  Co.,  L.  R.  8  C.  P.  131;  Mathews,  5  Kan.  118;  Lawrence  v. 
Lewis  V.  Rountrce,  79  N.  C.  122;  Wardwell,  6  Barb.  423;  Portman  v. 
Guetzkow  V.  Andrews,  92  Wis.  214,  Middleton,  4  C.  B.  (N.  S.)  322;  Gee 
52  L.R.A.  209,  53  Am.  St.  909 ;  Snell  v.  Lancashire,  etc.  R.  Co.,  6  H.  &  N. 
V.  Cottingham,  76  111.  161;  Kirby  211;  Hales  v.  London,  etc.  R.  Co., 
L.  Co.  V.  Cummings,  57  Tex.  Civ.  4  B.  &  S.  66;  Travis  v.  Duffau,  20 
App.  291,  citing  the  text.  Tex.   49;    Fox  v.   Harding,   7   Cush. 

88  9  Ex.  341.  516;    Dickerson  v.   Finley,   158  Ala. 

89  Griffin  v.  Colver,  16  N.  Y.  490;  149,   citing  this   section;    Hooks   S. 


§  52] 


COMPENSATION. 


197 


observations,  however,  in  favor  of  a  more  extended  lialiility, 
embracing  damages  brought  within  the  contemplation  of  the 
parties  at  the  time  of  contracting  by  communication  of  special 
circumstances,  have  been  the  subject  of  some  criticism  and 
conflict  of  opinion.  In  England,  however,  the  cases  have 
been  uniformly  decided  in  conformity  to  the  doctrine  of  that 
case;  ^°  but  there  have  been  dicta  in  several  of  a  contrary  tend- 
ency, especially  with  reference  to  its  application  to  carriers, 
who  were  supposed  to  have  no  option  to  refuse  to  accept  goods 
offered  for  transportation,  in  view  of  enlarged  responsiltility 
on  account  of  special  circumstances  unless  an  increased  com- 
pensation be  paid.^^     The  tendency  of  the  decisions  there  ap- 


Co.  V.  Planters'  C.  Co.,  72  Ark.  275; 
Albany  P.  Co.  v.  Hugger,  4  Ga.  App. 
771,  citing  the  text;  Clyde  C.  Co. 
V.  Pittsburg,  etc.  R.  Co.,  226  Pa. 
391,    26    L.R.A.(N.S.)    1191. 

Delay  in  shipping  goods  is  not  at- 
tended with  liability  for  an  in- 
creased customs  duty  which  takes  ef- 
fect intermediate  the  date  when 
they  should  have  arrived  if  there 
had  been  no  delay  and  the  date 
when  they  reached  their  destination. 
Emu  Gravel  &  R.  Co.  v.  Gibson,  3 
New  South  Wales  St.  Rep.  204.  See 
Commonwealth,  P.  C.  Co.  v.  Weber, 
id.  516. 

90  Agius  v.  Great  Western  C.  Co., 
[1899]   1  Q.  B.  413. 

If  the  goods  contracted  for  arc  of 
a  particular  shape  and  description, 
and  the  party  who  is  to  furnisli 
them  knows  that  the  contract  is 
substantially  like  one  the  purchaser 
has  made  with  a  customer  of  his, 
and  that  it  is  made  to  enable  the 
purchaser  to  fulfill  such  contract, 
and  there  is  no  market  for  the  goods, 
the  latter  may  recover  as  damages 
for  the  breach  the  profit  he  would 
have  made  had  he  been  able  to  sup- 
ply his  customer,  and  also  damages 
recovered  against  him  by  the  latter 
for   the  resulting  breach.      In   esti- 


mating such  last-nicnlioiu'd  dam- 
ages the  judgment  of  a  foreign  court 
will  be  regarded  as  establishing 
a  reasonable  sum  for  tlieir  com- 
putation. Tlie  lial)ility  of  tlic  pur- 
cliaser  to  his  customer  for  a  ]icnalty 
if  he  failed  to  keep  bis  contract  witli 
him  must  have  been  known  to  the 
original  vendor.  Grebert-Rorgnis  v. 
Nugent,  15  Q.  B.  Div.  85. 

91  See  §§  900,  913,  914.  In  Rorrics 
V.  Hutchinson,  18  C.  B.  (X.  S.)  445, 
and  in  Smeed  v.  Foord,  1  K.  &  K. 
602,  the  damages  were  larger  and 
the  recovery  sustained  by  reason  of 
the  defendant  iiaving  notice  of  the 
purpose  of  the  other  party  in  mak- 
ing the  contract,  llobhs  v.  London, 
etc.  R.  Co.,  L.  IJ.  IOC,)  i'..  Ill:  Siuitti 
V.  Green,  1  C.  P.  Div.  92:  Simi)son 
V.  London,  etc.  R.  Co.,  1  Q.  15.  Div. 
274;  Wilson  v.  General  I.  S.  Co.,  47 
L.  J.   (N.  S.)    (Q.  R.)   239. 

See,  as  to  the  liability  of  carriers 
and  the  particularity  of  tlie  notice 
they  are  entitled  to  as  a  condititm 
precedent  to  liability  for  unusual 
damages,  British  Columbia  S.  M.  Co. 
V.  Nettleship,  L.  R.  3  C.  P.  499; 
Home  V.  Midland  R.  Co.,  L.  R.  7 
C.  P.  583,  8  id.  136. 

In  Elbinger  Actien-Gesellschaft  v. 
Armstrong,  L.  R.  9  Q.  B.  473    (ap- 


198 


SUTHERLAND    ON    DAMAGES. 


[§   52 


pears  to  be  to  require  the  special  purpose  of  the  contract  to 
be  so  far  in  view  when  the  contract  is  made  that  it  is  reason- 


proved  in  Grebert-Borgnis  v.  Nugent, 
15  Q.  B.  Div.  85),  the  plaintiff  con- 
tracted for  the  purchase  of  wlieels 
and  axles,  he  designed  to  use  in  the 
manufacture  of  wagons;  and  the 
wagons  he  had  contracted  to  sell  and 
deliver  to  a  Russian  company  by  a 
certain  day,  or  forfeit  two  roubles  a 
wagon  per  day.  The  defendant,  who 
contracted  to  sell  the  wheels  and 
axles,  was  informed  of  the  other  con- 
tract, but  not  of  the  amount  of  the 
penalties.  Some  delay  occurred  in 
the  plaintiff's  deliveries,  by  the  de- 
fendant's fault,  and  in  consequence 
the  plaintiff  had  to  pay  £100  in  pen- 
alties; and  the  action  was  brought 
to  recover  that  sum  of  the  defendant. 
There  was  no  market  in  which  the 
goods  could  be  obtained,  and  it  was 
therefore  contended  in  behalf  of  the 
defendant  that  only  nominal  dam- 
ages could  be  recovered.  Tlie  court 
held  the  defendant  liable  for  sub- 
stantial damages,  not  for  the  penal- 
ties the  plaintiff  had  been  obliged 
to  pay,  the  defendant  having  no 
notice  of  them,  but  the  reasonable 
value  of  the  use  of  the  wagons  dur- 
ing the  delay.  A  verdict  of  flOO 
was  sustained.  But  the  court,  by 
Blackburn,  J.,  remarked:  "If  we 
thought  that  this  amount  could  only 
be  come  at  by  laying  down  as  a  prop- 
osition of  law  that  the  plaintiffs  were 
entitled  to  recover  the  penalties 
actually  paid  to  the  Russian  com- 
pany, we  should  pause  before  we  al- 
lowed the  verdict  to  stand."  After 
referring  to  Hadley  v.  Baxendale  he 
continued:  "But  an  inference  has 
been  drawn  from  the  language  of 
the  judgment,  that  whenever  there 
has  been  notice,  at  the  time  of  the 
contract,  that  some  unusual  conse- 
quence is  likely  to  ensue,  if  the  con- 


tract is  broken  the  damages  must  in- 
clude that  consequence;  but  this  is 
not,  as  yet,  at  least,  established  law. 
In  Mayne  on  Damages  (p.  10,  2d  ed. 
by  Lumley  Smith ) ,  in  commenting 
on  Hadley  v.  Baxendale,  2  Am.  Neg. 
Rep.  400,  it  is  said:  'The  principle 
laid  down  in  the  above  judgment, 
that  a  party  can  only  be  held  re- 
sponsible for  such  consequences  as 
may  be  reasonably  supposed  to  have 
been  in  the  contemplation  of  both 
parties  at  the  time  of  making  the 
contract,  and  that  no  consequence 
which  is  not  the  necessary  result  of 
a  breach  can  be  supposed  to  have 
been  so  contemplated,  unless  it  was 
communicated  to  the  other  party, 
are,  of  course,  clearly  just.  But, 
it  may  be  asked,  with  great  defer- 
ence, whether  the  mere  fact  of  such 
consequences  being  communicated 
to  the  other  party  will  be  sufficient, 
without  going  on  to  show  that  he 
was  told  that  he  would  be  answer- 
able for  them,  and  consented  to  un- 
dertake such  a  liability. 
The  law  says  that  every  one  who 
breaks  a  contract  shall  pay  for  its 
natural  consequences:  and,  in  most 
cases,  states  what  those  consequences 
are.  Can  the  other  party,  by  merely 
acquainting  him  with  a  number  of 
further  consequences,  which  the  law 
would  not  have  implied,  enlarge  his 
responsibility,  without  any  contract 
to  that  effect?'  We  are  not  aware 
of  any  case  in  which  Hadley  v.  Bax- 
endale has  been  acted  upon  in  any 
such  way  as  to  afford  an  answer  to 
the  learned  author's  doubts;  and, 
in  Home  v.  Midland  R.  Co.,  L.  R. 
8  C.  P.  131,  much  that  fell  from 
the  judges  in  the  exchequer  cham- 
ber tends  to  confirm  those  doubts." 
In  this  case  the  court  held  that  the 


52] 


COMPENSATION. 


199 


able  to  infer  a  tacit  acceptance  of  it  as  made  for  the  accom- 
plishment of  that  object,  and  a  tacit  consent  to  be  bound  to 


plaintili'  was  not  entilk'd  to  damages 
for  the  delay,  exceeding  tlie  penalty 
he  was  bound  for  and  had  paid  to 
his   vendee. 

In  Hinde  v.  Liddell,  L.  R.  10  Q.  B. 
2(i5,  the  defendant  contracted  to  sup- 
ply the  plaintili'  two  thousand  pieces 
of  grey  shirtings,  to  be  deJivered  on 
the  20th  of  October,  certain,  at  so 
much  per  piece,  the  defendant  being 
informed  that  they  were  for  ship- 
ment. Shortly  before  the  20th  of 
October  the  defendant  informed  the 
plaintiff  that  he  would  be  unable  to 
complete  his  contract  by  the  time 
specified;  and,  thereupon,  the  plain- 
tiff endeavored  to  get  the  shirtings 
elsewhere,  but,  there  being  no  mar- 
ket in  England  for  it,  that  kind  of 
shirtings  could  only  be  procured  by 
a  previous  order  to  manufacture  it. 
The  plaintiff,  therefore,  in  order  to 
ship  according  to  his  contract  with 
his  sub-vendee,  procured  two  thou- 
sand pieces  of  other  shirtings,  of  a 
somewhat  superior  quality,  at  an  in- 
crease of  price,  which  the  sub-vendee 
accepted,  but  paid  no  advance  in 
price  to  the  plaintiff'  who  recovered 
against  the  defendant  the  excess 
over  the  contract  price. 

In  Grebert-Borgnis  v.  Nugent,  15 
Q.  B.  Div.  85,  it  is  said  that  a  ven- 
dor who  contracts  with  a  purchaser 
knowing  that  the  latter  has  a  for- 
eign customer  for  the  articles  con- 
tracted for  must  understand  that  if 
such  purchaser  fails  to  fulfill  his 
contract  he  will  be  liable  to  his  cus- 
tomer for  damages;  and  while  the 
judgment  of  a  foreign  court  will  not 
be  held  binding  as  to  the  amount  of 
damages,  it  will  be  assumed  that  the 
sum  fixed  thereby  is  reasonable. 

In  Simpson  v.  London,  etc.  E.  Co., 
1    Q.   B.   Div.   274,    the    plaintiff,   a 


manufacturer  of  cattle  food,  was  in 
the  habit  of  sending  samples  of  his 
goods  to  cattle  shows,  with  a  show 
tent  and  banners,  and  attending 
there  himself  to  attract  custom, 
lie  intended  to  exhibit  sonic  of  these 
samples  at  the  Newcastle  show,  and 
delivered  them  for  transmission  to 
the  defendants.  The  contract  was 
made  with  the  defendants'  agent  at 
a  cattle  show  at  Bedford,  where  the 
plaintiff  had  been  exhibiting  his 
samples,  and  where  the  defendants 
had  an  agent  and  ollice  on  the  show 
ground  for  the  purpose  of  seeking 
traffic.  The  evidence  as  to  the  terms 
of  the  contract  was  that  a  consign- 
ment note  was  filled  up  by  the  plain- 
tiff's son  consigning  the  goods  as 
"boxes  of  sundries"  to  "Simpson  & 
Co.,  the  show  ground,  Newcastle  on 
TjTie,"  and  that  he  indorsed  the  note 
"must  be  at  Newcastle  on  Monday 
certain,"  meaning  the  next  Monday, 
the  20th  of  July.  Nothing  was  ex- 
pressly said  as  to  the  plaintiff's  in- 
tention to  exhibit  the  goods  at  New- 
castle, nor  as  to  the  goods  being 
samples.  They  did  not  arrive  until 
several  days  after  time,  and  when 
the  show  was  over.  It  was  found 
that  the  plaintiff  obtained  custom 
by  exhibiting  his  samples  at  shows, 
but  no  evidence  was  given  as  to  his 
prospects  with  regard  to  the  New- 
castle show  in  particular.  A  verdict 
by  consent  was  entered  for  £20  be- 
yond a  sum  which  had  been  paid  in, 
with  leave  to  move  to  enter  the  ver- 
dict for  the  defendants,  if  the  court 
should  be  of  opinion  that  the  plain- 
tiff was  not  entitled  to  recover  for 
either  loss  of  time  in  waiting  for  the 
goods  or  loss  of  profits.  It  was  held 
that  the  plaintiff  was  entitled  to  the 
verdict.    Cockburn,  C.  J.,  said:  "The 


200 


SUTHEKI^AND    ON    DAMAGES. 


[§  52 


more  than  the  ordinary  damages,  in  case  of  default,  on  that 
account;  otherwise  the  damages  in  respect  to  that  object  are 
not  deemed  to  have  been  within  the  contemplation  of  the  parties. 
This  is  probably  also  the  doctrine  of  the  American  courts.^^ 
The  parties  are  not  supposed  to  actually  intend  to  pay  dam- 
ages by  any  other  than  a  legal  standard  unless  they  formally 


law,  as  it  is  to  be  found  in  the  re- 
ported cases,  has  fluctuated;  but  the 
principle  is  now  settled  that,  when- 
ever either  the  object  of  the  sender 
is  specially  brought  to  the  notice  of 
the  carrier,  or  circumstances  are 
known  to  the  carrier  from  which 
the  object  ought  in  reason  to  be  in- 
ferred, so  that  the  object  may  be 
taken  to  have  been  within  the  con- 
templation of  both  parties,  damages 
may  be  recovered  for  the  natural 
consequences  of  the  failure  of  that 
object."  See  Kennedy  v.  American 
Exp.  Co.,  22  Ont.  App.  278. 

In  Jameson  v.  Midland  R.  Co.,  50 
L.  T.  Rep.  426,  the  plaintiff  delivered 
a  parcel  at  the  defendant's  office 
addressed  to  M.,  Stand  23,  Show 
Ground,  etc. ;  nothing  was  said  by 
him.  The  label  so  addressed  was 
sufficient  notice  that  the  parcel  was 
being  sent  to  a  show,  and  the  defend- 
ant was  liable  for  the  loss  of  profits 
and  expenses  resulting  from  its  de- 
lay. 

92  Notice  to  a  carrier,  after  goods 
have  been  shipped,  of  circumstances 
which  render  special  damages  a 
probable  consequence  of  delay  does 
not  affect  the  original  contract  so  as 
to  render  it  liable  for  such  damages 
although  the  subsequent  delay  is  un- 
reasonable. Bradley  v.  Chicago,  etc. 
R.  Co.,  94  Wis.  44 ;  Missouri,  etc.  R. 
Co.  V.  Belcher,  35  S.  W.  6  (Tex.  Sup. 
Ct.)  ;  Clyde  C.  Co.  v.  Pittsburg,  etc. 
R.  Co.,  226  Pa.  391,  26  L.R.A.(N.S.) 
1191.  See  Kolb  v.  Southern  R.  Co., 
81  S.  C.  536,  distinguishing  obiter 
remarks    in    other    cases   as   to   the 


effect  of  subsequent  notice  of  further 
delay  in  delivering  goods. 

If  the  bill  of  lading  is  silent  as  to 
the  time  goods  are  to  be  delivered 
the  fact  that  notice  was  given  the 
carrier  that  unusual  loss  would  re- 
sult if  there  was  delay  in  delivery 
may  be  shown  by  parol.  Central  T. 
Co.  v.  Savannah,  etc.  R.  Co.,  69 
Fed.  683. 

"In  the  absence  of  a  definite  con- 
tract for  carriage  to  a  given  point 
by  a  given  time,  with  such  reasons 
for  its  making  as  would  naturally 
lead  the  agent  of  the  carrier  to  con- 
template the  profits  the  passenger 
expected  to  realize,  it  is  clear  that 
the  damage  claimed  for  the  failure 
to  realize  such  profits  is  too  uncer- 
tain and  remote."  Southern  R.  Co. 
V.  Myers,  32  C.  C.  A.  19,  87  Fed. 
149.  See  Foster  v.  Cleveland,  etc.  R. 
Co.,  56  Fed.  434,  stated  in  §  51. 

Where  the  work  contracted  to  be 
done  was  of  little  value  as  compared 
with  the  damages  claimed  because  it 
was  not  properly  done  the  court 
said :  Where  the  damages  arise  from 
special  circumstances,  and  are  so 
large  as  to  be  out  of  proportion  to 
the  consideration  agreed  to  be  paid 
for  the  services  to  be  rendered  under 
the  contract,  it  raises  a  doubt  at 
once  as  to  whether  the  party  would 
have  assented  to  such  a  liability  had 
it  been  called  to  his  attention  at  the 
making  of  the  contract  unless  the 
consideration  to  be  paid  was  also 
raised  so  as  to  correspond  in  some 
respect  to  the  liability  assured.  To 
make  him  liable  for  the  special  dam- 


52] 


COMPENSATION. 


201 


liquidate  tliem,  whether  there  are  special  circumstances  or  not. 
They  know  the  legal  principle  of  compensation  and  the  rules 
subsidiary  to  it;  and  when  they  do  not  li(}uidatc  the  damages 
they  are  content  to  enter  into  the  contract  and  leave  the  meas- 
ure of  liability  to  be  decided  by  the  law;  they  know  that  it 
will  require  them  to  make  compensation  in  case  of  a  breach 
for  damages  which  directly  arise  therefrom  in  view  of  the 
intrinsic  nature  of  the  contract  and  of  the  special  circum- 
stances known  to  them  when  it  was  made  which  disclose  some 
particular  object  different  from  or  beyond  that  which  would 
be  suggested  by  the  mere  words  of  the  contract.^^ 


ages  in  such  a  case  there  must  not 
only  be  knowledge  of  the  special  cir- 
cumstances, but  such  knowledge 
"must  be  brought  home  to  the  party 
sought  to  be  charged  under  such  cir- 
cumstances that  he  must  know  that 
the  person  he  contracts  with  reason- 
ably believes  that  he  accepts  the  con- 
tract with  the  special  condition  at- 
tached to  it."  In  other  words,  where 
there  is  no  express  contract  to  pay 
such  special  damages  the  facts  and 
circumstances  in  proof  must  be  such 
as  to  make  it  reasonable  for  the 
judge  or  jury  trying  the  case  to  be- 
lieve that  the  party  at  the  time  of 
the  making  of  the  contract  tacitly 
consented  to  be  bound  to  more  than 
ordinary  damages  in  case  of  his 
default.  Hooks  S.  Co.  v.  Planters' 
C.  Co.,  72  Ark.  275,  citing  the  text. 
93  Booth  V.  Spuyten  Duyvil  R.  M. 
Co.,  60  N.  Y.  487.  In  this  case 
Church,  C.  J.,  said,  referring  to  the 
English  cases:  "Some  of  the  judges 
in  commenting  upon  it  (the  doctrine 
under  consideration)  have  held  that 
a  bare  notice  of  special  circum- 
stances which  might  result  from  a 
breach  of  the  contract,  unless  under 
such  circumstances  as  to  imply  that 
it  formed  the  basis  of  the  agreement, 
would  not  be  sufficient.  I  concur 
with    the    view    expressed    in    these 


cases,  and  I  do  not  think  that  tlie 
court  in  Hadley  v.  Baxendale  intend- 
ed to  lay  down  any  different  doc- 
trine." But  the  defendant  in  this 
case  was  held  to  be  liable  for  the 
loss  sustained  on  a  contract  which 
the  plaintiffs  had  with  tiie  New  York 
Cent.  E.  Co.,  by  reason  of  tlie  de- 
fendant's breach,  and  that  loss  wa.s 
held  to  be  brought  within  the  con- 
templation of  the  parties  by  mere 
notice,  generally,  that  tliere  was  a 
contract  depending  on  the  defend- 
ant's performance. 

In  Liman  v.  Pennsylvania  R.  Co., 
4  N.  Y.  Misc.  539,  the  plaintiff  was 
under  contract  to  exhibit  one  R.  in 
Chicago  for  two  weeks,  and  four 
days  before  the  time  fixed  therefore 
applied  to  the  defendant  at  its  office 
in  New  York  and  stated  tlie  circum- 
stances; the  defendant  agreed  to  de- 
liver to  R.  a  railroad  ticket  to  Chi- 
cago, but  failed  to  do  so.  .Judgment 
in  favor  of  the  plaintiff  for  the  sum 
paid  for  the  ticket  and  profits  on 
R.'s  engagement  was  affirmed.  The 
court  did  not  interpret  Booth  v. 
Spuyten  Duyvil  Rolling  Mill  Co., 
supra,  as  intending  that  a  contract- 
ing party  may,  notwithstanding  that 
he  has  been  sufficiently  informed  of 
the  existence  of  a  certain  other  con- 
tract, the  performance  of  which   ia 


202 


SUTHERLAND    ON    DAMAGES. 


[§  52 


Doubtless  it  is  essential,  in  order  to  bring  within  the  contem- 
j)lation  of  the  parties  damages  different  from  and  larger  in 
amount  than  those  which  usually  ensue,  that  the  special  cir- 
cumstances out  of  which  thej  naturally  proceed  shall  have 
been  known  to  the  party  sought  to  be  made  liable  in  such 
manner,  at  the  time  of  contracting,  as  to  make  it  manifest  to 
him  that  if  compensation  in  case  of  a  breach  on  his  part  is  ac- 
corded for  actual  loss  it  must  be  for  a  loss  resulting  from  that 


dependent  upon  performance  of  the 
proposed  contract  with  him,  to  put 
him  upon  reasonable  inquiry  in  re- 
spect thereto,  shield  himself  against 
consequential  damages  by  wilfully  or 
deliberately  abstaining  from  the  in- 
quiry. If,  under  such  circumstances, 
a  party  refrains  from  inquiry  he 
cannot  set  up  his  ignorance  to  limit 
his  liability. 

A  manufacturer  contracted  to  fur- 
nish machinerj'  and  make  essential 
repairs  upon  the  plant  of  a  compress 
company  by  a  fixed  date,  which  was 
known  by  both  parties  to  be  the  be- 
ginning of  the  season  for  the  opera- 
tion of  the  plant,  which  could  only 
be  operated  during  a  part  of  the 
year;  both  parties  also  knew  that  it 
was  the  intention  to  have  the  plant 
in  readiness  for  the  opening  of  the 
season.  The  notice  to  the  defendant 
was  sufficient  to  make  it  liable  for 
special  damages  resulting  from  its 
delay.  Machine  Co.  v.  Compress  Co., 
105  Tenn.  187,  53  L.R.A.  482;  Neal 
V.  Pender-H.  H.  Co.,  122  N.  C.  104, 
65  Am.   St.   697. 

In  Snell  v.  Cottingham,  72  111. 
161,  it  w^as  held  that  a  contractor 
who  fails  to  finish  a  railroad  by  the 
time  limited  in  his  contract  cannot 
be  held  for  the  loss  occasioned  to  the 
owner  of  the  road  by  reason  of  an- 
other contract  between  him  and  a 
third  party,  for  the  use  of  the  rqad 
after  the  time  it  should  have  been 
completed,  even  though  he  may  have 


known  of  the  existence  and  the 
terms  of  such  other  contract  at  the 
time  of  entering  into  his  own,  unless 
he  expressly  agrees  to  such  a  rate 
of  damages.  A  similar  doctrine  is 
laid  down  in  Bridges  v.  Stickney,  38 
Me.  369;  Hunt  v.  Oregon  Pac.  R. 
Co.,  36  Fed.  481,  1  L.R.A.  842.  See 
Clark  V.  Moore,  3  Mich.  55. 

The  Illinois  case  is,  probably,  not 
to  be  taken  as  declaring  a  general 
principle.  The  decision  was  doubt- 
less influenced  by  the  damages 
which  would  have  been  recovered  if 
the  rule  had  been  applied.  It  is 
said  in  the  opinion :  Had  it  been 
known,  that  it  was  expected  ap- 
pellees would  be  held  responsible  for 
such  extraordinary  damages,  it  is 
hardly  probable  that  they  would 
have  entered  into  the  contract,  for 
the  consequences  of  a  failure  for 
only  a  few  days  w^ould  be  most  dis- 
astrous. Tlie  damages  insisted  upon 
exceed  $44,000,  a  sum  enormously 
out  of  all  proportion  to  the  amount 
to  be  paid  for  the  entire  work.  The 
same  distinction  is  made  in  other 
cases.  Thus,  it  is  said  in  Booth  v. 
Spuyten  Duyvil  R.  M.  Co.,  supra: 
It  is  sufficient  to  hold,  what  appears 
to  me  to  be  clearly  just,  that  he  is 
bound  by  the  price  unless  it  is  shown 
that  the  price  is  extravagant,  or  of 
an  unusual  or  exceptional  character. 
See  Guetzkow  v.  Andrews,  92  Wis. 
2]4,  52  L.R.A.  209,  53  Am.  St.  909. 


§    52]  COMPENSATION.  203 

special  state  of  things  which  those  cii-cumstances  portended.^* 
Damages  are  not  the  primary  purpose  of  contracts,  but  are 
given  bj  law  in  place  of  and  as  a  compensation  and  ("(piivu- 
lent  for  something  else  which  had  heen  agreed  to  be  done  and 
has  not  been  done.  What  the  damages  would  ordinarily  be 
on  such  a  default  is  immaterial  if  the  contracting  party  as- 
sumed the  obligation  he  has  broken  with  a  knowledge  of  a 
peculiar  state  of  facts  connected  with  the  contract  which  in- 
dicated that  other  damages  would  result  from  a  breach,  and 
the  latter  are  claimed.  To  confine  the  injured  party's  recov- 
ery in  such  case  to  the  lighter  damages  which  usually  follow 
such  a  breach,  where  no  such  known  special  facts  exist,  and 
exclude  those  which  were  thus  brought  within  the  contempla- 
tion of  the  parties,  would  be  to  sacrifice  substantial  rights  to 
arbitrary  rule ;  to  set  aside  the  principle  which  entitles  a  party 
to  compensation  commensurate  with  his  injury  to  give  effect 
to  a  rule  formulated  to  render  that  principle  effectual ;  it 
would  be  to  apply  a  subordinate  rule  where  it  has  no  applica- 
tion instead  of  the  principle,  which  is  paramount  and  always 
applicable.^^  What  are  the  usual  damages  which  result  from 
the  breach  of  a  contract?  There  is  certainly  no  customary 
amount,  nor  is  there  any  rule  of  damages  which  is  universal 
like  the  principle  for  allowance  of  due  compensation.  If  it  is 
a  contract  of  sale  and  the  vendor  refuses  to  complete  it,  one 
rule  is  to  ascertain  that  compensation  by  the  difference  be- 
tween the  contract  price  and  the  market  value,  because  if  the 
article  which  is  the  subject  of  the  contract  can  be  obtained  in 
market  at  a  market  price  the  vendee  is  thereby  enabled  to 
supply  himself  without  loss  imless  the  price  has  increased. 
That  rule  goes  no  further,  but  the  principle  does.  Where  the 
vendee  cannot  obtain  the  article  in  the  market,  nor  at  all  if 
the  vendor  refuses  to  perform  his  contract,  that  rule  is  not 
applicable,  and  then  resort  must  be  had  to  other  elements 
of  value;  and  recourse  is  had  to  the  principle  to  determine  the 
measure  of  redress ;  even  a  contract  of  resale  made  by  the  veu- 

94  Alabama   C.    Co.    v.   Geiss,    143       Adiu'rs    v.    Kaccich,    12!t    T.!i.     KIO. 
Ala.  ,591,  quoting  the  text. 

95  Tulane       Educational       Fund's       quoting  the  text. 


204 


SU'l'llKHLAND    ON    DAMAGES. 


[§  ^2 


dee  and  of  which  the  vendor  had  no  notice  may  be  considered.^^ 
And  if  the  goods  were  not  bought  for  resale  and  had  no  mar- 
ket value,  but  were  intended  for  some  special  use,  the  dam- 
ages would  be  computed  according  to  the  value  for  the  use  to 
which  the  property  was  most  obviously  adapted  unless  the 
vendor  knew  of  the  intention  to  apply  them  to  a  different  one.^' 


96  France  v.  Gaudet,  L.  R.  6  Q.  B. 
1S)9;  McHose  v.  Fulmer,  73  Pa.  365; 
Carroll-P.  B.  &  T.  Co.  v.  Columbus 
Mach.  Co.,  5  C.  C.  A.  190,  55  Fed. 
451 ;  Hockersmith  v.  Hanley,  29  Ore. 
27,  citing  the  text;  Kirby  L.  Co.  v. 
Cummings  (Tex.  Civ.  App.),  122  S. 
W.  273,  citing  the  text;  Armeny  v. 
Madson  &  B.  Co.,  Ill  111.  App.  621, 
citing  the  text.  See  Tulane  Educa- 
tional Fund's  Adm'rs  v.  Baccich, 
supra,  stated  in  §  798. 

France  v.  Gaudet,  supra,  was  an 
action  for  the  conversion  of  the 
property  sold,  and  hence  is  not  to  be 
considered  as  authority  to  the  full 
extent  of  the  proposition  to  which 
it  is  cited.  If  the  article  the  vendor 
has  contracted  to  supply  or  an  arti- 
cle of  the  same  quality  cannot  be 
procured  in  the  market,  it  is  pre- 
siimed  that  such  fact  was  within  the 
contemplation  of  the  parties  to  the 
contract.  McHose  v.  Fulmer,  supra. 
But  this  rule  is  denied  in  an  English 
case  (Thol  v.  Henderson,  8  Q.  B. 
Div.  457 ) .  There  was  a  contract 
to  deliver  goods  which  were  not  ob- 
tainable in  the  market;  the  purchas- 
er had  entered  into  a  contract  for 
their  sale.  The  vendor  had  no  • 
knowledge  of  the  particular  con- 
tract, but  was  aware  that  the  goods 
were  ordered  for  the  purpose  of  re- 
selling them.  Such  knowledge  was 
held  not  to  bring  the  case  within  the 
rule  of  Hadley  v.  Baxendale,  so  as 
to  allow  the  recovery  of  profits 
which  would  have  been  made  if  there 
had  not  been  a  breach  of  the  con- 
tract.    This  is  too  strict  an  applica- 


tion of  the  rule,  because  it  was  im- 
material to  the  vendor  who  liis  pur- 
chaser's customer  was;  the  former 
had  knowledge  sufficient  to  act  as  an 
incentive  to  the  prompt  fulfillment 
of  his  contract  and  to  apprise  him  of 
the  fact  that  its  breach  would  espe- 
cially damage  the  vendee.  See  Loe- 
scher  v.  Disterberg,  26  111.  App.  520, 
which  is  in  harmony  with  McHose  v. 
Fulmer,  supra. 

In  Hamilton  v.  Magill,  12  L.  R. 
Ire.  186,  one  of  the  points  especially 
relied  upon  by  the  defendant  was 
that  at  the  time  the  contract  in  suit 
was  made  the  plaintiff  had  not  actu- 
ally completed  his  contract  for  the 
sale  of  the  property  purchased,  and 
that  the  case  should  be  treated  as  if 
the  defendant  had  no  other  notice 
than  that  it  was  bought  for  resale 
generally.  The  answer  of  the  court 
was  that  it  appears  "illogical  and 
contrary  to  principle  that  a  person 
who,  having  an  ofter,  enters  into  a 
contract  with  another,  which  if  car- 
ried out  would  enable  him  to  accept 
that  offer,  but  refrains  from  actually 
accepting  it  until  he  has  entered 
into  the  contract,  should  be  in  a 
worse  position  than  one  who  makes 
a  contract  for  sale  on  the  chance  of 
afterwards  purchasing  from  another 
the  goods  which  he  has  previously 
contracted  to  sell.  To  establish  such 
a  distinction  would  place  the  specu- 
lator in  a  more  advantageous  posi- 
tion than  the  prudent  merchant." 

97  Cory  V.  Thames  I.  Works  Co., 
L.  R.  3  Q.  B.  181;  Machine  Co.  v. 
Compress    Co.,    105    Tenn.    187,    53 


§    52]  COMPENSATION.  205 

Their  delivery  in  the  case  where  a  contract  of  resale  existed 
would  have  enabled  the  vendee  to  obtain  the  reselling  price, 
and  in  the  other  to  avoid  the  loss  which  has  otherwise  resulted 
from  being  deprived  of  the  property.  Such  recoveries  are  not 
unusual.  It  may  be  said  that  sales  are  generally  made  of  arti- 
cles having  a  market  value.  True.  But  there  is  no  uniform 
relativeness  between  the  contract  and  market  prices.  The  de- 
faulting vendor  will  pay  nominal  damages  when  the  market 
price  is  less  than  the  contract  price  and  sul)stantial  daniag'es, 
according  to  the  excess  of  the  former  at  the  time  the  goods 
should  have  been  delivered.  When  the  vendor  refused  to  de- 
liver ice  according  to  his  contract,  knowing  when  he  made  the 
agreement  that  it  was  wanted  as  a  means  of  preserving  fresh 
meat  in  the  prosecution  of  the  vendee's  business,  and  the  ice 
could  not  be  obtained  in  market,  what  should  be  deemed  the 
usual  damages  for  a  breach  of  the  contract  ?  Certainly  not 
what  had  been  the  market  price  when  ice  was  plenty  and 
could  be  had  from  other  sources ;  but  its  value  when  it  should, 
according  to  the  contract,  have  been  delivered  and  when  the 
vendor,  as  the  fact  probably  may  be,  alone  could  supply  it, 
and  when  the  vendee  must  have  it  or  lose  a  certain  amount  of 
meat  or  suspend  business  notwithstanding  his  best  endeavors 
by  other  means  to  preserve  the  meat  or  continue  his  business.®^ 
A  vendor  of  undersized  bottles  may  be  liable  to  his  vendee 
for  the  abandonment  of  his  business  because  of  the  refusal  of 
his  patrons  to  deal  with  him,  if  he  is  unable  to  procure  bottles 
of  full  size.^^  The  failure  to  supply  water  for  irrigation  is 
attended  with  liability  for  the  loss  of  fruit  trees  growing  on 
the  land  which  was  to  have  been  irrigated  in  their  growing 
state,   and  in  arriving  at  their  value  the  difference  between 

L.R.A.  482;  Ideal  W.  Co.  v.  Garvin  of  profits  or  interest  on  tlie  invest- 

Mach.  Co.,   92  App.   Div.   187.  ment. 

In  Alabama  C.  Co.  v.  Geiss,  143  98  Hammer     v.     Schoenfelder,     47 

Ala.    591,    the   loss   sustained   by   a  ^.^    ^^.,    g^^.^^^  ^j^^  j    ^  ^    ^^ 

purchaser    of    lumber    which    might  „„    »   ,      r.,,. 

r  ,  ,  .    •      ,    •      i,  1    4.       V.   Adams,   69   Ark.   219. 

have  been   obtained   in   the   market 

did  not  include  a  forfeiture  which  he  99  North   Baltimore   B.   (i.   Co.   v. 

released  liis  contractor  from,  the  loss       Altpeter,  133  Wis.  112. 


206  SUTHERLAND    ON    DAMAGES.  [§    52 

the  value  of  the  land  with  and  without  them  at  the  time  of 
their  destruction  may  be  considered.^ 

If  the  contract  is  made  to  serve  a  particular  purpose,  not 
communicated  and  known  to  both  parties,  nor  indicated  by 
its  subject-matter  and  the  loss  in  respect  to  that  purpose  is  so 
exceptional  as  neither  to  be  within  the  contemplation  of  the 
parties  at  the  making  of  the  contract,  nor  within  the  first  branch 
of  the  rule  laid  down  in  Hadley  v.  Baxendale,  it  cannot  be 
recovered;  but  where  the  injury  is  within  such  contemplation 
if  the  parties  give  the  subject  consideration  when  the  contract 
is  made  they  are  admonished  by  the  prevalence  of  the  principle 
of  compensation  in  the  law  that,  if  they  do  not  perform,  the 
alternative  of  making  reparation  on  the  scale  of  equivalence  to 
the  actual  injury  will  be  compulsory;  and  there  is  no  need 
of  any  agreement  to  submit  to  such  a  legal  consequence.  The 
law  as  laid  down  in  Hadley  v.  Baxendale  has  been  generally 
accepted  in  this  country;  it  includes  all  such  damages  as  may 
reasonably  be  supposed  to  have  been  in  the  contemplation  of 
both  parties  at  the  time  they  made  the  contract  as  the  probable 
result  of  the  breach  of  it.^  And  in  accordance  with  the  doc- 
trine of  that  case  it  is  sufficient  if  the  special  circumstances 
under  which  the  contract  was  actually  made  were  communicated 
to  the  party  sought  to  be  charged,  and  the  damages  resulting 
from  the  breach  are  such  as  both  parties  would  reasonably 
contemplate  would  be  the  amount  of  the  injury  which  would 
ordinarily  follow  from  a  breach  under  those  circumstances.  As 
said  by  Selden,  J. :  ''The  broad  general  rule  ...  is  that 
the  party  injured  is  entitled  to  recover  all  his  damages,  in- 
cluding gains  prevented  as  well  as  losses  sustained;  and  this 
rule  is  subject  to  but  two  conditions.  The  damages  must  be 
such  as  may  fairly  be  supposed  to  have  entered  into  the  con- 
templation of  the  parties  when  they  made  the  contract;  that 
is,  must  be  such  as  might  naturally  be  expected  to  follow  its 
violation;  and  they  must  be  certain  both  in  their  nature  and 

IHanes  v.  Idaho  I.  Co..  21  Idaho,  29  Ex.  353;  Gross  v.  ITeckert,  120 

512.  Wis.   314. 


§  53] 


COMPENSATION. 


207 


in  respect  to  the  cause  from  which  they  proceed."^  And  this 
leads  naturally  to  the  consideration  of  the  certainty  which  is 
necessary  to  warrant  the  recovery  of  damages. 

Section   5. 

required   certainty  of  damages. 

§  53.  Must  be  certain  in  their  nature  and  cause.  Damages 
must  be  certain  both  in  their  nature  and  in  respect  to  the 
cause  from  which  they  proceed.^     Judge  Selden  said  that  the 


3  Griffin  v.  Colver,  16  N.  Y.  494; 
Savannah,  etc.  R.  Co.  v.  Pritchard, 
77  Ga.  412,  418,  4  Am.  St.  92;  Ben- 
jamin V.  Puget  Sound  C.  Co.,  12 
Weesh.  476,  quoting  the  text;  Collins 
V.  Laveile,  19  E.  I.  45,  citing  the 
text;  Northwestern  S.  B.  Mfg.  Co. 
V.  Great  Lakes  E.  Works,  181  Fed. 
38,  104  C.  C.  A.  52;  Tevis  v.  Ryan, 
1.3  Ariz.  120;  Roberts  v.  Krafts,  141 
Cal.  20  (injury  to  trees  and  crops 
by  reason  of  breacli  of  contract  to 
supply  water)  ;  Hale  v.  Milliken,  5 
Cal.  App.  344;  Carolina  P.  C.  Co. 
V.  Columbia  I.  Co.,  3  Ga.  App.  483; 
Louisville  &  N.  R.  Co.  v.  Coyle,  123 
Ky.  854,  8  L.R.A.(N.S.)  433,  citing 
the  text;  Crowley  v.  Burns  B.  &  Mfg. 
Co.,  100  Minn.  178;  Brown  v.  Weir, 
95  App.  Div.  78.  See  Connersvillo 
W.  Co.  V.  McFarlan  C.  Co.,  166  Ind. 
123,  3  L.R.A.(N.S.)  709;  Benziger 
V.  Miller,  50  Ala.  206,  stated  in  note 
to  §  80;  Pendleton  v.  Cline,  85  Cal. 
142,  stated  in  note  to  §  695;  Lamb 
v.  Buker,  34  Neb.  485,  stated  in  note 
to  §   605. 

In  a  late  case  the  defendant  con- 
tended for  the  rule  that  not  only 
must  the  parties  have  notice  of  the 
contract  for  the  furtherance  of 
which  the  plaintiff  made  the  con- 
tract in  suit,  but  there  must  be 
something  in  the  terms  of  the  latter, 
read  in  the  light  of  surrounding  cir- 


cumstances, which  sliows  an  inten- 
tion on  the  part  of  the  vendor  to 
assume  a  larger  engagement,  a  wider 
responsibility,  than  is  assumed  in 
ordinary  contracts  for  the  sale  and 
delivery  of  merchandise.  The  an- 
swer was  that  where  notice  is 
brought  home  to  the  vendor  that  the 
goods  are  purchased  to  be  put  to  a 
particular  use  lie  is  chargeable  with 
the  consequences  of  a  failure  to  per- 
form and  with  the  results  which 
such  notice  fairly  apprised  him 
would  follow  upon  his  default.  In- 
dustrial Works  v.  Mitchell,  114 
Mich.  29,  citing  Booth  v.  Spuyten 
Duyvil  R.  :^.  Co.,  60  N.  Y.  487; 
Richardson  v.  Chynoweth,  26  Wis. 
656;  Illinois  Cent.  R.  Co.  v.  Cobb, 
64  111.  ]28;  True  v.  International 
Tel.  Co.,  60  Me.  9,  11  Am.  Rep. 
156. 

4  Western  U.  Tel.  Co.  v.  Ivy,  177 
Fed.  63,  100  C.  C.  A.  481;  Lane  v. 
Storke,  10  Cal.  App.  347;  American 
P.  F.  Co.  v.  Elliott,  151  N.  C.  393, 
31  L.R.A.(N.S.)  91  n.  quoting  the 
text;  Flynn  v.  Judge,  —  App.  Div. 
— ,  133  N.  Y.  Supp.  794;  Hawkins 
V.  Hubbell,  127  Tenn.  312;  Truitt  v. 
Osier,  4  Del.  555;  Lanston  Mono- 
type Mach.  Co.  V.  Times-Dispatch 
Co.,  115  Va.  797. 

"To  entitle  plaintiff  to  recover 
present    damages    for    apprehended 


208 


SUTHERLAND    ON    DAMAGES. 


[§    ^>^ 


requisite  that  the  damages  must  not  be  the  remote,  but  the 
proximate  consequence  is  in  part  an  element  of  the  required 
certainty.*  In  the  preceding  pages  the  requirement  that  the 
damages  be  the  natural  and  proximate  result  of  the  act  com- 
plained of  has  been  discussed;  but  mainly  with  reference  to 
the  consequences  as  a  whole,  l^ow  it  remains  to  consider  the 
certainty  necessary  not  only  in  regard  to  the  consequences  as  a 
whole  but  also  in  detail.  A  fatal  uncertainty  may  infect  a  case 
where  an  injury  is  easily  provable,  but  the  alleged  responsible 
cause  cannot  be  sufficiently  established  as  to  the  whole  or  some 
part  of  that  injury.^  So  it  may  exist  where  a  known  and 
provable  wrong  or  violation  of  contract  appears,  but  the  alleged 
loss  or  injury  as  a  result  of  it  cannot  be  shown  with  reasonable 
certainty.'''  Many  of  the  illustrations  already  given  apply  to 
the  first,  as  where  the  injury  is  not  the  natural  or  proximate 


future  consequences,  there  must  be 
such  a  degree  of  probability  of  their 
occurring,  as  amounts  to  a  reason- 
able certainty."  Lauth  v.  Chicago 
Union  Traction  Co.,  244  111.  244 
See  also,  Chicago  City  Ry.  Co.  v 
Henry,  62  111.  142;  Elward  v.  Illi 
nois  Central  E.  Co.,  184  111.  App 
107 ;  Amann  v.  Chicago  Consol 
Traction   Co.,  243  111.  2(5,3. 

5  Griffin  v.  Colver,  16  N.  Y.  494 
Russell  V.  Fernandez,  131  La.  76. 

6  Foehr  v.  New  York  S.  L.  R.  Co., 
40  Pa.  Super.  7 ;  First  Nat.  Bank  v. 
Thurman,  69  Iowa  693;  Ulrich 
V.  Pateros  W.  D.  Co.,  67  Wash.  328; 
American  P.  F.  Co.  v.  Elliott,  supra; 
Evans  v.  Cincinnati,  etc.  R.  Co.,  78 
Ala.  341.  See  Evans  v.  Cumberland 
Tel.  &  T.  Co.,  135  Ky.  66,  13-5  Am. 
St.  444;  Reiser  v.  Grever  &  T.  Co., 
11  Ohio  Dec.  444. 

As  where  there  was  a  breach  of  a 
contract  to  elect  one  president  of  a 
bank  for  a  term  of  years  at  an 
agreed  annual  salary,  when  the  elec- 
tion, if  there  had  been  no  breach, 
could  have  been  for  only  one  year, 
to   which  time  the   recovery  of  the 


salary  was  limited.  Witham  v.  Co- 
hen, 100  Ga.  670;  Kenyon  v.  West- 
ern U.  Tel.  Co.,  100  Cal.  454;  Coth- 
ran  v.  Witham,  123  Ga.  190,  69 
L.R.A.  101. 

Another  example  is  afforded  by  a 
contract  so  vague  and  indefinite  that 
it  does  not  furnish  a  safe,  satisfac- 
tory or  proper  basis  for  computing 
the  damages  caused  by  its  breach. 
Hart  v.  Georgia  R.  Co.,  101  Ga.  188. 
See  Fletcher  v.  Bold  P.  Co.,  41  App. 
Div.    (N.  Y.)    30. 

If,  in  an  action  of  tort,  it  be  im- 
possible to  distinguish  between  the 
damage  arising  from  the  actionable 
injury  and  the  damage  which  has 
another  origin  the  jury  must  make 
the  best  estimate  in  their  power,  and 
award  compensation  for  the  action- 
able injury.  Jenkins  v.  Pennsylvania 
R.  Co.,  67  N.  J.  L.  331,  57  L.R.A. 
309.  See  Ogden  v.  Lucas,  48  111. 
492;  Harrison  v.  Adamson,  86  Iowa 
693;  Washburn  v.  Gilman,  64  Me. 
163,  18  Am.  Rep.  246;  Chicago  &  N. 
R.  Co.  V.  Hoag,  90  111.  339 ;  Mark  v. 
Hudson  River  B.  Co.,  103  N.  Y.  28. 

7  Eisleben  v.  Brooks,  179  Fed.  86, 


§  53] 


COMPENSATION. 


209 


result  of  the  act  complained  of;  then  the  relation  of  cause  and 
effect  does  not  exist  between  the  alleged  cause  and  the  alleged 
injury.  This  uncertainty  may  be  further  illustrated  by  the 
case  of  one  who  complained  that  the  defendant  had  taken  his 
flat  from  his  ferry,  and  that  being  obliged  to  go  in  search  of 
it  in  order  to  cross  the  river  he  left  his  horses  attached  to  a 
wagon  standing  on  the  bank,  and  while  he  was  gone  they  ran 
into  the  river  and  were  drowned.*  Their  loss  was  not  a  natural 
consequence  of  the  taking  of  the  flat  which  the  defendant  could 
foresee  as  a  probable  result  of  his  wrongful  act;  there  was  a 
more  immediate  cause  in  the  negligence  of  the  owner;  and 
after  the  event  it  cannot  be  ascribed  with  the  requisite  certainty 
to  the  defendant's  act  although  it  was  the  beginning  of  the  series 


102  C.  C.  A.  380;  Somers  v.  Musolf, 
86  Ark.  97;  Kuechle  v.  Springer, 
145  111.  App.  127;  Connersville  W. 
Co.  V.  McFarlan  C.  Co.,  166  Ind.  123, 
3  L.R.A.(N.S.)  709,  citing  the  text; 
Denton  v.  Nashville  T.  Co.,  112 
Tenn.  320;  My  Laundry  Co.  v. 
Schmeling,  129  Wis.  597;  Re  Pub- 
lishers' Syndicate,  7  Ont.  L.  R.  223. 
See  Sweet  v.  Western  U.  Tel.  Co., 
139  Mich.  322. 

The  rule  is  applicable  where  there 
has  been  a  breach  of  contract  by  a 
water  company  to  supply  water  to  a 
municipality  for  extinguishing  fires. 
Pothinger  v.  Owensboro  W.  Co.,  6 
Ky.  L.  Rep.  453.  See  Pacific  P.  L. 
Co.  V.  Western  U.  Tel.  Co.,  123  Cal. 
428;  Kenyon  v.  Same,  100  Cal.  454. 

The  pecuniary  interest  a  husband 
has  in  the  chance  that  an  embryo 
not  quickened  into  life  would  be- 
come a  living  child  is  so  absolutely 
uncertain  that  the  loss  of  that 
chance  cannot  be  recovered  for.  But- 
ler V.  Manhattan  R.  Co.,  143  N.  Y. 
417,  5  Am.  Neg.  Cas.  364,  42  Am. 
St.    738,    26    L.R.A.    46. 

The  certainty  that  the  damages 
flowed  from  the  breach  of  a  contract 
is  well  shown  if  the  .jury  find  that 
Suth.  Dam.  Vol.  I.— 14. 


the  result  is  such  as  tlie  common  e.\- 
perienccs  of  life,  viewed  tlirougli 
the  application  of  the  sense  usually 
possessed  by  impartial  men  of  ordi- 
nary prudence,  show  to  be  the  usual 
efl^ect.  The  mere  fact  that  the  find- 
ing rests  upon  probability  only,  or 
is  made  by  drawing  inferences  from 
circumstantial  evidence  is  not  fatal 
to  it.  McDaniel  v.  United  R.  Co., 
165  Mo.  App.  678;  Salinger  v.  Sal- 
inger, 69  N.  H.  589.     See  §  69. 

The  damages  caused  the  assignor 
of  accounts  for  discount  and  collec- 
tion because  of  failure  to  use  care  in 
collecting  tliem,  whereby  the  patron- 
age of  customers  was  lost,  are  too 
speculative  to  be  recoverable.  P^ngel 
V.  Georgiacles.  —  App.  Div.  — ,  140 
N.   Y.    Supp.   93. 

The  breach  of  a  contract  to  extend 
a  debtor  further  credit  may  result 
in  his  being  obliged  to  quit  business 
and  deprive  him  of  the  ability  to 
pay  his  creditors;  but  it  does  not 
justify  the  recovery  b^  a  creditor  of 
the  amount  of  liis  claim  against  the 
party  who  broke  liis  contract.  I^f- 
kovitz  v.  First  Nat.  Bank  of  Gads- 
den,  152  Ala.   521. 

8  Gorden  v.  Butts,  2  N.  ,T.  L.  334. 


210  SUTHERLAND  ON  DAMAGES.  [§  53 

of  facts  which  culminated  in  that  loss.^  A  grantee  of  land 
cannot  recover  damages  for  the  breach  of  the  grantor's  cove- 
nant against  incumbrances  because  of  an  existing  inchoate  right 
of  dower  in  the  premises  a  sum  paid  by  himself  to  an  auction- 
eer for  selling  them  to  a  person  who  refuses  to  complete  the 
purchase  on  discovering  the  incumbrance.^^ 

In  an  action  for  the  wrongful  revocation  of  an  agreement 
to  submit  a  controversy  to  arbitration  the  plaintiff  is  not  en- 
titled to  recover  damages  for  the  trouble  and  expense  incurred 
in  making  the  agreement;  but  he  can  recover  for  his  loss  of 
time  and  for  his  trouble  and  necessary  expenses  in  preparing 
for  a  hearing,  such  as  employing  counsel,  taking  depositions, 
paying  witnesses  and  arbitrators,  so  far  as  such  preparations 
are  not  available  for  a  subsequent  trial  in  court.'^^  Where  it 
was  agreed  that  a  pending  action  between  the  parties  should 
be  discontinued  and  submitted  to  arbitration  and  one  of  them 
subsequently  revoked  the  submission  the  other  recovered  the 
costs  and  expenses  he  incurred  in  the  discontinued  suit.''^  And 
where  one  of  the  parties  had  released  a  cause  of  action  against 
a  third  person  upon  the  agreement  of  the  other  to  pay  such  a 
sum  as  should  be  awarded  the  one  who  revoked  the  submis- 
sion was  liable  for  the  costs  of  the  other  incurred  in  the  arbi- 
tration, and  also  for  the  amount  of  his  claim  for  the  loss  of  his 
cause  of  action."  The  Vermont  cases  cited  are  distinguished 
from  one  in  which  the  contract  to  arbitrate  was  wholly  exec- 
utory when  the  breach  occurred.  ''Where  nothing  has  been 
done  in  partial  execution  of  the  covenant,  and  the  covenant 
does  not  fix  anything  by  way  of  penalty  or  liquidated  dam- 

9  See    Cuello    v.    Fuster,    3    Porto  Hayden    v.    Cabot,    17    Mass.    169; 

Eico  Fed.  193;  Walker  v.  Goe,  3  H.  Green  v.  Mann,  11  111.  613;  Hargous 

&  N.  395,  4  id.  350;  Dubuque  Ass'n  v.  Ablon,  3  Denio   406,  45  Am.  Dec. 

V.  Dubuque,  30  Iowa  176;  Hofnagle  431:   Brayton  v.  Chase,  3  Wis.  456; 

V.  New  York,  etc.  R.,  55  N.  Y.  608;  chatterton  v.  Fox,  5  Duer  64. 
Davis  V.  Fish,  1  G.  Greene  406,  48 
Am.  Dec.  387;  Lewis  v.  Lee,  15  Ind. 
499;  Ashley  v.  Harrison,  1  Esp.  49; 
Barber  v.  Lesiter,  7  C.  B.    (N.  S.)  "Pond  v.  Harris,  113  Mass.  114 


10  Harrington     v.     Murphy,     109 
Mass.  299. 


175;  Collins  v.  Cave,  4  H.  &  N.  225 
Everard  v.  Hopkins,  2  Bulst.  332 
Walker  v.  Moore,  10  B.  &  C.  416 


12  Hawley  v.  Dodge,  7  Vt.  237. 

13  Day  V.  Essex  County  Bank,  13 
Vt.  97. 


§    53]  COMPENSATION.  211 

ages,  the  loss  arising  from  a  refusal  to  fultill  is  usually  wholly 
conjectural  because  it  is  impossible  to  prove  that  the  party 
would  have  profited  by  the  arbitration.^* 

A  defendant  chartered  the  plaintiff's  vessel  from  Liverpool 
to  Puerto  Cabello  at  a  stipulated  freight;  a  clause  was  after- 
wards added  to  the  charter-party  allowing  the  defendant  to 
send  on  a  part  of  the  cargo  to  Alaracaibo,  with  a  proviso  that 
any  expense  incurred  by  so  doing  should  be  borne  by  the  char- 
terer. Under  pretense  of  an  attempt  by  the  master  to  evade 
the  customs  on  the  part  so  shipped  the  custom-house  authori- 
ties at  Puerto  Cabello  wrongfully  imposed  a  line  of  $500  on 
him  and  detained  the  vessel  for  several  months;  but  would 
have  allowed  her  to  depart  if  the  fine  had  been  paid,  which 
the  master  had  not  the  means  to  pay  and  did  not.  The  gov- 
ernment agreed  afterwards  to  pay  the  master  $5,000  for  the 
wrongful  detention,  but  did  not.  It  was  held  that  the  owner 
of  the  vessel  could  recover  from  the  charterer  neither  the  loss 
sustained  by  the  detention  nor  the  expense  incurred  in  repair- 
ing the  damage  to  the  ship  in  consequence  thereof,  nor  for 
the  costs  of  legal  proceedings  taken  by  him  in  respect  to  the 
ship,  nor  for  the  fine.^*  Where  the  object  of  a  bonus  con- 
tract providing  for  the  erection  of  a  mill  was  to  enhance  the 
value  of  the  property  in  the  place  in  which  the  mill  was  to  be 
the  damages  resulting  from  the  sale  of  the  mill  without  re- 
quiring the  vendee  to  bind  himself  to  fulfill  the  conditions  of 
the  original  contract,  as  it  stipulated  for  if  a  sale  should  be 
made,  and  the  burning  of  the  mill,  without  any  obligation  on 
the  vendee's  part  to  rebuild  and  operate  it  for  the  period  re- 

l4Munson  v.  Straits  of  Dover  S.  the  revocation  of  a  submission,     riic 

S.    Co.,   43    C.    C.    A.    57,    102    Fed.  damages  so  fixed  for  preparing  foi 

926.  and  conducting  the  arbitration  may 

When    a    party    to    a    submission  ^e    recovered    notwitlistanding    tlie 

agreement    has    covenanted    therein  submission  provides  tliat  the  fi-es  of 

to  pay   the  award  by  revoking  the  arbitrators   and    witnesses    sliall    Ix- 

submission    he    breaches    the    cove-  ^^.^  ^^^^jj^  ^^  ^,^^  ^^^^.^.^.^      ^,,,j^_,, 

nant,  and  if,  pursuant  to  the  agree-  ^^.L^rr^'       i  tt   x- 

,  '  *^    ,        .  J         .,    ,       Ins.   Co.  V.  Central  T.  Co.,   157   ><. 

ment,   a   pledge  has   been  deposited 

to  secure  the  payment  of  the  award       ^-  ^^^>  ^^  L-RA.  227. 

it  may  be  foreclosed  to  the  extent  16  Sully    v.    Duranty,    .3.'!     I..    •). 

of  the  damages  fixed  by  statute  for        (Ex.)   319. 


212  SUTHERLAND    ON    DAMAGES.  [§    ^3 

quired,  are  not  clearly  ascertainable  in  their  nature  and  origin, 
but  are  speculative.^^  One  named  as  a  director  of  a  proposed 
corporation  persuaded  others  so  named  and  others  who  ex- 
pected to  become  members  of  it  not  to  do  so.  For  the  mis- 
representations made  to  accomplish  such  result  the  person 
making  them  was  not  liable  to  those  who  were  proposed  as 
directors  for  the  loss  of  the  profits  resulting  from  the  failure 
to  organize  the  corporation.^'  It  will  not  be  assumed  that  a 
fatal  uncertainty  appearing  at  the  time  of  the  trial  will  be 
removed  l)y  subsequent  events.^* 

§  54.  Liability  for  the  principal  loss  extends  to  details  and 
incidents.  Where  the  alleged  wrong  or  breach  of  contract  is 
shown  with  the  requisite  certainty  to  be  the  cause  of  the  injury 
in  question  it  is  also  to  be  deemed  the  cause  of  all  the  con- 
comitant and  incidental  details  which  are  constituent  parts 
of  the  injury,  including  necessary  and  judicious  expenditures 
made  to  stay  or  efface  the  wrong  or  limit  its  consequences.^^ 
A  riparian  owner  brought  an  action  for  polluting  the  waters 
of  a  stream  running  through  his  farm.  He  recovered  for  the 
loss  of  an  opportunity  of  renting  his  grist-mill,  the  diminution 
in  the  rental  value  of  his  farm  and  the  inconveniences  he  was 
put  to  in  the  use  of  the  same,  resulting  directly  from  the  con- 
duct of  the  defendant.^"  A  plaintiff's  house  was  injured  by 
the  partial  falling  in  of  the  partition  wall  between  it  and  the 
defendant's  house,  which  was  caused  by  digging  too  near  the 
wall  for  the  purpose  of  deepening  the  cellar  under  it.  JSTo 
notice  was  given  by  the  defendant  of  his  intention  to  deepen 
his  cellar,  and  evidence  was  offered  to  show  that  the  excavation 
was  done  in  a  careless  and  negligent  manner,  and  also  to  show 
that  the  business  of  the  plaintiff  was  interrupted  for  several 
days.     The  court  held  that  the  plaintiff  was  entitled  to  such 

16  Hudson  V.  Archer,  9  S.  D.  240.  Chalice  v.   Witte,  80  Mo.   App.   84, 

17  Martin  v.  Deetz,  102  Cal.  55,  95,  quoting  the  text;  New  Haven  & 
41  Am.  St.  151.  N.  Co.  v.  Hayden,  117  Mass.  433; 

18  Byrne  M.  Co.  v.  Robertson,  149  Thayer-M.  B.  Co.  v.  Campbell,  164 
Ala.  273.  Mo.  App,  8.     See  O'Brien  v.  Illinois 

iSMcDaniel  v.  Crabtree,  21  Ark.       S.  Co.,  203  Fed.  436,  121  C.  C.  A. 
431;   Smith  v.  Condry,  1  How.  35;        546;  §§  26,  1250. 
Loker   v.    Damon,     17     Pick.     284;  20  Gladfelter  v.  Walker,  40  Md.  3. 


§  54] 


COMPENSATION. 


213 


damages  as  would  be  sufficient  to  reinstate  the  wall  and  the 
house  in  as  good  condition  as  they  were  prior  to  the  injury, 
and  to  compensate  him  for  the  loss  consequent  upon  the  inter- 
ruption of  his  business ;  and  to  show  the  latter  he  might  prove 
its  usual  profits  prior  to  the  wi-ong.'^^     If  a  collision  between 


21  Bi-own  V.  Werner,  40  Md.  35; 
White  V.  Moaeley,  8  Pick.  356; 
Simmons  v.  Brown,  5  R.  I.  299,  73 
Am.  Dec.  66;  Allison  v.  Chandler,  11 
Mich.  542;  Collins  v.  Lavelle,  19  R. 
I.  45,  citing  the  text;  Moore  S.  Co. 
V.  Boston  I.  Co.,  210  Mass.  364. 
See  §  70. 

Walrath  v.  Redfield,  11  Barb. 
368  (see  s.  c,  18  N.  Y.  457),  was 
an  action  on  the  case  for  damages 
to  the  plaintiffs'  saw-mill  and  other 
property  occasioned  by  the  defend- 
ant in  constructing  a  dam  and  dike 
below  such  mill,  and  thereby  caus- 
ing the  water  to  flow  back  upon  the 
mill,  and  rendering  it  incapable  of 
being  used.  The  plaintiffs  were  held 
entitled  to  recover  the  value  of  the 
use  of  their  mill  during  the  time 
they  were  necessarily  deprived  of 
its  use,  and  the  amount  which  it 
was  permanently  diminished  in 
value  by  the  erection  of  the  dam; 
but  could  not  recover  the  amount  of 
a  loss  upon  saw  logs  on  hand  at 
the  time  of  the  injury,  sustained 
either  in  consequence  of  a  deteriora- 
tion in  their  value  or  by  a  depres- 
sion in  the  market  price.  The  dam- 
ages in  respect  to  the  logs  were  too 
speculative,  uncertain,  remote  and 
contingent  to  be  allowed  even  upon 
proof  that  the  plaintiffs  could  not, 
by  the  use  of  ordinary  diligence, 
have  procured  the  logs  to  be  sawed 
elsewhere,  and  could  not  have  dis- 
posed of  them  before  sawing.  In 
actions  of  tort,  where  there  has 
been  no  wilful  injury,  the  plaintiff 
can  only  recover  the  damages  neces- 
sarily  resulting   from  the  act  com- 


plained of,  and  lie  cannot  conduct 
himself  in  sucli  a  manner  as  to 
make  tlieni  uimccessarily  burden- 
some. 

A  more  reasonable  rule  and  one 
in  better  accord  with  the  principle 
of  holding  a  wrong-doer  liable  for 
such  consequences  as  would  natu- 
rally and  in  the  usual  course  of 
things  result  from  his  conduct  was 
laid  down  in  McTavish  v.  Carroll, 
17  Md.  1,  an  action  for  damages  for 
obstructing  a  right  of  way  for  re- 
pairing a  mill-race.  The  declara- 
tion alleged  that  the  obstruction 
prevented  the  repair  of  the  race, 
whereby  the  mill  became  idle  and 
could  not  be  worked,  and  the  plain- 
tiff lost  the  custom  and  trade  there- 
of, "and  the  use  of  the  same  for 
grinding  his  own  grain,  and  was, 
therefore,  at  great  expense,  obliged 
to  carry  it  to  other  mills."  Held, 
that  under  tliis  declaration,  evi- 
dence that  the  plaintiff  was  owner 
of  a  large  body  of  land  around  his 
mill,  and  was  accustomed  to  grind 
the  grain  raised  thereon  at  this  mill 
for  his  cattle,  horses,  hands  and 
family,  and  in  consequence  of  its 
stoppage  had  been  compelled  to 
carry  his  grain  to  another  mill,  at 
a  greater  distance,  is  admissible. 
Hinckley  v.  Beckwith,  13  Wis.  31. 

But  in  such  a  case  it  has  been 
ruled  there  can  be  no  recovery  for 
diminished  profits  arising  from  the 
manufacture  of  flour.  Todd  v. 
Minneapolis,  etc.  R.  Co.,  39  Minn. 
186. 

A  more  satisfactorj'  rule  is  sus- 
tained  by   Terre  Haute  v.   Hudnut, 


214  ,  SUTHEELAND    ON    DAMAGES.  [§    54 

vessels  results  in  disabling  one  of  them  so  that  her  owners  can- 
not use  her  for  a  voyage  for  which  she  has  been  engaged,  though 
no  regular  charter-party  has  been  entered  into,  the  damages 
resulting  from  the  loss  of  the  profits  of  such  voyage  are  the 
result  of  the  collision.^^  If  logs  are  deliberately  stored  in  a 
stream  navigable  for  their  transportation,  so  as  to  prevent  the 
entry  of  logs  owned  by  another,  and  in  a  stream  which  empties 
into  the  one  so  blocked,  the  person  who  is  responsible  therefor  is 
liable  to  the  other  for  the  wages  and  board  of  the  latter's  men 
while  waiting  a  reasonable  time  to  get  his  logs  out,  for  the  ex- 
pense of  moving  one  crew  of  men.  out  and  another  in,  for  the 
increased  cost  of  driving  the  logs  the  next  season,  and  for  in- 
terest on  the  contract  price  for  making  the  drive  during  such 
^  time  as  the  payment  thereof  was  delayed ;  but  not  for  the  loss 
of  supplies  left  in  the  woods.*^^ 

§  55.  Only  the  items  which  are  certain  are  recoverable.  The 
charterer  of  a  vessel  who  was  subjected  to  expense  in  getting 
her  off  from  a  gas  pipe  which  was  an  unlawful  obstruction 
to  the  navigation  of  a  river,  and  upon  which  she  caught  in 
passing  while  navigating  with  due  care,  may  maintain  an  ac- 
tion against  those  who  laid  the  pipe  to  recover  for  such  expense, 
but  for  not  for  any  delay  in  his  business  or  other  consequential 
damages.^^  Where  the  defendant  was  enjoined  from  removing 
his  negroes  and  upon  an  order  of  seizure  they  were  taken  out 
of  his  possession  and  a  decree  subsequently  rendered  in  his 
favor,  it  was  held  his  damages  would,  ordinarily,  be  what  their 
labor  would  have  been  worth  had  they  continued  in  his  posses- 
sion. But  he  would  also  be  entitled  to  damages  for  any  loss 
that  was  the  direct,  proximate  and  natural  consequence  of  their 
removal  out  of  his  possession,  which  were  not  remote  and  specu- 

112  Ind.  542,  where  the  operations  22  Owners  of  The  Gracie  v.  Own- 

of  a  mill  which  had  an  established       grs  of  The  Argentino,  14  App.  Cas. 

business  were  suspended  by  an  over-       g^g.    affirming    The    Argentino,    13 

flow,  and  machinery  in  it  was  dam-  t)     >     t~v      ir>i 

'                             •'  Frob.  Div.  191. 

aged  to  such  an  extent  as  to  make  „„  , ,  ^,    ,                ,  ^           „ . 

^     .                            m,          -           •  23  MePheters    v.    Moose    River    L. 
repairs  necessary.     Ihe  net  earnings 

of  the  past  and  present  were  proven       ^-  ^°'  "^^  ^'^^-  ^'^^■ 

as  a  basis  for  estimating  the  dam-  24  Benson   v.    Waldon,    etc.    G.   L. 

ages.  Co.,  6  Allen  149. 


§    55]  COMPENSATION.  215 

lative,  involving  inquiries  collateral  to  the  consideration  of 
the  wrongful  act.  And  so  he  could  not  recover  counsel  fees 
incurred  in  defending  the  suit  nor  exi)enses  involved  in  employ- 
ing an  agent  to  attend  to  his  other  business  whilst  he  was 
engaged  in  such  defense;  nor  what  would  or  might  have  been 
the  profits  of  his  business  had  not  his  possession  of  the  negroes 
been  interrupted.^^  The  plaintiff's  oxen  were  stolen  in  Ver- 
mont and  taken  to  the  defendant,  and  being  found  in  his 
possession  in  I^ew  York  were  demanded  and  refused!  Tlie 
plaintiff  then  successfully  resorted  to  legal  process  to  gain  pos- 
session, but  incurred  expense  therein.  He  was  not  entitled  to 
recover  such  expense  as  part  of  his  damages  for  the  conversion 
in  a  subsequent  action.^^  These  expenses  were  not  rejected 
because  a  remote  or  uncertain  incident  of  the  wrong,  but  be- 
cause they  were  costs  of  a  judicial  proceeding  in  which  such 
allowable  expenses  are  collectible,  and  if  not  thus  compensated 
cannot  be  recovered.^'  The  expense  of  regaining  property  tor- 
tiously  taken  is  a  part  of  the  injury  and  recoverable.^*  Where 
goods  wrongfully  seized  are  taken  from  the  wrong-doer  by 
another  their  owner  may,  in  an  action  against  the  former, 
recover  the  amount  paid  the  pther  wrong-doer  to  get  them  back.^® 
In  an  action  upon  an  attachment  bond  the  rule  restricting  the; 
recovery  to  the  natural  and  proximate  damages  will  exclude 
any  claim  for  injuries  to  credit  and  business,^"  and  for  mental 
suffering.^^  But  w'here  a  party  took  a  least  of  a  ferry  and 
covenanted  to  maintain  and  keep  the  same  in  good  order,  but 
instead  of  doing  so  diverted  travelers  from  the  usual  landing 
to  another  landing  owned  by  himself,  by  means  whereof  a 
tavern-stand  belonging  to  the  plaintiff  situate  on  the  first  land- 
ing was  so  reduced  in  business  as  to  become  tenantless,  it  was 

25McDaniel  v.   Crabtree,  21  Ark.  30  state  v.   Thomas,   10   Mo.   613, 

431;    Jenkins    v.    Commercial    Nat.  63    Am.   Dec.   580;    Weeks   v.    Pres- 

Bank,  19  Idaho  290.  cott,  53  Vt.  57,  74;    Braunsdorf  v. 

26  Harris  v.  Eldred,  42  Vt.  39.  Fellner,    76    Wis.    1 ;    Anderson    v. 

27  Atchison,    etc.    R.    Co.    v.    Citi-  Sloane,    72    Wis.    566,    78    Am.    St. 
zens'  T.  &  P.  Co.,  16  N.  M.  163.  885;   Pollock  v.  Gantt,  69  Ala.  373, 

28  Bennett  v.  Lockwood,  20  Wend.  44  Am.  Rep.  519.     See  ch.  25. 
223,  32  Am.  Dec.  532.  31  Tisdale   v.   ;Major,   106   Iowa    1, 

29  Keene  v.  Dilke,  4  Ex.  388.  citing  tliis  section. 


216  SUTHERLAND    ON    DAMAGES.  [§    55 

held  in  an  action  by  the  landlord  for  breach  of  the  contract 
that  he  might  recover  as  damages  the  loss  of  rent  on  the  tavern- 
stand.^^  Where  a  negro  hired  to  make  a  crop  was  taken  av^^ay 
by  the  owner  in  the  middle  of  the  year,  whereby  the  crop  was 
entirely  lost,  the  proper  measure  of  damages  was  the  hire  of 
the  negro  paid  in  advance,  the  rent  of  the  land  and  the  expenses 
incurred  for  the  purpose  of  making  the  crop.^^ 

§  56.  Recovery  for  successive  consequences.  Where  the  in- 
jury to  be  recovered  for  consists  of  several  items,  variously 
related  consequentially  to  the  alleged  cause,  the  right  to  each 
must  be  decided  upon  the  same  principles  as  where  only  one 
inseparable  injurious  effect  is  in  question.  It  may  happen  that 
such  items  are  successive,  and  the  first  may  in  some  sort  oper- 
ate as  cause  in  respect  to  later  effects.  When  this  is  the  case 
a  recovery  for  items  subsequent  to  the  first  will  depend  on 
whether  the  act  complained  of  is  the  efficient  cause  of  the  en- 
tire damage  as  represented  by  all  such  items,  and  whether 
they  are  consequences  which  ought  reasonably  to  have  been 
contemplated  to  ensue,  or,  in  case  of  contract,  whether  they 
may  fairly  be  supposed  to  have  been  within  the  contemplation 
of  the  parties  at  the  time  of  contracting.  This  is  well  illus- 
trated by  an  English  case.  The  defendant  contracted  to  de- 
liver a  threshing  machine  to  the  plaintiff,  a  farmer,  within 
three  weeks.  It  was  the  latter's  practice,  known  to  the  de- 
fendant, to  thresh  his  wheat  in  the  field  and  send  it  thence 
direct  to  market.  At  the  end  of  three  weeks  plaintift''s  wheat 
was  ready  in  the  field  for  threshing,  and,  on  his  remonstrating 
at  the  delay  in  the  delivery  of  the  machine,  the  defendant 
several  times  assured  him  it  should  be  sent  forthwith.  The 
plaintiff,  having  successfully  tried  to  hire  another  machine, 
was  obliged  to  carry  home  and  stack  the  wheat,  which,  while 
so  stacked,  was  damaged  by  rain.  The  machine  was  afterwards 
delivered  and  the  price  paid.  The  wheat  w'as  then  threshed, 
and  it  was  found  necessary,  owing  to  its  deterioration  by  rain, 
to  kiln-dry  it.  When  dried  and  sent  to  market  it  sold  for  a 
less  price  than  it  would  have  fetched    had  it  been  threshed 

32  Dewint  v.  Wiltse,  9  Woiid.  325.         33  Hobhs  v.  Davis,  30  Ga.  423. 


§    57]  COMPENSATION.  *  217 

at  the  time  fixed  by  the  contract  for  the  delivery  of  tlie  ma- 
chine and  then  sold,  the  market  price  of  wheat  having  mean- 
while fallen.  It  was  held,  in  an  action  for  the  non-delivery 
of  the  machine,  that  the  plaintiff  was  entitled  to  recover  for 
the  expense  of  stacking  the  wheat,  the  loss  from  the  deteriora- 
tion by  the  rain  and  the  expense  of  kiln-drying  it,  but  not  for 
the  loss  by  the  fall  in  the  market,  the  latter  being  too  uncer- 
tain to  have  been  contemplated  and  not  the  natural  result  of 
the  breach.^*  There  is  much  reason  for  holding  that  the  latter 
loss  was  also  recoverable.^^  The  case  referred  to  is  much  more 
satisfactory  than  cases  which  hold  that  a  farmer  cannot  re- 
cover damages  resulting  to  his  crops  from  delayed  delivery 
or  the  failure  to  work  as  warranted  of  a  harvesting  machine 
sold  with  knowledge  that  it  was  to  be  used  in  securing  the 
purchaser's  grain.^^ 

§  57.  Illustrations  of  the  rule  of  the  preceding  section.  In 
an  action  for  negligent  driving,  whereby  the  plaintiff'?*  horse 
was  injured,  it  appeared  that  the  horse  was  sent  to  a  farrier 
for  six  weeks  for  the  purpose  of  being  cured  and  at  the  end 
of  that  time  it  was  ascertained  that  it  was  damaged  to  the 
extent  of  201.  The  plaintiff  recovered  for  the  keep  of  the 
horse  at  the  farrier's,  the  amount  of  the  farrier's  charges  and 
the  difference  in  its  value  at  the  time  of  the  accident  and  at 
the  end  of  the  six  weeks,  but  not  for  the  hire  of  another  horse 
during  that  period.^'  Had  a  claim  been  made  for  the  loss  of 
the  use  of  the  horse  during  his  treatment  it  would  have  been 

34Smeed  v.  Foord,  1  E.  &  E.  602.  50  Am.  Rep.  786;   Prosser  v.  Jones, 

35  Flint  &  W.  Mfg.  Co.  v.  Beckett,  41   Iowa  674;    Wilson   v.   Reedy,  32 

167  Ind.  491,  12  L.R.A.(N.S.)    924;  Minn.    256;    Osborne    v.    Poket,    33 

Ward  V.  New  York  Cent.  R.  Co.,  47  Mjnn.     10 ;     Brayton    v.    Chase,    3 

N.  Y.  29;  Sturgess  V.  Bissell,  46  N.  -y^jg     ^gg^    probably    overruled    by 

Y.   462;    Scott  v.   Boston,   etc.    Co.,  ^^^^^  referred    to    in    Thomas,  etc. 

106  Mass.  468;   Sisson  v.  Cleveland,  ^^    ^,    Wabash,  etc.  R.  Co.,  62 

etc.  R.  Co.,  14  Mich.  489;  Collard  v.  ^         ^^    ^^^                ^,,. 

Southeastern  R.  Co.,  7  H.  &  N.  79;  '  ^ 

TTT    .  /-,         ^   m       A    T,    r^       tzA        Compare  Coodloe  v.  Rogers,    10  La. 

Weston  V.  Grand  Trunk  R.  Co.,  54  ' 

Me.  376,  92  Am.  Dec.  552;   Peet  v.  '^""-  ^'^^• 

Chicago,  etc.  R.  Co.,  20  Wis.  594,  91  3?  Hughes  v.   Quentin,   S   C.   &   P. 

Am.  Dec.  446.  "•'•'5;    Clare  v.   Maynard,  7   C.  &   P. 

36  Fuller  V.  Curtis,  100  Ind.  237,  741. 


218  *     SUTHERLAND  ON  DAMAGES.  [§  57 

a  proper  item  of  damages.^^  If  a  horse  and  vehicle  are  injured 
through  a  defect  in  a  highway  and  in  consequence  thereof  the 
horse  becomes  frightened  and  unmanageable,  continues  to  be  a 
kicker  and  becomes  spoiled  for  driving  there  may  be  a  recov- 
ery for  the  depreciation  in  his  value  as  well  as  for  the  damage 
done  the  vehicle  by  the  kicking  and  by  the  defect.^^  A  trades- 
man took  a  ticket  to  go  from  L.  to  H.  On  arriving  at  an  inter- 
mediate station  he  found  no  train  ready  to  take  him  to  H.  the 
same  night,  as  there  should  have  been  according  to  the  pub- 
lished time-bill.  He  slept  at  that  place  and  in  the  morning 
paid  Is.  4:d.  fare  to  H.  In  consequence  of  the  delay  he  failed 
to  keep  appointments  with  his  customers,  and  was  detained  for 
many  days.  The  latter  was  deemed  within  the  contemplation 
of  the  parties.  The  court  told  the  jury  that  the  plaintiff  would 
have  been  entitled  to  charge  the  company  with  the  expense 
of  getting  to  H.,  but  he  had  no  right  to  cast  upon  it  the 
remote  consequences  of  remaining  the  night  at  the  intermediate 
place.  He  was  entitled  to  the  fare  thence  to  H.,  and  perhaps 
the  2s.  for  his  bed  and  refreshments.  A  motion  for  a  new  trial 
on  the  ground  of  misdirection  was  refused.  Pollock,  C.  B., 
said:  "In  actions  for  breach  of  contract  the  damages  must  be 
such  as  are  capable  of  being  appreciated  or  estimated.  Mr. 
Wilde  was  invited  at  the  trial  to  state  what  were  the  damages 
to  which  the  plaintiff,  was  entitled.  He  said  general  damages. 
The  plaintiff  is  entitled  to  nominal  damages  at  all  events,  and 
such  other  damages  of  a  pecuniary  kind  as  he  may  have  really 
sustained  as  a  direct  consequence  of  the  breach  of  the  contract. 

38  Gould   V.   Merril   R.   &   L.    Co.,  while   undergoing    repairs    is    a    re- 

139   Wis.   433,   citing  the   text   and  coverable  element  of  damage.     Per- 

interpreting   the   value    of    the   use  kins  v.  Brown,  —  Tenn.  — ,  L.R.A 

to   be    the   value    over    the    cost    of  ]9:5F,  723,  177  S.  W.  1158;  Andries 

keeping;      Albert     v.     Bleeker     St.  v.  Everitt-Metzger-Flanders  Co.,  177 

etc.   R.   Co.,   2   Daly,    393;     Bennett  Mich.  110. 

V.  Lockwood,  20  Wend.  223,  32  Am.  39  English  v.  Missouri  Pac.  R.  Co., 
Dec.  532;  Walrath  v.  Redfield,  11  73  Mo.  App.  232.  See  §  26. 
Barb.  368;  Gillett  v.  Western  R.  One  of  the  New  York  county 
Co.,  8  Allen  560;  The  Glaucus,  1  courts  has  denied  the  right  to  re- 
Lowell  366;  Sweeney  v.  Poi"t  Bur-  cover  for  the  depreciation  in  the 
well  H.  Co.,  17  Up.  Can.  C.  P.  574.  value  of  a  horse  caused  by  fright. 

Loss    of    use    of    an    automobile  Nason  v.  West,  31  N.  Y.  Misc.  583. 


§    57]  COMPENSATION.  219 

Each  case  of  this  description  must  be  decided  with  reference 
to  the  circumstances  peculiar  to  it;  but  it  may  be  laid  down 
as  a  rule  that,  generally,  in  actions  upon  contracts  no  damages 
can  be  given  which  cannot  be  stated  specifically,  and  that  the 
plaintiff  is  entitled  to  recover  whatever  damages  naturally  re- 
sult from  the  breach  of  contract,  but  not  damages  for  the  disap- 
pointment of  mind  occasioned  by  the  breach  of  contract."  *"  A 
subsequent  English  case  was  decided  by  the  queen's  bench 
on  this  state  of  facts:  The  plaintiff,  wife  and  two  children 
of  five  and  seven  years  old  respectively,  took  tickets  on  the 
defendant's  railway  from  W.  to  H,  by  the  midnight  train. 
They  got  into  the  train  but  it  did  not  go  to  11.,  but  along  an- 
other branch  to  E.  where  the  party  were  compelled  to  get  out. 
It  being  late  at  night  the  plaintiff  was  unable  to  get  a  convey- 
ance or  accommodation  at  an  inn ;  and  the  party  walked  to  his 
house,  a  distance  of  between  four  and  five  miles,  where  they 
arrived  at  about  three  o'clock  in  the  morning.  It  was  a  drizzling 
night  and  the  wife  caught  cold  and  was  laid  up  for  some  time, 
and  unable  to  assist  her  husband  in  his  business  as  before,  and 
expenses  w^ere  incurred  for  medical  attendance.*^  Three  items 
of  loss  and  injury  came  under  consideration:  first,  the  incon- 
venience, as  it  was  called,  of  having  to  walk  home ;  second, 
the  expense  of  the  wife's  sickness ;  and  third,  the  loss  of  her 
services.  The  last  two  items  being  coincident  in  time  and 
relation  to  the  defendant's  breach  of  contract  were  considered 
together.  Only  the  first  was  allowed.  It  was  remarked  that 
the  plaintiffs  did  their  best  to  diminish  the  inconvenience  to 
themselves,  and  they  had  no  alternative  but  to  walk;  that  it 
was  not  to  be  doubted  that  the  inconvenience  was  the  immediate 
and  necessary  consequence  of  the  breach  of  the  defendant's 
contract  to  convey  them  to  H.  The  other  consequences  were 
considered  secondary.  The  objection  to  what  is  termed  the 
"secondary  consequence"  is  that  it  is  not  a  consequence  so 
certain  to  occur  as  to  be  among  those  to  be  anticipated  from 
such  a  breach,  it  happening  from  other  than  tlie  usual  state  of 

40  Hamlin   v.   Great   Northern   l\.  41  Ilobhs  v.  London,  etc.  R.  Co.,  L. 

Co.,    1    H.    &   N.    408.      See   Denton 
V.  Same,  5  El.  &  Bl.  860.  R.  10  Q.  1?.  11] . 


220  SUTHERLAND    ON    DAMAGES.  [§57 

the  weather ;  but  it  was  not  any  more  a  secondary  consequence 
than  is  the  burning  of  a  second  building  by  a  continuous  fire 
or  the  injury  to  the  grain  by  rain  in  Smeed  v.  Foord.  It  is 
said  in  the  opinion  that  "the  nearest  approach  to  anything 
like  a  fixed  rule  is  this:  That  to  entitle  a  person  to  damages 
by  reason  of  a  breach  of  contract  the  injury  for  which  com- 
pensation is  asked  should  be  one  that  may  fairly  be  taken  to 
have  been  contemplated  by  the  parties  as  the  possible  result 
of  the  breach  of  contract.  Therefore  you  must  have  something 
immediately  fiowing  out  of  the  breach  of  contract  coinplained 
of,  something  immediately  connected  with  it,  and  not  merely 
connected  with  it  through  a  series  of  causes  intervening  be- 
tween the  immediate  consequence  of  the  breach  of  contract 
and  the  damage  or  injury  complained  of.  To  illustrate  that  I 
cannot  take  a  better  case  than  the  one  now  before  us :  Suppose 
that  a  passenger  is  put  out  at  a  wrong  station  on  a  wet  night 
and  obliged  to  Avalk  a  considerable  distance  in  the  rain,  catch- 
ing a  violent  cold  which  ends  in  a  fever,  and  the  passenger  is 
laid  up  for  a  couple  of  months,  and  loses  through  this  illness 
the  offer  of  an  employment  which  would  have  brought  him  a 
handsome  salary.  No  one  I  think  who  understood  the  law 
would  say  that  the  loss  so  occasioned  is  so  connected  with  the 
breach  of  contract  as  that  the  carrier  breaking  the  contract 
could  be  held  liable."  True,  there  the  sickness  would  be  the 
cause  of  an  accidental  loss,  but  in  the  case  under  discussion 
the  question  was  not  of  such  a  loss.  On  the  contrary,  it  was  the 
expense  and  loss  of  time  incident  to  the  sickness  itself.  Was 
not  that  "a  result  of  the  breach"  which  was  natural  and  proxi- 
mate, and  to  be  contemplated  under  the  other  circumstances 
of  the  breach  for  which  the  defendant  Avas  held  responsible? 
One  who  has  been  injured  may  recover  for  the  injury  though 
in  his  care  of  himself  thereafter  he  may  have  misjudged  as  to 
the  proper  treatment.  In  such  an  event  he  is  not  a  volunteer 
in  the  case  of  his  ailment ;  that  was  caused  by  the  defendant, 
and  the  plaintiff's  honest  mis  judgment  is  not  negligence.  The 
negligence  of  the  defendant  began  a  sequence  of  harmful  effects ; 
an  intervening  innocently  misjudged  act  of  the  injured  person 
aggravated  them;  but  the  latter  act  would  have  been  harmless 


§    58]  COMPENSATION.  221 

if  the  original  wrong  were  not  still  operative.  It  continues  to 
operate  more  harshly,  and  it  is  from  such  operation  that  the 
plaintiff  suffers.  The  original  cause  continues  and  accom- 
plishes the  whole  result.*^  A  member  of  a  society  wrongfully 
expelled  therefrom  may  recover  because  of  the  required  publi- 
cation of  the  fact  in  the  society's  journal,  for  the  loss  of  his 
insurance  policy,  traveling  card  or  sick  benefits.*^ 

§  58.  Same  subject.  In  an  action  under  the  code  it  appeared 
that  the  defendant  delivered  tickets  to  the  plaintiff  alx)ut  the 
1st  of  March,  1852,  for  transportation  from  Xew  York  to  San 
Francisco;  one  entitled  him  to  a  passage  to  Graytown,  at  the 
mouth  of  the  Nicaragua  river,  in  a  specified  ship  which  was 
to  sail  on  the  5th  of  that  month ;  another  entitled  him  to  a 
passage  up  that  river  and  through  the  lake  of  that  name  to 
San  Juan  del  Sur,  on  the  Pacific  ocean,  and  the  other  from 
the  latter  place  to  his  destination,  on  a  steamer  named,  which 
was  advertised  to  leave  about  fifteen  days  after  the  plaintiff 
would  arrive  at  the  starting  port  according  to  the  usual  course 
of  conveyances.  The  plaintiff  was  carried  on  his  first  ticket 
and  arrived  at  Graytown  March  15th,  where  he  was  detained 
eleven  days.  He  then  started  for  San  Juan  del  Sur.  He 
arrived  at  a  place  on  the  way  on  the  31st  of  March  when 
he  was  taken  sick.  There  he  received  news  that  the  steamer 
on  which  he  was  entitled  to  take  passage  under  his  third  ticket 
was  lost  on  the  27th  of  the  previous  month,  but  the  fact  was 
not  known  to  the  defendant  at  the  time  of  selling  the  tickets 
nor  until  about  the  20th  of  April.  The  plaintiff  arrived  at  San 
Juan  del  Sur  on  the  4th  of  April  and  remained  there  until  the 
9th  of  May,  endeavoring,  but  unsuccessfully,  to  procure  a  pas- 
sage to  San  Francisco.  He  then  returned  to  New  York  and 
remained  sick,  long  after  he  returned  home,  with  a  fever  pe- 
culiar to  the  climate  of  Nicaragua.  It  was  held  that  the 
time  he  lost  by  reason  of  his  detention  on  the  isthmus,  his  ex- 
penses there  and  of  his  return  to  New  York,   the  time  lost 

42  Hope  V.   Troy  &  L.   R.   Co.,  40  43  Thompson       v.       Grand        Int. 

Hun    4.38,    5    Am.    Neg.    Cas.    430,       ^y     .,      ,       ,     t  j     v     a-,   t        /■• 

'  ■    ■        -i^n  -KT    V        Hrotlicrhood  of  L.  h.,  41    Tex.  Civ. 

affirmed  without  opinion,  110  JN.  Y. 

643.     See  §   1244.  App.  176. 


222  SUTflERLAlSrD    ON    DAMAGES.  [§    58 

by  reason  of  sickness  after  the  return  home  and  the  expenses 
of  such  sickness,  so  far  as  the  same  were  occasioned  by  the 
defendant's  negligence  and  breach  of  duty,  as  well  as  the 
amount  originally  paid  for  his  passage,  were  damages  which 
the  plaintiff  was  entitled  to  recover.** 

The  damages  which  are  recoverable  for  breach  of  contract 
are  limited  to  the  direct  and  immediate  consequences;  but  the 
right  to  indemnity  is  not  satisfied  by  compensation  for  the 
first  item  of  loss  if  there  are  others  so  identified  with  it  that 
the  injury  as  a  whole  naturally  comprehends  all  and  they  to- 
gether constitute  the  immediate  consequence.  A  party  whose 
breach  of  contract  leaves  the  other  party  in  such  a  situation 
tjiat  sickness  is  its  natural,  immediate  and  probable  conse- 
quence causes  by  the  same  act  the  direct  pecuniary  losses  which 
are  its  usual  and  natural  concomitants,  as  loss  of  time  and  the 
expense  of  medical  and  other  attendance.  If  by  reason  of  the 
sickness  some  extraordinary  or  unusual  loss  occurs  for  want  of 
ability  on  his  part  to  attend  to  his  affairs  it  is  a  loss  Avhich  can- 
not be  considered  as  having  entered  into  the  contemplation  of 
the  parties ;  and  the  same  must  be  the  conclusion  if  the  sick- 
ness were  not  the  natural  and  probable  consequence  of  the 
act  complained  of  but  the  result  of  some  other  or  secondary 
cause.  Where  sickness  is  the  direct  or  proximate  consequence 
of  a  wrongful  act  the  pain  and  suffering  are  also  elements  of 
the  injury  for  which  compensation  may  be  recovered.*^ 

M  Williams   v.   Vanderbilt,   28   N.  71  111.  391;   Klein  v.  Jcwett,  26  N. 

Y.  217,  84  Am.  Dec.  333;  Heirn  v.  J.    Eq.   474,   5    Am.    Neg.     C'as.     1; 

McCauglian,  32  Miss.  17;   Porter  v.  Ransom  v.  New   York,  etc.  K.   Co., 

Steamboat   New    England,     17     Mo.  15  N.  Y.  415;   Ohio,  etc.  R.  Co.  v. 

290;  Yonge  v.  Pacific  Mail  S.  S.  Co.,  Dickerson,  59  Ind.  317,  9  Am.  Neg. 

1    Cal.    353;    Pearson    v.    Duane,    4  Cas.  279;   Whalen  v.  St.  Louis,  etc. 

Wall.   605,   18  L.   ed.   447;    The  Ze-  R.    Co.,    60   Mo.    323,    12   Am.   Neg. 

nobia,   1  Abb.  Adm.  80;   The  Cana-  Cas.  204;    Pittsburg,  etc.  R.   Co.  v. 

dian,   1  Brown  Adm.  11.  Andrews,   39   Md.   329,   9  Am.   Neg. 

45  Fillebrown  v.  Hoar,   124  Mass.  Cas.  421 ;  Johnson  v.  Wells,  etc.  Co., 

580;   Meagher  v.  Driscoll,  99  Mass.  6  Nev.   224,  3  Am.   Rep.  245;   Wil- 

281 ;   Pennsylvania  R.  Co.  v.  Books,  liamson  v.  Prairie  Oil  &  Gas  Co.,  94 

57  Pa.  339,  98  Am.  Dec.  229;  Ward  Kan.     238,    allowing    recovery    for 

V.  Vanderbilt,  4  Abb.  App.  Dec.  521  ;  future     pain     and     suffering.       See 

Indianapolis,  etc.  R.  Co.  v.  Birney,  §§  1242-1245. 


§  58] 


COMPENSATION. 


223 


The  earlier  cases,  especially  in  jurisdictions  in  which  exem- 
plary damages  are  recoverable,  generally  held  that  the  person 
whose  breach  of  contract,  fraud  or  other  wrongful  act  causes 
another  to  be  sued  under  such  circumstances  that  the  suit  is 
an  injurious  consequence  for  which  he  is  liable  is  bound  to 
respond  in  damages  for  the  expenses  which  are  the  necessary 
and  legal  incidents  of  the  suit.*^  But  not  in  the  absence  of 
such  circumstances.*'''  As  given  in  a  late  case,  the  reason  fof 
denying  counsel  fees  where  the  circumstances  do  not  warrant 
the  imj)osition  of  exemplary  damages  is  that  the  law  prescribes 
what  costs  shall  be  taxed  and  what  shall  be  therein  included 
as  the  fee  of  the  successful  party.  In  such  case  no  greater  fee 
should  be  recovered.  The  litigants  should  be  placed  on  an 
equality.  If  the  defendant  should  be  successful  it  is  clear  he 
cannot  recover  from  the  plaintiff,  in  addition  to  the  taxable 
costs,  the  fee  paid  by  him  to  his  attorney ;  nor  should  the  plain- 
tiff, if  successful,  recover  from  the  defendant  the  fee  he  may 
have  paid  or  become  liable  for  to  his  attorney.'*^    Counsel  fees 


46Philpot  V.  Taylor,  75  111.  300, 
20  Am.  Rep.  241;  Dixon  v.  Fawcus, 
.3  El.  &  El.  537;  Collen  v.  Wright, 
7  El.  &  B.  301;  Randell  v.  Tri- 
men,  18  C.  B.  786;  Anderson  v. 
Sloane,  72  Wis.  566,  7  Am.  St.-  885 ; 
Stevens  v.  Handley,  Wright  121  ; 
Roberts  v.  Mason,  10  Ohio  St.  277 ; 
Peckham  I.  Co.  v.  Harper,  41  Ohio 
St.  100;  Parsons  v.  Harper,  16 
Gratt.  64;  Marshall  v.  Betner,  17 
Ala.  832;  Lawrence  v.  Hagerman, 
.56  111.  68,  8  Am.  Rep.  674;  Ziegler 
V.  Powell,  54  Ind.  173;  Closson  v. 
Staples,  42  Vt.  209,  1  Am.  Rep. 
316;  Eastin  v.  Bank,  66  Cal.  123, 
56  Am.  Rep.  77;  Magmer  v.  Renk, 
65  Wis.  364;  Gregory  v.  Chambers, 
78  Mo.  294;  Bolton  v.  Vellines,  94 
Va.  793;  First  Nat.  Bank  v.  Wil- 
liams, 62  Kan.  431 ;  Stevenson  v. 
Whitesell,  10  Pa.  Super.  306;  Wink- 
ler V.  Boeder,  23  Neb.  706,  8  Am. 
St.  155. 

47  Burruss  v.  Hines,  94  Va.  413; 


St.  Peter's  Church  v.  Beach,  26 
Conn.  355;  Henry  v.  Davis,  123 
Mass.  345;  Warren  v.  Cole,  15  Midi. 
265 ;  Young  v.  Courtney,  13  La. 
Ann.  193;  Flanders  v.  Tweed,  15 
Wall.  450,  21  L.  ed.  203;  Oelrichs 
v.  Spain,  15  Wall.  211,  21  L.  ed. 
43 ;  Yarbrough  v.  Weaver,  7  Tex. 
Civ.  App.  215;  Landa  v.  Obert,  45 
Tex.  542;  Winstead  v.  Ilulme,  32 
Kan.  568;  Bull  v.  Keenan,  100 
Iowa  144;  Gibney  v.  Lewis,  68 
Conn.  392. 

48  Burruss   v.   Hines,   supra. 

A  recovery  of  attornej-'s  fees  has 
been  denied  in  an  action  by  a  stock- 
holder to  compel  the  olTicers  of  a 
corporation  to  allow  an  inspection 
of  its  books.  Clason  v.  Nassau  F. 
Co.,  20  N.  Y.  Misc.  315.  And  in 
an  action  against  an  executor  ilc 
son  toi't  for  wrongfully  withhold- 
ing property  and  resisting  proceed- 
ings to  punish  him  for  contemi)t. 
Bishop    v.    licndrick.    82    Ilun    32:!, 


224  SUTHERLAND    ON    DAMAGES.  [§    58 

paid  in  the  conduct  of  an  unsuccessful  suit  against  lot-owners 
to  recover  the  amount  of  an  assessment  assigned  by  a  city  to 
such  party  in  payment  for  the  construction  of  a  sewer,  which 
suit  failed  because  the  assessment  was  invalid,  are  not  recover- 
able in  an  action  subsequently  brought  against  the  city  for 
damages  for  the  violation  of  its  contract  though  the  city  had 
stipulated  that  the  assessment  should  be  valid.*®  The  weight  of 
authority  is  to  the  effect  that  counsel  fees  and  court  costs  made 
necessary  in  the  prosecution  or  defense  of  suits  occasioned  by 
the  breach  of  contracts  are  not  recoverable  in  actions  ex  con- 
tractu. There  are  some  exceptions,  such  as  actions  on  injunc- 
tion,*°  and  attachment  bonds,^^  and  the  like,  and  actions  on 
covenants  of  warranty  or  of  seizin,^^  where  there  has  been  an 
eviction  reasonably  resisted  by  the  grantee.  "Expenditures  of 
this  class,  though  growing  out  of  the  alleged  breach,  in  the  sense 
that  had  there  been  no  breach  the  occasion  for  them  would  not 
have  arisen,  are  yet  too  remote  to  have  been  in  the  contempla- 
tion of  the  parties,  and  hence  do  not  constitute  an  element  of 
legal  damage  when  the  suit  is  on  the  contract,  though  the  rule 
might  be  otherwise  were  it  in  case,  setting  out  the  contract  as 
inducement  merely."  ^^ 

If  one's  property  is  taken,  injured  or  put  in  jeopardy  by  an- 

146  N.   Y.   398.      And    against    the  part    of    the    costs.      Montesano    v. 

usurper     of     an     office.      Palmer   v.  Blair,  12  Wash.  188. 

Darby,   2    Ohio   N.    P.   416,   1   Ohio  49  Gates    v.    Toledo,    57    Ohio    St. 

Dee.  48.  105. 

A  plaintiff  can  recover  attorney's  50  See  §  524. 

fees  as  damages  only  when  permitted  51  See  §  512. 

by   statute.     Spencer  v.   Murphy,   6  52  See  §§  617-619;  also  §§  83,  84. 

Colo.  App.  453.  53  Burton  v.  Henry,  90  Ala.  281 ; 

One    who    has    succeeded    in    an  Marvin  v.  Prentice,  94  N.  Y.  295; 

action    cannot   recover    in    a    subse-  Copeland    v.    Cunningham,    63    Ala. 

quent  action  the  expense  of  the  first.  394;    White    River,    etc.    R.    Co.    v. 

Lowell  V.  House  of  Good  Shepherd,  Star  R.  &  L.  Co.,  77  Ark.  128. 

14  Wash.  211  ;   Marvin  v.  Prentice,  Tlie  right  to  recover  the  expenses 

94  N.  Y.  295.  of  litigation  in  actions  ex  contractu 

Where  provision  is  made  by  stat-  must  be  because    of    fraud,    deceit, 

ute  for  a  reasonable  attorney's  fee  breach  of  trust,  wilful  misappropri- 

to    be    fixed    by    the    court    and    it  ation  of  funds,  or  fraud  in  securing 

makes  an  allowance,   it   is  error  to  a  contract  or  property  thereunder, 

allow  in  addition  the  statutory  fee  For   expenses   of   litigation   are   not 

provided  for  the  successful  party  as  allowed    for   bad    faith    in    refusing 


§  59] 


COMPENSATION. 


22; 


other's  neglect  of  duty  imposed  by  contract  or  by  his  w  roiioiiil 
act  any  necessary  expense  incurred  for  its  recovery,  rei)air  or 
protection  is  an  element  of  the  injury.  It  is  often  the  legal 
duty  of  the  injured  party  to  incur  such  expense  to  prevent  or 
limit  the  damages;  and  if  it  is  judicious  and  made  in  good 
faith  it  is  recoverable  though  abortive.^* 

§  59.  Required  certainty  of  anticipated  profits.  In  another 
clasS  of  cases  the  question  of  the  certainly  of  damages  is  more 
distinctly  involved.  They  are  cases  in  which  the  act  complained 
of  is  plainly  actionable  and  easy  of  proof,  and  the  actual  injury 
occasioned  thereby  consists  in  destroying  or  impairing  arrange- 
ments from  which  it  is  alleged  that  pecuniary  advantages  would 
have  resulted.  Such  effects  may  be  produced  by  the  refusal  of 
a  party  to  fulfill  his  contract,  or  by  tortious  acts  by  which  some 
business  scheme  is  frustrated.  The  pecuniary  advantages  which 
would  have  been  realized  but  for  the  defendant's  act  must  often 
be  ascertained  without  the  aid  which  their  actual  existence  would 
afford.  The  plaintiff's  right  to  recover  for  such  a  loss  depends 
on  his  proving  with  reasonable  certainty  ^*  that  such  advantages 


to  pay,  but  where  the  party  has 
acted  in  bad  faitli  in  the  trans- 
action and  dealings  out  of  which 
the  cause  of  action  arose.  Traders' 
Ins.  Co.  V.  Mann,  118  Ga.  381;  Mc- 
iCenzie  v.  Mitchell,  123  Ga.  72. 

54  Nading  v.  Dennison,  22  Tex. 
Civ.  App.  173,  quoting  the  text; 
Nashville  v.  Sutherland,  94  Tenn. 
356;  Watson  v.  Lisbon  Bridge,  14 
Me.  201;  Hughes  v.  Quentin,  8  C. 
&  P.  703;  Gillet  v.  Western  R.  Co., 
8  Allen,  560;  Emery  v.  Lowell,  109 
Mass.  197;  Hoffman  v.  Union  F.  Co., 
68  N.  Y.  385;  Jutte  v.  Hughes,  67 
N.  Y.  268;  Loker  v.  Damon,  17 
Pick.  284;  Hamlin  v.  Great  North- 
ern R.  Co.,  1  H.  &  N.  408;  Mailler 
V.  Express  Propeller  Line,  61  N.  Y. 
312;  Smeed  v.  Foord,  1  E.  &  E. 
602;  Clark  v.  Russell,  110  Mass. 
133;  James  v.  Hodsden,  47  Vt.  127: 
First  Nat.  Bank  v.  Williams,  62 
Kan.  431,  quoting  the  te.xt;  Welling- 
Suth.  Dam.  Vol.  I.— 15. 


ton  Nat.  Bank  v.  Robbing,  71  Kan. 
748,  114  Am.  St.  523,  quoting  the 
text;  McGaw  v.  Acker,  111  Md.  153, 
134  Am.  St.  592,  citing  the  text. 
See  §  88. 

55  Fredonia  G.  Co.  v.  Bailey,  77 
Kan.  296;  Hattiesburg  Lumber  Co. 
V.  Her  rick,  129  C.  C.  A.  288,  212 
Fed.  834;  Southwestern  Telegrapli 
&  Telephone  Co.  v.  Memphis  Tel. 
Co.,  Ill  Ark.  474;  Yazoo  &  M.  V. 
R.  Co.  V.  Consumers'  Ice  &  Power 
Co.,  —  Miss.  — ,  67  So.  657:  Allied 
Silk  Mfgrs.  v.  lOrstoin,  —  App  Div. 
—  (N.  Y.),  153  N.  Y.  S.  976;  Bow- 
man V.  Blankensliip,  165  N.  C.  519; 
First  State  Bank  of  Maimsville  v. 
Howell,  41  Okl.  216:  Wimiifurd  v. 
MacLeod,  68  Ore.  301. 

"The  rule  that  damages  which 
are  uncertain  or  contingent  cannot 
be  recovered  does  not  embrace  an 
uncertainty  as  to  the  value  of  the 
benefit  or  gain   to  be   derived   from 


226 


SUTHERLAND    ON    DAMAGES. 


[§  59 


would  have  resulted  legitimately  and,  therefore,  that  the  act 
complained  of  prevented  theni.^^ 


tlie  performance  of  the  contract,  but 
an  uncertainty  or  contingency  as 
to  whether  sucli  gain  or  benefit 
would  be  derived  at  all.  It  only 
applies  to  such  damages  as  are  not 
the  certain  result  of  the  breach,  and 
not  to  such  as  are  the  certain  re- 
sult but  uncertain  in  amount."  In 
the  latter  case  the  law  will  adopt 
that  mode  of  estimating  the  dam- 
ages which  is  most  certain  and  defi- 
nite. Blagen  v.  Thompson,  23  Ore. 
239,  254,  18  L.R.A.  315;  Occidental 
C.  M.  Co.  V.  Comstock  T.  Co.,  125 
Fed.  244;  Hoskins  v.  Scott,  52  Ore. 
271;  Carrico  v.  Stevenson  (Tex.  Civ. 
App.),  135  S.  W.  260;  Martin  v. 
Seaboard  A.  L.  R.,  70  S.  C.  8; 
Beach  v.  Johnson,  102  Miss.  419; 
Bredemeier  v.  Pacific  S.  Co.,  G4 
Ore.  576. 

"Certainty"  means  reasonable 
certainty.  Baltimore  &  0.  R.  Co.  v. 
Stewart,  79  Md.  487;  Stewart  v. 
Patton,  65  Mo.  App.  21 ;  Ramsay  v. 
Meade,  37  Colo.  465;  Phoenix  P. 
Co.  V.  American  C.  &  P.  Co.,  Ill 
Md.  459.  But  it  has  been  declared 
that  there  cannot  be  a  recovery  for 
lost  profits  unless  the  proof  is  clear 
and  unqualified.  Iron  City  Tool- 
works V.  Welisch,  128  Fed.  693,  63 
C.  C.  A.  245. 

In  Deslandes  v.  Scales,  187  Ala. 
25,  loss  of  profits  from  running  a 
boarding  house  were  held  too  un- 
certain to  furnish  a  basis  for  esti- 
mation of  damages. 

56Myerle  v.  United  States,  33 
Ct.  of  Cls.  1,  26,  quoting  the  text; 
Fell  V.  Newberry,  106  Mich.  .542; 
Lazier  G.  E.  Co.  v.  Dubois,  130  Fed. 
834,  65  C.  C.  A.  172;  Milliken  I. 
Co.  V.  United  States,  40  Ct.  of  Cls. 
81  ;   Metzger    v.    Brincat,    154    Ala. 


397 ;  Southern  R.  Co.  v.  Coleman, 
153  Ala.  266;  Nichols  v.  Rasch,  138 
Ala.  372;  Smuggler-Union  M.  Co. 
V.  Kent,  47  Colo.  320,  citing  the 
text;  Silka  v.  Quinn,  46  Colo.  596; 
Mountain  City  M.  Co.  v.  Coblj,  124 
Ga.  937;  Southern  Bell  Tel.  &  T. 
Co.  V.  Earle,  118  Ga.  506;  Atchison, 
etc.  R.  Co.  V.  Thomas,  70  Kan.  409 ; 
Lynn  S.  Co.  v.  Auburn-L.  S.  Co., 
]03  Me.  334;  Western  U.  Tel.  Co. 
V.  Lehman,  106  Md.  318;  Herron  v. 
Raupp,  156  Mich.  162;  Duvall  v. 
Furwerda,  146  Mich.  13;  Emerson 
V.  Pacific  Coast  &  N.  P.  Co.,  92 
Minn.  523;  Standard  F.  Co.  v.  St. 
Louis  M.  F.  Co.,  177  Mo.  559;  Gard- 
ner V.  Springfield  G.  &  E.  Co.,  154 
Mo.  App.  666;  Egan  v.  Browne,  128 
App.  Div.  (N.  Y.)  184;  Brooklyn 
Hills  I.  Co.  V.  New  York,  etc.  R.  Co., 
80  id.  508;  Machine  Co.  v.  Tobacco 
Co.,  141  N.  C.  284,  8  L.R.A. (N.S.) 
255;  Wilson  v.  Wernwag,  217  Pa. 
82;  Jimienez  v.  San  Juan  L.  &  T. 
Co.,  3  Porto  Rico  Fed.  178  (estimat- 
ed futvue  profits  from  the  use  of  a 
disabled  automobile)  ;  Hays  v. 
Western  U.  Tel.  Co.,  70  S.  C.  16, 
67  L.R.A.  481,  ]06  Am.  St.  731; 
Springer  v.  Riley  (Tex.  Civ.  App.), 
136  S.  W.  577;  Reagan  R.  B.  Co.  v. 
Dickson  C.  W.  Co.,  55  Tex.  Civ.  App. 
509;  McGinnis  v.  Hardgrove,  163 
Mo.  App.  20;  Sun  Mfg.  Co.  v.  Eg- 
bert, 37  Tex.  Civ.  App.  512;  Parker 
V.  McKannon,  76  Vt.  96;  Bristol  B. 
L.  R.  Co.  V.  Bullock  E.  Mfg.  Co., 
101  Va.  652;  Sedro  V.  Co.  v.  Kwapil, 
62  Wash.  385,  citing  tlie  text; 
Church  V.  Wilkerson-T.  Co..  58 
Wash.  262,  137  Am.  St.  1059;  Belch 
V.  Big  Store  Co.,  46  Wash.  1; 
Richey  v.  Union  Cent.  L.  Ins.  Co., 
140    Wis.    486.      See    Fitzgerald    v. 


§  59] 


COMPENSATION. 


227 


The  grounds  upon  which  is  founded  the  gen(Mnl  cule  of  ex- 
duding  profits  in  estimating  damages  are,  (1)  that  in  tlie  great- 


Wiley,  22  App.  D.  C.  329;  Des 
Allemands  L.  Co.  v.  Morgan  City 
T.  Co.,  117  La.  1;  Maynard  v. 
Royal  Worcester  C.  Co.,  200  Mass. 
1;  Kerns  v.  Western  U.  Tel.  Co., 
170  Mo.  App.  642;  Wellington  v. 
Spencer,  37  Okla.  461,  46  L.R.A. 
(N.S.)  469;  Walter  B.  Co.  v. 
Blackburn  (Tex.  Civ.  App.),  67  S. 
W.  220;  Johnson  v.  Wild  Rice  B. 
Co.,  118  Minn.  24;  Neal  v.  Jeffer- 
son, 212  Mass.  517,  41  L.R.A.  (N.S.) 
387;  Randall  v.  Peerless  M.  C.  Co., 
212  Mass.  352;  Rawlings  v.  Nash, 
1J7  Md.  393;  Hollweg  v.  Schafer  B. 
Co.,  197  Fed.  689,  117  C.  C.  A.  83; 
Bour  V.  Illinois  Cent.  R.  Co.,  176 
III.  App.  185;  Harmon  v.  Frye,  103 
Ark.  584;  Raven  Red  Ash  C.  Co. 
V.  Herron,  114  Va.  103,  §  78; 
Wilkes  V.  Stacy,  113  Ark.  556;  J. 
B.  Carr  &  Co.  v.  Southern  Ry.  Co., 
]2  Ga.  App.  830;  O'Neal  v.  Bain- 
bridge,  94  Kan.  518;  McGinnis  v. 
Studebaker  Corp.,  —  Ore.  — ,  146 
Pac.  825. 

If  land  covering  deposits  of  phos- 
phate has  been  rodded,  bored  and 
pitted  and  excavations  made  to 
ascertain  their  depth,  there  is  suf- 
ficient evidence  to  form  a  basis  for 
an  award  of  damages  based  on  the 
value  of  the  phosphate.  Silver 
Springs,  etc.  R.  Co.  v.  Van  Ness,  45 
Fla.  559. 

The  loss  resulting  from  the  in- 
fringement of  the  right  to  main- 
tain a  noncompeting  ferry  is  well 
shown  by  tlie  diminution  in  tlio 
plaintiff's  receipts;  it  need  not  be 
.shown  that  the  persons  who  patron- 
ized tlie  defendant  would  have  been 
carried  by  the  plaintiff  if  his  ferry 
was  the  only  one.     Hatten  v.  Tur- 


man,  123  Ky.  S44 ;    .Morse  v.    I  inicH 
R.  P.  Co.,   124  Iowa  707. 

Though  the  original  lioldcr  of  u 
contract  did  not  find  it  prolitablo 
when  he  operated  under  it  the  fact 
that  his  assignee  took  it  and  giuir- 
antied  a  large  protit  an<l  found  it 
profitable  shows  that  prolits  might 
have  been  made  under  it  by  tlie  aw- 
signor.  Pennsylvania  S.  Co.  v. 
New  York  City  R.  Co.,  198  Fed.  721, 
117  C.  C.  A.  503. 

In  Wood  V.  Grand  Valley  15.  Co., 
26  Ont.  L.  R.  441,  the  plaintiff  pur- 
chased bonds  of  a  railroad  company 
to  aid  in  the  construction  of  a 
branch  line  to  the  place  in  wiiicli 
he  was  doing  business;  the  road 
was  not  built.  The  damages  sought 
were  for  the  inconvenience  of  doing 
business  without  the  road,  and  the 
loss  of  profits  because  of  the  in- 
creased prosperity  the  road  would 
have  brought  to  the  village  in  which 
he  lived.  These  elements  of  uncer- 
tainty were  too  great  to  enter  into 
the  measure  of  damages,  which  the 
court  placed  at  the  sum  paid  for 
the  bonds,  less  whatever  value  they 
had. 

Profits  made  in  violation  of  tlie 
laws  concerning  gambling  or  the 
sale  of  liquor  are  not  to  be  regard- 
ed. §  869;  Kauffman  v.  Babcock, 
67  Tex.  241  ;  Prude  v.  Sebastian,  107 
La.  64;  Morris  v.  Western  l'.  Tel. 
Co.,  94  Me.  423. 

Ordinarily,  there  cannot  be  a  re- 
covery of  the  gains  which  would 
have  been  made  by  the  use  of  money 
not  supplied  according  to  contract; 
the  disappointed  party  must  be  con- 
tent with  interest.  See  Levinski  v. 
Middlesex  B.  Co.,  92  Fed.  449,  34 
C.  C.  A.  452;  Greene  v.  Goddard.  9 


228 


SlITJIERLANU    ON    DAMAGES- 


[§    59 


er  number  of  cases  such  profits  are  too  dependent  upon  numerous 
and  clianging  contingencies  to  constitute  a  definite  and  trust- 
worthy measure  of  damages;  (2)  because  such  loss  of  profits  is 
ordinarily  remote  and  not  the  direct  and  immediate  result  of 
a  non-fulfillment  of  the  contract;  (3)  the  engagement  to  pay 
such  loss  of  profits,  in  cases  of  default  in  performance,  does 
not  form  a  part  of  the  contract,  nor  can  it  be  said,  from  its 
nature  and  terms,  that  it  was  within  the  contemplation  of  the 
parties.  Cases  arise,  however,  in  which  loss  of  profits  is  said 
to  be  clearly  within  the  contemplation  of  the  parties,  although 
not  provided  for  by  the  terms  of  the  contract,  and  where  such 
profits  are  not  open  to  the  objection  of  uncertainty  or  remote- 
ness. An  instance  of  the  latter  kind  is  where  the  contract  is 
entered  into  for  the  purpose,  in  part  at  least,  of  enabling  the 
party  to  fulfill  a  collateral  agreement  from  which  profits  would 
arise,  of  the  existence  of  which  he  informed  the  other  party 
prior  to  the  making  of  the  contract.  In  such  cases  the  loss  of 
profits  from  the  collateral  agreement  is  clearly  within  the  con- 
templation of  the  parties,  and  is  not  remote  or  speculative." 


Mete.  (Mass.)  212.  See  §  76,  and, 
for  some  exceptions,  §  77. 

In  Williams  v-.  Stephenson,  33 
Can.  Sup.  Ct.  323,  the  trial  court 
guessed  at  the  profits  the  plaintiff 
was  deprived  of  by  the  breach  of 
the  contract,  and  its  action  was 
sustained. 

In  actions  to  recover  for  personal 
injuries  which  disqualify  the  per- 
son injured  from  giving  attention  to 
the  business  in  which  he  is  engaged 
it  is  error  to  receive  testimony  of 
tlie  average  profits  made  therein  as 
a  basis  for  estimating  damages. 
Bierbach  v.  Goodyear  Rubber  Co., 
54  Wis.  208,  41  Am.  Rep.  19;  Mas- 
terton  v.  Mount  Vernon,  58  N.  Y. 
391 ;  Blair  v.  Milwaukee,  etc.  R. 
Co.,  20  Wis.  262,  10  Am.  Neg.  Cas. 
518.  This  rule  is  disapproved  of  in 
Terre  Haute  v.  Hudnut,  112  Ind. 
542,   552,   and   the   New   York   case 


cited  pronounced  not  in  harmony 
with  later  cases  in  that  state.  See 
Wakeman  v.  Wheeler  &  W.  Co., 
101  N.  Y.  205,  54  Am.  Rep.  676; 
§  1246. 

57  Per  Parker,  Ch.  J.,  in  Wither- 
bee  V.  Meyer,  155  N.  Y.  446,  453; 
Pacific  S.  M.  Works  v.  California 
C.  Co.,  164  Fed.  980,  91  C.  C.  A. 
108;  Milliken  I.  Co.  v.  United 
States,  40  Ct.  of  Cls.  81 ;  Spencer  M. 
Co.  V.  Hall,  78  Ark.  336;  Sumwalt 
I.  &  C.  Co.  V.  Knickerbocker  I.  Co., 
114  Md.  403;  Independent  B.  Ass'n 
V.  Burt,  109  Minn.  323;  Chisholm  & 
M.  Mfg.  Co.  V.  United  States,  111 
Tenn.  202;  Perolin  Co.  v.  Young,  65 
Wash.  300;  Church  v.  Wilkerson-T. 
Co.,  58  Wash.  262,  137  Am.  St. 
1059;  Federal  I.  &  B.  B.  Co.  v. 
Ilock,  42  Wash.  668;  Gross  v. 
Ileckert,  120  Wis.  314;  Pennsyl- 
vania S.  Co.  v.  New  York  City  R. 


59] 


COMPENSATION. 


229 


If  a  vendor  fails  to  deliver  property  pursuant  to  Jiis  contract 
the  vendee,  having  paid  for  it,  is  deprived  of  such  benefit  as 
siich  sale  completed  would  have  conferred,  which  is  a  loss  e(|nal 
to  the  value  of  the  property  at  the  time  it  should  have  been 
delivered,  with  interest  from  that  time.  This  value  can  gen- 
erally be  proved  with  certainty.  If  the  property  has  not  been 
paid  for  the  compensation  is  still  adjusted  with  reference  to  the 
value,  and  is  the  difference  between  the  contract  price  and 
the  value.  Thus,  the  vendee  is  entitled  to  recover  according  to 
the  advantage  he  would  have  derived  from  performance  of  the 
contract,  namely,  the  profit  he  could  have  made  by  the  bargain. 
He  is  entitled  to  such  sum  as  would  enable  him  to  obtain  the 
property  if  it  is  obtainable.^®  On  the  other  hand,  where  a  vendee 
breaks  his  contract  the  property  is  left  on  the  vendor's  hands ; 
his  loss  is  equal  to  the  difference  between  the  contract  price  and 
any  less  sum  the  property  is  worth  when  the  vendee  was  bound 
to  take  and  pay  for  it.  The  loss  he  suffers  is  the  profit  he  would 
have  made  by  the  completion  of  the  sale,^^ 


Co.,  198  Fed.  721,  117  C.  C.  A.  503: 
Hicks  V.  National  S.  Co.,  169  Mo. 
App.  479;  Roper  v.  Milbourn,  9.3 
Neb.  809;  Bredemeier  v.  Pacific  S. 
Co.,  64  Ore.  576;  Beach  v.  Johnson, 
102  Miss.  419. 

58  Cincinnati,  etc.  R.  Co.  v.  Baker, 
]30  111.  App.  414. 

In  Haskel  v.  Hunter,  23  Mich, 
305,  an  action  was  brought  for  dam- 
ages for  breach  of  a  contract  to 
sell  and  deliver  lumber,  and  it  ap- 
peared that  a  portion  of  the  lum- 
ber had  been  delivered  to  the  plain- 
tiffs at  a  place  other  than  that 
specified  in  the  contract,  and  sub- 
ject to  a  heavy  bill  of  freight  in 
consequence  thereof.  In  the  absence 
of  any  proof  that  the  plaintiffs  had 
accepted  the  same  in  satisfaction  to 
that  extent  of  the  contract,  or  had 
waived  their  right  to  compensation 
to  that  extent  for  the  breach  there 
of,  it  was  not  proper  to  deduct  the 


amount  so  delivered  from  the  whole 
amount  to  be  delivered.  An  in- 
struction to  the  juiy  tliat  thf  proper 
measure  of  damages  is  the  differ- 
ence between  the  contract  price  of 
tlie  lumber  not  delivered  and  tlie 
wholesale  price  at  the  place  of  de- 
livery was  erKiiicous.  'I  "he  true 
measure  is  tiie  diircreiicc  between 
tlie  contract  [jrice  and  what  it  would 
have  cost  the  plaintill's  to  procure, 
at  the  place  of  delivery.  ;niil  at  the 
time  or  times  wiu'U  it  was  reason- 
able and  proper  for  tiiem  to  supply 
themselves  with  luuiber  of  the  kind 
and  quality  tliev  were  to  receive  on 
tlie  contract;  and  if  it  were  imprac- 
ticable to  supply  themselves,  except 
at  retail  rates,  they  were  entitled 
to  demand  those  rates  of  the  de- 
fendants. 

59  Houghton  v.  Furbush,  18.") 
Mass.  251;  Gordon  v.  Norris,  49  \. 
H.  370;  Haines  v.  Tucker,  ."lO  X.   11. 


^30 


SUTiniKLAKU    ON    DAMAGES.  {§     60 


§  60.  Same  subject.  In  many  eases  the  sum  which  shall  rep- 
resent the  value  to  a  vendee  who  has  been  disappointed  in  the 
receipt  of  property  bargained  for  cannot  be  ascertained  from 
jn-oof  of  a  market  value,  either  because  the  article  is  not  obtain- 
able in  market  or  because  it  is  contracted  for  and  must  be 
obtained  from  the  vendor  to  answer  a  particular  purpose,  and 
not  for  resale.  Then,  in  applying  the  general  rule  that  the 
damages  for  breach  of  contract  are  to  be  measured  by  the  benefits 
which  would  have  been  received  if  the  contract  had  been  per- 
formed resort  must  be  had  to  the  known  or  customary  use  of 
the  property  and  such  practical  elements  of  value  as  the  case 
presents.  If  the  sale  is  made  with  a  warranty,  express -or  im- 
plied, that  the  article  is  of  a  particular  description  or  suitable 
for  a  designated  use,  on  a  breach  by  the  vendor  the  damages 
are  properly  computed  according  to  the  actual  loss  in  respect 
to  that  object.  The  ascertainment  of  the  damages  may  involve 
an  inquiry  into  the  advantages  derivable  from  the  delivery  of 
articles  of  the  required  description  or  suitable  for  the  contem- 
plated use,  and  of  losses  occasioned  by  the  breach  with  reference 
to  the  particular  purpose  of  the  contract  as  known  to  the  parties. 
In  such  cases  the  same  degree  of  certainty  is  not  always  attain- 
able and  there  is  much  conflict  of  authority  as  to  the  proper 
scope  of  the  incpiiry.  The  same  considerations  apply  to  the 
question  of  the  proper  mode  of  arriving  at  the  amount  of  dam- 
age whatever  be  the  nature  of  the  contract.  The  injured  party 
is  entitled  to  gains  prevented  and  losses  sustained  if  his  evi- 

307;  Collins  V.  Delaporte,  115  Mass.  boom    cannot    be    recovered.      Car- 

159;    UUman  v.   Kent,  60  111.   271;  bondale  I.  Co.  v.  Burdick,  5S  Kan 

Sanborn    v.    Benedict,    78    111.    310;  517. 

Camp  V.  Hamlin,  55  Ga.  259;  Mc-  A  distinction  is  to  be  made  be- 
Cracken  v.  Webb,  36  Iowa  551;  tween  cases  where  the  difference  be- 
Uustan  V.  McAndrew,  44'  N.  Y.  72 ;  tween  the  agreed  price  and  the 
Hayden  v.  Demets,  53  N.  Y.  426;  ascertainable  value  of  performance 
Beardsley  v.  Smith,  61  111.  App.  is  involved  and  those  in  which  the 
340.  claim  is  based  upon  some  thing 
The  loss  of  profits  based  upon  hypotlietical.  Connersville  W.  Co. 
the  sale  of  town  lots  at  prices  be-  v.  McFarlan  C.  C,  166  Ind.  123,  3 
yond  their  value  and  which  are  de-  L.R.A.  (N.S.)  709;  Holliday  v.  High- 
pendent  upon  the  working  up  of  a  land  I.  &  S.  Co.,  43  Ind.  App.  342. 


§   60] 


COMPENSATION. 


231 


deuce  has  proved  tliein  with  sufficient  certainty.^"    In  Fletcher  v. 


60  Deliner-Wallen  Co.  v.  Delaware 
L.  &  W.  R.  Co.,  89  Misc.  (N.  Y.) 
252;  W.  H.  Norris  Lumber  Co.  v. 
Harris,  —  Tex.  Civ.  App.  — ,  177  S. 
W.  515;  Allen  v.  Field,  130  Fed. 
641,  65  C.  C.  A.  19;  Morgan  v.  Sut- 
live,  148  Iowa  318;  lowa-M.  L.  Co. 
V.  Conner,  136  Iowa  674;  White  v. 
Leatherberry,  82  Miss.  103;  Pun- 
teney-M.  Mfg.  Co.  v.  Northwall,  70 
Neb.  688;  Kelley  v.  La  Crosse  C. 
Co.,  120  Wis.  84,  102  Am.  St.  971; 
Sedro  V.  Co.  v.  Kwapil,  62  Wash. 
385,  citing  the  text;  Hoge  v.  Nor- 
ton, 22  Kan.  374;  Brown  v.  Hadley, 
43  Kan.  267 ;  Arkansas  Valley  T.  & 
L.  Co.  V.  Lincoln,  56  Kan.  145;  New 
Market  Co.  v.  Embry,  20  Ky.  L. 
Rep.  1130;  Washington  County  W 
Co.  V.  Carver,  91  Md.  398;  Wiggins 
F.  Co.  V.  Chicago  &  A.  R.  Co.,  128 
Mo.  224;  Stewart  v.  Patton,  65  Mo. 
App.  21;  Wittenberg  v.  Mollyneaux, 
60  Neb.  583,  59  Neb.  203:  Lake- 
side P .  Co.  v.  State,  45  App. 
Div.   (N.  Y.)   112;  Burruss  v.  Hines, 

04  Va.  413;  Carroll-Porter  B.  & 
T.     Co.     V.     Columbus     Mach.     Co., 

5  C.  C.  A.  190,  55  Fed.  451;  Hitch- 
cock V.  Anthony,  28  C.  C.  A.  80,  83 
Fed.  779;  Safety  Insulated  W.  & 
C.  Co.  V.  Mayor,  13  C.  C.  A.  375, 
60  Fed.  140;  Fontaine  v.  Baxley,  90 
Ga.  416;  Border  City  I.  &  C.  Co. 
V.  Adams,  69  Ark.  219;  Gordon  v. 
Sanborn  (Tex.  Civ.  App.),  35  S.  W. 
291  (repudiation  of  trust)  ;  Port- 
able E.  Mfg.  Co.  V.  Bradley,  158 
Iowa  19;  Quarnberg  v.  Chamber- 
lain, 29  S.  D.  377:  Bredemeier  v. 
Pacific  S.  Co.  04  Ore.  576. 

In  an  action  brought  to  recover 
the  price  of  nine  and  one-half  tons 
of  fertilizer  the  defendant  set  up 
that  the  plaintiff  agreed  to  sell  and 
deliver  to  him  twenty  tons  of  ferti- 
lizer    at     a     stipulated    price,    with 


notice  tiiat  it  was  intended  for  use 
on  the  defendant's  cotton  crop,  liic 
defendant  was  unable  to  buy  tiie  re- 
maining quantity  elsewhere,  and 
the  plaintiff  refused  to  deliver  it. 
The  land  upon  whicli  the  fertilizer 
was  designed  to  be  used  was  culti- 
vated in  a  farmer-like  manner. 
Upon  a  portion  the  fertilizer  dc 
livered  was  used.  This  portion  pro- 
duced between  three  hundred  and 
four  hundred  pounds  of  seed  cotton 
per  acre  more  than  that  adjoining, 
which  was  also  planted  in  cotton— 
the  quality  and  cultivation  of  each 
part  being  precisely  the  same.  The 
court  say :  "The  true  rule  seems  to 
be  tliat  [the  loss  of]  profits  whicli 
have  been  sustained  as  the  natural 
consequence  of  the  breach  or  the 
wrongful  act  complained  of  are  re- 
coverable imless  they  are  objection- 
able either  on  the  ground  of  remote- 
ness or  of  uncertainty.  Those 
profits  are  usually  considered  too 
remote,  among  many  others,  which 
are  not  the  immediate  fruits  of  the 
principal  contract,  but  are  depend- 
ent upon  collateral  engagements 
and  enterprises  not  brought  to  the 
notice  of  the  contracting  parties, 
and  not  therefore  brought  within 
their  contemplation  or  tliat  of  the 
law.  Those  are  considered  uncer- 
tain which  are  purely  speculative 
in  their  nature,  and  depend  upon 
so  many  incalculable  contingencies 
as  to  make  it  impracticable  to  de- 
termine them  definitely  liy  any 
trustworthy  mode  of  computation. 
We  would  not  be  willing  to  say  tliat 
the  damages  here  claimed  by  the 
defendant  by  way  of  lost  profits 
would  have  been  recoverable  if 
their  ascertainment  had  been  left 
to  mere  conjecture.  The  amount  of 
cotton    or    other    crops    which    land 


232 


SUTHERLAND    ON    DAMAGES. 


[§    60 


Tayleur/^  the  action  was  against  a  ship-builder  to  recover  dam- 
ages for  nondelivery  of  an  iron  ship  at  the  time  appointed  in  the 
contract.  The  ship  wsis  intended  by  the  plaintiffs  and  from  the 
nature  of  her  fittings  the  defendant  must  have  known  she  was 
intended  for  a  passenger  ship  in  the  Australian  trade.  The 
witnesses  called  on  the  part  of  the  plaintiff  stated  that  the  vessel 
would,  in  all  probability,  have  obtained,  if  completed  by  the 
time  mentioned  in  the  contract,  at  the  then  current  rates,  an 
outward  freight  of  about  7,000Z.,  and  a  gross  freight  home  of 
about  9,r)00L,  and  that,  allowing  for  the  necessary  outlay  and 
expenses,  the  profits  would  in  all  probability  have  been  a  sum 
somewhat  exceeding  7,000Z.  The  amount  of  freight  received 
by  the  plaintiffs  when  the  ship  sailed  was  4,280^  The  court 
submitted  the  case  to  the  jury,  to  be  decided  by  the  rule  laid 
down  in  Hadley  v.  Baxendale,  and  the  jury  returned  a  verdict 
in  favor  of  the  plaintiffs  for  2,7501.,  which  was  sustained. 
Under  the  particular  circumstances  it  is  to  be  inferred  that 
the  data  for  ascertaining  what  the  ship  would  have  earned  if 
she  had  been  finished  at  the  proper  time  were  not  purely  con- 


produces  is  dependent  upon  so 
many  varying  contingencies  as  to 
render  it  very  indeterminate.  It 
will  vary  with  the  seasons,  the 
adaptation  of  soil  and  climate,  and 
its  comparative  exemption  from  the 
ravages  of  vVorms  or  other  destruc- 
tive insects.  Speculative  opinions 
of  witnesses  as  to  the  probable  in- 
fluences of  these  operative  causes 
would  be  a  poor  criterion  for  the 
measure  of  values.  In  this  case, 
however,  these  difficulties  are  en- 
tirely removed.  The  character  of 
the  season  is  absolutely  known. 
So  is  the  precise  effect  of  the  fer- 
tilizer used  during  this  particular 
season.  No  speculation  is  needed 
as  to  how  much  rain  and  how 
much  sunshine  were  requisite  to 
produce  a  given  amount  of  crops  to 
the    acre,    nor    as    to    the    probable 


effect  of  the  fertilizer  upon  the  dif- 
ferent kinds  of  soil,  or  even  the 
proportion  of  it  best  suited  to  the 
land,  and,  therefore,  what  would 
necessarily  have  been  produced  on 
the  remainder,  which  is  shown  to 
have  been  in  precisely  the  same 
state  of  cultivation,  and  similar  in 
quality  of  soil."  Bell  v.  Reynolds, 
73  Ala.  511.  See  Goodsell  v.  West- 
ern U.  Tel.  Co.,  53  N.  Y.  Super.  46, 
58  id.  26. 

One  who  has  agreed  to  buy  prop- 
erty from  another,  knowing  that  the 
latter  intended  to  purchase  it  at 
a  foreclosure  sale,  and  who  outbids 
such  person  at  the  sale  must  answer 
for  the  difference  between  the  price 
bid  and  that  he  agreed  to  pay. 
Patterson  v.  Meyerhofer,  204  N.  Y. 
96. 

6117   C.  B.  21. 


60] 


COMPENSATION. 


233 


jectural,  but  were  nearJy  as  reliable  as  is  the  proof  of  market 
values.^^ 

But  while  this  case  on  its  facts  is  quite  satisfactory  and  no 
doubtful  principles  are  announced  in  it  the  damages  were 
arrived  at  in  a  manner  which  the  courts  in  this  country  have 
generally  refused  to  adopt;  that  is,  where  there  is  any  other 
and  more  certain  method  of  ascertaining  the  damages  they  will 
not  generally  attempt  to  ascertain  in  what  profits  could  be 
realized  by  conducting  a  business,^^  especially  if  the  enterprise 
is  a  new  one.^^  In  actions  for  damages  for  not  fulfilling  in 
time  contracts  for  particular  works  to  be  completed  at  a  stipu- 
lated date  the  plaintiff  cannot  recover  damages  estimated  on  the 
value  of  profits  which  would  have  been  realized  by  their  use 
if  the  contract  had  been  performed.  The  value  of  such  use  for 
general  purposes  to  which  they  are  adapted  or  some  known  use 
for  which  they  were  intended,  during  the  delay,  with  any  ex- 


62  It  is  said  in  connection  with 
tlie  case  cited  that  the  rule  of  aver- 
age profits  made  by  the  use  of  un- 
delivered chattels  has  not  been 
adopted  as  a  separate  rule,  and  is 
inapplicable  to  the  breach  of  a  con- 
tract to  serve  a  mare  with  a  par- 
ticular stallion.  Sapwell  v.  Bass, 
[1910]  2  K.  B.  486.     See  §  6]. 

63  Smith  V.  Curran,  138  Fed. 
150;  Connersville  W.  Co.  v.  Mc- 
Farlan  C.  Co.,  166  Ind.  12.3,  3 
L.K.A.(N.S.)  709;  Gossage  v.  Phila- 
delphia, etc.  R.  Co.,  ]01  Md.  698; 
Wade  v.  Belmont  I.  C.  &  W.  P. 
Co.,  87  Neb.  732;  Punteney-M.  Mfg. 
Co.  v.  Northwall,  70  Neb.  688; 
Standard  S.  Co.  v.  Carter,  81  S.  C. 
181,  19  L.R.A.(N.S.)  155;  Shrop- 
shire V.  Adams,  40  Tex.  Civ.  App. 
339;  Hurxthal  v.  St.  Lawrence  B.  & 
M.  Co.,  65  W.  Va.  346;  Taylor  v. 
Maguire,  12  Mo.  313;  Blanchard  v. 
Ely,  21  Wend.  342;  Walker  v.  El- 
lis, 1  Sneed,  515;  Porter  v.  Woods, 
3  Humph.  56,  39  Am.  Dec.  153; 
Singer   v.   Farnsworth,   2   Ind.  597; 


Glidden  v.  Pooler,  50  111.  App.  36; 
Lanahan  v.  Heaver,  79  Md.  413; 
Delp  v.  Edlis,  190  Pa.  25;  Sliarpe 
v.  Southern  R.  Co.,  130  N.  C.  613; 
Douglas  v.  Railroad  Co.,  51  W.  Va. 
523;  Central  C.  &  C.  Co.  v.  Hart- 
man,  111  Fed.  96,  49  C.  C.  A.  244; 
Armistead  v.  Shreveport,  etc.  R.  Co., 
]0S  La.  171;  Asher  v.  Stacey,  23 
Ky.  L.  Rep.  1586;  Silurian  M.  S. 
Co.  V.  Kuhn,  65  Neb.  646;  Garden 
City  S.  Co.  v.  Southern  Fire  B. 
&  C.  Co.,  177  Til.  App.  280; 
Thompson  v.  Corbin,  41  Xova 
Scotia,  386. 

64  Creamery  P.  Mfg.  Co.  v.  Ben- 
ton County  C.  Co.,  120  Iowa  584; 
Whitehead  v.  Cape  Henry  Syndi- 
cate, 111  Va.  193;  Kellogg  v.  Ma- 
lick,  125  Wis.  239;  Mitchell  v.  Cor- 
nell, 44  N.  Y.  Super.  401.  See 
Owensboro-H.  Tel.  Co.  v.  Wisdom, 
23  Ky.  L.  Rep.  97,  where  a  lesser 
degree  of  proof  seems  to  have  satis- 
fied the  court  than  has  been  re- 
quired  in   many  other  cases. 


234 


SUTllEKLANJJ    OJN    DAMAGKS. 


[§  60 


peiiscs  which  have  to  be  incurred  in  the  meantime,  is  usually 
the  measure  of  damages.^^  Where  the  plaintiff  took  possession 
of  a  store  under  a  contract  of  purchase  and  carried  on  a  profit- 
able business  in  it  for  several  months  and  was  then  ejected  by 
the  defendant  and  kept  out  of  possession  the  latter  was  liable 
for  the  value  of  the  business  lost,  which  was  provable  by  evi- 
dence of  the  profits  made.^^  On  the  breach  of  a  contract  for 
the  loan  of  money  to  be  used  in  erecting  houses,  none  of  which 
were  built  until  three  years  after  its  breach,  there  cannot  be 
a  recovery  for  the  loss  of  their  rental  value.  The  fact  that  the 
plaintifi^  was  unable  during  that  time  to  borrow  the  money 
from  any  other  source  on  the  same  security  offered  the  defend-, 
ant,  and  which  he  did  not  impair,  was  taken  as  evidence  of  the 
uncertainty  and  speculative  character  of  the  anticipated  profits.^^ 
In  particular  cases  there  may  be  losses  in  outlays  made  by 
the  injured  party  in  anticipation  of  the  performance  by  the 


65  Tompkins  v.  Monticello  C.  0. 
Co.,  153  Fed.  817;  Curran  v.  Smith, 
14!)  Fed.  945,  81  C.  C.  A.  537; 
Bliss  V.  Buffalo  T.  C.  Co.,  131  Fed. 
51,  65  C.  C.  A.  289;  Dustin  v.  St. 
Petersburg  I.  Co.,  126  Fed.  816; 
Connersville  W.  Co.  v.  McFarlan  C. 
Co.,  166  Ind.  123,  3  L.R.A.(N.S.) 
709;  First  Nat.  Bank  v.  Car- 
roll, 35  Mont.  302;  Callahan  v. 
Chickasha  C.  0.  Co.,  17  Okla.  544; 
Standard  S.  Co.  v.  Carter,  81  S. 
C.  181,  19  L.R.A.(N.S.)  155;  Stark 
G.  Co.  V.  Harry  Bros.  Co.,  57  Tex. 
Civ.  Api).  529 ;  Ulrich  v.  Pateros, 
67  Wash.  328;  Griffin  v.  Colver, 
16  N.  Y.  489;  Taylor  v.  Brad- 
ley, 39  N.  Y.  129;  McBoyle  v. 
Reeder,  1  Ired.  607;  Benton  v.  Fay, 
64  111.  417;  Green  v.  Mann,  11  111. 
614;  Priestly  v.  Northern  I.  &  C. 
R.  Co.,  26  111.  207,  71  Am.  Dec. 
369;  Strawn  v.  Coggswell,  28  111. 
461;  Fleming  v.  Beck,  48  Pa.  309; 
Lewis  V.  Atlas  Mut.  L.  Ins.  Co., 
61  Mo.  534;  Green  v.  Williams,  45 
111.  206;  Dean  v.  White,  5  Iowa 
266;   Rogers  v.  Beard,  36  Barb.  31; 


Snell  V.  Cottingham,  72  111.  161; 
Cassidy  v.  Le  Fevre,  45  N.  Y.  562; 
Parker  v.  Gilliam,  1  Ired.  545;  Le- 
croy  V.  Wiggins,  31  Ala.  13;  Pettee 
V.  Tennessee  Mfg.  Co.,  1  Sneed  381; 
Heard  v.  Holman,  19  C.  B.  (N.  S.) 
]  ;   Davis  v.  Cincinnati,  etc.  R.  Co., 

1  Disney,  23;  Blair  v.  Kilpatrick, 
40  Ind.  312;  Thompson  v.  Shattuck, 

2  Mete.  (Mass.)  615;  Corbet  v. 
Johnson,  10  Ont.  App.  564;  Bridges 
V.  Lanham,  14  Neb.  369,  45  Am. 
Rep.  1 21 ;  Witherbee  v.  Meyer,  155 
N.  Y.  446;  Rogers  v.  Bemus,  69  Pa. 
432;  Pennypacker  v.  Jones,  106  Pa. 
237;  Finnegan  v.  Allen,  60  111.  App. 
354;  Paola  G.  Co.  v.  Paola  G.  Co., 
,56  Kan.  614,  54  Am.  St.  598;  Wil- 
liams V.  Island  City  M.  Co.,  25  Ore. 
573,  citing  the  text;  Watson  v. 
Kirby,  112  Ala.  436;  Atlantic  &  D. 
R.  Co.  V.  Delaware  C.  Co.,  98  Va. 
503;  Sharpe  v.  Southern  R.  Co.,  130 
N.  C.  613. 

66  Collins  V.  Lavelle,   19  R.  I.  45. 

67  Levinsky   v.   Middlesex    B.   Co., 
34  C.  C.  A.  452,  92  Fed.  449. 


60]  COMPKXSAIIO.N. 


Of>: 


other  party  and  actual  loss  of  wages  of  iiion  kept  idle,  and 
various  other  items  which  ai'c  easily  proved;  th(\s(\  with  the 
rental  value  of  the  agreed  structure,  enable  the  court  to  ascertain 
the  damages  with  more  certainty  than  by  consideration  of  profits 
to  be  made  in  coudiieting  a  business  where  nearly  all  the  factors 
in  the  calculation  are  suppositious.*'  Hut  where  there  is  not 
such  a  certain  mode  of  estimating  damages  the  court  will  not 
dismiss  the  injured  party  with  nominal  damages  unless  the 
case  is  such  there  is  no  certainty  that  he  has  sutfercnl  actual 
injury.  In  a  suit  by  an  agent  against  a  life  insurance  com- 
pany for  damages  resulting  from  his  discharge  during  the  terui 
of  his  engagement  his  measure  of  damages  is  the  amount  he 
has  lost  in  consequence ;  and  testimony  of  actuaries  as  to  the 
probable  value  of  renewals  for  the  remainder  of  his  term  on 
policies  already  obtained  is  competent  to  assist  in  arriving  at 
the  result.*^  But  an  estimate  of  the  probable  earnings  there- 
after, derived  from  proof  of  the  amount  of  his  collections  and 
commissions  before  the  breach,  without  other  proof  relating 
thereto,  was  too  speculative  to  be  admissible.'"  Where  the  per- 
sonal element  is  a  factor  in  realizing  profits  from  a  business  the 
success  of  one  person  does  not  afford  a  basis  for  inferring  that 
another  would  have  succeeded  in  the  same  business  on  the  same 
premises.'^  But  this  principle  may  not  apply  where  the  chances 
of  success  are  not  affected  by  the  employment  of  capital.  Hence 
on  the  breach  of  a  contract  to  return  a  fisherman  who  owned 
appliances  to  a  place  where  employment  at  his  occupation  was 
certain  it  was  competent  to  show  the  earnings  of  fishermen 

68  Quay    V.    Duluth,    etc.    R.    Co.,  Tlie    right   to    be   reimbursed    for 

153  Mich.  5G7,  ]8  L.R.A.  (N.S.)  250;  outlay  and  expenses  does  not  depend 

Brown  v.  East  Carolina  R.  Co.,  154  upon  proof  of  the  right  to  recover 

N.  C.   300;    Kelley  v.  La  Crosse  C  profits.      United    States    v.    Belian: 

Co.,  120  Wis.  84,  102  Am.  St.  971;  Taylor    Mfg.    Co.    v.    Hatclier    Mfg. 

Standard   0.   Co.   v.   Weeks,   6   Ala.  Co.,  supi-a. 

App.    161;    Gates   v.   Northern   Pac.  69  ^tna  L.  Ins.  Co.  v.  Xexsen,  84 

R.   Co.,   64   Wis.  64;    United  States  Ind.   347;    Lewis   v.   Atlas  Mut.    L. 

V    Behan,   110  U.  S.  338,  28  L.  ed.  Ins.  Co.,  61  Mo.  534;   Titles  v.  :\Iu- 

1G8:    Taylor    Mfg.    Co.    v.    Hatcher  tual  L.   Ins.   Co.,   1    Mart.   Ch.   Deo. 

Mfg.  Co.,  39  Fed.  440,  3  L.R.A.  587;  313.     See  §  69. 

Mandia  v.  McMahon,   17   Ont.  App.  70  Lewis  v.  Ins.  Co.,  .lupm. 

34;    cases  cited   in  n.   59,  supra.  71  Gross  v.  Hedcert,  120  Wis.  314. 


236  SUTHERLAND    ON    DAMAGES.  [§    ^0 

situated  as  he  would  have  been  if  the  contract  had  not  been 
broken.'^  The  value  which  land  might  have  acquired  if  the 
operation  of  a  street  railroad  over  it  had  not  been  discontinued 
is  so  dependent  on  uncertain  contingencies  as  to  be  unsafe  as 
a  ground  for  measuring  damages ;  ''^  and  so  of  the  loss  of  profits 
of  a  store  and  mill  in  consequence  of  the  breach  of  an  agree- 
ment to  locate  houses  for  employees  near  them.'* 

In  estimating  the  damages  sustained  by  a  company  for  the 
laying  out  of  a  highway  across  its  railroad  or  for  permitting  an- 
other railroad  to  cross  it  at  grade  the  jury  have  no  right  to  take 
into  consideration  any  supposed  future  damage  to  it  from  a 
probable  increase  in  the  expense  of  doing  business  in  conse- 
quence of  the  establishmeut  of  the  new  highway  or  crossing; 
and  evidence  of  payments  of  money  on  account  of  accidents  at 
the  several  crossings,  and  of  the  comparative  profit  of  travel 
over  the  railroad  between  different  stations  is  inadmissible ;  it 
is  too  uncertain  and  contingent.'''^  The  conjectural  or  possible 
profits  of  a  whaling  or  other  voyage  cannot  be  taken  into  con- 
sideration in  estimating  the  damage  against  a  master  for  run- 
ning away  with  the  vessel  and  abandoning  the  voyage.''^^  Where 
there  was  a  breach  of  a  contract  to  give  a  theatrical  performance 
on  one  occasion  only  proof  of  the  leading  actor's  repute  and 
popularity,  that  during  the  previous  year  he  had  played  to  a 
large  house  in  the  same  place,  the  inhabitants  of  which  largely 
patronized  such  performances,  and  the  testimony  of  the  plain- 
tiff, based  upon  experience  in  the  management  of  the  theater  in 
which  the  play  was  to  have  been  rendered,  of  the  cash  receipts 
of  similar  plays  given  there,  as  to  what  the  receipts  might  have 

72  Johnson  v.  San  Juan  F.  &  P.  124;  Chicago  &  A.  R.  Co.  v.  Joliet, 
Co.,  3]  Wash.  238.  etc.  R.  Co.,  105  111.  388,  44  Am.  Rep. 

73  Eckington  &  S.  H.  R.  Co.  v.  799 .  Boston  &  M.  R.  Co.  v.  County 
McDevitt,  191  U.  S.   103,  48  L.  ed.  Com'rs,    79    Me.    386.      See    §    1077 


et  seq. 

76  Brown  v.  Smith,  12  Cush.  366; 


112. 

74  Evans  v.  Cincinnati,  etc.  R.  Co. 

_,„■,      ■  _     „  TVT-JJ1  Schooner  Lively,  1  Gall.  314;   Boyd 

75  Boston,   etc.   R.   Co.   v.  Middle-  •"  '        j 

sex,  1  Allen  .324;  Portland  &  R.  R.  ^-  ^^o^"'  "  ^'^^'-  ^53;   The  Anna 

Co.  V.  Deering,  78  Me.   61,  57   Am.  Maria,  2  Wheat.  327,  4  L.  ed.  252; 

Rep.  784;  Massachusetts,  etc.  R.  Co.  Del   Col   v.   Arnold,   3   Dall.   333,   1 

V.    Boston,    etc.    R.    Co.,    121    Mass.  L.  ed.  624.     See  §  ]289. 


§    60]  COMPENSATION.  237 

been  if  the  play  had  been  given,  was  insufficient  to  sustain  a 
judgment  for  substantial  damages.''''  And  where  the  breach 
was  of  a  theatrical  '"sharing  terms"  agreement,  which  contem- 
plated a  considerable  period  for  its  execution,  the  loss  of  profits 
was  not  shown  by  the  previous  receipts  of  the  i)laiutiif"s  theater 
and  by  proof  of  the  success  of  the  play,  which  was  to  have  been 
given  therein,  in  other  cities.'^  The  damages  which  will  result 
from  a  contemplated  advance  in  the  price  of  real  estate  because 
of  the  proposed  erection  and  operation  of  a  factory  on  adjoining 
land  cannot  be  recovered  in  an  action  for  the  breach  of  a  ct)n- 
tract  for  the  erection  and  operation  thereof.'^  But  if  lands  are 
exchanged  with  an  agreement  as  part  of  the  consideration  by 
one  of  the  parties  that  he  will  make  valuable  improvements  upon 
the  tract  conveyed  by  him,  the  damages  resulting  from  his 
breach  are  not  too  uncertain  if  the  complaint  alleges  the  dif- 
ference between  the  value  of  the  tracts  at  the  time  the  exchange 
was  made.^°  In  a  Wisconsin  case  there  was  a  breach  of  contract 
to  purchase  and  work  a  stone  quarry,  of  which  the  plaintiff  was 
to  have  one-half  of  the  net  profits  so  long  as  it  could  be  profitably 
worked.  The  defendant  refused  to  perform -before  any  profits 
were  realized.  It  was  proven  that  the  quarry  had  been  worked 
at  a  profit  for  three  years  preceding  the  trial  and  an  estimate 
was  made  of  profits  based  in  part  on  earnings  for  another  year. 
The  court  considered  the  loss  of  profits  sufficiently  established, 
and  held  that  the  time  during  which  a  recovery  might  be  had 
therefor  was  for  the  jury.^^ 

77  Todd  V.  Keene,   ]67  Mass.   157.  78  Moss  v.  Tompkins,  G9  Hun  288, 

In  Western  U.  Tel.  Co.  Auslet,  53  affirmed  without  opinion,  144  N.  Y. 

Tex.  Civ.  App.  264,  it  is  held  that  659;   approved  in  Cutting  v.  iliner. 

evidence   of   the   number   of   tickets  30  App.  Div.  457,  see  also  Alkahest 

sold  for  a  single  performance,  sup-  Lyceum    System    v.    Curry.    6    Ga. 

plemented  by  evidence  of  the  attend-  App.  625. 

ance  upon   similar   performances  iti  79  ])uliea   v.   Taylor,  35   Up.   Can. 

the  same  place,  was  not  as  to  the  Q.  B.  395;   Kockford,  etc.  R.  Co.  v. 

latter   altogether    speculative:    tliat  Beckemeier,   72   TH.   267;    Waterson 

the  damages  could  not  be  estimated  v.  Allegheny  Valley  R.  Co.,  74  Pa. 

with    accuracy    is    not    ground    for  208;  St.  Louis,  etc.  R.  Co.  v.  Berry. 

denying  a  recovery,  there  being  some  86  Ark.  309. 

standard   from   which   they   may  be  80  Wilson  v.  Yocum.  77  Iowa  569. 

approximately    ascertained    with    a  81  Treat    v.    Ililes,    81    Wis.    280, 

reasonable  degree  of  certainty.  approved   in   Hitchcock  v.   Supreme 


238  SUTHERLAND    ON    DAMAGES.  [§    61 

§  61.  Warranties  of  seeds  and  breeding  quality  of  animals, 
etc.  Where  a  vendor  falsely  warranted  that  seed  sold  would 
produce  Bristol  cabbages  the  damages  recoverable  were  the  value 
of  a  crop  of  Ijristol  cabbages  such  as  would  ordinarily  have 
been  produced  that  year,  deducting  the  expense  of  raising  it 
and  the  value  of  the  crop  actually  raised.^^  What  would  have 
been  produced  from  other  seed  and  of  the  kind  warranted,  of 
course,  could  not  be  proved  directly,  and  it  was  not  attempted ; 
l)ut  the  regularity  of  production  under  usual  conditions  is  such 
that  a  judicial  conclusion  may  be  based  upon  it  as  sufficiently 
certain.  Mere  speculative  profits,  such  as  might  be  conjectured 
would  be  the  probable  result  of  an  adventure  defeated  by  the 
breach  of  contract,  the  gains  from  which  are  entirely  conjectural 
and  with  respect  to  which  no  means  exist  of  ascertaining  even 
approximately  the  probable  results,  cannot  under  any  circum- 
stances be  brought  within  the  range  of  damages  recoverable. 
In  Georgia  the  rule  is  that  for  the  breach  of  an  implied  war- 
ranty of  the  merchantable  quality  of  seed  for  planting  the  dam- 
ages are  limited  to  the  purchase-money  with  interest  thereon  and 
expenses  incurred  in  planting  and  preparing  for  the  planting 
of  the  seed.^^  In  Tennessee  only  the  difference  in  value  between 
the  seed  purchased  and  that  delivered  can  be  recovered.^*  The 
cardinal  rule  in  relation  to  the  damages  to  be  compensated  on 

Tent,    100   Mich.   40,   and   in    Schu-  ()34,   90   Am.   Dec.   753;    Wolcott   v. 

maker  v.   Heinemann,  99  Wis.  251.  Mount,  36  N.  J.  L.  262,  13  Am.  Rep. 

Wliere   it   was   sought  to  recover  438;   Van  Wyck  v.  Allen,  69  N.  Y. 

tlie  loss  of  the  profits  of  an  estab-  (^i    25  Am.  Rep.  136;  White  v.  Mil- 

lislied  business  in   an   action  on  an  |^j.    -.^^   -j^    y.   333 ;    Ferris  v.   Com- 

injunction    bond    it   was    said:      It  stock,  33  Conn.  513;  Page  v.  Pavev, 

may    not    be    possible    to    show    by  3   ^    ^^   p    -gg.    j^^^dall  v.   Raper, 

demonstration  the  precise  extent  of  ^^  ^   ^    ^^^  ^j.^j^  ^    Weather- 


bee,  20  Wis.  392 ;  Wagstaff  v.  Short 
Horn    D.    Co.,    1    Cab.    &    E.    324; 


sucli  damages,  but  profits  for  a  rea 

sonable    period    next   preceding   the 

time  of  the  injury  may  be  taken  as 

\^    ,    • ,  „   ,„,        Phelps  V.  EvriaM.  Co.,  12  Ohio  Dec. 

the   measure   of  .such   damages   and  f  •  ' 

as  the  basis  of  an  estimate  thereof,  692,   quoting  the   text.     See   Reiger 

leaving    the    other    party    to    show  v.  Worth,  127  N.  C.  230,  52  L.R.A. 

that,  by  depression  in  trade  or  other-  36_. 

wise,    they    would    have    been    less.  83  Butler  v.  Moore,  68  Ga.  780,  45 

Landis  v.  Wolf,  206  111.  392.  Am.  Rep.  508. 

82  Passinger  v.  Thorburn,  34  N.  Y.  84  Hurley  v.  Buchi,  10  Lea  346. 


61] 


COMPENSATION. 


239 


the  breach  of  a  contract  is  that  the  phiintill'  riinst  estalilisli  tlic 
((nantuni  of  his  loss  by  evidence  from  whirli  the  jurv  will  l)e 
able  to  estimate  the  extent  of  his  injury;  tlii.s  will  exclude  all 
such  elements  of  damage  as  are  incapable  of  beini;-  ascertained 
by  the  usual  rules  of  evidence  to  a  reasoiutbic  degree  of  cer- 
tainty.*^ Instances  of  such  uncertain  damages  are  prntits  ex- 
pected from  a  whaling  voyage  and  the  gains  which  depend  in  a 
great  measure  upon  chance ;  they  are  too  purely  conjectural 
to  be  capable  of  entering  iiito  compensation  for  non-perfonnance 
of  a  contract*®  or  for  a  tort.*'''  For  a  similar  reason  the  loss  of  the 
value  of  a  crop  for  which  seed  had  been  sown,  the  yield  of  which 
would  depend  upon  the  contingencies  of  weather  and  season, 
have  been  excluded  as  incapable  of  estimation  with  the  degree  of 
certainty  which  the  law  exacts  in  the  proof  of  danuiges ;  **  but  as 
to  this  the  cases  are  not  agreed  if  the  probable  ultimate  value  of 
an  unmatured  crop  can  be  arrived  at  by  evidence  of  the  actual 
matured  value  of  other  like  crops,  cultivated  during  the  same 
period  as  that  in  question,  in  the  same  locality  and  under  sub- 
stantially similar  conditions.*^    The  loss  of  profits  following  the 


85  Wolcott  V.  Mount,  su/pra;  Brig- 
liiim  V.  Carlisle,  78  Ala.  243,  56 
Am.  Rep.  28,  quoting  the  text;  Hair 
V.  Barnes,  26  111.  App.  580;  Morgan 
V.  Sutlive,  148  Iowa  318. 

86  Favar  v.  Riverview  Park,  144 
111.  App.  86,  quoting  the  text;  Wol- 
cott V.  Mount,  supra. 

87  Lamond  v.  Seacoast  C.  Co.,  108 
Me.  ]55;  Wright  v.  Mulvaney,  78 
Wis.  89,  9  L.R.A.  807,  23  Am.  St. 
393.  Contra,  Pacific  S.  W.  Co.  v. 
Alaska  P.'s  Ass'n,  ]28  Cal.  632.  See 
§  1289. 

88  Injuries  to  growing  crops  must 
be  estimated  with  reference  to  their 
condition  at  the  time  they  are  in- 
flicted. Their  value  cannot  be  prov- 
en by  showing  the  worth  of  sim- 
ilar crops  which  matured.  Drake  v. 
Chicago,  etc.  R.  Co.,  63  Iowa  302, 
50  Am.  Rep.  746;  Sabine,  etc.  R. 
Co.  V.  Joachim,  58  Tex.  456;  Texas, 
etc.   R.    Co.   V.   Young,   60   id.   201; 


G.,  C.  &  S.  F.  R.  V.  Ilolliday,  65 
id.  512;  Jones  v.  George,  61  id.  345, 
48  Am.  Rep.  280,  56  Tex.  ]49;  Gres- 
ham  V.  Taylor,  51   Ala.  505. 

And  on  account  of  the  uncertainty 
involved  in  the  maturing  of  crops 
the  fhunage  sustained  by  injuries 
done  tliereto  cannot  be  reduced  by 
efforts  to  show  what  niiglit  liavc 
been  realized  if  another  crop  iiad 
been  planted  on  the  land  on  which 
that  injured  was  growing.  (I.  C.  & 
S.  F.  R.  V.  Holliday,  supra. 

89Malone  v.  Hastings,  1!I3  Fed.  1, 
113  C.  C.  A.  320;  Wolcott  v.  .Mount, 
Passinger  v.  Thorburn,  White  v.  Mil- 
ler, 71  N.  Y.  133;  Colorado  C.  Co. 
v.  McFarland  (Tex.  Civ.  App.),  94 
S.  W.  400;  Rice  C.  &  M.  Co.  v. 
Wells,  33  Tex.  Civ.  App.  545;  Tres 
Palacios  R.  &  I.  Co.  v.  Eidman. 
41  id.  542;  Payne  v.  Railroad,  etc. 
Co.,  38  La.  Ann.  164,  58  Am.  Rep. 
174. 


240 


SUTHERLAND    ON    DAMAGES. 


[§  61 


breach  of  a  contract  to  publish  an  advertisement  have  been  held 
to  be  incapable  of  being  estimated;^"  a  conclusion  which  has 
been  denied.^^  The  damages  resulting  from  the  breach  of  a 
warranty  of  the  breeding  qualities  of  an  animal  are  too  con- 
tingent and  uncertain  to  support  a  recovery  when  compensation 
for  the  services  he  renders  is  to  be  paid  only  when  the  animals 
served  actually  foal/^  as  are  the  damages  caused  by  the  loss 
of  profits  because  of  the  failure  to  serve  a  mare  with  a  particular 
stallion,  though  there  be  proof  of  the  profits  the  plaintift"  had 
made  from  the  sale  of  foals  by  the  same  stallion  out  "of  other 
mares.^^     The  same  is  true  of  the  reduction  of  the  number  of 


90  Tribune  Co.  v.  Bradshaw,  20 
111.  App.  1. 

The  damages  for  the  breach  of  an 
agreement  to  advertise  certain  rem- 
edies over  the  name  of  a  druggist 
who  gives  an  order  for  such  remedies 
are  too  speculative  to  permit  of  a 
recovery.  Stevens  v.  Gale,  113  Mich. 
680. 

91  The  plaintiff,  on  beginning  busi- 
ness as  a  ladies'  tailor,  made  a  con- 
tract with  the  defendant  for  the 
insertion  of  an  advertisement  in  a 
special  place  in  a  newspaper.  The 
publication  was  made  for  only  a 
part  of  the  stipulated  time.  The 
jury  was  instructed  as  to  the  meas- 
ure of  damages  according  to  the  rule 
of  Hadley  v.  Baxendale,  2  Am.  Neg. 
Rep.  400,  and  returned  a  verdict  for 
substantial  damages.  Kennedy,  J., 
said :  The  defendant  knew  the  ob- 
ject of  the  advertisement.  If  it  be 
material,  I  think  he  ought  to  be 
taken  to  have  known  at  the  time 
that  if  he  broke  the  contract  the 
result  would  be,  as  a  natural  conse- 
quence, loss  to  the  plaintiff  in  his 
business.  The  plaintiff  said  he  suf- 
fered loss  to  the  extent  of  £100, 
which  he  attributed  to  the  loss  of 
the  advertisement.  No  suggestion 
was  made  by  the  defendant  as  to 
any  other  cause  for  the  loss  of  busi- 


ness. The  defendant  knew  that  the 
plaintiff  could  not  get  the  adver- 
tisement inserted  in  a  journal  of 
such  unique  position  in  such  a  place 
as  he  had  contracted  to  give  him. 
I  am  of  opinion  that  the  evidence 
of  loss  of  business  was  proper  for 
the  consideration  of  the  jury  in  as- 
sessing the  damages.  Marcus  v. 
Myers,  U  T.  L.  Rep.  327    (1895). 

Where  there  was  a  breach  of  a 
contract  to  permit  a  party  to  put 
up  signs  at  drinking  stations  on 
the  grounds  of  an  exposition  adver- 
tising a  water  filter,  testimony  of 
qualified  witnesses  giving  opinions 
as  to  the  value  of  the  right  un- 
der that  contract"  was  admissible. 
World's  Columbian  Exposition  Co. 
v.  Pasteur-C.  F.  Co.,  82  111.  App.  94. 

92  Connoble  v.  Clark,  38  Mo.  App. 
476. 

93Sapwell  V.  Bass,  [1901]  2  K.  B. 
486.  It  is  said:  It  will  be  observed 
that  the  expectation  of  profit  aris- 
ing from  the  contract  at  the  time  it 
was  made  was  not  and  could  not  be 
based  on  any  tangible  market  price 
of  the  expected  progeny  of  the  stal- 
lion and  the  undetermined  mare,  nor 
on  the  enhanced  prospective  price  of 
such  mare,  but  upon  a  succession  of 
contingencies  which  could  not  be 
foretold   more  than   a  year  before- 


62] 


COMPENSATION. 


241 


members  iu  a  given  class  in  a  mntual  benefit  society,  the  effect 
being  that  the  amount  realized  by  the  beneficiary  under  a  cer- 
tificate is  thereby  lessened.  What  the  result  would  have  been 
if  the  change  which  brought  about  such  reduction  had  not  been 
made  is  a  matter  of  speculation.^*  But  if  a  vessel  is  under 
charter  or  engaged  in  a  trade  the  earnings  of  which  can  be 
ascertained  by  reference  to  the  usual  schedule  of  freights  in  the 
market,  or  if  a  crop  has  been  sown  and  the  ground  prepared  for 
cultivation  and  the  complaint  is  that  because  of  the  inferior 
quality  of  the  seed  a  crop  of  less  value  is  produced,  by  these 
circumstances  the  means  would  be  furnished  to  enable  the  jury 
to  make  a  proper  estimate  of  the  injury  resulting  from  the  loss 
of  profits  of  this  character.^^ 

§  62.  Prospective  growth  of  orchard  and  of  animals.  An 
instructive  case  arose  in  Ohio  involving  this  question  of  uncer- 
tainty.^^   The  action  was  on  a  contract  by  which  the  defendant 


hand,  such  as  the  following:  (1) 
That  the  stallion  would  be  alive  and 
well  at  the  time  of  the  intended 
service.  (2)  That  the  mare  sent 
would  be  a  well-bred  one,  and  that 
the  plaintiff  would  for  his  own  sake 
aijd  without  any  obligation  towards 
the  defendant  make  a  good  and  suit- 
able selection  of  such  mare.  (3) 
That  the  mare  would  not  prove 
barren,  which  had  happened  to  an- 
other mare  sent  by  the  plaintiff  to 
the  same  stallion.  (4)  That  the 
mare  sent  would  not  slip  her  foal, 
and  that  such  foal  would  be  born 
alive  and  would  be  strong  and 
healthy.  (5)  The  chance  whether  it 
would  be  a  colt  or  filley,  the  former 
being  more  valuable.  (6)  That  the 
foal  would  be  all  right  when  offered 
for  sale.  ( 7 )  That  the  relative  rep- 
utations of  the  stallion  and  other 
sires  and  their  respective  foals 
would  be  the  same  in  1909  as  in 
1908.  (8)  That  no  substitute  for 
the  stallion  available  in  1909  would 
equal  or  e.Kceed  him  in  public  esti- 
mation or  in  results.  (9)  That  the 
Suth.  Dam.  Vol.  I.— 16. 


offspring  of  a  substituted  stallion 
would  not  command  as  good  a  price 
as  that  of  the  stallion  in  question. 
See  §  71. 

9*  Supreme  Lodge  v.  Knight,  117 
Ind.  489,  500,  3  L.R.A.  409. 

95Wolcott  v.  Mount,  36  N.  J.  L, 
271,  13  Am.  Rep.  438;  Owners  of 
The  Gracie  v.  Owners  of  The  Argeii- 
tino,  14  App.  Cas.  519,  affirming 
The  Argentine,  13  Prob.  Div.  191; 
Bell  V.  Reynolds,  78  Ala.  511,  56 
Am.  Rep.  52,  quoted  from  in  note 
to  preceding  section. 

96  Rhodes  V.  Baird,  ]6  Ohio,  573. 
It  is  said  of  this  case  that  if  it 
goes  so  far  as  to  hold  that  depriva- 
tion of  future  profits  cannot  be 
ground  for  damages,  it  is  not  in  ac- 
cord with  the  current  of  authority. 
Se^  §  107.  The  case  in  which  this 
observation  was  made  ruled  that 
evidence  of  the  value  of  an  orchard 
at  the  time  of  trial,  in  the  prospec- 
tive profits  of  which  the  plaintiff 
was  interested,  was  admissible,  and 
it  was  not  to  be  presumed  in  favor 
of  a  wrongdoer  that  such  value  will 


242  SUTHERLAND    ON    DAMAGES.  [§    (32 

agreed  to  make  a  lease  to  the  plaintiff  for  the  term  of  ten  years 
of  certain  lands  on  which  to  plant  and  cultivate  a  peach  orchard. 
The  breach  consisted  in  the  failure  to  make  a  lease  and  in  de- 
fendant causing-  the  plaintiff',  within  two  years  from  his  taking 
possession  and  after  the  peach  trees  were  planted,  to  be  evicted 
from  the  premises.  On  the  trial  the  plaintiff  was  permitted  to 
give  evidence  of  the  probable  profits  that  might  be  realized  from 
the  orchard,  judging  from  the  number  of  crops  and  the  prices 
of  peaches  in  the  county  for  the  last  ten  or  fifteen  years.  This 
testimony  was  incompetent,  because  too  uncertain  and  specu- 
lative. The  court  said :  To  the  extent  that  the  damages  de- 
])ended  upon  the  loss  of  the  use  of  the  property,  its  market  value 
at  the  time  of  the  eviction,  subject  to  the  performance  of  the 
contract  on  the  part  of  the  plaintiff,  was  the  standard  for  award- 
ing compensation ;  if  it  had  no  general  market  value  its  value 
should  have  been  ascertained  from  witnesses  whose  skill  and  ex- 
perience enabled  them  to  testify  directly  to  such  value  in  view 
of  the  hazards  and  chances  of  the  business  to  which  the  land  was 
to  be  devoted.^'  Where  the  plaintiff  sought  to  recover  the  value 
of  his  stock  in  a  green-house,  w'hich  was  damaged  or  destroyed 
by  a  defective  heating  apparatus,  he  was  permitted  to  show  the 
value  of  the  plants  by  testifying  as  to  the  number  of  flowers  cut 
from  them  the  year  previous,  he  having  had  long  experience 
in  cultivating  plants  by  artificial  heat  and  knowing  how  many 
flowers  could  be  produced  from  a  plant.^^  The  damages  result- 
ing from  the  failure  to  furnish  an  agreed  number  of  steers  to 
be  cared  for  and  sold  at  a  profit,  the  plaintiff'  to  be  compensated 
for  his  services  by  a  share  of  the  profits  resulting  from  their 
improvement  in  condition,  are  not  too  uncertain.  In  the  absence 
of  any  agreement  as  to  the  weight  or  age  of  the  steers  it  was 
assumed  that  they  were  such  as  were  ordinarily  purchased  for 
feeding  purposes   in  the  community.^^      The  decrease   in  the 

become  less.      Shoemaker   v.   Acker,  ]43  Mo.  App.  4]0;  Wade  v.  Belmont 

116   Cal.   239.     See  Kellogg  v.  Ma-  I.  C.  &  W.  P.  Co.,  87  Neb.  732,  31 

lick,  125  Wis.  239.  L.R.A.(N.S.)    743. 

97  Griffin  v.  Colver,  16  N.  Y.  489;  98  Laufer   v.   Boynton    F.    Co.,    84 

Giles  V.  O'Toole,  4  Barb.  261;  New-  Hun,  311.     See  Black  v.  Minneapo- 

brough   V.   Walker,   8   Gratt.   16,   56  lis,  etc.  E.  Co.,  122  Iowa  32. 

Am.  Dec.  127;  Jenkins  v.  Womach,  99  Rule    v.    McGregor,    117    Iowa 


§    63]  COMPENSATION.  243 

growth  of  cattle  because  of  the  use  of  improper  food  or  wrongful 
ti-eatiiH'iit  is  not  tno  uiicci'taiu  to  Ik?  I'ccovered  for.^ 

§  63.  Profits  of  special  contracts.  The  liability  for  the  prof- 
its which  woiikl  have  resulted  from  the  i)erforuianee  of  a  con- 
tract is  co-extensive  with  the  j)ower  to  contract;  and  the  govern- 
ment is  liable  therefor  to  the  same  extent  as  an  individual.^ 
The  right  of  a  party  to  recover  the  [)roiits  he  would  have  made 
in  fulfilling  a  contract  depends  solely  upon  the  fault  of  the 
other  party  to  it  and  the  plaintiff's  ability  to  show  that  the 
profits  claimed  were  reasonably  certain  to  have  been  realized 
but  for  the  wrongful  act  complained  of.^  It  is  not  an  insuper- 
able objection  to  their  recovery  that  they  cannot  be  directly  and 
absolutely  proved.  The  general  uncertainty  attending  human 
life  and  the  special  contingencies  as  to  its  duration  on  account 
of  the  physical  condition  of  an  individual  whose  rights  are 
involved  do  not  prevent  the  recovery  of  damages  for  causing  his 
death  or  injuring  his  person.  An  agreement  by  one  person  to 
support  another  during  life  is  an  entire,  continuing  contract 
upon  the  total  breach  of  which  the  obligor  is  liable  for  full  and 
final  damages  estimated  to  the  time  the  person  who  was  to  be 

419;     Schrandt    v.    Young,    2    Neb.  the  text;  Schiffman  v.    Peerless  M.C. 

(Unof.)    54G.  Co.,   13  Cal.  App.  600;   Barnette  S. 

In  an  action  for  negligence  in  car-  Co.  v.  Ft,  Harrison  L.  Co.,  126  La. 
ing  for  cattle  the  testimony  as  to  75;  Crowley  v.  Burns  B.  &  Mfg.  Co., 
their  condition  when  received  by  the  100  Minn.  178;  Wilkinson  v.  Dun- 
defendant,  as  to  the  number  of  bar,  149  N.  C.  20;  Pittsburg  Steel 
calves  which  probably  would  have  F.  v.  Pittsburg  S.  Co.,  22.3  Pa.  4.30; 
been  dropped  if  the  cows  had  been  Hagan  v.  Nashville  T.  Co.,  124  Tenn. 
properly  bred  and  cared  for,  and  as  93;  Church  v.  Wilkerson-T.  Co.,  '^A 
to  the  value  of  such  calves  was  given  Wash.  262,  137  Am.  St.  1059;  Smith 
by  farmers,  and  was  suflScient  to  v.  Atlas-P.  C.  Co.,  66  W.  Va.  599; 
fix  the  probable  loss  of  profits.  Mat-  Schumaker  v.  Heinemann,  99  Wis. 
tern  v.  McCarthy,  73  Neb.  228.  251;    Treat   v.   Hiles,   81   Wis.   280; 

1  Swift  V.  Redhead,  147  Iowa,  94;  American   C.   Co.   v.   Bullen   B.   Co., 

Richner    v.    Plateau    L.    S.    Co.,    44  29   Ore.   549,   561,   citing  the   text; 

Colo.  302.  Rule  v.   McGregor,    117   Iowa,   419; 

2Danold8   v.   State,   89   N.  Y.   36,  Schrandt  v.  Young,  2  Neb.    (Unof.) 

42  Am.  Rep.  277.  546;  Farmers'  L.  &  T.  Co.  v.  Eaton, 

3Bixby-T.  L.  Co.  v.  Evans,  167  114  Fed.  14,  51  C.  C.  A.  640;  Ma- 
Ala.  431,  29  L.R.A.(N.S.)  194;  Mc-  guire  v.  Kiesel,  86  Conn.  453,  cit- 
Connoll  v.  Crown  City  W.  Co.,  149  ing  the  text;  Howard  v.  Brown,  — 
i'a].  60,  8  L.R.A.(N.S.)   1171,  citing  Iowa  — ,  148  N.  W.  987. 


244 


SUTHERLAND    ON    DAMAGES. 


[§  63 


supported  would  probably  die.*  It  is  the  constant  practice  to 
so  assess  damages  in  actions  to  recover  for  personal  injuries. 
In  the  nature  of  things  where  performance  has  been  prevented 
the  proof  of  profits  cannot  be  direct  and  absolute.  The  injured 
party  must,  however,  introduce  evidence  legally  tending  to  estab- 
lish damage  and  sufficient  to  warrant  a  jury  in  coming  to  the 
conclusion  that  the  damages  they  find  have  been  sustained ;  but 
no  greater  degree  of  certainty  in  this  proof  is  required  than  of 
any  other  fact  which  is  essential  to  be  established  in  a  civil 
action.  If  there  is  no  more  certain  method  of  arriving  at  the 
amount  the  injured  party  is  entitled  to  submit  to  the  jury  the 
particular  facts  which  have  transpired  and  to  show  the  whole 
situation  which  is  the  foundation  of  the  claim  and  expectation 
of  profit,  so  far  as  any  detail  offered  has  a  legal  tendency  to 
support  such  claim.^     The  law  does  not  require  that  the  party 


4Sche]l  V.  Plumb,  55  N.  Y.  592; 
First  Nat.  Bank  v.  St.  Cloud,  73 
Minn.  219;  Ironton  L.  Co.  v.  Butch- 
art,  73  Minn.  39;  Morriaon  v.  Mc- 
Atee,  23  Ore.  530;  Freeman  v.  Fogg, 
82  Me.  408. 

5  Lum  Ah  Lee  v.  Ah  Soong,  16 
Hawaii  163,  quoting  the  text;  Iowa 
M.  L.  Co.  V.  Conner,  136  Iowa 
674 ;  Long  v.  Kaufman,  128  La.  767  ; 
Hendrix  v.  Wabash  R.  Co.,  107  Mo. 
App.  127 ;  Smith  v.  Hicks,  14  N.  M. 
560,  19  L.R.A.(KS.)  938;  El  Paso, 
etc.  R.  Co.  V.  Eichel  (Tex.  Civ.  App.) , 
130  S  W.  922;  Wilson  v.  Wernwag, 
217  Pa.  82 ;  Griffin  v.  Colver,  16  N.  Y. 
489;  Giles  v.  O'Toole,  4  Barb.  261; 
Newbrough  v.  Walker,  8  Gratt.  16, 
56  Am.  Dec.  127;  Taylor  Mfg.  Co. 
V.  Hatcher  Co.,  39  Fed.  440,  446,  3 
L.R.A.  587,  quoting  the  text;  Brew- 
ing Co.  V.  McCann,  118  Pa.  314; 
Dart  V.  Laimbeer,  107  N.  Y.  664; 
Wakeman  v.  Wheeler  &  W.  Mfg.  Co., 
101  N.  Y.  205,  217,  54  Am.  Rep.  676; 
quoting  the  text;  Shoemaker  v. 
Acker,  116  Cal.  239;  Lavens  v.  Lieb, 
]2  App.  Div.  487;  Dickinson  v.  Hart, 
142  N.  Y.  183;  United  States  T.  Co. 


V.  O'Brien,  143  N.  Y.  284;  Skinner 
V.  Shew,   [1894]  2  Ch.  581. 

The  difficulty  of  fairly  estimating 
tlic  injury  done  an  unknown  author 
by  the  breach  of  a  contract  to  pub- 
lish his  first  book  is  not  necessarily 
insuperable.  Gale  v.  Leckie,  2  Stark. 
107 ;  Bean  v.  Carleton,  51  Hun  318, 
Compare  Bean  v.  Carleton,  12  N.  Y. 
Supp.  519.  Nor  the  net  proceeds 
wliicli  miglit  have  been  derived  from 
the  sale  of  tickets  to  hear  a  noted 
lecturer.  Savery  v.  Ingersoll,  46 
Hun  T76.  This  is  a  very  doubtful 
proposition  in  the  absence  of  proof 
of  an  advance  sale  of  tickets.  See 
Bernstein  v.  Meech,  130  N.  Y.  354, 
and  §  60.  Nor  the  damages  result- 
ing to  a  hotel  from  the  violation  of  a 
contract  to  maintain  a  depot  at  a 
certain  point.  Houston,  etc.  R.  v. 
Molloy,  64  Tex.  607.  But  it  is  other- 
wise with  the  breach  of  a  contract 
to  furnish  a  mule  for  the  cultivation 
of  land:  in  such  case  the  damage 
resulting  to  crops  is  too  uncertain. 
Harper  v.  Weeks,  89  Ala.  577 ;  Luce 
V.  Hoisington,  56  Vt.  436. 

Tlie  damages  following  the  breach 


63J 


COMPENSATION. 


245 


seeking  to  recover  for  gains  prevented  shall  furnish  data  from 
which  they  can  be  m^ithematically  computed.  "When  one 
breaks  a  contract  which  the  other  party  has  partly  performed 
and  the  violator  then  performs  the  work  himself,  from  which 
he  reaps  the  profits  which  the  other  party  might  have  made,  he 
cannot  escape  liability  for  damages  if  such  other  party  can 
show  the  profits  made  while  he  was  executing  it  and  the  benefits 
received  from  its  subsequent  completion.^ 

The  profits  which  would  have  been  made  from  a  farm  which 
was  to  l>e  operated  by  a  cori)oration  are  too  uncertain  to  be  a 


of  a  contract  to  issue  an  annual  rail- 
way pass  during  the  life  of  a  party 
are  not  too  uncertain.  Curry  v. 
Kansas,  etc.  R.  Co.,  58  Kan.  6. 

6  Hitchcock  V.  Supreme  Tent,  100 
Mich.  40;  Schiffman  v.  Peerless  M. 
C.   Co.,   13   Cal.   App.   600. 

Where  the  plaintilf  was  permitted 
to  sink  but  one  of  five  wells  which 
he  had  contracted  to  sink  not  less 
than  two  hundred  feet  in  depth  and 
five  hundred  feet  if  practicable  and 
possible  in  the  defendant's  judg- 
ment, it  was  sufficient  to  show  as*a 
basis  for  damages  what  profit  was 
made  in  sinking  other  wells  in  the 
vicinity  of  an  average  depth  of  four 
hundred  feet.  Sanford  v.  East  Eiv- 
erside  Dist.,   101   Cal.  275. 

If  the  trial  does  not  occur  until 
long  after  the  cause  of  action  arose 
and  the  contract  contemplated  a 
long  period  for  its  performance  the 
plaintiff  may  show  the  facts  as  they 
then  exist.  Shoemaker  v.  Acker,  116 
Cal.  239.     See  §  107. 

There  is  noticeable  a  lack  of  har- 
mony in  the  cases  as  to  the  recovery 
of  profits  as  damages,  some  requir- 
ing a  higher  degree  of  proof  than 
others,  and  some  courts  manifesting 
a  marked  hesitancy  as  to  permitting 
their  recovery.  This  seems  to  be  the 
case  in  Michigan,  where  the  recovery 
of  lost  profits  has  been  denied  under 
circumstances  similar  to  those  which 


have  justified  tlieir  recovery  in  other 
jurisdictions.  See  McKinnon  v.  Mc- 
Ewan,  48  Mich.  106;  Allis  v.  Mc- 
Lean, id.  428  (citing  approvingly  in 
Williams  v.  Island  City  M.  Co.,  25 
Ore.  573,  590)  ;  Talcott  v.  Crippen, 
52  Mich.  633;  Petrie  v.  Lane,  67 
Mich.  454.  Talcott  v.  Crippen,  su- 
pra, is  limited  in  Leonard  v.  Beau- 
dry,  68  Mich.  318;  Fell  v.  Newberry, 
100  Mich.  542,  and  Barrett  v.  Grand 
Rapids  V.  Works,  110  Mich.  6.  See 
First  Nat.  Bank  v.  Thurman,  69 
Iowa  693.  Allis  v.  McLean,  supra, 
is  approved  in  Moulthrop  v.  Hyett, 
105  Ala.  493,  and  followed  in 
Hutchinson  Co.  v.  Pinch,  91  Mich. 
156,  and  the  rule  there  laid  down 
has  been  applied  in  Quay  v.  Du- 
luth,  etc.  R.  Co.,  153  Mich.  567, 
18  L.R.A.(N.S.)  250.  See  also,  Her- 
ron  V.  Raupp,  156  Mich.  162;  Oliver 
V.  Perkins,  92  id.  304;  Burrell  v. 
New  York,  etc.  S.  Co.,  14  id.  39; 
Allison  V.  Chandler,  11  id.  558; 
Mueller  v.  Betliesda  S.  Co.,  88  id. 
390,  recognize  the  right  to  recover 
lost  profits,  as  do  others  of  the  cases 
cited  supra- 

The  profits  lost  to  a  mill  owner 
because  of  the  nondelivery  of  logs 
as  contracted  for,  to  be  manufac- 
tured into  lumlier  at  a  fixed  price, 
arc  not  too  speculative.  Barrett  v. 
Crand  Rapids  V.  Works,  110  ^Vlich. 
6. 


246  SUTHERLAND    ON    DAMAGES.  [§63 

measure  of  damages  for  the  Ijreacli  of  a  contract  to  work  it.  The 
recovery  is  measurable  by  the  differejice  between  the  market 
value  of  the  lease  and  the  price  paid  for  it.'  The  profits  made 
under  the  contract  prior  to  the  trial  may  be  shown  for  the 
double  purpose  of  ascertaining  what  the  award  should  be  on 
account  of  them  and  to  aid  in  forming  a  conclusion,  in  con- 
nection with  other  facts,  as  to  the  profits  to  be  reasonably  ex- 
pected in  the  ordinary  course  of  events.* 

§  64.  Same  subject;  Masterton  v.  Mayor.  In  the  leading 
case  in  A'ew  York,^  which  has  been  extensively  cited  and  ap- 
])roved,  the  plaintiffs  agreed  to  furnish  and  deliver  marble 
wrought  in  a  particular  manner  from  a  designated  quarry  for 
a  public  building.  The  quantity  necessary  to  fill  their  contract 
was  eighty-eight  thousand  eight  hundred  and  nineteen  feet,  for 
which  they  were  to  be  paid  a  specified  price.  They  afterwards 
contracted  with  the  proprietors  of  that  quarry  for  the  marble. 
When  the  plaintiffs  had  delivered  fourteen  thousand  seven 
hundred  and  seventy-nine  feet  and  had  on  hand  at  the  quarry 
three  thousand  three  hundred  and  eight  feet  ready  for  delivery 
the  defendants  suspended  the  performance  of  the  contract  with- 
out fault  of  the  plaintiffs.  They,  sought  to  recover  the  profits 
of  the  contract  and  also  the  damages  to  which  they  were  sub- 
jected for  the  consequent  violation  of  their  subcontract  for  the 
marble  at  the  quarry.  Nelson,  C.  J.,  said :  "It  is  not  to  be 
denied  that  there  are  profits  or  gains  derivable  from  a  contract 
which  are  uniformly  rejected  as  too  contingent  and  speculative 
in  their  nature  and  too  dependent  upon  the  fluctuation  of  the 
markets  and  chances  of  business  to  enter  into  a  safe  or  reason- 
able estimate  of  damages.  Thus  any  supposed  successful  opera- 
tion the  party  might  have  made  if  he  had  not  been  prevented 
from  realizing  the  proceeds  of  the  contract  at  the  time  stip- 
ulated is  a  consideration  not  to  be  taken  into  the  estimate,  lie- 
sides  the  uncertain  and  contingent  issue  of  such  an  operation 

7  Augusta  N.  S.  Co.  v.  Forlaw,  13'3       olds  v.  State,  89  id.  36,  42  Am.  Rep. 

^*-  1^8-  277;    Taft   v.    Tiede,    .55    Iowa    370; 

8  Maguire  V.  Kiesel,  86  Conn.  4.53,       „         ^.  *       ,     ,„„^^    ,^    „^, 
.,.        r,  .          ..                                               I5ernstein  v.  Meech,  130  N.  Y.  354; 

citing  this  section. 

9Ma8ter};on  v.  Mayor,  7  Hill  61.  ^'^^^  ^'-  ^'<^^"»  ^-  ^-  ^o..  88  TU.  App. 
See  Jones  v.  Judd,  4  N.  Y.  411 ;  Dan-       407. 


§    64]  COMI'EXSATIOX.  247 

ill  itself  considered  it  has  no  Iei»,"al  or  iiecessarv  coniiection 
with  the  stipiihitioiis  between  the  jiartics  and  cannot,  there- 
fore, be  presinned  to  have  entered  into  their  coiisi(h'rati()n 
at  the  time  of  contracting.  It  has  accordingly  been  held  that 
the  loss  of  any  specnlation  or  enterprise  in  which  a  party  may 
have  embarked,  relying  on  the  proceeds  to  be  derived  from  the 
fulfillment  of  an  existing  contract,  constitutes  no  part  of  the 
damages  to  be  recovered  in  case  of  breach.^"  So,  a  good  bargain 
made  by  a  vendor,  in  anticipation  of  the  price  of  the  article  sold  ; 
or  an  advantageous  contract  of  resale  made  by  a  vendee  con- 
iiding  in  the  vendor's  promise  to  deliver  the  article  are  con- 
siderations excluded  as  too  remote  and  contingent  to  affect  the 
question  of  damages.  .  .  .  When  the  books  and  cases  speak 
of  the  profits  anticipated  from  a  good  bargain  as  matters  too 
remote  and  uncertain  to  be  taken  into  account  in  ascertaining  the 
true  measure  of  damages  they  usually  have  reference  to  de- 
pendent and  collateral  engagements  entered  into  on  the  faith 
and  in  expectation  of  the  performance  of  the  principal  con- 
tract. The  performance  or  non-performance  of  the  latter  may, 
and  doubtless  often  does,  exert  a  material  influence  upon  the 
collateral  enterprises  of  the  party ;  and  the  same  may  be  said 
as  to  his  general  affairs  and  business  transactions.  But  the 
influence  is  altogether  too  remote  and  subtle  to  be  reached  by 
legal  proof  or  judicial  investigation.  And  besides,  the  conse- 
quences, when  injurious,  are  as  often,  perhaps,  attributable  to 
the  indiscretion  and  fault  of  the  party  himself  as  to  the  con- 
duct of  the  delinquent  contractor.  His  condition,  in  respect 
to  the  measure  of  damages,  ought  not  to  be  worse  for  having 
failed  in  his  engagement  to  a  person  whose  affairs  are  embar- 
rassed than  if  it  had  been  made  with  one  in  pros])erous  or  af- 
fluent circumstances.^^  But  profits  or  advantages  which  are  the 
direct  and  immediate  fruits  of  the  contract  entered  into  be- 
tween the  parties  stand  upon  a  different  footing.  These  are 
part  and  parcel  of  the  contract  itself,  entering  into  and  con- 
stituting a  portion  of  its  very  elements;  something  stipulated 
for,  the  right  to  the  enjoyment  of  which  is  just  as  clear  and 

10  Slioemakcr    v.    Acker,    116   Cal.  n  Dom.,   J?.  :i,  tit.   T),  §  2,  art.  4. 

239,  245.     See  §  47. 


248  SUTMEELAND  ON  DAMAGES.  [  §  04 

plain  as  to  tlio  fiilfiUment  of  any  other  stipulation.  They  are 
presumed  to  have  been  taken  into  consideration  and  deliberated 
upon  before  the  contract  was  made  and  formed,  perhaps,  the 
only  inducement  to  the  arrangement.^^  The  parties  may  have 
entertained  different  opinions  concerning  the  advantages  of  the 
bargain,  each  supposing  and  believing  that  he  had  the  best  of  it ; 
but  this  is  mere  matter  of  judgment,  going  to  the  formation  of 
the  contract,  for  which  each  has  shown  himself  willing  to  take 
the  responsibility,  and  must,  therefore,  abide  the  hazard."  Ap- 
plying these  principles  the  judge  said:  "The  plaintiffs'  claim 
is  substantially  one  for  not  accepting  goods  bargained  and  sold ; 
as  much  so  as  if  the  subject-matter  of  the  contract  had  been 
bricks,  rough  stones  or  other  article  of  commerce  used  in  the 
process  of  building.  The  only  difficulty  or  embarrassment  in 
applying  the  general  rule  grows  out  of  the  fact  that  the  article 
in  question  does  not  appear  to  have  any  well-ascertained  market 
value.  But  this  cannot  change  the  principle  which  must  govern, 
but  only  the  mode  of  ascertaining  the  actual  value,  or  rather 
the  cost  to  the  party  producing  it.  Where  the  article  has  no 
market  value  an  investigation  into  the  constituent  elements  of 
the  cost  to  the  party  who  has  to  furnish  it  becomes  necessary, 
and  that,  compared  with  the,  contract  price,  will  afford  the 
measure  of  damages.  The  jury  will  be  able  to  settle  this  upon 
evidence  of  the  outlays,  trouble,  risk,  etc.,  which  enter  into  and 
make  up  the  cost  of  the  article  in  the  condition  required  by  the 
contract  at  the  place  of  delivery.  ...  It  has  been  argued 
that,  inasmuch  as  the  furnishing  of  the  marble  would  have  run 
through  a  period  of  five  years — of  which  about  one  year  and  a 
half  only  had  expired  at  the  time  of  the  suspension — the  benefits 
which  the  party  might  have  realized  from  the  execution  of  the 
contract  must  necessarily  be  speculative  and  conjectural;  the 

12  Shoemaker  v.  Acker,  supra,  Farmers'  L.  &  T.  Co.  v.  Eaton,  114 
quoting  the  te.\t ;  Goldhammer  v.  Fed.  14,  51  C.  C.  A.  640 ;  Owensboro- 
Dyer,  7  Colo.  App.  29;  Paola  G.  Co.  jj  ^el.  Co.  v.  Wisdom,  23  Ky.  L. 
V.  Paola  G.  Co.,  .56  Kan.  614,  622,  ^  ^^  g  ^^.  .^9;  Ford  H.  L. 
54  Am.  St.  598 ;  Hirschhorn  v.  Brad- 
ley, 117  Iowa,  130:  Treat  v.  Hiles,  C«-  ^-  dement,  97  Ark.  522;  George 
81  Wis.  280;  Anvil  M.  Co.  v.  Hum-  v.  Lane,  80  Kan.  94;  Wilkinson  v. 
ble,   153  U.   S.  540,   38  L.  ed.   814;  Dunbar,   149  N.   C.   20. 


§    64]  COMPENSATION.  249 

court  and  jury  having  no  certain  data  upon  wliicli  to  make 
the  estimate.  If  it  were  necessary  to  make  tlie  estimate  upon  any 
such  basis  the  argument  would  be  decisive  of  the  present  claim. 
But  in  my  judgment  no  such  necessity  exists.  When  the  con- 
tract, as  in  this  case,  is  broken  before  the  arrival  of  the  time  for 
full  performance,  and  the  opposite  party  elects  to  consider  it 
in  that  light,  the  market  price  on  the  day  of  the  breach  is  to 
govern  in  the  assessment  of  damages.  In  other  words,  the  dam- 
ages are  to  be  settled  and  ascertained  according  to  the  existing 
state  of  the  market  at  the  time  the  cause  of  action  arose  and 
not  at  the  time  fixed  for  full  performance.  *  *  *  It  will  be 
seen  that  we  have  laid  altogether  out  of  view  the  subcontract 
*  *  *  and  all  others  that  may  have  been  entered  into  by  the 
plaintiffs  as  preparatory  and  subsidiary  to  the  fulfillment  of  the 
principal  one  with  the  defendants.  Indeed,  I  am  unable  to 
comprehend  how  these  can  be  taken  into  the  account,  or  become 
the  subject-matter  of  consideration  at  all  in  settling  the  amount 
of  damages  to  be  recovered  for  a  breach  of  the  principal  con- 
tract. The  defendants  had  no  control  over  or  participation  in 
the  making  of  the  subcontracts,  and  are  certainly  not  to  be  com- 
pelled to  assume  them  if  improvidently  entered  into.  On  the 
other  hand,  if  they  were  made  so  as  to  secure  great  advantages  to 
the  plaintiffs,  surely  the  defendants  are  not  entitled  to  the 
gains  which  might  be  realized  from  them.  In  any  aspect,  there- 
fore, these  subcontracts  present  a  most  unfit  as  well  as  unsatis- 
factory basis  upon  which  to  estimate  the  real  damages  and  loss 
occasioned  by  the  default  of  the  defendants.  .  .  .  And  yet, 
the  fact  that  these  subcontracts  must  ordinarily  be  entered 
into  preparatory  to  the  fulfillment  of  the  principal  one  shows 
the  injustice  of  restricting  the  damages  in  cases  like  the  present 
to  compensation  for  the  work  actually  done,  and  the  item  of 
the  materials  on  hand.  We  should  thus  throw  the  whole  loss 
and  damage  that  would  or  might  arise  out  of  contracts  for 
further  materials,  etc.,  entirely  upon  the  party  not  in  default. 
If  there  was  a  market  value  of  the  article  in  this  case,  the  ques- 
tion would  be  a  simple  one.  As  there  is  none,  however,  the 
parties  will  be  obliged  to  go  into  an  inquiry  as  to  the  actual 
cost  of  furnishing  the  article  at  the  place  of  delivery;  and  the 


250  "      SUTHERLAND    ON    DAMAGES.  [§    64 

court  and  jury  should  see  that  in  estimating  this  amount  it  be 
made  upon  a  substantial  basis,  and  not  left  to  rest  upon  loose 
and  speculative  opinions  of  witnesses.  The  constituent  elements 
of  the  cost  should  be  ascertained  from  sound  and  reliable 
sources ;  from  practical  men,  having  experience  in  the  particular 
department  of  labor  to  which  the  contract  relates.  It  is  a  very 
easy  matter  to  figure  out  large  profits  upon  paper;  but  it  will 
be  found  that  these,  in  a  great  majority  of  the  cases,  become 
seriously  reduced  when  subjected  to  the  contingencies  and  haz- 
ards incident  to  actual  performance.  A  jury  should  scrutinize 
with  care  and  watchfulness  any  speculative  or  conjectured  ac- 
count of  the  cost  of  furnishing  the  article  that  would  result  in 
a  very  unequal  bargain  between  the  parties,  by  which  the  gains 
and  benefits,  or,  in  other  words,  the  measure  of  damages  against 
the  defendants,  are  unreasonably  enhanced.  They  should  not 
overlook  the  risks  and  contingencies  which  are  almost  insepa- 
rable from  the  execution  of  contracts  like  the  one  in  question, 
and  which  increase  the  expense  independently  of  the  outlay 
in  labor  and  capital." 

§  65.  Violation  of  contract  to  lease.  The  plaintiff  agreed 
with  the  defendant  to  take  a  lease  of  premises  belonging  to  the 
latter  for  the  purpose,  as  he  knew,  of  carrying  on  a  trade  which 
the  plaintiff  was  about  to  commence.  The  defendant  wilfully 
refused  to  carry  out  his  agreement,  and  plaintiff  was  unable  for 
fifteen  weeks  to  commence  business.  Specific  performance  of 
the  agreement  was  decreed  and  damages  were  awarded  for  loss 
of  profit.-^^  The  damages  resulting  from  the  failure  to  perform 
a  contract  to  rent  premises  is  the  difference  between  what  they 
were  worth  and  the  rent  agreed  upon.^^  Where  the  lease  of  a 
farm  which  was  to  be  worked  on  shares  for  several  years  stipu- 
lated that  if  the  owner  exercised  his  reserved  right  to  sell  the 
farm  during  the  term  he  should  pay  any  damages  which  the 
lessee  sustained  by  giving  up  possession,  the  latter's  rights  are 

13  Jaques  v.  Millar,  6  Ch.  Div.  153;  not  in  accord  with  the  English  case. 

Alexander  v.  Bisliop,  59  Iowa  572;  See   Benyaker   v.    Scherz,    103   App. 

Brockway  v.  Thomas,  36  Ark.  518;  Div.   192;    §  867  and  note. 

Beidler    v.   Fish,    14   111.   App.   623;  14  Eastman   v.   Mayor,   152   N.  Y. 

Jarrait  v.  Peters,  145  Mich.  29,  are  468. 


§    06]  COMPENSATION.  251 

the  same  as  they  would  have  hecu  if  tlie  sale  had  been  made 
wroiiiil'iilly ;  he  was  entitled  to  recover  the  value  of  his  contract 
— what  the  privilege  of  oceuj)ying'  and  working'  the  farm  was 
worth,  subject  to  the  terms  of  the  contract  and  under  all  the 
contingencies  liable  to  aH'ect  the  result."  I3ut  time  spent  by 
the  person  who  was  to  be  the  lessee  in  securing  other  premises 
is  not  an  element  of  the  damages.^^  if  the  lessee  of  business 
premises  is  evicted  and  his  business  broken  up  he  may  recover 
.the  prospective  profits  thereof  for  the  renuiinder  of  the  term." 
It  is  otherwise  as  to  profits  which  might  have  been  made  on  a 
farm  by  a  person  who  was  without  experience.^^  If  the  lessor 
of  business  property  fails  to  keep  it  in  repair  as  he  agreed  to  do 
the  lessee  may  recoup  for  the  loss  of  custom  and  the  profits  he 
might  have  made  but  for  the  breach ;  and  it  will  be  enough  for 
him  to  show  facts  which  enable  the  jury  to  ai)proximate  his 
losses.^^  A  lessee  who  violates  covenants  in  the  lease  as  to  post- 
ing a  notice  "to  let"  and  allowing  the  ])remises  to  be  shown 
will  be  liable  for  the  loss  of  rent  resulting. ^° 

§  66.  Profits  of  labor.  Where  a  party  has  contracted  to  i)er- 
form  labor  from  which  a  profit  is  to  spring  as  a  direct  result 
of  the  work  done  at  the  contract  price  and  is  prevented  from 
earning  this  profit  by  the  wrongful  act  of  another  party  its 
loss  is  a  direct  and  natural  result  which  the  law  will  presume 

15  Depcw    V.    Ketchum,    75    Hun,  the  result."     Cornelius  v.  Lytle,  240 

227;    Taylor   v.    Bradley,   39   N.   Y.  Pa.  205. 

129;  Shoemaker  V.  Crawford,  82  Mo.  16  Schultz    v.    Brenner,    24    N.   Y. 

App.    487;    Cilley    v.    Hawkins,    48  Misc.   522. 

III.  308;  North  Chicago  S.  R.  Co.  V.  17  Snow    v.    Pulitzer,    142    N.    Y. 

Le    C4rand    Co.,    95    111.    App.    435;  263;  Farmers'  L.  &  T.  Co.  v.  Eaton, 

Kjelsberg  v.  Chilberg,  177  Fed.  109,  114  Fed.  14,  51  C.  C.  A.  640,  apply- 

100  C.  C.  A.  529.  ing  the  rule  to  the  termination   of 

The  measure  of  damages  for  the  the  lease  of  a  railroad  e.xecuted  by 

breach  of  a  contract  to  lease  a  farm  a   receiver;    Owensboro-H.   Tel.    Co 

for  a  period  of  years  is  not  what  the  v.  Wisdom,  23  Ky.  L.  Rep.  97,  62  S. 

plaintiff  as  lessee,  "might  have  made  W.  529    (violation  of  lease  for  use 

out  of  it  under  the  most  favorable  of  telephone)  ;  Neal  v.  Jefferson,  212 

conditions  not  within  Iiuman  power  Mass.  517. 

to   command,   but  the  value  of  the  18  Kellogg  v.  Maliek,  125  Wis.  2.S0. 

privilege  of  occupying  and  cultivat-  19  Stewart  v.  Lanier  House  Co.,  75 

ing  the  farm   subject  to  the  condi-  Ga.   582. 

tions  of  the  lease,  and  all  the  con-  20  United  States  T.  Co.  v.  O'Brien, 

tingencies  that  were  liable  to  affect  ]43  N.  Y.  284.     See  ch.  XX. 


252 


SUTHERLAND    ON    DAMAGES. 


[§    66 


to  follow  the  breach  of  the  contract ;  and  he  is  entitled  to  recover 
it  without  special  allegations  in  his  declaration.  The  amount 
of  damage  may  be  established  by  showing  how  much  less  than 
the  contract  price  it  will  cost  to  do  the  work  or  perform  the 
contract.^^  Actual  damages  clearly  include  the  direct  and  actual 
loss  which  a  plaintiff  sustains  propter  rem  ipsam  non  habitam. 
And  in  case  of  such  contracts  the  loss  of  profits,  among  other 
things,  is  the  difference  between  the  cost  of  doing  the  work  and 
the  price  to  be  paid  for  it.  This  difference  is  the  inducement 
and  real  consideration  which  causes  the  contractor  to  enter  into 
the  contract.  For  this  he  expends  his  time,  exerts  his  skill, 
uses  his  capital  and  assumes  the  risks  which  attend  the  enter- 
prise. Where  profits  are  advisedly  spoken  of  as  not  a  subject 
of  damages  it  will  be  found  that  something  contingent  upon 
future  bargains,  or  speculations,  or  state  of  the  market  is  re- 
ferred to,  and  not  the  difference  betAveen  an  agreed  price  of 
something'  contracted  for  and  its  ascertainable  value  or  cost.^^ 


21  Leonard  v.  Beaudry,  68  Mich. 
310,  13  Am.  St.  344;  Mississippi  & 
Rum  River  B.  Co.  v.  Prince,  34 
Mich.  71;  Oldham  v.  Kerchner,  79 
N.  C.  106;  Jolly  v.  Single,  16  Wis. 
280;  Kinney  v.  Crocker,  18  id.  74; 
Hinckley  v.  Beckwith,  13  id.  31; 
McAndrews  v.  Tippett,  39  N.  J.  L. 
105 ;  United  States  v.  Speed,  8  Wall. 
77,  19  L.  ed.  449;  Doolittle  v.  Mc- 
CuUough,  12  Ohio  St.  360;  Midde- 
kauflf  V.  Smith,  1  Md.  343;  Clark  v. 
Mayor,  4  N.  Y.  338,  53  Am.  Dec. 
379;  Cook  v.  Commissioners,  6  Mc- 
Lean 612;  Frye  v.  Maine,  etc.  R. 
Co.,  67  Me.  414;  Lentz  v.  Choteau, 
42  Pa.  435;  James  v.  Adams,  8  W. 
Va.  568;  Cramer  v.  Metz,  57  N.  Y. 
659;  Devlin  v.  Mayor,  63  N.  Y.  8; 
Hoy  V.  Gronoble,  34  Pa.  9,  75  Am. 
Dec.  628;  Thompson  v.  Jackson,  14 
B.  Mon.  114;  Fox  v.  Harding,  7 
Cush.  516;  Milburn  v.  Belloni,  39 
N.  Y.  53,  100  Am.  Dec.  403;  Eliza- 
bethtown,  etc.  R.  Co.  v.  Pottinger, 
10  Bush  185 ;  Wallace  v.  Tumlin,  42 


Ga.  462;  United  States  v.  Smith,  94 
U.  S.  214,  24  L.  ed.  115;  Somers  v. 
Wright,  115  Mass.  292;  Richmond 
V.  D.  &  S.  C.  R.  Co.,  40  Iowa  264; 
Fail  V.  McRee,  36  Ala.  61;  Goldman 
V.  Wolff,  6  Mo.  App.  490;  Dennis  v. 
Maxfield,  10  Allen  138;  Skagit  R. 
&  L.  Co.  V.  Cole,  2  Wash.  57;  Fell 
V.  Newberry,  106  Mich.  542;  O'Con- 
nor V.  Smith,  84  Tex.  232 ;  Barrett  v. 
Grand  Rapids  V.  Works,  110  Mich. 
6;  Ramsey  v.  Holmes  E.  P.  Co.,  85 
Wis.  174;  Equitable  M.  Co.  v.  Wed- 
dington,  2  Tex.  Civ.  App.  373;  Mc- 
Connell  v.  Corona  City  W.  Co.,  149 
Cal.  60,  8  L.R.A.(N.S.)  1171,  quot- 
ing the  text;  Stumm  v.  Western  U. 
Tel.  Co.,  140  Wis.  528.  See  §  713. 
22  Philadelphia,  etc.  R.  Co.  v. 
Howard,  13  How.  344,  14  L.  ed.  173; 
O^Connor  v.  Smith,  84  Tex.  232; 
Hirschhorn  v.  Bradley,  117  Iowa 
130;  Carrico  v.  Stevenson  (Tex.  Civ. 
App.),  135  S.  W.  260;  El  Paso,  etc. 
R.  Co.  V.  Eichel  (Tex.  Civ.  App.), 
130    S.    W,    922;    Smith    v.    Curry, 


§    67]  COMPENSATION.  253 

Tips  are  too  indefinite  and  uncertain  in  ainmint  to  atl'ord  a  basis 
for  estimating"  profits  or  income. ^^ 

§  67.  Profits  from  commercial  ventures.  The  success  of  busi- 
ness ventures  is  not  antecedently  certain  in  an  absolute  sense; 
they  are  generally  nndertaken  in  reliance  upon  probabilities 
based  upon  the  law  of  demand  and  supply.  Though  speculative 
in  their  inception,  by  anticipating  future  values,  they  are  gen- 
erally retrospectively  examined  when  they  become  subjects  of 
judicial  investigation,  and  then  such  values  are  capable  of  proof. 
If  the  business,  the  profits  from  which  are  in  question,  is  a  trad- 
ing business  they  must  depend  on  a  succession  of  purchases  of 
stock  for  sale,  or  the  employment  of  labor  or  material  to  be 
purchased  for  its  production,  and  a  succession  of  sales.  Where 
the  injury  complained  of  is  an  interruption  or  prevention  of 
such  a  business  or  causes  a  diminution  of  it  it  is  scarcely  possible 
to  establish  damages  to  a  very  high  degree  of  certainty.^*  In 
many  cases  the  best  conclusion  will  be  merely  a  probable  one. 
The  rule  of  law  is  the  same  in  all  cases,  that  the  damages  be 
proved  with  reasonable  certainty;  but  a  greater  degree  of  cer- 
tainty being  attainable  in  some  cases  than  is  possible  when  the 
result  soiight  depends  on  the  chances  of  future  bargains  the  law. 
will  not  ])ermit  the  proof  which  is  certain  to  be  neglected  and 
resort  be  made  to  that  which  is  less  satisfactory ;  though  the 
latter  in  other  cases,  is  the  best  the  nature  of  the  case  admits 
of  and  must  be  received  as  the  only  guide  to  the  proper  amount 
of  compensation,  and  is  then  available.^^     The  damages  result- 

(Ky.)  14G  S.  W.  434  (a  music  teach-  Co.,    140   Mo.   App.   200;    PaUen   v. 

er  who  has  not  been  supplied  with  a  Lynett,  133  App.  Div.   (N.  Y.)   746; 

piano    as    agreed    may    recover    the  American  P.  F.   Co.  v.   Elliott,   151 

profits  that  would  have  been  made  N.  G.  393;  Paola  G.  Co.  v.  Paola  G. 

if   it  was   impracticable  to   procure  Co.,   56  Kan.  614,   622,  54   Am.   St. 

another  piano)  ;  Beckwith  v.  Talbot,  59cS. 

2   Colo.   639;    Dockstader   v.   Young  The   loss   of   property   because   of 

Men's  C.  Ass'n,  —  Iowa  — ,  109  N.  the  negligence  of  a  bailee  is  not  ac- 

W.  906.  ctmipanied    with    liability    for    the 

23  Torgesou  v.  TIanford,  79  Wash.  profits  lost  because  the  bailor  was 
56.  unable  to   immediately  sxipply  him- 

24  See  Carsey  v.  Farmer,  117  Ky.  self  with  like  property,  \\eick  v. 
826;  Winslow  E.  &  M.  Co.  v.  Hoff-  Dougherty,  13!)  Ky.  528,  3  L.R.A. 
man,  107  Md.  621,  17  L.R.A.  (N.S.)  (X.S.)    348. 

1130;    Morrow  v.   Missouri   Pac.   K.  25  Eairchild   v.    Rogers,   32   Minn. 


254 


SUTllEKLANl)    ON    DAMAGES. 


[§  t57 


iiig  from  the  breach  of  au  agreement  to  furnish  the  plaintiff 
facilities  for  carrying  on  his  business  in  a  store  during  a  fixed 
term  were  sulticientlj  shown  by  proof  of  the  gross  receipts  made 
during  the  two  years  business  was  done  there,  the  net  profits, 
the  income  obtained  elsewhere  during  the  succeeding  year,  and 
what  plaintiff  was  able  to  earn  after  his  business  in  the  store 
was  broken  up.^®  A  proposed  contract  cannot  be  a  basis  for 
the  recovery  of  profits.^'  Anticipated  profits  from  a  business 
to  be  established  are  too  uncertain  to  form  a  basis  of  damages.^^ 
§  68.  Profits  on  dissolution  of  partnership.  One  partner  may 
maintain  an  action  at  law  against  another  for  a  breach  of  the 
copartnership  articles  in  dissolving  before  the  time  limited  there- 
for, and  may  do  so  before  the  expiration  of  the  period  for  which 
the  partnership  was  to  continue.  The  damages  are  the  profits 
which  would  have  accrued  to  the  plaintiff  from  the  continuation 
of  the  partnership  business  and   which  are  lost  by  its  unau- 


201) ;  Alexander  v.  Brceden,  14  B. 
Mon.  154;  Houston,  etc.  R.  Co.  v. 
Hill,  70  Tex.  51 ;  Same  v.  MoUoy,  64 
Tex.  607;  Kelly  v.  Miles,  58  N.  Y. 
Super.  495,  Oliver  v.  Perkins,  92 
Mich.  304;  Treat  v.  Hiles,  81  Wis. 
280;  World's  Columbian  Exp.  Co.  v. 
Pasteur-C.  F.  Co.,  82  111.  App.  94; 
Fraser  v.  Echo  M.  &  S.  Co.,  9  Tex. 
Civ.  App.  210;  Dr.  Harter  M.  Co.  v. 
Hopkins,  83  Wis.  309;  American  C. 
Co.  V.  Caswell  (Tex.  Civ.  App.  ),  141 
S.  W.  1013;  Harper  F.  Co.  v.  South- 
ern Exp.  Co.,  148  N.  C.  87,  30  L.R.A. 
(N.S.)  483.  See  §  913  and  note, 
and  Atchison,  etc.  R.  Co.  v.  Thomas, 
70  Kan.  409. 

In  an  action  to  recover  for  mis- 
representations concerning  his  busi- 
ness the  plaintiff  alleged  injury  to 
his  credit,  whereby  he  was  unable 
to  obtain  goods  to  sell  and  therefore 
lost  profits.  The  damage  claimed 
under  the  latter  head  was  too  re- 
mote. Bradstreet  Co.  v.  Oswald,  96 
Ca.  396. 

One  cannot  recover  the  prospective 
profits  of  a  business  which  is  illegal 


and  which  ho  discontinued  because 
of  threats.  Prude  v.  Sebastian,  107 
La.  64. 

26  Dickinson  v.  Hart,  142  N.  Y. 
183;  Gagnon  v.  Sperry,  206  Mass. 
547;  Standard  S.  Co.  v.  Carter,  81 
S.  C.  181,  19  L.R.A.  (N.S.)   155. 

The  loss  of  the  profits  caused  by 
the  partial  breach  of  a  license  for 
the  exclusive  privilege  of  selling 
goods  on  a  fleet  of  steamers  for  a 
series  of  seasons  is  well  shown  by 
proof  of  the  sums  realized  in  previ- 
ous years,  including  the  time  the 
contract  was  in  effect,  the  ability  of 
the  plaintiff  to  do  business,  the 
nature  of  the  business  and  the  op- 
portunities for  prosecuting  it.  Nash 
V.  Thousand  Islands  S.  Co.,  123  App. 
Div.  148. 

27  Western  U.  Tel.  Co.  v.  Adams 
Mach.  Co.,  92  Miss.  849. 

28  Webster  v.  Beau,  77  Wasli.  444, 
51  L.R.A.(N.S.)  81;  C.  W.  Ketter- 
ing Mercantile  Co.  v.  Sheppard,  — 
N.  M.  — ,  142  Pac.  1128,  citing  au- 
thorities.    See  also  §  704. 


68] 


COMPENSATION. 


thorized  dissolution.^^  The  only  legitimate  beneficial  conse- 
quence of  continuini>-  a  partnership  is  the  making  of  profits. 
The  most  direct  and  legitimate  injurious  ct)use(iiion('e  which 
can  follow  upon  an  unauthorized  dissolution  of  a  i)artnership 
is  the  loss  thereof.  Unless  that  loss  can  be  made  up  to  the  in- 
jured party  it  is  idle  to  say  that  any  obligation  is  imposed  by 
a  contract  to  continue  a  partnership  for  a  fixed  period.^"  It  is 
safe  to  say  that  such  profits  cannot  be  proved  except  to  a  reason- 
able certainty,  wliieh  is  sufiicient.^^  The  profits  innnediately 
before  the  dissolution  may  be  shown  for  the  consideration  of 
the  jury.  In  Bagley  v.  Smith  ^^  Judge  Johnson  said :  "It  seems 
to  me  quite  obvious  that  outside  of  a  court  of  justice  no  man 
would  undertake  to  form  an  opinion  as  to  pros})ective  profits  of 
a  business  without  in  the  first  place  informing  himself  as  to  its 
past  profits,  if  that  fact  were  accessible.  As  it  is  a  fact  in  its 
nature  entirely  capable  of  accurate  ascertainment  and  proof,  1 
can  see  no  more  reason  why  it  should  be  excluded  from  the  con- 


29  Bagley  v.  Smith,  10  N.  Y.  489, 
61  Am.  Dec.  756;  Treat  v.  Hiles,  81 
Wis.  280 ;  Ramsay  v.  Meade,  37  Colo. 
465;  Tygart  v.  Albritton,  5  Ga.  App. 
412. 

30  Bagley  v.  Smith,  supra;  Mc- 
Neill V.  Reid,  9  Bing.  68;  Gale  v. 
Leckie,  2  Stark.  107;  Mitchell  v. 
Read,  84  N.  Y,  556;  Burckhardt  v. 
l:urckhardt,  42  Ohio  St.  474,  498,  58 
Am.  Rep.  842,  citing  the  text  and 
applying  the  principle  to  the  breach 
of  a  contract  for  the  sale  of  the 
good  will  of  a  business;  Zimmerman 
V.  Harding,  227  U.  S.  489,  57  L.  ed. 
C08;  Karrick  v.  Hannaman,  168  U. 
S.  328,  42  L.  ed.  484;  Dennis  v.  Max- 
field,  10  Allen,  138. 

In  Reiter  v.  Morton,  96  Pa.  229, 
242,  the  measure  of  damages  for  the 
wrongful  dissolution  of  a  manufac- 
turing partnership  was  held  to  be 
tlie  actual  money  value  of  the  plain- 
tifl"'a  interest  in  the  firm  at  the  time 
of  the  breach.  "VVliat  would  the  in- 
terest sell  for  to  a  person  willing  to 


buy  and  having  the  means  to  l)uy  ? 
As  illustrating  this  question  the  ac- 
tual state  and  condition  of  the  prop- 
erty, business  and  assets  of  tlie 
firm  at  the  time,  together  with  proof 
of  actual  results  accomplislied, 
whether  of  profit  or  loss  or  bt)tli,  in 
the  past,  would  be  competent  evi- 
dence. Beyond  this,  at  least  so  far 
as  conjectural  profits  in  tlie  future 
are  concerned,  it  would  not  Im'  safe 
to  go." 

Where  one  partner  rendered  serv- 
ices and  the  other  furnished  tlie  caj)- 
ital,  there  being  no  time  fixed  for  tlie 
duration  of  the  partnership,  the 
damages  recoverable  by  the  former 
for  its  wrongful  dissolution  were  tlif 
value  of  his  services,  skill,  etc..  in 
conducting  the  ])artncislii|i  lni-^iiics-', 
and  not  his  share  of  inolits  fur  any 
specific  time.  Ball  v.  liriltdii,  .■)S 
Tex.  57. 

31  Ramsay  v.  Meade,  37  Colo.  46."). 

32  10  X.  V.  4S9,  III   Am.  D.-.'.  IM. 


256  SUTHERLAND    ON    DAMAGES.  [§    68 

sideration  of  the  tribunal  called  upon  to  determine  con jectur ally 
the  amount  of  prospective  profits  than  proof  of  the  nature  of 
the  business,  or  any  other  circumstances  connected  with  its  trans- 
action.    It  is  very  true  that  there  is  great  difficulty  in  making 
an  accurate  estimate  of  future  profits,  even  with  the  aid  of 
knowing  the  amount  of  past  profits.     This  difficulty  is  inherent 
in  the  nature  of  the  inquiry.    We  shall  not  lessen  it  by  shutting 
our  eyes  to  the  liglit  which  the  previous  transactions  of  the 
partnership  throw  upon  it.    iSTor  are  we  more  inclined  to  refuse 
to  make  the  inquiry,  by  reason  of  its  difficulty,  when  we  re- 
member that  it  is  the  misconduct  of  the  defendants  which  has 
rendered  it  necessary."     In  a  subsequent  case,  where  the  busi- 
ness in  the  past  had  been  a  losing  one,  it  was  held  error  to  charge, 
as  the  plaintiff  requested,  that  the  jury  were  not  confined  in 
estimating  damages  to  the  rate  of  profits  at  the  time  of  dissolu- 
tion, but  might  consider  and  give  damages  for  profits  that  would 
probably  have  been  made  by  the  higher  prices ;  and  might  con- 
sider the  present  and  probable  future  rate  during  the  balance 
of  the  partnership,  though  the  court  added :     ''It  requires  some 
care.     You  are  not  to  guess  about  this  matter.     If  you  can 
rationally  see  through  this  that  the  profits  would  have  been 
greater  in  the  future,  and  are  greater  at  the  present  time  than 
at  the  time  of  the  dissolution,  and  you  believe  that  the  present 
increased  profits,  if  such  there  would  be,  are  likely  to  continue 
and  increase,  and  you  can  satisfy  yourself  of  this  in  your  own 
mind,  then  you  have  the  right  to  look  through  the  remainder 
of  the  time  of  the  partnership,  making  a  verv'  careful  estimate 
in  regard  to  what  the  profits  might  probably  be."    The  supreme 
court  regarded  the  instruction  to  give  damages  for  profits  that 
would  prohcibly  have  been  made  by  the  higher  prices,  and  au- 
thorizing the  jury  to  consider  the  present  and  probable  future 
rate,  as  going  beyond  any  previous  case  in  favor  of  speculative 
and  contingent  profits ;  the  former  case  was  referred  to  as  adher- 
ing to  the  rule  of  certainty.     The  court  say,  also,  "The  case  at 
bar  differs  from  that  case,  and  the  cases  cited  therein,  inasmuch 
as  in  those  cases  where  the  court  was  submitting  the  questior 
of  damages  to  the  jury  they  were  no  longer  prospective;  but 
at  the  time  of  the  trial  in  those  cases  respectively,  the  time  had 


§69]  COMPENSATION.  257 

expired  up  to  which  the  profits  in  question  were  to  he  esti- 
mated. In  siich  cases  all  the  daia  for  ascertaining  what  profits 
might  have  been  obtained  from  the  business  could  be  furnished 
by  witnesses  and  there  was  no  need  of  resorting  to  conjecture."  ^' 
This  case  insists  on  a  more  rigid  rule  than  the  former  one.  It 
was,  however,  a  case  in  which  there  was  very  little  data  for 
finding  even  a  probable  profit.^*  Evidence  of  the  profits  jirev- 
iously  made  may  be  supplemented  by  evidence  of  the  prosperity 
and  growth  of  the  local  community  during  the  time  the  partner- 
ship had  continued  and  also  of  the  ability  and  skill  of  the 
plaintiff.^^  If  one  partner  fails  to  pay  in  a  portion  of  his  share 
of  the  capital  and  the  copartner  continues  in  the  firm  until  it 
is  dissolved  by  mutual  consent  there  cannot  be  a  recoveiy  of 
profits  which  might  have  been  made  if  such  share  had  been  fully 
paid ;  the  payment  of  interest  will  adjust  the  parties'  rights.^^ 
Where  a  copartner  to  whom  a  premium  has  been  paid  wrong- 
fully brings  an  action  to  dissolve  the  partnership  the  premium 
may  be  apportioned  and  an  equitable  part  of  it  be  adjudged  in 
such  action  to  be  returned.^' 

§  69.  Commercial  and  insurance  agencies;  proof  of  damages. 
The  contracts  between  commercial  agents  and  their  principals 
embody  as  many  elements  of  uncertainty  as  are  usually  found 
in  combination;  among  others  (at  least  where  the  compensation 
is  based  upon  commissions)  the  state  of  trade,  quality  and  price 
of  the  goods  offered,  the  skill,  energy  and  industry  with  which 
the  business  is  prosecuted,  the  credit  of  the  parties  to  whom  sales 
are  made,  and  the  acceptance  of  the  agent's  orders  by  his  prin- 
cipal are  all  considerations  which  tend  to  make  the  damages  sus- 
tained by  an  agent  by  reason  of  the  wrongful  revocation  of  his 
agency  so  uncertain  as  to  be  difficult,  if  not  impossible,  of  ascer- 

33  Van  Ness  v.  Fisher,  5  Lans.  236  que,  etc.  R.  Co.,  33  Iowa  423 ;  Satcli- 

84  See  Dobbins  v.  Duquid,  6G  111.  well    v.    Williams,    40    Conn.    371; 

464;  Park  v.  C.  &  S.  W.  R.  Co.,  43  Schile  v.  Brokhahus,  80  N.  Y.  614; 

Iowa  636;  vSmith  v.  Wunderlich,  70  Treat  v.  Hiles,  81  Wis.  280;  Burdall 

111.    426;    Sewall's   Falls    Bridge   v.  v.  Johnson,  122  Mo.  App.  119. 

Fisk,  23  N.  H.  171;   Shafer  v.  Wil-  35  Ramsay  v.  Meade,  37  Colo.  465. 

son,  44  Md.  268;  Lacour  v.  Mayor,  36  Delp  v.  Edlis,  190  Pa.  25. 

3  Duer  406;   St.  John  v.  Mayor,  13  37  Con-oran  v.  Sinni)tion.  70  Minn. 

How.  Pr.  527;   Richmond  v.  Duhu-  108. 
Suth.  Dam.  Vol.  I.— 17. 


25<S  SnTTTERT,ANr>    ON    DAMAGES.  [§    00 

taimnent.^^  Past  sales,  it  has  been  said,  do  not  afford  a  safe 
basis  for  estimating  future  profits  because  conditions  may  not 
remain  as  they  were,^^  and  also  because  the  time  and  service 
of  the  salesman,  which  have  been  given  to  the  making  of  them, 
will  be  his,  on  the  termination  of  the  employment,  to  use  other- 
wise.^" The  damages  in  cases  of  this  class  are  not  speculative 
or  remote,  and  the  difficulty  in  ascertaining  them  does  not  deter 
courts  from  awarding  such  compensation  for  their  breach  as 
the  evidence  shows  with  reasonable  certainty  the  wronged  party 
is  entitled  to.  It  would  be  a  reproach  to  the  law  if  he  could  not 
recover  all  the  damages  sustained.*^  Where  an  agent  selling  on 
commission  was  discharged  three  months  before  the  expiration 
of  his  contract  the  court  said  it  could  see  no  great  difficulty  in 
proving  facts  that  would  enable  a  jury  to  determine  approxi- 
mately the  amount  of  goods  he  would  have  sold  during  that 
time.  He  had  been  a  traveling  salesman  for  the  defendant 
during  the  two  preceding  years,  and  his  sales  during  the  cor- 
responding months  of  those  years  could  have  been  shown,  as 
might  the  state  of  the  markets,  the  number  of  his  regular  custo- 
mers, etc.*^     If  the  agent,  at  the  time  of  the  revocation  of  his 

38  Union  Ref.  Co.  v.  Barton,  77  404;  Spencer  M.  Co.  v.  Hall,  78  Ark. 
Ala.  148;  Brigham  v.  Carlisle,  78  id.  336.  It  is  said:  When,  as  in  this 
243,  56  Am.  Rep.  28 ;  Stern  v.  Ros-  ease,  there  is  a  breach  of  a  contract 
enheim,  67  Md.  503.  See  Noble  v.  in  which  the  parties  expressly  con- 
Hand,  163  Mass.  289.  tracted   for    the   earning   of   profits 

It  has  been  said  that,  where  the  by  way  of  commission  on  sales  of 
employer  discontinues  his  business  goods  to  be  made  by  the  agent,  they 
and  his  agent  thereby  loses  the  prof-  must  necessarily  have  had  in  con- 
its  of  sales  upon  commission  there  templation  the  loss  of  such  profits  as 
can  be  no  recovery  because  it  was  ^j^  element  of  damages  upon  the 
within  the  contemplation  of  the  breach  of  tlie  contract.  They  can- 
parties  that  "the  employe  took  the  ^.^^^  therefore,  be  said  to  be  either 
chances  of  his  employer  finding  his  ^^^   uncertain   of   ascertainment   or 

business  profitable  and  carrying  it       ,  4.^.1  -a       ^         +1 

^       „        .  ,     ,,     .        T  too  remote  to  be  considered  as  the 


proximate   result   of   the   breach   of 
the  contract.     See  Fortaine  v.  Bax- 


on."      In    re    Scottish    Marine    Ins 
Co.,  5  Ch.  App.  737.    See  §  694. 

39  Washburn  v.  Hubbard,  6  Lans 
11;    Hair    v.    Barnes,    26    111.    App.       ^^'y>  ^0   Ga.   416. 

580;  Roth  V.  Spero,  48  N.  Y.  Misc.  ^2  Cranmer  v.  Kohn,  7  S.  D.  247; 

5Qg  Laishley  v.  Goold  B.  Co.,  6  Ont.  L. 

40  Ray  V.  Lewis,  67  Minn.  365.  R-  319    (court  of  appeal).     See  Og- 

41  Baldwin    v.    Marqueze,    91    Ga.       dens  v.  Nelson,  [1903]  2  K.  B.  287. 


69] 


COMPENSATION. 


259 


authority,  had  agreements  for  sales  which  he  could  have  oon- 
summated  but  for  the  wrongful  act  of  his  principal  he  is  entitled 
to  his  commissions  on  them,  if  it  is  clear  they  would  have  l^een 
made.  Mere  expectations,  doubtful  offers  or  other  vague  or 
indefinite  assurances  of  intention  to  purchase  are  speculative.*' 
The  loss  of  employment  is  an  element  of  damage,  but  no  standard 
can  be  fixed  for  ascertaining  the  extent  of  it.**  If  the  princi[)al 
has  accepted  orders  from  his  agent  and  refused  to  fill  them 
the  commission  thereon  may  be  recovered ;  *^  but  not  damages 
which  resulted  to  the  business  of  the  agent  otherwise.*^  A 
more  liberal  rule  has  been  held  in  a  case  which  has  been  often 
cited.*''  The  contract  sued  upon  provided  that  if  the  plaintiif 
should  sell  fifty  of  the  defendant's  machines  to  one  firm  in 
Mexico  for  every  such  sale  he  should  have  the  exclusive  agency 
of  the  machines  in  that  locality,  they  to  be  furnished  by  the  de- 
fendant at  the  lowest  price,  and  the  plaintifi"  to  receive  a  com- 


43  Kenney  v.  Knight,  127  Fed. 
403;  Sterling  0.  Co.  v.  House,  25 
W.  Va.  64.  See  La  Favorite  R. 
Mfg.  Co.  V.  Channon  Co.,  113  111. 
App.  491;  Dowagiac  Mfg.  Co.  v. 
Corbit,  127  Mich.  473. 

44  Beck  V.  West,  87  Ala.  213.  See 
Taylor  v.  Spencer,  75  Kan.  152. 

45  Taylor  Mfg.  Co.  v.  Hatcher 
Mfg.  Co.,  39  Fed.  440,  3  L.K.A.  587. 

46  Id.  In  accord :  Bennett  L.  Co. 
V.  Walnut  Lake  C.  Co.,  105  Ark. 
421. 

47Wakeman  v.  Wheeler  &  W. 
Mfg.  Co.,  101  N.  Y.  205,  54  Am. 
Rep.  671;  Bannatyne  v.  Florence 
M.  &  M.  Co.,  77  Plun,  289,  apply- 
ing the  rule  in  the  Wakeman  case, 
supra;  Crittenden  v.  Johnston,  7 
App.  Div.  258;  More  v.  Knox,  52 
N.  Y.  Supp.  145;  Wells  v.  Na- 
tional L.  Ass'n,  39  C.  C.  A.  476, 
99  Fed.  222,  53  L.R.A.  33,  ap- 
proving the  Wakeman  case,  su- 
pra; Hitchcock  V.  Supreme  Tent,  100 
Mich.  40,  43  Am.  St.  423;  Hirsch- 
horn    V.    Bradley,    117    Iowa    130; 


Emerson  v.  Pacific  Coast  &  N.  P. 
Co.,  96  Minn.  11,  113  Am.  St.  603; 
Nash  V.  Thousand  Islands  S.  Co., 
123  App.  Div.  (N.  Y.)  148;  Roth  v. 
Spero,  48  N.  Y.  Misc.  506;  Dunham 
V.  Hastings  P.  Co.,  95  App.  Div. 
360;  Federal  I.  &  B.  B.  Co.  v.  Hock, 
42  Wash.  668;  American  Agricul- 
tural C.  Co.  V.  Rhodes,  139  Ga.  495. 
See  Independent  B.  Ass'n  v.  Burt, 
109  Minn.  323;  Wilson  v.  Wernwag, 
217  Pa.  82;  Meylert  v.  Gas  Consum- 
ers' B.  Co.,  26  Abb.  N.  C.  262,  §  62, 
and  Mechanics'  &  T's.  Ins.  Co.  v. 
McLain,  48  La.  Ann.  109;  HoUweg 
V.  Schaefer  B.  Co.,  197  Fed.  689, 
117  C.  C.  A.  83,  is  an  important 
case  on  this  question. 

The  profits  made  in  a  business 
formerly  pursued  by  the  plaintiff 
and  abandoned  in  reliance  on  the 
performance  of  the  contract  in  ques- 
tion may  be  shown  to  establish  the 
lost  profits.  Meylert  v.  Gas  Co., 
supra;  Arkansas  Valley  T.  &  L.  Co. 
V.  Lincoln,  56  Kan.  145. 


260  SUTHERLAND    ON    DAMAGES.  [§    G9 

mission.  Two  such  sales  were  made,  the  order  for  one  of  which 
was  filled ;  the  other  order  was  not  filled,  and  the  contract  was 
repudiated.  Agencies  were  established  by  the  plaintiff  at  the 
places  these  sales  were  made.  The  court  observed  that  these 
agencies  were  to  be  exclusive  and  to  have  sbme  permanency. 
They  were  valuable  to  the  plaintiff,  and  though  there  was  diffi- 
culty in  ascertaining  the  damages  he  sustained  it  was  not  greater 
than  existed  in  other  cases  where  profits  had  been  recovered. 
There  were  some  facts  upon  which  a  jury  could  base  a  judg- 
ment, not  certain  nor  strictly  accurate,  but  sufficiently  so  for 
the  administration  of  justice;  such  as  the  fact  that  sales  had 
been  made  before  the  breach  and  afterwards ;  the  qualifications 
of  the  agent  and  those  who  operated  under  him  to  make  sales; 
the  facilities  for  carrying  on  business,  and  like  facts  would 
have  warranted  a  verdict  which  would  have  approached  as  near 
the  proper  measure  of  justice  as  the  nature  of  the  case  and  the 
infii*mity  which  attaches  to  the  administration  of  the  law  will 
allow.*^  In  another  case  there  was  an  unauthorized  revocation 
of  the  sole  agency  for  the  sale  of  an  article.     The  agent's  re- 

48  Stevens    v.    Ansinck,    149    App.  Ass'n,  39  C.  C.  A.  476,  95  Fed.  222, 

Div.     (N.    Y.)    220.      See    Wiley    v.  53  L.R.A.  33.     See  also,  Klingman 

California  H.  Co.,  97   Cal.  18.  v.    Racine    Sattley    Co.,    143    Iowa 

In  Howe  Mach.  Co.  v.  Bryson,  44  435. 
Iowa  159,  24  Am.  Rep.  735,  a  ma-  A  jobber  who  has  been  granted 
jority  of  the  court  held  that  an  the  sole  and  exclusive  sale  of  an  ar- 
agent  could  not  recover  as  damages  tide  not  obtainable  in  the  general 
for  the  breach  of  a  contract  to  fur-  market  and  who  has  bound  himself 
nisli  him  machines  to  sell  on  com-  to  use  all  good  methods  to  promote 
mission  the  profits  which  might  have  jtg  sale  during  the  life  of  the  con- 
been  realized  if  the  contract  had  ^.j-j^^^  j^^y,  for  the  refusal  to  supply 
been  performed.  The  New  York  jjj,jj  ^^jj.,j  ^.j^g  article,  recover  the 
court  in  the  case  considered  in  the  p^^^^.^  ^^  ^^^^j^  j^^^^  ^^^^  ^^  ^^j 
text  concurs  with  the  two  Iowa  ^^^^^^  ^^^^^  ^^^.^^  ^^^j^  ^j^^ 
judges  who  dissented.     It  is  said  in  ^^  ^^^^   ^^  ^^^^  ^^^^  ^^^  ^^ 

Hirschhorn  V.  Bradley,  supra ;    If  the  °                                           . 

,.'            ,,     ,.  be  .filled   until  after   its  expiration, 

question  considered  in  Howe  Machine  -         ,  xj 

^           „                                               ,  The  parties  must  have  contemplated 

Co.  V.  Bryson,  supra,  were  now  be-  ^                                              ^ 

r  f      4.1,     «^„<-  +;.v,„   „To  v^io-Tif        that    the    usual    methods    of    doing 

fore  us  for  the  first  time,  we  might,  => 

in  view  of  the  later  authorities,  in-  business     would     be     pursued     and 

cline  to  the  view  expressed  in  the  orders  for  future  delivery  be  taken, 

dissenting   opinion.      As   supporting  Portable    E.    Mfg.    Co.    v.    Bradley, 

that  view,  see  Wells  v.  National  L.  158  Iowa  19. 


§    69]  COMPENSATION.  261 

covery  was  measured  by  the  profits  he  might  have  realized  if 
there  had  been  no  breach  of  the  principal's  contract.  In  order 
to  determine  what  they  would  have  been  proof  of  the  actual 
sales  of  the  article  made  by  the  agent's  successor  during  the 
term  the  former  was  entitled  to  the  agency  was  admissible.*^ 
On  the  revocation  of  such  an  agency  in  prescribed  territory 
evidence  of  the  sales  made  by  the  agent  after  the  breach  and 
up  to  the  time  of  the  trial  is  competent  to  establish  his  claim 
for  the  loss  of  profits,^"  and  so  are  sales  made  in  the  agent's 
exclusive  territory  by  the  principal ;  he  will  not  be  heard  to 
allege  that  the  agent  would  not  have  made  them.*^  Where  an 
agent  made  sales  for  two  years  of  the  three  the  agency  was  to 
continue  the  result  of  his  efforts  was/  a  basis  on  which  damages 
might  be  assessed  in  his  favor,  though  a  diminished  demand 
for  the  goods  during  the  third  year  was  shown.^^  The  profits 
on  articles  the  plaintiff  had  a  fair  expectation  of  making  within 
a  reasonable  time  may  be  considered  on  the  basis  of  his  efi^orts 
to  make  a  market  for  them.^^  The  rights  of  an  agent  under  a 
contract  limited  as  to  time  and  territory  do  not  require  that 
the  principal  shall  supply  goods  beyond  the  reasonable  need 

49  Corbin  v.  Taussig,  137  Fed.  defendant  was  liable  for  the  loss  of 
151;  Mueller  v.  Bethesda  M.  S.  Co.,  profits  on  sales  made  within  the 
88  Mich.  390,  approved  in  Cranmer  stipulated  territory  by  otlier  sales- 
V.  Kohn,  7  S.  D.  247 ;  Hirschhorn  men  prior  thereto  and  on  machines 
V.  Bradley,  117  Iowa  130;  Scbu-  bought  by  the  agent  and  not  sold 
maker  v.  Heinemann,  99  Wis.  2.51,  by  him  in  so  far  as  the  latter  profits 
is  in  harmony  with  the  cases  sus-  were  lost  by  putting  other  salesmen 
taining  the  right  to  recover  profits,  in  the  territory  after  tiie  terinina- 
as  is  Carlson  v.  Stone-0.  W.  Co.,  tion  of  the  contract;  but  was  not 
40  Mont.  434;  Independent  B.  Ass'n  liable  for  the  loss  of  i)ro(its  on  other 
v.  Burt,  109  Minn.  323;  and  Brede-  ^^^as  made  thereafter. 

meier  v.  Pacific  S.  Co.,  64  Ore.  570,  g^  Schitl'man  v.  Peerless  M.  C.  Co., 

131  Pac.  312.  j3  ^..jj    ^pp    (joq.    (_ajrc  v.  Newark 

50  Hirschhorn  v.  Bradley,  Carl-  ^  ^^^^  ^^^  ^g  ^  Y  ^^.^^  ^-^ 
son  V.  Stone-0.  W.  Co  supra;  Her-  ^^^  Cincinnati,  etc.  G.  I.  Co.  v. 
man  v.   Pierce,    105   App.   Div.    (N 


Western    S.-L.   Co.,   152   U.   S.   200, 
38  L.  ed.  411. 


Y.)   16. 

In  White  S.  M.  Co.  v.  Shaddock,  ^     , ,  „   ^      „  ^  ^ 

79  Ark.  220,  a  contract  allotting  an  ""  Laishley  v.  Coold  B.  Co.,  6  Ont. 

agent    exclusive    territory    provided  I-'-  R-  319. 

for  its  termination  upon  giving  no-  B3  Kenney    v.    Knight,     127     Fed. 

tice;  and  it  was  so  terminated.   The  403. 


262  SUTHERLAND    ON    DAMAGES.  [§    69 

of  the  agent's  business  during  such  time.  If  a  claim  is  made 
for  the  loss  of  profits  because  of  the  failure  to  furnish  goods 
beyond  the  extent  to  which  sales  made  in  anticipation  of  ad- 
ditional goods  being  supplied  it  must  be  shown  with  reasonable 
certainty  that  other  sales  were  prevented  within  the  contract 
period.^* 

As  is  disclosed  by  what  has  been  said  in  the  text  and  notes 
the  range  of  evidence  in  cases  of  this  class  is  wide.  It  may  be 
shown  what  sales  were  made  of  the  article  in  question  previous 
to  the  establishment  of  the  agency,  and  also  to  what  extent 
sales  were  made  of  other  like  articles,  the  public  demand  for 
them  as  evidenced  by  the  sales  made  by  others  in  the  locality 
in  which  the  plaintiff  was  doing  business,  his  acquaintance  with 
the  business,  the  good  reputation  of  the  article,  and  other  evi- 
dence in  connection  with  the  expense  the  plaintiff  incurred  in 
doing  business.  Such  evidence  shows  the  damages  caused  by 
the  revocation  of  the  agency  with  the  certainty  necessary  to 

55 

support  a  recovery. 

In  the  absence  of  an  agreement  for  a  commission  on  sales 
made  within  his  exclusive  territory  an  agent  may  recover  only 
nominal  damages  because  of  sales  made  therein  by  his  principal 
unless  he  shows  a  custom  or  usage  upon  which  to  predicate  the 
recovery  of  substantial  damages,  or  that  he  could  have  made 
them  if  the  principal  had  not.^^  In  fixing  the  profits  the  agent 
would  have  made  on  sales  made  by  the  principal  the  price  at 
which  the  latter  sold  is  the  basis  upon  which  they  are  to  be 
arrived  at."  The  liability  of  the  principal  for  the  revocation 
of  an  agency  is  not  affected  by  the  profits  made  by  the  agent 
from  the  sale  of  other  and  competing  articles  if  his  whole  time 
was  not  required  to  be  given  to  the  sale  of  the  principal's  goods. 
The  latter  may  show  in  mitigation  that  the  agent  was  financially 
unable  to  carry  out  his  contract  obligations.^* 

The  breach  of  a  contract  giving  the  plaintiff  a  general  agency 

54  Rawlings  v.  Nash,  117  Md.  393.        Curry  v.   E.   M.  F.   Co.,  28  Ont.  L. 

55  Randall  v.  Peerless  M.   C.  Co.,       E.  427. 

212  Mass.  352.  57  Koehring    M.    Co.    v.    Chicago 

56Illsley    V.    Peerless    M.    C.    Co.,  Builders'  S.  Co.,  177  111.  App.   100. 

177  111.  App.  459;   Roberts  v.  Min-  58  Randall  v.  Peerless  M.  C.   Co., 

neapolis   T.   M.    Co.,    8    S.    D.    579;  supra. 


§    G9]  COMPENSATION.  263 

for  a  term  of  years,  within  a  specified  territory,  of  a  life  in- 
surance company,  be  to  have  sole  charge  of  snch  territory,  estab- 
lish sub-agencies  and  receive  as  compensation  commissions  on 
the  first  and  subsequent  premiums  paid  gives  a  cause  of  action 
for  loss  of  commissions  on  premiums  to  become  due  afterward. 
It  was  said:  ''It  is  evident  that  all  the  schemes  of  insurance 
referred  to  in  the  contract  to  be  offered  to  the  public  contem- 
plated the  keeping  of  the  policies  alive  by  payments  made  from 
time  to  time  subsequent  to  the  first  year's  premium.  Between 
the  parties  to  the  contract  the  presumption  is  that  the  policies 
would  be  kept  alive,  and  these  subsequent  payments — renewal 
premiums  as  they  are  called — would  be  received  by  the  defend- 
ant company.  The  conduct  of  that  company  in  breaking  the 
contract  entitles  the  plaintiff  to  this  presumption  and  puts  upon 
the  defendant  the  burden  of  showing  the  contrary,  if  it  exists, 
and  the  extent  to  which  it  does  exist.  So  all  uncertainty  is 
eliminated  from  this  branch  of  the  plaintiff's  claim  for  loss  of 
profits.  As  to  the  other  branch,  assuming,  as  we  must  for  the 
present  do,  that  the  defendant  breached  the  contract  as  alleged 
in  the  petition,  entered  the  territory  allotted  to  the  plaintiff, 
and  has  through  other  agents  and  agencies,  since  the  date  of  the 
breach,  written  a  large  amount  of  other  insurance,  such  as  the 
contract  between  the  parties  contemplated  would  be  obtained 
by  and  through  the  action  of  the  plaintiff  and  his  sub-agents,  the 
amount  of  such  insurance  so  taken  and  carried  by  the  defendant 
up  to  the  time  of  the  trial  may  be  exactly  shown  by  the  testi- 
mony of  the  managing  agents  of  the  defendant,  or  by  its  books, 
or  by  both.  *  *  *  There  can  be,  therefore,  no  substantial 
difficulty  in  arriving  at  this  amount,  at  least  with  substantial 
accuracy.  *  *  *  Whether  he  could,  and  wnth  reasonable 
probability  would,  have  done  all  or  a  definite  portion  of  this 
work,  had  the  defendant  not  breached  the  contract,  is  a  proper 
subject  for  the  finding  of  a  jury  on  the  proof  that  may  be 
offered  as  to  the  means  which  the  plaintiff  had  organized  and 
s  using  for  the  efficient  prosecution  of  this  work,  coni])ared 
with  the  means  and  effort  wliich  the  defendant  has  used  in  its 
accomplishment  of  the  work  so  done  by  it  in  the  territory  allotted 
to  tlie  plaintiff".    He  is  not  necessarily  or  even  probably  entitled 


264  SUTHERLAND    ON    DAMAGES.  L§    ^^ 

to  receive  the  full  specified  rate  of  per  cent,  on  the  first  year's 
and  subsequent  premiums  paid  and  to  be  paid  on  policies  so 
issued  by  defendant  through  its  other  agents  and  agencies,  for 
some  deduction  must  necessarily  be  made  on  account  of  the  fact 
that  he  would  incur  no  current  expenses,  nor  render  any  per- 
sonal services  in  the  procurement  of  this  insurance  thus  ob- 
tained by  the  defendant  through  its  other  agents  and  agencies. 
The  condition  of  the  business"  in  the  territory  assigned  to  the 
plaintiff  "at  the  time  of  the  breach ;  the  means  that  had  been 
used  and  were  being  used  by  the  plaintiff  to  work  the  territory 
allotted  to  him ;  the  machinery  which  he  had  organized  for  the 
purpose  of  that  work ;  the  reasonable  cost  of  its  continued  opera- 
tion ;  the  extent  of  the  territory  allotted  to  him ;  the  number  of 
persons  therein  who  were  fit  subjects  for  such  insurance  as  the 
defendant  proposed  to  write ;  the  reasonable  relative  proportion 
of  cost  for  the  first  year  of  organizing  the  business  and  putting 
it  in  operation  to  the  cost  of  continuing  its  conduct  during  the 
subsequent  years ;  the  machinery  actually  used  by  the  defendant 
after  it  entered  the  territory  allotted  to  the  plaintiff,  and  its 
success,  through  the  use  of  this  machinery,  and  the  agencies 
it  established,  in  obtaining  applicants  for  insurance  and  holders 
for  its  policies,  should  all  be  given  to  the  jury."  ^®  A  manu- 
facturer of  a  particular  style  of  hats  who  gives  a  local  dealer 
the  exclusive  agency  for  their  sale  cannot,  upon  withdrawing 
the  agency,  refuse  to  fill  orders  sent  by  the  agent  and  accepted 
prior  to  the  termination  of  the  agency;  and  where  such  agency 
is  transferred  to  another  dealer  in  the  same  city,  so  that  it  was 

59  Wells  V.  National  L.  Ass'n,  39  In  Richey  v.  Union  Cent.  L.  Ins. 

C.  C.  A.  476,  489,  99  Fed.  222,  53  Co.,  140  Wis.  486,  evidence  showing 

L.R.A.    33 ;    Hitchcock    v.    Supreme  the  amount  of  business  done  during 

Tent,  100  Mich.  40,  43  Am.  St.  423;  ^^^   ^^^^   ^^^^.^   ^.j^^   ^^^^^^   existed. 

Power  V.  Brown,  2  Ohio  C.  C.    (N.  ^^.j^^^   j^^^   ^^^^   ^^^^   .^   organizing 

S.)   320;  Michigan  Mut.  L.  Ins.  Co.  .^      ...,  •       ^  j     ^-       -x    x, 

^  ,  ,?„    m  <,-■  ^       c  it  With  a  view  to  conducting  it,  the 

V.    Coleman,    118    Tenn.    215.      See  ^    ,  .^  f. 

_       .  .,,       TiT-TT        /-.       01  success  of  the  plaintiii  and  his  pros- 

Lewis  V.  Atlas  Mut.  L  Ins.  Co.,  61  f  f 

Mo.  534;   Pellett  v.  Manufacturers'  P^^^ts  was  considered  ample  to  sup- 

&   M's.   Ins.   Co.,   43    C.   C.   A.   669,  Y>ort   the   recovery   of    damages    for 

104   Fed.   502 ;    Oklahoma   Fire  Ins.  the  termination  of  the  contract.    See 

Co.  v.  Ross,  —  Tex.   Civ.   App.  — ,  Press    Pub.    Co.     v.    Reading    News 

170  S.  W.  1062.  Agency,  44  Pa.   Super.  428. 


§    TO]  COMPENSATION.  265 

impossible  for  the  deposed  agent  to  buy  the  hats  at  wholesale, 
he  may  prove  the  retail  price  charged  by  the  new  agent  as  tend- 
ing to  show  the  market  value  of  the  hats  called  for  by  such 
orders  and  as  establishing  the  measure  of  recovery  for  the  profits 
lost.  The  plaintiff's  right  to  such  profits  was  not  affected  be- 
cause he  sold  other  hats  as  valuable  as  those  made  by  the  defend-  ' 
ant,  nor  though  he  sold  as  many  of  such  as  he  would  formerly 
have  sold  of  those  furnished  by  the  defendant. °°  In  ascertaining 
the  value  of  such  agency  no  account  is  to  be  taken  of  the  stock 
in  the  hands  of  the  agent  which  he  has  paid  for,  the  principal 
not  having  bound  himself  to  take  it  from  the  agent.®^  In 
equity  an  agent  whose  exclusive  territory  is  invaded  by  a 
stranger  to  his  contract  may  recover  only  to  the  extent  that  the 
latter  derived  advantages  or  benefits  from  the  sales  made.  These 
are  ascertained  on  the  same  principles  as  govern  in  patent  in- 
fringement cases,^^  The  period  during  which  profits  may  be 
recovered  is  measured  by  the  life  of  the  contract,  and  not  by  an 
unexercised  option  for  its  extension.^' 

§  70.  Tortious  interference  with  business.  In  actions  for 
torts  injurious  to  business  the  extent  of  the  loss  is  provable  by 
the  same  testimony  as  in  actions  to  recover  for  the  loss  of  profits 
caused  by  the  breach  of  contracts,  and  recovery  may  be  had  for 
such  as  is  proved  with  reasonable  certainty;  it  is  enough  to 
show  what  the  profits  would  probably  have  been.^*     Certainty 

60  More    V.    Knox,    52    App.    Div.  62  Corbin    v.    Taussig,     137     Fed. 

(N.  Y.)   145.  151;   §§  1190,  1191. 

Where  a  person  has  the  exclusive  63  Ramsey   v.    Holmes   E.    P.    Co., 

right  to  buy  from  another  and  resell  85  Wis.  174. 

the  goods  so  bought  within  a  certain  64  Allison   v.    Chandler,    11    Mich, 

territory,  in  which  the  vendor  has  a  542 ;    Dennery  v.   Bisa,   6  La.   Ann. 

monopoly,  and  he,  violating  his  con-  365;    Shepard   v.    Milwaukee   G.    L. 

tract,   sells  goods   to   other   persons  Co.,  15  Wis.  318,  82  Am.  Dec.  679; 

within  such  territory,  he  is  liable  to  Sewall's    Falls    Bridge    v.    Fisk,    23 

the   first  person   for   the   profits   he  N.  H.  171 ;  Schile  v.  Brokhahus,  80 

may  show  with  reasonable  certainty  N.    Y.    614;    Oliver   v.    Perkins,    92 

would   have   been   his   if  there   had  Mich.  304;  Jackson  v.  Stanfield,  137 

not  been  a  breach   of  the  contract.  Ind.   592,   23   L.R.A.   588;   White  v. 

Russell   V.   Horn,   etc.   Mfg.   Co.,   41  Moseley,    8    Pick,    356;     French    v. 

Neb.  567.  Connecticut  River  L.  Co.,  145  Mass. 

eiVosburg    V.    Mallory,    70    App.  261;    Terre   Haute   v.   Hudnut,    112 

Div.  247.  Ind.  542;  National  Fibre  Board  Co. 


266 


SUTHERLAND    ON    DAMAGES. 


[§  70 


is  very  desirable  in  estimating  damages  in  all  cases ;  and  where 
from  the  nature  and  circumstances  of  the  case  a  rule  can  be 
discovered  by  which  adequate  compensation  can  be  accurately 
measured  it  should  be  applied  to  actions  of  tort  as  well  as  to 
those  upon  contract.  The  law,  however,  does  not  require  im- 
possibilities ;  and  cannot,  therefore,  demand  a  higher  degree 
of  certainty  than  the  nature  of  the  case  admits.  If  a  regular 
and  established  business  is  wrongfully  interrupted  the  damage 
thereto  can  be  shown  by  proving  the  usual  profits  for  a  reason- 
able time  anterior  to  the  wrong  complained  of.^^  But  it  is 
otherwise  where  the  business  is  subject  to  the  contingencies  of 
weather,  breakages,  delays,  etc.®^  There  is  no  good  reason  for 
requiring  any  higher  degree  of  certainty  in  respect  to  the  amount 


V.  Lewiaton  &  A.  E.  L.  Co.,  95  Me. 
318;  Wolff  S.  Co.  v.  Frankenthal, 
96  Mo.  App.  307;  Pacific  S.  W.  Co. 
V.  Alaska  P.'s  Ass'n,  128  Cal.  632; 
Yates  V.  Why  el  Coke  Co.,  137  C. 
C.  A.  327,  221  Fed.  603;  Hillsdale 
C.  &  C.  Co.  V.  Pennsylvania  R.  Co., 
229  Pa.  61;  International,  etc.  R. 
Co.  V.  Capers,  33  Tex.  Civ.  App.  283. 
65  Barnes  v.  Midland  R.  R.  Ter- 
minal Co.,  161  App.  Div.  (N. 
Y.)  621;  Sparks  v.  McCreary,  156 
Ala.  382,  22  L.R.A.(N.S.)  1224; 
Barnes  v.  Berendes,  139  Cal.  32; 
Sacchi  v.  Bayside  L.  Co.,  13  Cal. 
App.  72;  Keegan  v.  Harlan,  134  111. 
App.  363;  Manning  v.  Grinstead, 
121  Ky.  802;  McCausey  v.  Hoek, 
159  Mich.  570;  Morrow  v.  Missouri 
Pac.  R.  Co.,  140  Mo.  App.  200 ;  West 
V.  Martin,  51  Wash.  85,  21  L.R.A. 
(N.S.)  324;  Mensing  v.  Wright,  86 
Kan.  98;  Willis  v.  Perry,  92  Iowa 
297,  306,  26  L.R.A.  124;  Kyd  v. 
Cook,  56  Neb.  71,  71  Am.  St.  661; 
Schriver  v.  Johnstown,  71  Hun  232, 
affirmed  without  opinion,  148  N.  Y. 
758;  Langan  v.  Potter,  8  N.  Y. 
Misc.  541;  Williams  v.  Island  City 
M.  Co.,  25  Ore.  573,  589,  citing  the 
text;  Paul  V,  Cragnaz,  25  Nev.  293, 


320,  47  L.R.A.  540;  Exchange  Tel. 
Co.  v.  Gregory,  [1896]  1  Q.  B.  147; 
Hartman  v.  Pittsburgh  I.  Co.,  159 
Pa.  442;  Leach  v.  New  York,  etc. 
R.  Co.,  89  Hun  377;  Butler  v.  Man- 
hattan R.  Co.,  143  N.  Y.  417,  5 
Am.  Neg.  Gas.  364,  42  Am.  St.  738, 
26  L.R.A.  46;  Goebel  v.  Hough,  26 
Minn.  252;  Terre  Haute  v.  Hudnut, 
National  Fibre  Board  Co.  v.  Lewis- 
ton  &  A.  E.  L.  Co.,  supra;  Gunter 
V.  Astor,  4  Moore  12. 

66  The  Bodlewell,  [1907]  Prob. 
Div,  286;  Gushing  v.  Seymour,  30 
Minn.  301.  In  this  case  plaintiff 
had  entered  into  contracts  for 
threshing  grain  before  the  conver- 
sion of  the  machine  which  he  was 
to  use  in  executing  them. 

In  Jones  v.  Call,  96  N.  C.  337, 
60  Am.  Rep.  416,  a  manufacturer 
of  machines,  unlawfully  prevented 
from  carrying  on  his  business,  re- 
covered damages  to  the  extent  that 
the  machines  then  contracted  for 
would  have  yielded  him  a  profit. 
The  estimated  profits  beyond  that 
point  were  too  speculative  and  re- 
mote. See  Clements  v.  State,  77 
N.  C.  142,  doubted  in  the  preceding 
qase, 


§  TOJ 


COMPENSATION. 


207 


of  damages  than  in  respect  to  any  other  branch  of  a  cause. 
Juries  are  allowed  to  act  upon  probable  and  inferential  as  well 
as  direct  and  positive  proof.  And  when  from  tlie  nature  of  the 
case  the  amount  of  the  damages  cannot  be  estimated  with  cer-' 
tainty,  or  only  a  part  of  them  can  be  so  estimated,  no  objection 
is  perceived  to  placing  before  the  jury  all  the  facts  and  circum- 
stances of  the  case  having  any  tendency  to  show  damages  or 
their  probable  amount,  so  as  to  enable  them  to  make  the  most 
intelligible  and  accurate  estimate  which  the  nature  of  the  case 
will  permit.  This  should,  of  course,  be  done  with  such  instruc- 
tions and  advice  from  the  court  as  the  circumstances  may  re- 
quire and  as  may  tend  to  prevent  the  allowance  of  such  dam- 
ages as  may  be  merely  possible,  or  too  remote  or  fanciful  in 
their  character  to  be  safely  considered  as  the  result  of  the  in- 
jury.^'    If  the  business  interfered  with  was  conducted  under 


67  People  V.  Schwartz,  151  111. 
App.  190;  Hoober  v.  New  Holland 
W.  Co.,  43  Pa.  Super.  262;  Asia  v. 
Pool,  47  Wash.  515;  Bigbee  F.  Co. 
V.  Scott,  3  Ala.  App.  385;  Allison  v. 
Chandler,  11  Mich.  542.  In  this  case 
Christiancy,  J.,  said:  "Since,  from 
the  nature  of  the  case  (one  of  in- 
jury to  business),  the  damages  can- 
not be  estimated  with  certainty  and 
there  is  risk  of  giving  by  one  course 
of  trial  less,  and  by  the  other  more, 
than  a  fair  compensation — to  say 
nothing  of  justice — does  not  sound 
policy  require  that  the  risk  should 
he  thrown  upon  the  wrong-doer  in- 
stead of  the  injured  party?  How- 
ever this  question  may  be  answered, 
we  cannot  resist  the  conclusion  that 
it  is  better  to  run  a  slight  risk  of 
giving  somewhat  more  than  actual 
compensation  than  to  adopt  a  rule 
which,  under  the  circumstances  of 
the  case,  will,  in  all  reasonable  prob- 
ability, preclude  the  injured  party 
from  the  recovery  of  a  large  propor- 
tion of  the  damages  he  has  actually 
sustained  from  the  injury,  though 
the  amount  thus  excluded  cannot  be 


estimated  with  accuracy  by  a  fixed 
and  certain  rule."  Gilbert  v.  Ken- 
nedy, 22  Mich.  129.  See  Jenkins  v. 
Pennsylvania  R.  Co.,  67  N.  J.  L. 
331,  11  Am.  Neg.  Rep.  464,  57 
L.R.A.  309,  stated  in  §  1059,  where 
other  cases  to  the  same  purport  are 
cited;  Chalupa  v.  Tri-State  L.  Co., 
92  Neb.  477;  Cosgriff  v.  Miller,  10 
Wyo.  190:  Thayer-M.  R.  Co.  v. 
Campbell,  164  Mo.  App.  8;  Virtue 
V.  Creamery  P.  Mfg.  Co.,  123  ]\Iinn. 
17;  Richmond  v.  Dubuque,  etc.  R. 
Co.,  33  Iowa  422.  See  Howe  Mach. 
Co.  V.  Bryson,  44  Iowa  159,  24  Am. 
Rep.  735;  Fultz  v.  WycofT,  25  Ind. 
321;  Flick  v.  Wetherbee,  20  Wis. 
392;  Heard  v.  Ilolman,  19  C.  B. 
(N.  S.)  1;  Simmons  v.  Brown,  'i 
R.  I.  299,  73  Am.  Dec.  66;  McKnight 
v.  Ratcliff,  44  Pa.  156:  The  Narra- 
gansett,  Olcott,  388;  Douty  v.  Bird, 
60  Pa.  48;  Hanover  R.  Co.  v.  Coyle, 
55  Pa.  396;  Chapman  v.  Kirby,  49 
111.  211;  Ludlow  v.  Yonkers,  43 
Barb.  493;  Todd  v.  Minneapolis,  etc. 
R.  Co.,  39  Minn.  186;  Swain  v. 
Sdiioflelin,  134  N.  Y.  471,  18  L.R.A. 
385;   Dickinson  v.   Hart,   142  N.   Y. 


268  SUTHERLAND    ON    DAMAGES.  [§    70 

a  license  granted  by  public  officers  and  the  issue  of  a  new  license 
depends  upon  their  discretion  profits  which  might  have  been 
realized  for  a  time  beyond  the  existence  of  the  license  in  force 
when  the  wrong  was  done  cannot  be  recovered.®*  A  person  who 
has  been  forcibly  prevented  from  fishing  in  public  waters  may 
show  the  quantity  of  fish  he  might  have  caught,  the  value  of  the 
same  and  the  probable  profits  he  would  have  made.  As  an 
aid  in  determining  these  questions  he  may  prove  the  quantity 
of  fish  caught  in  the  waters  from  which  he  was  excluded  by 
the  defendant.®^ 

§  71.  Chances  for  prizes  and  promotions.  In  an  action  against 
a  carrier  for  negligently  delaying  the  transportation  of  models 
made  to  compete  for  a  prize  until  the  award  was  made  the 
judges  differed  as  to  the  measure  of  damages,  and  it  was  left 
undecided  whether  they  should  be  given  for  the  labor  and  mate- 
rials used  in  making  the  models  or  whether  the  chance  for 
the  prize  might  be  taken  into  consideration.  Patteson,  J., 
favored  the  latter:  ''The  goods  were  made  for  a  specific  pur- 
pose, which  had  been  defeated  by  the  negligence  of  the  defend- 
ant, and  they  have  become  useless."  Erie,  J.,  said:  "I  have 
great  doubts  whether  that  chance  was  not  too  remote  and  con- 
tingent to  be  the  subject  of  damages.'''"  A  like  view  has  been 
held  in  Texas.'''^  The  unsatisfactory  condition  in  which  the  Eng- 
lish law  was  left  by  the  case  referred  to  has  been  materially 
lessened  by  a  recent  case  in  the  Court  of  Appeal,  in  the  deci- 
sion of  which  the  judges  were  agreed.  The  plaintiff  sued  upon 
a  contract  giving  her  the  opportunity  of  appearing  in  a  com- 
petition in  which  considerable  prizes  were  offered.  It  was 
held  that  the  damages  were  not  too  remote,  neither  were  they 
of  such  a  nature  as  to  be  impossible  of  ascertainment.     It  was 

183;  Malone  v.  Weill,  67  App.  Div.  Ass'n,    138    Cal.    632;    Smalling    v. 

(N.  Y.)    169;   Ingram  v.  Lawson,  6  Jackson,    133    App.    Div.     (N.    Y.) 

Bing.  N.   C.   212;    Savery  v.  Inger-  382.     See  §  1289. 

soil,  46  Hun  176;   Wood  v.  Monte-  70  Watson    v.    Ambergate    R.    Co., 

leone,  118  La.  1005;  Holden  v.  Lake  1.3  Jiir.  448. 

Co.,  53  N.  H.  552.  71  Ft.  Worth,  etc.  R.  Co.  v.  Ikard 
68  Porter  v.  Johnson,  96  Ga.  154.  (Tex.  Civ.  App.),  140  S.  W.  502,  cit- 
es Pacific  S.  W.  Co.  V.  Alaska  P.'s  ing  the  text. 


§    Tl]  COMPENSATION.  200 

for  the  jury  to  fix  them  according  to  their  good  sense.'^  In  a 
Pennsylvania  case  the  plaintiff  had  delivered  to  the  defendants, 
who  were  carriers,  a  box  containing  plans  and  specifications 
to  be  forwarded  to  a  committee  at  a  distant  place,  who  had 
offered  a  premium  to  the  successful  competitor  for  the  best 
plans  for  a  building.  In  consequence  of  the  defendants'  negli- 
gence they  were  not  delivered  at  their  destination  until  after 
the  premium  had  been  awarded.  There  was  no  evidence  on 
the  part  of  the  plaintiff'  to  show  that  there  was  any  probability 
that  his  plans  would  have  been  adopted,  and  there  was  some 
evidence  to  the  contrary.  On  this  gi-ound  it  was  held  the  plain- 
tiff was  entitled  to  only  nominal  damages.  But  it  was  held 
that  such  proof  was  admissible  to  show  the  value  of  his  oppor- 
tunity to  compete,  and  that  the  loss  of  this  was  the  direct  and 
immediate  effect  of  the  negligence  complained  of.''^^ 

Damages  cannot  be  recovered  against  a  telegraph  company 
because  the  inaccurate  transmission  of  a  message  prevented  a 
horse  from  being  entered  in  competition  for  a  purse,'*  but  it  is 
otherwise  as  to  the  loss  of  profits  from  a  prospective  contract  for 

72  Chaplin  v.  Hicks,   [1911]   2  K.  give  effect  to  the  consideration  that 

B.  786.     It  was  said  by  one  of  the  the  plaintiff's  chance  is  only  one  out 

judges:  Where  by  a  contract  a  man  of   four   and   that   they   cannot   tell 

has  a  right  to  belong  to  a  limited  whether  she  would  have  ultimately 

class  of  competitors,  he  is  possessed  proved  to  be  the  winner.     But  hav- 

of    something    of    value,    and    it    is  ing  considered  all  tliis  they  may  well 

the  duty  of  the  jury  to  estimate  the  think  that  it  is  of  considerable  pe- 

pecuniary   value   of  that  advantage  cuniary   value   to   have  got   into   so 

if  it  is  taken  from  him.     The  pres-  small  a  class,  and  they  must  assess 

ent  case  is  a  typical  one.     From  a  the   damages   accordingly.      Two   of 

body    of    6000,    who    sent    in    their  the  judges  distinguished  Sapwell  v. 

photographs,   a  smaller  body  of  50  Bass,  [1910]  2  K.  B.  486,  stated  in 

was  formed,  of  which  the  plaintiff  §  61. 

was   one,    and   among   that   smaller  73  Adams  Exp.  Co.  v.  Egbert,   36 

body  twelve  prizes  were  allotted  for  Pa.  360,  72  Am.  Dec.  382. 

distribution;    by   reason   of   the  de-  74  Larsen    v.    Postal    Tel.-C.    Co.. 

fendant's  breach  of  contract  she  lost  ]')0  Iowa  748;   Cain  v.  VoUmcr,  lil 

all   the   advantage   of  being   in   the  Idaho    163,     32    L.R.A.(N.S.)     38; 

limited  competition,  and  she  is  en-  Western    U.    Tel.    Co.    v.    Crall,    30 

titled  to  have  her  loss  estimated.  I  Kan.  580;  Hessee  v.  Columbus,  etc. 

cannot  lay  down  any  rule  as  to  the  R.  Co.,  58  Ohio  St.  167;   Bonnet  v. 

measure  of  damages  in  such  a  case;  Galveston,  etc.   R.  Co.,  89  Tex.  72. 

this  must  be  left  to  the  good  sense  Contra,   Gulf,   etc.    R.   Co.   v.   .lolin, 

of  the  jury.     They  must,  of  course,  9  Tex.  Civ.  App.  342. 


270  SUTHERLAND    ON    DAMAGES.  [§71 

services.'^  The  fact  that  an  injured  person  was  in  the  line 
of  promotion  from  the  position  of  fireman  to  engineer  cannot 
be  considered  in  awarding  him  damages/^  but  promotion  under 
civil  service  rules,  though  conditioned  upon  showing  qualifica- 
tions, is  not  too  remote.''"''  A  person  who,  in  connection  with 
others,  has  arranged  for  the  capture  of  one  accused  of  crime 
and  for  whose  arrest  a  reward  has  been  offered  may  recover 
the  amount  of  the  reward  from  a  telegraph  company  which 
negligently  failed  to  deliver  a  message  relating  to  the  cap- 
ture if  the  jury  find  that  the  arrest  would  have  been  made  but 
for  the  negligence.'^  The  defendant  failed  to  deliver  to  the 
plaintiff'  a  message  sent  him  by  the  comptroller  of  the  cur- 
rency :  "Would  you  accept  receivership  of  a  bank  named  ? 
Bond  $35,000;  compensation  $200  per  month,  subject  to  future 
modification."  Because  there  would  have  been  no  binding 
obligation  if  the  message  had  been  received  and  an  affirmative 
answer  sent  to  make  the  appointment  there  could  not  be  a 
recovery.'''^  The  defeat  of  a  candidate  of  office  because  of  a 
slander  is  a  damage  too  remote,  uncertain  and  speculative  to 
justify  a  recovery.^" 

§  72.  Contingent  advantage.  The  fact  that  the  value  of  a 
contract  or  the  advantage  to  be  derived  from  it  is  contingent — 
that  is,  that  the  expected  advantage  depends  on  the  concur- 
rence of  circumstances  subsequently  to  transpire  and  which 
may  by  possibility  not  happen — is  not  an  insuperable  objec- 
tion to  recovering  damages  for  its  loss.      The  chance,  so  to 

75  Stumm  V.  Western  U.  Tel.  Co.,  have  any  probative  force  on  the 
140  Wis.  528.  question  of  damages."     Marshall  v. 

76  Brown  v.  Chicago,  etc.  R.  Co.,  Dalton  P.  Mills,  82  Vt.  489,  24 
64  Iowa  652,  14  Am.  Neg.  Cas.  654.  L.R.A.(N.S.)    128. 

But  see  ch.  36.  77  Williams    v.    Spokane    Falls    & 

"Testimony    by    an    injured    serv-  N.   R.   Co.,   42   Wash.   597. 

ant  that  by  his  experience  in  hold-  78  McPeek  v.  Western  U.  Tel.  Co., 

ing  positions   of  lower  grades  in  a  107    Iowa    356,    5    Am.    Neg.    Rep. 

particular   line  of  work   he   is   cap-  314,  20  Ky.  L.  Rep.  171,  70  Am.  St. 

able  of  doing  the  work  of  a  higher  205,   43   L.R.A.   214.     But   compare 

position   than   he   ever   held,   carry-  Smitha  v.  Gentry,  42  L.R.A.  302. 

ing  more  pay  than  he   was  receiv-  79  Walser  v.  Western  U.  Tel.  Co., 

ing  when  injured,  standing  alone,  is  114  N.  C.  440. 

too  problematical  and  uncertain  to  80  Field  v.  Colson,  93  Ky.   347. 


§    74]  COMPENSATION. 


271 


speak,  of  obtaining  that  advantage  by  performance  of  the  con- 
tract and  the  conjunction  of  the  necessary  subsequent  facts 
may  be  valuable.  The  nature  of  the  contingency  must  be 
considered.  If  it  is  purely  conjectural  and  cannot  be  reason- 
ably anticipated  to  happen  in  the  usual  course  of  things  it  is 
too  uncertain.  There  must  be  proof  legally  tending  to  show 
and  sufficient  to  satisfy  the  jury  that  it  would  happen."  The 
chance  that  a  father  would  pay  a  son's  debt  to  procure  his  re- 
lease from  custody  has  been  held  capable  of  cstimation.^^  The 
advantages  resulting  from  the  use  of  trading  stamps  as  a  means 
of  increasing  trade  are  so  contingent  that  they  cannot  form  a 
basis  on  which  to  rest  a  recovery  for  the  breach  of  a  contract 
to  supply  them.  In  lieu  of  compensation  based  thereon  the 
court  directed  the  recovery  of  the  sum  expended  in  preparation 
f(jr  carrying  on  business  in  connection  with  the  use  of  the 
stamps.^^  It  is  to  be  assumed  where  contracts  are  required 
to  be  let  to  the  lowest  bidder  that  the  discretionary  power  vested 
in  a  public  officer  to  refuse  to  do  so  will  not  be  exercised; 
hence  a  person  who  has  made  the  lowest  bid  may  recover  from 
a  surety  company,  for  its  failure  to  file  his  bond  or  to  notify 
him  of  its  decision  not  to  do  so,  for  the  loss  of  the  contract 
he  might  have  secured.®* 

§  73.  Uncertain  mitigation  of  breach  of  marriage  promise. 
In  assessing  damages  for  the  breach  of  a  promise  of  marriage 
it  would  not  be  a  legitimate  subject  for  the  jury  to  consider 
the  consequences  to  the  plaintiff,  in  mitigation  of  damages, 
of  marrying  the  defendant  and  thereby  forming  an  unhappy 
alliance  by  reason  of  a  want  of  that  love  and  affection  a  hus- 
band should  bear  his  wife.®^ 

§  74.  Failure  to  provide  sinking  fund.  The  damages  to  a 
creditor  for  the  failure  of  a  municipal  corporation  to  fulfill  its 
contract  to  provide  a  sinking  fund  as  security  for  the  debt  are 
not  capable  of  legal  computation ;  there  is  no  legal  standard  by 

81  Occidental  C.  M.  Co.  v.  Com-  83  Sperry  v.  O'Neill,  185  Fed.  231. 
stock  T.  Co.,  125  Fed.  244,  quoting       ]07  C  C.  A.  337. 

the  text;  Maclay  v.  United  States,  84  Hicks  v.  National  S.   Co.,   169 

43  Ct.  of  Cls.  90.     See  §  01. 

^,1        T      T>     1    n  ^^o.  Ann.  4/9. 

82  Macrae   v.   Clarke,   L.   K.    1    C.  " 

P.  403.    See  §  71.  ^^  PiP^^  ^-  Kingsbury,  48  Vt.  480. 


272  SUTHERLAND  ON  DAMAGES.  [§  75 

which  they  can  be  fixed ;  they  are  shadowy,  uncertain  and  specu- 
lative.*^ 

Section  6. 

tile  constituents  of  compensation,  or  elements  of 

DAMAGE. 

§  75.  Elementary  limitation  of  damages.  The  elementary 
limitation  of  recovery  to  a  just  indemnity  for  actual  injury, 
estimated  upon  the  natural  and  proximate  consequences  of  the 
injurious  act,  fixes  a  logical  boundary  of  redress  in  the  form 
of  compensation  and  furnishes  a  general  test  by  which  any 
particulars  may  be  included  or  rejected.  Recovery  beyond 
nominal  damages  requires  that  actual  injury  be  shown  except 
in  those  casess  where  there  are  no  pecuniary  elements  or  meas- 
ure and  the  amount  of  the  recovery  is  necessarily  left  to  the 
discretion  of  the  jury,  as  in  cases  of  personal  injury  or  defama- 
tion of  character.*^  What  are  the  elements  of  injury  which  may 
be  compensated  ?  This  inquiry  is  a  legal  one  and  must  be  de- 
termined by  the  court;  where  the  details  are  capable  of  pecuni- 
ary valuation  the  law  affords  some  standard  for  measuring 
compensation  for  them.  The  elements  of  damage  are  always 
correlative  to  the  right  violated  by  the  act  complained  of;  and 
the  amount  of  compensation,  whether  measured  by  legal  rules 
or  referred  to  the  discretion  of  the  jury,  must  depend  on  the 
nature  of  the  right  and  the  mode,  incidents  and  consequences 
of  the  violative  act.**    Each  party  to  a  contract  has  a  legal  right 

86  Memphis  v.  Brown,  20  Wall  liealth  of  the  apprentice  had  suf- 
289,  22  L.  ed.  264.  fered     by     the     master's     improper 

87  In  Scott  V.  Williams,  1  Dev.  treatment;  but  it  did  not  appear  to 
376,  an  action  for  assault  and  bat-  what  extent  it  had  been  injured, 
tery  and  false  imprisonment,  its  ob-  It  was  ruled  not  to  be  error  to  in- 
ject being  to  determine  whether  the  struct  the  jury  that  they  might  de- 
plaintiff  who  was  held  as  a  slave  termine  if  there  was  damage  from 
was  not  a  freeman,  more  than  nomi-  that  cause  and  fix  the  amount, 
nal  damages  were  given  though  88  If  land  is  injured  by  a  wrong- 
there  seems  to  have  been  no  proof  ful  act  or  taken  under  the  power 
of  the  actual  damages.  of  eminent  domain   the  owner  may 

In  Creech  v.  Creech,  98  N.  C.  155,  have  his  damages  fixed  with  regard 
an  action  upon  an  apprentice  bond,  to  its  adaptability  to  any  use  to 
evidence  was  given  to  show  that  the       which  it  may  be  applied;  he  is  not 


§   70] 


COMPENSATION. 


273 


to  pei-foriiiaiice  by  the  other  according  to  its  legal  import  and 
effect.  Any  default  is  a  violation  of  that  right,  'i'ho  injured 
party  is  entitled  to  a  measure  of  compensation  which  will 
place  him  in  as  good  condition  as  if  the  contract  had  been  ful- 
filled. In  other  words,  all  the  natural  and  proximate  results 
of  the  act  complained  of  will  be  considered  with  a  view  to 
giving  him  compensation  for  all  gains  prevented  and  all  losses 
sustained.*^  The  particular  stipulations  of  the  contract  and 
the  alleged  breach  will  circumscribe  the  inquiry,  and  the  facts 
establishing  the  breach  and  its  consequences  will  constitute  its 
subjects. 

§  76.  Damages  for  nonpayment  of  or  failure  to  loan  money. 
On  a  contract  for  the  mere  payment  of  money  the  unpaid  prin- 
cipal, together  with  the  stipulated  or,  after  maturity,  the  lawful 
rate  of  interest  is  the  measure  of  damages.  It  is  the  invariable 
measure  of  recovery  in  a  creditor's  action  against  his  debtor.^" 
The  failure  to  pay  a  debt  when  due  may  disappoint  the  creditor 
and  embarrass  him  in  his  affairs  and  collateral  undertakings; 
he  may  consequentially  suffer  losses  for  which  interest  is  a 


restricted  to  such  damages  as  it 
sustained  for  the  purpose  it  was 
used  when  the  injury  was  done  or 
it  was  taken.  Boom  Co.  v.  Patter- 
son, 98  U.  S.  403,  25  L.  ed.  206; 
Ft.  Worth,  etc.  R.  Co.  v.  Wallace, 
74  Tex.  581;  Same  v.  Hogsett,  67 
Tex.  685.     See  eh.  26. 

The  damages  for  the  loss  of  a 
grove  wholly  situated  upon  a  part 
of  a  farm  which  is  separated  from 
the  larger  tract  included  in  it  by  a 
railroad  are  to  be  awarded  with 
regard  to  its  usefulness  to  the  whole 
farm.  Brooks  v.  Chicago,  etc.  R. 
Co.,  73  Iowa  179. 

89Hurxthal  v.  Boom  Co.,  53  W. 
Va.  87,  97  Am.  St.  954,  citing  the 
text. 

90  Board  of  Directors  v.  Roach, 
174  Fed.  949,  90  C.  C.  A.  453; 
Baumgarten  v.  Alliance  Assur.  Co., 
159  Fed.  275;  Bixby-T.  L.  Co.  v. 
Evans,  167  Ala.  431,  citing  the  text; 
Suth.  Dam.  Vol.  I.— 18. 


Lightfoot  V.  Murphy,  47  Tex.  Civ. 
App.  112;  Malin  v.  McCutcheon,  33 
Id.  387;  Fletcher  v.  Tayleur,  17  C. 
B.  21;  Short  v.  Skipwith,  1  Brock. 
103;  Bender  v.  Froraberger,  4  Dall. 
436,  1  L.  ed.  898;  Loudon  v.  Taxing 
Dist.,  104  U.  S.  771,  26  L.  ed.  923; 
H  >blit  V.  Bloomington,  71  111.  App. 
204;  Greene  v.  Goddard,  9  Mete. 
(Mass.)  212,  232;  Ladies'  B.  Ass'n 
V.  Bobbins,  1  Mart.  Ch.  134,  152; 
Western  W.  &  P.  Co.  v.  West,  [1892] 
1  Ch.  271,  277;  South  African  Ter- 
ritories V.  Wallington,  [1898]  .App. 
Cas.  309;  Henderson  v.  Bank,  25 
Ont.  641 ;  Bethel  v.  Salem  I.  Co.,  93 
Va.  354,  33  L.R.A.  602;  Arnott  v. 
Spokane,  6  Wash.  442;  Blue  v. 
Capital  Nat.  Bank,  145  Ind.  518; 
Morrill  v.  Weeks,  70  N.  H.  178. 

The  plaintiff  may  not  recover  for 
lost  time  in  attending  to  litigation. 
Mutual  Ins.  Co.  v.  Chambliss,  131 
Ga.  60. 


274  SUTHERLAND    ON    DAMAGES.  [§    76 

very  inadequate  compensation;  but  they  are  remote  and  do 
not  result  alone  from  the  default  of  his  debtor.  Money,  like 
the  staples  of  commerce,  is,  in  legal  contemplation,  always  in 
market  and  procurable  at  the  lawful  rate  of  interest;  and  the 
same  principle  which  limits  a  disappointed  vendee's  recovery 
against  his  defaulting  vendor  to  the  market  value  of  the  com- 
modity which  is  the  subject  of  his  contract  restricts  the  cred- 
itor to  the  principal  and  interest.  The  practical  difficulty  to 
a  creditor  of  borrowing  the  money,  where  the  debtor  is  with- 
holding the  sum  he  owes  and  which  is  wanted,  and  that  of  a 
vendee  in  making  a  new  purchase,  after  he  has  paid  the  de- 
faulting vendor  for  the  goods  needed,  is  the  same.  N^o  party's 
condition  in  respect  to  the  measure  of  damages  should  be 
worse  for  having  failed  in  his  engagement  to  a  person  whose 
affairs  are  embarrassed  than  if  the  same  result  had  occurred 
with  one  in  prosperous  or  affluent  circumstances.^^  The  utmost 
liability  of  a  person  who  breaches  his  contract  to  loan  money, 
in  the  absence  of  notice  of  special  circumstances,  is  for  the 
increased  interest  the  other  person  was  obliged  to  pay.^^ 

§  77.  Greater  damages  than  interest  for  failure  to  pay  or 
loan  money.  Where  the  obligation  to  pay  money  is  special  and 
has  reference  to  other  objects  than  the  mere  discharge  of  a 
debt,  as  where  it  is  agreed  to  be  done  to  facilitate  trade  and 
to  maintain  the  credit  of  the  promisee  in  a  foreign  country, 
to  take  up  commercial  paper,  pay  taxes,  discharge  liens,  relieve 
sureties,  or  for  any  other  supposable  ulterior  object,  damages 
beyond  interest  for  delay  of  payment,  according  to  the  actual 
injury,  may  be  recovered.^^     The  contract  implied  between  a 

91  Masterton  v.  Mayor,  7  Hill  61 ;  the    nonliability    of    the    defaulting 

Lowe  V.  Turpie,  147   Ind.  652,   677,  party  for  interest  does  not  affect  the 

37    L.R.A.    233,    quoting    the    text;  rule.     See  Dody  v.   State  Bank,   82 

Smith  V.  Parker,  148  Ind.  127;  Fox  Kan.  406. 

V.  Poor  Ridge  etc.  T.  R.  Co.,  8  Ky.  92  New  York  L.  Ins.  Co.  v.  Pope, 

L.  Rep.  427   (Ky.  Super.  Ct.)  ;  Hob-  139  Ky.  567;    Gooden  v.  Moses,  99 

lit  V.  Bloomington,  71  111.  App.  204;  Ala.    230;     Thorp    v.    Bradley,    75 

McGee  v.  Wineholt,  23  Wash.  748;  Iowa    50;    Luce    v.    Hoisington,    56 

Western   U.   Tel.   Co.   v.   Westmore-  Vt.  436;    Coles  v.   Standard  L.  Co., 

land,     151     Ala.     319;     Chicago     v.  150  N.  C.   183. 

Duffy,    117    111.    App.    261,    quoting  93  Bixby-T.   L.   Co.   v.   Evans,   167 

the  entire  section,  and  holding  that  Ala.  431,  29  L.R.A.  (N.S.)    194,  cit- 


§  T7] 


COMPENSATION. 


275 


bank  and  its  depositors  is  that  the  former  will  hold  tlio  funds 
and  ])SLj  them  out  on  the  order  of  the  latter;  for  failing  so  to 
do  the  bank  is  liable  either  in  tort  or  upon  contract. °*  If  the 
action  be  brought  on  the  contract  and  the  failure  to  pay  was 


ing  the  text;  O'Grady  v.  Stotts  City 
Bank,  106  Mo.  App.  366,  citing  the 
text;  Scheele  v.  Lafayette  Bank,  120 
Id.  611  (loss  of  insurance)  ;  Holt 
V.  United  Security  L.  Ins.  Co.,  76 
N.  J.  L.  585,  21  L.R.A.(N.S.)  691; 
Bohemian-Am.  VVorkingmen's  G. 
Ass'n  V.  Northern  Bank  (N.  Y. 
Misc.),  120  Supp.  134;  Pardee  v. 
Douglas,  122  App.  Div.  (N.  Y.) 
395  (increased  cost  of  doing  the 
work  for  which  the  loan  was  to  be 
made)  ;  Hanna  v.  Chicago,  etc.  R. 
Co.,  89  Kan.  503. 

In  Treanor  v.  New  York  B's.  Co., 
51  N.  Y.  Misc.  607,  in  reliance  on 
a  promise  to  loan  money  to  furnish 
a  place  to  do  business  in,  the 
plaintiff  secured  a  lease,  paid  two 
months'  rent,  secured  the  good  will 
of  the  business,  and  at  the  expira- 
tion of  two  months  bought  a  re- 
lease from  his  landlord.  He  re- 
covered the  sums  paid  for  the  good 
will  and  for  the  release,  but  was 
denied  a  recovery  for  the  rent  paid 
on  the  theory  that  the  premises 
were  worth  that  sum. 

In  Donshkess  v.  Burger  B.  Co., 
20  App.  Div.  (N.  Y.)  375,  one  con- 
sequence of  the  failure  to  loan 
money  payable  on  demand  to  remove 
a  lien  on  property  was  the  foreclos- 
ure of  the  lien.  The  damages  were 
measured  by  the  difference  between 
the  value  of  the  property  and  the 
amount  of  the  lien,  and  the  liabil- 
ity of  the  owner  to  the  holder  of 
the  lien  for  the  stipulated  expense 
of  the  foreclosure  procedings. 

In  Banwur  v.  Levenson,  171  Mass. 
1,  the  breach  of  a  contract  to  apply 
the    defendant's    money    in    such    a 


way  as  to  release  the  plaintiff's 
property  from  attachment  and  liim 
from  liability  for  debts  of  three 
times  the  amount  of  money  to  be 
used  was  attended  with  liability  for 
tlie  difference  between  the  wliolc 
amount  of  the  debts  which  the  de- 
fendant was  to  discharge  and  the 
sum  he  was  to  pay  the  creditors, 
and  which  the  plaintiff  was  to  pay 
him  to  redeem  the  property.  The 
defendant  was  also  liable  for  any  of 
the  plaintiff's  property  received  un- 
der the  contract. 

A  mortgagee  who  breaches  his 
contract  to  pay  prior  mortgages 
given  by  the  mortgagor  to  others 
and  the  taxes  on  the  mortgaged 
property  by  procuring  the  assign- 
ment of  one  of  these  mortgages  to 
himself  and  permitting  the  foreclos- 
ure of  the  other,  causing  the  loss  of 
the  equity  of  redemption,  is  charge- 
able with  the  difference  between  the 
value  of  that  equity  and  the  amount 
due  on  the  mortgage,  and  a  decree 
may  pass  ordering  him  to  discharge 
both  mortgages.  Page  v.  Franklin, 
214  Mass.  552. 

Loss  of  business  is  too  remote  to 
be  a  ground  of  damage  for  the 
breach  of  an  agreement  to  extend 
an  existing  credit.  LefRovits  v. 
First  Nat.  Bank,  152  Ala.  521. 

94  Columbia  Nat.  Bank  v.  Mac- 
Knight,  29  App.  D.  C.  580;  Calla- 
han V.  Bank,  69  S.  C.  374;  Citizens' 
Nat.  Bank  v.  Importers'  &  T.'s 
Bank,  119  N.  Y.  195;  Burroughs  v. 
Tradesmen's  Nat.  Bank,  87  Hun  6, 
affirmed  without  opinion,  156  N.  Y. 
663. 


276 


SUTIIEELAND    ON    DAMAGES. 


[§    '^7 


not  wilful  and  no  special  damages  are  proved  and  the  check 
has  been  paid  only  nominal  damages  can  be  recovered,^^  imless 
the  depositor  was  a  trader,  in  which  case  injury  to  his  credit 
may  be  inferred  and  substantial  compensation  allowed  without 
further  proof. ^^  If  the  depositor  is  not  a  trader  on  the  wrong- 
ful refusal  to  pay  him  in  person  he  can  recover  only  interest 
on  the  amount.^'  He  cannot  recover  for  injury  to  his  credit 
because  no  publicity  is  given  to  the  refusal  to  pay.^^  Though 
payment  is  refused  with  knowledge  of  the  use  to  be  made  of 
the  money  there  cannot  be  a  recovery  for  mental  suffering,  the 
action  being  for  breach  of  the  contract.^^  In  the  absence  of 
proof  of  special  damage  a  farmer  whose  check  is  not  honored 
can  recover  only  a  nominal  sum,^  in  addition  to  the  protest  fees.^ 
But  a  depositor  who  proves  special  damage  to  himself  as  a 
stock  and  share-broker  and  stock-jobber  may  recover  very  sub- 
stantial damages,  though  he  is  not  a  trader.^ 

Under  various  circumstances   an   enlarged  liability  results 
from  the  failure  to  pay  checks  of  customers  who  have  provided 


95  Burroughs  v.  Bank,  supra. 

96  Wiley  V.  Bunker  Hill  Nat. 
Bank,  183  Mass,  495. 

97  Henderson  v.  Bank,  25  Ont. 
641. 

98  Hanna  v.  Drovers'  Nat.  Bank, 
92  111.  App.  611;  Carsey  v.  Farmer, 
117  Ky.  826. 

99  Smith  V.  Sanborn  State  Bank, 
147  Iowa  640,  30  L.R.A.(N.S.)  517. 
Compare  §  95. 

1  Bank  of  New  South  Wales  v. 
Milvain,  10  Vict.  L.  R.  (law)  3. 
But  more  than  nominal  damages 
have  been  recovered  for  the  refusal 
to  pay  the  check  of  a  depositor  who 
was  not  a  trader,  though  no  special 
damages  were  shown.  Columbia 
Nat.  Bank  v.  MacKnight,  29  App. 
D.  C.  580. 

2  Third  Nat.  Bank  v.  Ober,  178 
Fed.  678,  102  C.  C.  A.  178. 

3  Dean  v.  Melbourne  Stock  Ex- 
change A.  &  B.  Co.,  16  Vict.  L.  R. 
403.     In  this  case  the  plaintiff  was 


.rendered  unable  to  meet  his  busi- 
ness engagements  and  was  suspend- 
ed by  a  stock  exchange  of  which  he 
was  a  member,  and  suffered  damage 
to  his  reputation.  A  judgment  for 
2,900i.  was  sustained. 

In  Spearing  v.  Whitney-Cent. 
Nat.  Bank,  129  La.  607,  the  court, 
in  view  of  the  facts  that  the  dis- 
honor of  the  plaintiff's  checks  was 
made  known  to  bankers  and  other 
business  men  in  several  cities  and 
in  the  town  in  which  he  resided, 
fixed  his  damages  at  $300,  after 
making  allowance  for  the  defend- 
ant's efforts  to  repair  the  injury 
done. 

A  trader  originally  meant  a  shop- 
keeper, a  tradesman;  but  now  it 
includes  all  business  men.  Any 
man  engaged  in  business  may  re- 
cover temperate  damages  for  the 
dishonor  of  his  check  without  prov- 
ing special  damages.  Peabody  v. 
Citizens'  State  Bank,  98  Minn.  302. 


§  T7] 


COMPENSATIOISr. 


277 


funds  to  meet  them,  or  to  loan  money  as  agreed ;  *  in  such 
cases  the  business  standing  and  especially  the  credit  of  the 
parties  may  be  impaired.*  In  one  such  case  for  refusal  to  pay 
a  check  of  48Z.  the  jury  gave  a  verdict  of  500Z.  damages,  and 
there  was  no  evidence  that  special  damage  had  been  sustained. 
This  was  deemed  excessive  and  was  reduced  by  consent  to  200Z.^ 


4  A  bank  agreed  to  advance  monej' 
to  a  customer  with  knowledge  of 
the  use  he  designed  to  make  of  it, 
and  subsequently  refused  to  do  so. 
He  was  unable  to  procure  the  money 
elsewhere  and  was  obliged  to  aban- 
don his  enterprise.  There  was  a  re- 
covery of  the  actual  damages  sus- 
tained. Manchester  &  0.  Bank  v. 
Cook,  49  L.  T.  Rep.  674. 

5  Metropolitan  S.  Co.  v.  Garden 
City  B.  &  F.  Co.,  114  111.  App. 
318;  Third  Nat.  Bank  v.  Ober, 
178  Fed.  678,  102  C.  C.  A.  178; 
Lorick  v.  Palmetto  Bank  &  T.  Co., 
74  S.  C.  185  (temperate  damages)  ; 
Siminoff  v.  Goodman  Bank,  18  Cal. 
App.  5  (the  rule  of  damages  is  not 
prescribed  by  the  code)  ;  Svendsen 
V.  State  Bank,  64  Minn.  40,  58  Am. 
St.  522,  31  L.R.A.  552,  citing  the 
text;  Bank  v.  Goos,  39  Neb.  437, 
23  L.R.A.  90;  Patterson  v.  Marine 
Nat.  Bank,  130  Pa.  419,  17  Am.  St. 
779;  First  Nat.  Bank  v.  Railsback, 
58  Neb.  248;  Marzetti  v.  Williams, 
1  B.  &  Ad.  415;  Birchall  v.  Third 
Nat.  Bank,  17  Phila.  139;  James 
Co.  V.  Continental  Nat.  Bank,  105 
Tenn.  1,  51  L.R.A.  255;  Fleming  v. 
Bank  of  New  Zealand,  [1900]  App. 
Cas.  577;  Winkler  v.  Citizens'  S. 
Bank,  89  Kan.  279. 

6  Rolin  v.  Steward,  14  C.  B.  595 ; 
Boyd  V.  Fitt,  14  Ir.  C.  L.  (N.  S.) 
43;  Larios  v.  Gurety,  L.  R.  5  P.  C. 
346;  Prehn  v.  Royal  Bank,  L.  R. 
5  Ex.  92;  Patterson  v.  Marine  Nat. 
Bank,  130  Pa.  419,  17  Am.  St.  779. 

In  Schaffner  v.  Ehrman,  139  111. 


109,  a  verdict  for  $400  was  sus- 
tained for  a  mistaken  refusal  to 
casli  checks  amoxmting  to  .$900. 

In  the  absence  of  proof  of  special 
damage  a  bank  whicli  failed  to  pay 
a  check  sent  it  by  mail,  solely 
through  the  negligent  mistake  of  an 
employee,  was  liable  for  "temperate 
damages;"  judgment  for  $200  was 
affirmed.  Atlanta  Nat.  Bank  v. 
Davis,  96  Ga.  334,  51  Am.  St.  139. 

On  the  dishonor  of  a  note  because 
of  the  breach  of  an  agreement  to  re- 
new it,  altliough  pecuniary  loss  was 
not  shown,  a  judgment  for  the  plain- 
tiff's expenses  and  1501.  for  general 
damages  was  sustained;  but  a  re- 
covery of  lOL  for  attorney's  ex- 
penses was  disallowed.  Dowling  v. 
Jones,  2  New  South  Wales,  359. 

In  Commercial  Nat.  Bank  v.  La- 
tham, 29  Okla.  88,  the  bank  acted 
oppressively  and  caused  the  funds 
to  be  impounded  as  those  of  an- 
other; the  plaintiff  incurred  expense 
to  the  extent  of  $69,  and  obtained  a 
judgment  for  $1000  in  addition,  as 
compensatory  damages.  The  deposit 
amounted  to  $670. 

An  award  of  $1000  was  sustained 
where  a  trader's  check  for  a  small 
sum  was  refused  payment  one  day 
and  paid  on  the  day  following,  no 
special  damage  being  shown.  Bai- 
ley V.  Bank,  6  New  South  Wales  St. 
Rep.  686. 

The  state  of  the  plaintiff's  credit 
when  his  check  was  dishonored  is 
a  material  consideration  in  deter- 
mining whether  or  not  his  recovery 


2Y8 


SUTHERLAND    ON    DAMAGES. 


[§  TT 


The  rule  of  Hadley  v.  Baxendale  is  applied  to  such  cases.' 
Bankers  at  Liverpool  by  letter  of  credit  delivered  to  a  customer 
undertook  to  accept  drafts  drawn  abroad  to  be  paid  with  his 
money  deposited  for  that  purpose.  Before  maturity  they  gave 
notice  that  they  would  be  unable  to  pay  the  drafts  at  maturity 
and  the  customer  was  put  to  the  expense  of  a  commission  to  an- 
other party  to  take  up  the  bills,  of  protesting  them  and  of  tel- 
egrams. These  were  proper  elements  of  damage.^  In  another 
case  the  defendant's  failure  to  meet  the  plaintiff's  drafts  caused 
a  suspension  of  the  latter's  business  at  one  place,  injured  it  at 
another  and  caused  the  loss  of  a  valuable  agency;  all  resulting 
losses  were  recoverable.^  The  breach  of  an  agreement  to  secure 
the  extension  of  time  for  the  payment  of  a  mortgage  involves 
the  expense  incurred  in  obtaining  another  loan.'^"  The  elements 
of  damage  for  the  non-payment  of  a  check  include  time  lost, 
expense  incurred  and  loss  of  business  sustained. ^^  The  fact 
that  the  drawer  of  an  unpaid  check  had  a  nervous  chill  in  conse- 
quence of  its  non-payment  is  too  remote.  ^^     The  arrest  and 


was  excessive.  Miles  v.  Commercial 
B.  Co.,  4  New  South  Wales  St.  Rep. 
223. 

7  Coles  V.  Standard  L.  Co.,  150 
N.  C.  183;  Parker  v.  Cunningham, 
5  Vict.  L.  R.  (law)  202,  and  cases 
cited  supra,  except  Boyd  v.  Fitt,  14 
Ir.  C.  L.  (N.  S.)  43,  in  which  it  is 
suggested  that  it  is  for  the  jury  to 
find  whether  the  damages  are  the 
natural  and  proximate  consequence 
of  the  breach  of  contract. 

8  Prehn  v.  Royal  Bank,  L.  R.  5 
Ex.  92;  Urquhart  v.  Mclver,  4 
Johns.  103;  Riggs  v.  Lindsay,  7 
Cranch  500. 

9  Boyd  V.  Fitt,  14  Ir.  C.  L.  (N. 
S.)   4.3^ 

It  is  not  according  to  the  usual 
course  of  events  that  the  refusal  of 
a  bank  to  pay  a  note  for  $517  which 
was  payable  there  out  of  a  deposit 
of  $611  should  result  in  the  entry 
of  judgment  for  over  $8,000,  and 
the  seizure  of  the  business   of  the 


maker  of  the  note.  Brooke  v. 
Tradesmen's  Nat.  Bank,  69  Hun, 
202. 

Where  a  check  has  been  dishon- 
ored the  plaintiff  may  show  as  evi- 
dence of  damage  to  his  business 
reputation  the  loss  of  a  partnership; 
but  such  loss  is  too  remote  to  be 
regarded  as  special  damage.  Dy- 
son V.  Union  Bank,  8  Vict.  L.  R. 
(law)    106. 

10  Hoch  V.  Braxmar,  109  App.  Div. 
(N.  Y.)    209. 

11  American  Nat.  Bank  v.  Morey, 
infra. 

The  expenses  recoverable  do  not 
include  attorney's  fees  or  other  ex- 
penses in  connection  with  looking 
after  the  matter  prior  to  the  com- 
mencement of  suit.  Winkler  v. 
Citizens'  S.  Bank,  89  Kan.  279. 

12  American  Nat.  Bank  v.  Morey, 
69  S.  W.  759,  58  L.R.A.  956.  As  to 
the  liability  of  telegraph  companies, 
see  §  97. 


§    77]  COMPENSATION.  279 

imprisonmeut  of  the  drawer  of  a  check  is  not  a  result  which 
may  be  considered  in  awarding  him  compensation  for  its  non- 
payment.^^ If  the  plaintiif  pleads  and  proves  he  is  a  trader 
he  may  show  a  general  impairment  of  credit  as  the  result  ot 
dishonoring  his  checks  without  alleging  special  damage;"  but 
if  loss  of  custom  and  credit  from  particular  persons  is  relied 
upon  it  must  be  specially  pleaded.^^  If  special  damages  are  not 
claimed  there  may  be  a  recovery  of  temperate  (which  are  m<jre 
than  nominal)  damages,  to  be  ascertained  by  proof  of  the  plain- 
tiff's financial  standing  and  credit.^® 

Where  a  depositor's  checks  had  been  refused  payment  four 
times  in  close  succession,  with  knowledge  that  his  deposit  was 
sufficient  to  pay  them,  the  plaintiff  recovered  damages  for  his 
actual  money  loss  because  of  the  notice  of  protest  and  expend- 
itures made  in  arranging  matters  after  he  knew  of  the  dis- 
honor of  his  checks,  substantial  damages  for  the  impairment 
of  his  credit,  notwithstanding  he  was  not  a  trader.  On  this 
feature  of  the  recovery  it  was  said  that  plaintiff  was  engaged 
in  actual  business,  and  that  it  was  in  the  course  of  that  business 
that  the  checks  had  been  drawn.  Ordinarily,  an  honest  man 
draws  checks  only  on  a  bank  where  he  has  an  account,  and 
though  sometimes  by  mistake  he  may  draw  checks  when  he 
has  overdrawn  his  account,  yet,  if  he  does  that  repeatedly, 
any  one  knowing  it  would  be  sure  to  conceive  an  unfavorable 
opinion,  not  only  as  to  his  honesty,  but  also  as  to  his  credit ;  so 

13  Bank  v.  Goos,  39  Neb.  437,  23  in  the  case  of  a  corporation,  as 
L.E.A.  90;  Western  Nat.  Bank  v.  well  as  of  an  individual,  prosuuu- 
White  (Tex.  Civ.  App.),  131  S.  W.  without  proof  of  special  damages 
828.  tliat  by  tlie  dishonor  of  its  clieck  it 

14  James  Co.  v.  Continental  Nat.  has  sustained  special  or  substantial 
Bank,   105   Tenn.   1,  51   L.R.A.   255.  damages.     While  the  wrong  was  un- 

"While  it  may  be  true  that  a  cor-  intentional,  the  refusal  to  pay  was 

poration  has  no  individual  personal  intentional  and  without  just  excuse, 

character  to  be  affected  by  a  libel,  and  the  presumption  of  legal  malice 

independent  of  its  trade  or  business,  follows."      Metropolitan    S.    Co.    v. 

its  credit  may  be  impaired  and  its  Garden   City  B.   &.  T.  Co..   114  111. 

business   injured   in   the   same   way  App.  318. 

and  to  the  same  extent  by  the  dis-  15  Fleming  v.   Bank,   [IflOO]    App. 

honor  of  its  checks  as   in  the  case  Cas.  577. 

of  an  individual  trader.     No  reason  16  Hilton  v.  Jesup  B.  Co.,  128  Ga. 

is  apparent  why  the  law   will  not  30,  11  L.R.A. (N.S.)  224. 


280  SUTHERLAND    ON    DAMAGES.  [§    '^'i^ 

that  the  act  of  a  bank  in  refusing  to  pay  its  customer's  checks 
is  something  more  than  a  mere  nominal  breach  of  the  contract 
to  be  paid  for  by  requiring  the  bank  to  make  good  the  money 
which  its  act  has  cost  him.  From  these  repeated  refusals  the 
jury  might  infer  that  the  credit  of  the  plaintiff  was  impaired 
thereby.  A  further  recovery  was  sustained  for  injured  feelings 
and  mental  anxiety  over  the  matter;  so  far  as  these  resulted 
directly  and  proximately  from  the  defendant's  acts  if  these  were 
committed  maliciously  through  wrongful  and  improper  motives. 
As  to  this  head  the  court  said:  As  we  have  seen,  when  the 
animus  is  a  question  for  the  jury  they  are  at  liberty,  when 
they  find  that  damages  are  snifered  because  of  the  tort,  not 
only  to  award  the  actual  money  damages  sustained,  but  dam- 
ages for  the  mental  suffering  and  anxiety  which  accompany 
the  material  damages  resulting  from  the  wrongful  act.  *  *  * 
If  it  can  be  fairly  inferred  that,  as  the  result  of  the  act,  the 
plaintiff,  who  was  a  prosperous  business  man  in  good  standing, 
has  suffered  damage  to  his  credit,  so  that  his  status  in  that 
regard  has  been  changed,  and  that  has  taken  place  because  of 
the  wrongful  and  intentional  act  of  the  defendant,  it  is  not  too 
much  to  infer  that,  as  a  result  of  that  act  and  the  damages 
caused  by  it,  the  plaintiff  has  suffered  anxiety  and  the  feeling 
of  humiliation  which  would  necessarily  follow  the  consciousness 
of  a  loss  of  one's  business  reputation.  The  case  is  quite  analo- 
gous to  an  action  of  slander.  It  is  quite  true  that  in  such  a 
case  as  this  the  bank  says  nothing  which  can  be  laid  hold  of 
as  the  basis  of  the  action,  but  by  its  act  it  affirms  that  the  per- 
son who  has  drawn  checks  upon  it  has  made  an  effort  to  obtain 
money  from  the  bank  and  to  impose  his  checks  upon  his  neigh- 
bors with  whom  he  deals,  knowing  that  they  would  not  be 
honored  when  presented;  and  that  is  substantially  saying  that 
in  respect  to  that  matter  his  dealing  is  dishonest,  and  neces- 
sarily impairs  his  credit  as  an  honest  man.  The  jury  were, 
therefore,  justified  in  considering  that  an  act  of  the  bank  which 
raised  an  inference  that  the  plaintiff  was  not  an  honest  man, 
necessarily  inflicted  upon  him  that  humiliation  and  mental 
anxiety  which  follows  upon  the  knowledge  by  a  man  that  he 
has  been  accused  of  the  dishonest  act,  which  the  action  of  the 


§    77]  COMPENSATION.  281 

bank  has  given  rise  to.^'^  The  rule  which  supports  a  recovery 
for  the  loss  of  credit  where  a  bank  refuses  to  pay  a  depositor's 
check  has  no  application  in  the  case  of  unintentional  delay  in 
the  delivery  of  money  by  a  telegraph  company  whereby  the 
plaintiff's  note  was  protested  unless  he  shows  a  pecuniary  loss 
because  of  the  protest."  Where  the  plaintiff  gave  up  certain 
claims  against  the  defendant  as  a  consideration  for  the  supply 
of  funds  by  the  latter  for  specified  purposes  and  for  a  fixed 
time,  and  at  the  expiration  of  three-fourths  of  that  time  the 
defendant  broke  his  contract,  the  plaintiff"  was  not  entitled  to 
recover  the  value  of  such  claims,  the  failure  of  consideration 
not  being  total;  he  did  recover  the  expenses  directly  entailed 
upon  him  by  the  breach,  a  liberal  sum  in  respect  to  loss  and 
embarrassment,  to  avoid  which  he  surrendered  those  claims, 
which  loss  and  embarrassment  were  in  the  contemplation  of 
the  parties  when  they  contracted.  The  first  head  of  damage 
consisted  of  the  expense  of  transferring  the  loan,  and  it  was 
allowed  notwithstanding  the  transfer  would  necessarily  have 
been  made  three  months  later. ^^ 

In  order  that  the  liability  for  the  breach  of  a  contract  to 
loan  money  to  pay  an  incumbrance  shall  exceed  a  nominal  sum 
it  must  appear  that  the  contract  was  made  with  knowledge  of 
the  purpose  for  which  the  money  was  to  be  used,  the  necessity 
for  its  use,  and  also  that  the  land  was  lost  to  the  owner  because 
of  the  incumbrance,  and  without  his  knowledge  and  solely 
through  the  fault  of  him  who  was  to  make  the  loan;  or,  if  the 
other  person  had  notice  of  the  neglect  or  refusal  to  make  the 
loan,  it  came  at  a  time  when  he  was  deprived  of  the  oppor- 
tunity to  procure  the  money  elsewhere  and  pay  the  incumbrance 
or  redeem  the  land  if  it  had  been  sold.^°     Under  such  circum- 

1' Davis  V.   standard  Nat.   Bank,  to  be  paid,  unless  the  plaintiff  shows 

^0  App.  Div.    (N.  Y. )   210.  his   inability   to   obtain   the   money 

18  Smith  V.  Western  U.  Tel.  Co.,  from  other  sources  to  discharge  the 
150  Pa.  561.  debt   which,   by   his   default   in   the 

19  Parker  v.  Cunningham,  5  Vict.  payment  of  interest,  has  matured. 
L.  R.   (law)   202.  Western   U.   Tel.    Co.   v.    Hearne,    7 

On  the  breach  of  a  contract  to  ex-  Tex.  Civ.  App.  G7. 

tend   a   loan   the   only   damages   re-  20  Lowe  v.   Turpie,   147   Ind.   052, 

coverable  are   those   represented   by  675,    37    L.R.A,    233.      See    Savings 

the  difference  in  the  rate  of  interest  Bank  v.  Asbury,  117  Cal.  96. 


282  SUTHERLAND    ON    DAMAGES.  [§77 

stances  as  are  indicated  there  may  be  a  recovery  of  the  amount 
lost  by  reason  of  the  breach  of  the  contract.^^  The  breach  of  a 
contract  to  advance  money  and  supplies  to  carry  on  a  logging 
business,  the  contract  having  been  made  with  knowledge  that 
the  obligee  could  not  procure  these  elsewhere,  renders  the  party 
guilty  thereof  liable  for  the  profits  which  could  have  been  made 
by  putting  logs  in  the  market.^^  If  the  facts  leave  the  proof  of 
profits  remote  and  uncertain  the  plaintiff  may  recover  the  rental 
value  of  the  mill  he  was  to  reconstruct  with  the  money  which 
was  to  have  been  supplied  during  the  time  required  to  make 
the  change,  if  that  period  was  of  such  length  as  to  give  it 
such  value,  otherwise  the  recovery  may  be  of  interest  on  its 
value,  and,  in  addition,  the  cost  incurred  and  labor  used  pre- 
paratory to  its  reconstruction  in  reliance  on  the  money  being 
supplied,  and  the  cost  of  restoring  it  to  its  former  condition, 
and  its  rental  value  until  it  was  restored.^* 

The  general  rule  that  a  person  can  recover  only  nominal 
damages  because  of  the  refusal  of  another  to  advance  monev 
of  which  he  may  immediately  demand  the  repayment,^^  does  not 
apply  where  the  circumstances  indicate  that  the  parties  did 
not  intend  the  transaction  to  be  a  demand  loan  though  it  was 
such  in  terms ;  in  such  a  case  the  plaintift'  may  prove  the  dam- 
ages he  has  sustained  because  of  the  breach  of  contract.^^  The 
purchaser  of  a  stock  of  goods  who  has  failed  to  pay  the  claim 
of  the  vendor's  creditors  as  agreed  is  liable  therefor  and  for 
such  other  damages  as  the  vendor  has  sustained.^^ 

21Hedden   v.    Schneblin,    126   Mo.  24  Bradford,    etc.   R.    Co.    v.    New 

App.  478,  citing  this  section.  York,  etc.  R.  Co.,  123  N.  Y.  316,  11 

22  Graham    v.    McCoy,    17    Wash.  ljj.a.   116. 

63 ;  Holt  V.  United  Security  L.  Ins.  25  Alderton      v.      Williams,      139 

Co.,  76  K  J.  L.  585,  21  L.R  A.  ( N.S. )  ^^.^^^    ^^^ .  ^^^^^^^^^^^  ^    ^^^^^^  ^ 

691.     Contra,   Towles   v.   Cincinnati  ^  ,       •        »         txt     /-, 

T.  W.  Co.,  146  Ky.  301,  also  deny-  t'"'    '^^P'^^    Bohemian-Am.    W.    G. 

ing  a  recovery  of  expenses  incurred  Ass'n  v.  Northern  Bank,  120  N.  Y. 

in  reliance  on  the  loan  being  made.  Supp.  134;  Goldsmith  v.  Holland  T. 

But  it  is  otherwise  in  New  Jersey  Co.,  5  App.  Div.   (N.  Y.)    104.     See 

as   to   expenses.      Holt   v.    Ins.   Co.,  ^^^^^   ^    Bright,   23   C.    C.   A.   586, 

supra.      See   Pugh   v.    Jackson,    154  j-  -c'  a    040 

Ky.  649.  /      e  .         . 

■23Bixby-T.     Co.     v.     Evans,     174  26  Doolittle  v.  Murray,  134   Iowa 

Ala.  571.  536. 


§    78]  COMPENSATION.  283 

Where  one  person  furnishes  money  to  another  to  discharge 
an  incumbrance  upon  the  huid  of  the  person  fiffnishing  the 
money  and  the  person  undertaking  to  discharge  it  neglects  to 
do  so  and  the  Lnnd  is  lost  to  the  owner  by  reason  of' the  neg- 
lect, the  measure  of  damages  may  be  the  money  furnished 
with  interest,  or  the  vahie  of  the  land  lost,  according  to  cir- 
cumstances.^^ If  the  land-owner  has  knowledge  of  the  agent's 
failure  in  time  to  redeem  the  land  himself  his  damages  will 
be  the  money  furnished  with  interest;  but  if  he  justly  relies 
upon  his  agent  to  whom  he  has  furnished  money  to  discharge 
the  incumbrance  and  the  land  is  lost  without  his  knowledge  and 
solely  through  the  fault  of  the  agent,  the  latter  will  be  liable 
for  the  value  of  the  land  at  the  time  it  is  lost.'^* 

§  78.  Liability  for  gains  and  losses.  For  the  breach  of  other 
contracts  than  to  pay  money  the  injured  party  is  entitled  to 
compensation  for  gains  prevented  ^®  and  losses  sustained.  The 
gains  prevented  are  those  which  would  accrue  to  the  contract- 
ing parties  from  the  mutual  performance  of  the  contract.  The 
damages  for  the  total  breach  of  a  contract  should  include  the 
value  of  it  to  the  injured  party.  This  is  generally  the  meas- 
ure. There  are  some  exceptions,  as  in  case  of  contracts  for 
the  sale  of  land  where  title  unexpectedly  cannot  be  made,  and 
generally  on  covenants  for  title  in  conveyances  of  real  estate.^" 

27  In  actions  upon  covenants  not  apply  where  an  individual  ac- 
against  incumbrances  or  covenants  cepts  a  deed  for  the  land  of  anotlior 
to  pay  off  specific  incumbrances  the  and  agrees  with  liim  to  advance 
damages  are  the  diminution  in  value  money  to  pay  his  debts,  and  to  sell 
of  the  estate  by  reason  of  the  in-  tlic  land  to  raise  money  with  which 
cumbrances,  and  where  the  contract  to  repay  himself  the  amount  thus 
broken  was  to  pay  off  a  specific  lien  advanced,  where,  after  receiving  the 
the  owner  may  recover  the  whole  deed,  he  refuses  to  make  the  ad- 
amount  of  it  although  no  damage  vancements.  The  liability  of  such 
has  been  proved.  Lethbridge  v.  Myt-  person  is  not  for  tlie  value  of  the 
ton,  2  B.  &  Ad.  772;  Carr  v.  Rob-  land  nor  the  sum  which  was  to  be 
erts,  5  id.  78;  Loosemore  v.  Rad-  advanced,  but  for  the  actual  dam- 
ford,  9  M.  &  W.  657;  Hodgson  ages  sustained.  Turpie  v.  Lowe, 
V.  Wood,  2  H.  &  C.  649.  See  Paro  114  Ind.  37,  54;  Stanley  v.  Nye, 
V.  St.  Martin,  180  Mass.  29;  Boy-  51  Mich.' 2.32.  See  Duckworth  v. 
den  V.  Hill,  198  Mass.  477.  Ewart,  2  Hurl.  &  C.  129. 

28  Blood  V.  Wilkins,  43  Iowa  565 ;  29  See  §  59  et  seq. 

Gallup  V.  Miller,  25  Hun  208.  30  Fhireau  v.  Thornhill,  2  \V.   HI. 

The  rule  stated  in  the  text  does       1078;    Worthington   v.    Warrington, 


284 


SUTHERLAND    ON    DAMAGES. 


[§  78 


By  this  general  rule  the  party  thus  injured  by  a  total  breach 
is  entitled  to  recover  the  profits  of  the  particular  contract 
which  he  shows,  with  sufficient  certainty,  would  have  accrued 
if  the  other  party  had  performed.  He  is  entitled  to  recover 
proportionately  for  a  partial  breach.  And  to  ascertain  these 
profits  the  nature  and  the  special  purpose  of  the  contract,  a 
subcontract,  or  other  subsidiary  and  dependent  arrangement, 
within  the  contemplation  of  the  parties  at  the  time  of  con- 
tracting,  may  be   taken   into  consideration.^^     The  objection 


8  C.  B.  134;  Buckley  v.  Dawson,  4 
Ir.  C.  L.   (N.S.)   211;  Sikes  v.  Wild, 

1  B.  &  S.  594;  Bain  v.  Fothergill, 
L.  R.  6  Ex.  59,  L.  R.  7  Eng.  & 
Irish  App.   158;    Baldwin  v.  Munn, 

2  Wend.  399,  20  Am.  Dec.  627; 
Conger  v.  Weaver,  20  N.  Y.  140; 
Pumpelly  v.  Phelps,  40  id.  60; 
Sweem  v.  Steele,  5  Iowa  352; 
Drake  v.  Baker,  34  N.  J.  L.  358; 
Violet  V.  Rose,  39  Neb.  661.  See 
eh.  13. 

31  South  Memphis  L.  Co.  v.  Mc- 
Lean H.  L.  Co.,  179  Fed.  417,  102 
C.  C.  A.  563;  Hardaway-W.  Co. 
V.  Bradley,  163  Ala.  596;  Prestwood 
V.  Carlton,  162  Ala.  327;  Schiffman 
V.  Peerless  M.  C.  Co.,  13  Cal.  App. 
600;  Silver  Springs,  etc.  R.  Co.  v. 
Van  Ness,  45  Fla.  559;  Elzy  v. 
Adams  Exp.  Co.,  141  Iowa  407; 
Thorn  v.  Morgan,  135  Mich.  51  ; 
Kitchen  Bros.  H.  Co.  v.  Philbin,  2 
Neb.  (Unof.)  340;  Meyer  D.  Co.  v. 
McKinney,  137  App.  Div.  (N.  Y.) 
541  ;  Lande  v.  Hyde,  66  N.  Y.  Misc. 
259;  Bowie  v.  Western  U.  Tel.  Co., 
78  S.  C.  424 ;  Peden  v.  Platte  Valley 
F.  &  C.  Co.,  93  Neb.  141;  Frankfort 
&  C,  R.  Co.  V.  Jackson,  153  Ky.  534; 
Pugh  V.  Jackson,  154  Ky.  649; 
American  S.  &  W.  Co.  v.  Copeland, 
159  N.  C.  556;  Mason  v.  Alabama 
I.  Co.,  73  Ala.  270 ;  Jones  v.  Foster, 
67  Wis.  296;  Cameron  v.  White,  74 
Wis.  425,  5  L.R.A.  493;  Treat  v. 
Hiles,  81   Wis.  280;    Oliver  v.  Per- 


kins, 92  Mich.  304;  Morgan  v. 
Hefler,  68  Me.  131;  Hadley  v. 
Baxendale,  9  Ex.  341,  2  Am.  Neg. 
Rep.  400;  McHose  v.  Fulmer,  73 
Pa.  365 ;  Van  Arsdale  v.  Rundel,  82 
111.  63;  True  v.  International  Tel. 
Co.,  60  Me.  9;  Booth  v.  Spuyten 
Duyvil  R.  M.  Co.,  60  N.  Y.  487; 
Cassidy  v.  Le  Fevre,  45  id.  562; 
Hexter  v.  Knox,  63  id.  561;  Frye 
v.  Main  Cent.  R.  Co.,  67  Me.  414; 
Fultz  V.  Wycoff,  25  Ind.  321;  Hol- 
den  V.  Lake  Co.,  53  N.  H.  552; 
Coweta  Falls  Mfg.  Co.  v.  Rogers,  19 
Ga.  416,  65  Am.  Dec.  602;  Fox  v. 
Harding,  7  Cush.  516;  Fletcher  v. 
Tayleur,  17  C.  B.  21;  Masterton 
V.  Mayor,  7  Hill  61;  Wolcott  v. 
Mount,  36  N.  J.  L.  262,  13  Am. 
Rep.  438;  Passinger  v.  Thorburn, 
34  N.  Y.  634;  Smith  v.  Chicago, 
etc.  R.  Co.,  38  Iowa  518;  Van 
Wyck  V.  Allen,  69  N.  Y.  61,  25  Am. 
Rep.  136;  Ferris  v.  Comstock,  33 
Conn.  513;  France  v.  Gaudet,  L.  R. 
6  Q.  B.  199;  Richmond  v.  D.  &  S. 
C.  R.  Co.,  40  Iowa  264;  Sisson  v. 
Cleveland,  etc.  R.  Co.,  14  Mich. 
489;  Burrell  v.  New  York,  etc.  Co., 
14  Mich.  34;  Maynard  v.  Pease,  99 
Mass.  555;  Bell  v.  Cunningham,  3 
Pet.  69;  Farwell  v.  Price,  30  Mo. 
587;  Rice  Co.  v.  Penn.  P.  G.  Co., 
88  111.  App.  407,  citing  the  text; 
Smith  V.  Los  Angeles  «fe  P.  R.  Co., 
98  Cal.  210;  Post  v.  Davis,  7  Kan. 
App.     217;     McNeill    v.    Richards, 


§  78] 


COMPENSATION. 


285 


that  the  nature  of  the  business  to  which  the  contract  has 
reference  and  in  which  profits  might  have  been  earned  fur- 
nishes no  reasonable  basis  upon  which  to  make  an  estimate  of 
loss  is  not  controlling  where  the  contract  sued  upon,  or  the 
collateral  contract,  if,  in  the  latter  case,  the  defendant  is  re- 
sponsible for  its  breach,  consists  of  an  undertaking  to  do  specific 
work  for  a  specified  price,  although  in  the  performance  of  that 
work  machinery  as  well  as  labor  may  be  employed  and  the 
weather  may  affect  the  profits  by  interfering  with  the  work.'' 
The  infringement  of  an  exclusive  franchise  is  attended  with 
liability  for  the  losses  resulting.^^  Members  of  a  partnership 
who  use  the  property  of  a  co-partner  must  account  for  the  profits 
made  thereby.'*    A  judgment  creditor  of  a  corporation  who  has 


[1899]  1  Irish  79;  Consolidated  C. 
Co.  V.  Schneider,  93  111.  App.  88, 
citing  the  text;  Curry  v.  Kansas, 
etc.  R.  Co.,  58  Kan.  6,  61  Kan.  541  ; 
Watson  V.  Needham,  161  Mass.  404, 
24  L.R.A.  287;  Knowles  v.  Steele, 
59  Minn.  452;  Farr  v.  Griffith,  9 
Utah,  416,  citing  the  text;  Kendall 
Bank  Note  Co.  v.  Commissioners, 
79  Va.  563;  Bratt  v.  Swift,  99  Wis. 
579;  Crosby  L.  Co.  v.  Smith,  2  C. 
C.  A.  97,  51  Fed.  63;  Tinsley  v. 
Jemison,  20  C.  C.  A.  371,  74  Fed. 
177;  Lindsay  v.  Stevenson,  17  Vict. 
L.  R.  112;  Marcus  v.  Myers,  11  T. 
L.  Rep.  327. 

In  Pell  V.  Shearman,  10  Ex.  766, 
the  defendant  covenanted  with  the 
plaintiff  that  if  he  would  surren- 
der to  his  lessor  a  certain  lease 
they  would,  within  two  years  or  such 
period  as  should  be  agreed  in  a  new 
lease,  which  the  lessor  had  agreed 
to  grant  them,  sink  upon  the  de- 
mised premises  a  pit  to  the  depth 
of  one  hundred  and  thirty  yards  for 
the  purpose  of  finding  coal,  and,  in 
case  a  marketable  vein  of  coal 
should  be  reached,  pay  the  plaintiff 
2,500L  There  was  a  breach  of  the 
contract,    and    evidence    showing    a 


reasonable  probability  that  if  the 
pit  had  been  sunk  such  coal  would 
have  been  discovered.  Plaintiff's 
measure  of  damage  was  the  amount 
of  his  loss  by  being  deprived  of  the 
opportunity  to  find  coal. 

Machinery  put  into  a  mill  failed 
to  possess  the  capacity  as  to  the 
quantity  and  quality  of  flour  it  was 
warranted  to  produce.  The  dam- 
ages were  measured  by  the  amount 
paid  upon  it,  the  loss  by  reason  of 
its  defects  and  the  cost  incurred  in 
repairing  the  mill  and  putting  it 
in  condition  to  produce  the  quan- 
tity and  quality  of  flour  stipulated 
for.  Pennypacker  v.  Jones,  106 
Pa.  237. 

32  Industrial  Works  v.  Mitchell, 
114  Mich.  29;  South  Memphis  L. 
Co.  V.  McLean  H.  L.  Co.,  179  Fed. 
417,  102  C.  C.  A.  563;  Fredonia  G. 
Co.  V.  Bailey,  77  Kan.  296;  Candler 
V.  Washoe  Lake  R.  etc.  Co.,  28  Nev. 
151. 

33Hatten  v.  Turman,  123  Ky. 
844. 

34  Dunlap  v.  Watson,  124  Mass. 
305;  Freeman  v.  Freeman,  136 
Mass.  260;  Moore  v.  Rawson,  185 
Mass.  264. 


286  SUTHERLAND    ON    DAMAGES.  [§    78 

agreed  to  receive  bonds  in  satisfaction  of  his  demand  may 
recover  for  the  breach  of  a  contract  to  issue  bonds  and  put 
the  proceeds  into  the  improvement  of  the  corporation's  plant 
the  difference  between  market  value  his  bonds  would  have  had 
if  the  contract  had  been  performed  and  their  value  without 
performance,  but  not  to  exceed  their  face  value.^^  The  breach 
of  a  contract  by  stockholders  not  to  sell  their  stock  except  in 
connection  with  that  of  other  holders  is  cause  for  the  recovery 
of  damages  to  the  extent  of  the  depreciation  in  the  fair  cash 
market  value  of  the  stock  held  by  the  plaintiff  in  so  far  as  it 
was  the  result  of  such  breach.^^ 

§  79.  What  losses  elements  of  damage.  Losses,  aside  from 
gains  prevented,  may  be  sustained  in  various  ways  in  conse- 
queuce  of  the  breach  of  a  contract  or  duty.  First,  a  loss  may 
consist  of  money,  property  or  valuable  rights  which  may  be 
directly  taken  from  the  injured  party  by  the  breach.^'  A  serv- 
ant improperly  discharged  before  the  period  of  his  engagement 
has  expired  and  unable  to  find  any  other  employment,  or  one 
equally  remunerative,  is  thereby  deprived  of  the  right  to  earn 
the  stipulated  wages.     By  that  breach  of  contract  he  loses  the 

35  South  Texas  Tel.  Co.  v.  Hunt-  276 ;  Ramsey  v.  Maberry,  135  Mo. 
ington  (Tex.  Civ.  App.),  138  S.  W.  App.  569;  Clague  v.  Tri-State  L. 
38].  Co.,  84  Neb.  499,  133  Am.  St.  637; 

36  Havemeyer  v.  Havemeyer,  43  Dunsford  v.  Webster,  14  Manitoba, 
N.  Y.  Super.  506.  529    (depreciation    in   the   value   of 

37  Smith  V.  Los  Angeles  &  P.  K.  land  through  neglect  to  cultivate 
Co.,  98  Cal.  210;  Occidental  C.  M.  it)  ;  Agincourt  S.  S.  Co.  v.  Eastern 
Co.  V.  Comstock  T.  Co.,  125  Fed.  Extension,  etc.  Tel.  Co.,  [1907]  2 
244;  Bixby-T.  L,  Co.  v.  Evans,  167  K.  B.  305  (under  a  contract  pro- 
Ala.  431,  29  L.R.A.(N.S.)  194;  St.  viding  that  the  sacrifice  of  an 
Louis,  etc.  R.  Co.  v.  Berry,  86  Ark.  anchor  shall  be  compensated  for 
309;  O'Driscoll  v.  Doyle,  31  Colo.  ^^^^^.^  cannot  be  a  recovery  for  all 
193  (damages  recoverable  by  one  ^^^  consequences  of  such  sacrifice, 
who   has    bought   an    interest    m    a  ^^^^^^^  .^  ^^^^^^  ^^^  ^^^^  ^^  ^^pj^^ 

pending  suit  which  is  compromised  .         ,,  t_        •  j.  -i 

1  "  ,  .   .      ,      ,   .  ing    the    anchor    is    not   necessarily 

in   violation   of   the   original   plain-  /^ 

..„,  ,       ,  J  .      j.1.  the  measure  of  recovery)  ;  Green  v. 

tiff's  contract  are  measured  by  the  / 

price  paid  for  the  interest);    Pope  ^^^S^^^    ^^ex.    Civ.   App.),    142    S. 

V.  Graniteville  Mfg.  Co.,  1  Ga.  App.  W.     999;      Connally     v.     Saunders 

176;  Pittsburgh,  etc.  R.  Co.  v.  Wil-  (Tex.   Civ.   App.),   142   S.   W.   975; 

son,   34   Ind.   App.   324;    Wallace  v.  Carter  v.  Cairo,  etc.  R.  Co.,  240  111. 

Knoxville   W.    Mills,    117    Ky.   450;  152;    Eastman    v.    Dunn,    34    R.    1. 

Laughren    v.    Barnard,    115    Minn.  416. 


§  T9] 


COMPENSATION. 


2S^ 


whole  or  a  part  of  what  ho  was  entitled  to  earn  (hiring  tlie 
term  he  was  engaged  for  and  is  entitled  to  recover  accordingly.'^ 
And  that  measure  of  relief  will  he  accorded  him  against  a  third 
party  who  is  the  means  of  securing  his  dismissal  from  employ- 
ment.^^ 

An  agent  or  bailee  who,  by  breach  of  duty,  converts  his  prin- 
cipal's property,  or  by  neglect  or  othei'wise  suffers  it  to  be  lost 
or  destroyed,  or  by  failure  to  assert  his  rights  or  by  doing  it  in  a 
careless  or  inefficient  manner  subjects  him  to  loss,  must  re- 
spond in  damages  according  to  the  injury  thus  occasioned.*" 
The  directors  and  officers  of  a  corporation  who  deplete  its  treas- 
ury and  render  it  insolvent  in  order  that  its  property  may  be 
sold  upon  foreclosure  must  answer  for  the  full  value  of  it  and 
of  the  franchise  as  it  existed  prior  to  their  acts,  less  the  sum 
realized  upon  the  sale.*^  In  some  cases  such  losses  are  the 
measure  of  recovery,  as  where  there  is  a  breach  of  contract  by 


38Paola  G.  Co.  v.  Paola  G.  Co., 
56  Kan.  614,  54  Am.  St.  598; 
Hughes  V.  Robinson,  60  Mo.  App. 
194;  Athletic  B.  Ass'n  v.  St.  Louis 
S.'s  P.  &  C.  Ass'n,  67  Mo.  App.  653 ; 
Hutt  V.  Hickey,  67  N.  H.  411; 
Friedland  v.  Myers,  139  N.  Y.  432; 
Cutting  V.  Miner,  30  App.  Div.  (N. 
Y.)  457;  Wells  v.  National  L.  Ass'n, 
53  L.R.A.  33,  39  C.  C.  A.  476,  99 
Fed.  222;  Sutherland  v.  Wyer,  67 
Me.  64;  Gifford  v.  Waters,  67  N.  Y. 
80;  Gillis  v.  Space,  63  Barb.  177; 
Emerson  v.  Rowland,  1  Mason  45 ; 
Howe  Mach.  Co.  v.  Bryson,  44  Iowa 
159,  24  Am.  Rep.  735;  Williams  v. 
Anderson,  9  Minn.  50 ;  Williams  v. 
Chicago  C.  Co.,  60  111.  149;  Smith 
V.  Thompson,  8  C.  B.  44. 

The  damages  recoverable  from 
the  usurper  of  an  office  are  the 
salary  or  emoluments  received. 
]\almer  v.  Darby,  64  Ohio  St.  520. 

39  Lopes  v.  Connolly,  210  Mass. 
487,  38  L.R.A.  (N.S.)  986;  Carter  v. 
Oster,  134  Mo.  App.  146.  See  Han- 
son V.  Innis,  211  Mass.  301. 


A  member  of  a  union  illegally  ex- 
pelled therefrom  may  recover  for 
the  loss  of  opportunity  to  obtain 
employment.  Schouten  v.  Alpine, 
77  N.  Y.  Misc.  19. 

40McGaw  v.-  Acker,  111  Md.  153, 
134  Am.  St.  592;  Whitney  v.  Ab- 
bott, 191  Mass.  59;  Carll  v.  Gold- 
berg, 59  N.  Y.  Misc.  172;  White  v. 
Smith,  54  X.  Y.  522;  Dodge  v.  Pi-r- 
kins,  9  Pick.  368;  Clark  v.  Moody, 
17  Mass.  145;  Frothingham  v.' Ever- 
ton,  12  N.  H.  239;  Webster  v.  Dc 
Tastet,  7  T.  R.  157;  Blot  v.  Boi- 
ceau,  3  N.  Y.  78;  Maynard  v.  Pease, 
99  Mass.  555 ;  Stearine  etc.  Co.  v. 
Heintzmann,  17  C.  B.  (N.  S.)  56; 
Allen  V.  Suydam,  20  Wend.  321,  32 
Am.  Dec.  555;  Mallough  v.  Barber, 
4  Camp.  150;  Nickerson  v.  Soesman, 
98  Mass.  364;  Trinidad  Nat.  Bank 
v.  Denver  Nat.  Bank,  4  Dill.  290; 
De  Tastet  v.  Crousillat,  2  Wash.  C. 
C.  132;  Lilloy  v.  Doubleday,  7  Q. 
B.  Div.  510. 

41  Niles  v.  New  York  Cent.  etc. 
R.  Co.,  176  N.  Y.  119. 


288  SUTHERLAND    ON"    DAMAGES.  [§    79 

one  person  to  adopt  another  and  make  him  his  heir.  The  value 
of  the  services  rendered  or  outlay  incurred  on  the  faith  of  the 
promise,  and  not  the  value  of  the  promised  share  of  the  estate, 
measures  the  recoverj.^^  On  the  breach  of  a  contract  to  supply 
water  a  consumer  may  recover  the  value  of  the  labor  required 
to  obtain  it  from  another  source.*^  When  a  lessee  occupies  prem- 
ises for  the  entire  term,  but  is  compelled  to  pay  more  rent  than 
was  stipulated  for,  he  may  recover  the  excess.'**  The  same  rule 
applies  in  tort  actions,  as  where  egress  and  ingress  is  cut  off 
from  adjacent  lands  or  water  is  caused  to  run  or  stand  on  them; 
the  recovery  is  measured  by  the  expense  of  remedying  the 
wrong.  ^^  One  who  breaches  his  contract  to  permit  the  owner 
of  mortgaged  lands  to  redeem  them  after  foreclosure  and  sale 
by  selling  the  same  to  innocent  purchasers  is  liable  for  the  value 
of  the  lands  in  excess  of  the  mortgage  debt,  including  foreclosure 
costs;  if  but  a  small  part  of  the  lands  were  sold  at  the  time 
suit  was  begun,  the  remainder  not  being  thereby  depreciated 
in  value,  he  is  liable  for  the  value  of  those  sold  and  the  plaintiff 
may  recover  those  unsold  upon  payment  of  the  mortgage  debt 
and  charges;  if  the  defendant  continued  to  sell  the  remaining 
lands  after  suit  was  begim  he  is  responsible  for  their  value  unless 
the  plaintiff"  elected  to  proceed  against  the  purchasers,  who  were 
not  entitled  to  the  rights  of  innocent  holders.*^ 

The  wrongful  expulsion  of  a  member  of  a  society  is  attended 
with  liability  for  the  value  of  an  insurance  policy  thereby  lost 
and  the  value  of  a  traveling  card  forfeited.'*'''  A  vendee  who, 
because  of  the  negligence  of  an  abstractor,  secures  a  less  estate 
than  he  paid  for  may  recover  the  difference  between  the  sum 
paid  and  the  value  of  that  received.**     The  loss  resulting  from 

42McDaniel    v.    Hutcherson,    136  44  Myers  T.  Co.  v.  Keeley,  58  Mo. 

Ky.   412;    Sandham  v.   Grounds,   36  App.  491. 

C.  C.  A.   103,  94  Fed.  83;   Graham  45  Louisville  &  N.  R.   Co.  v.  Fin- 

V.   Graham,   34  Pa.  475,   overruling  ]gy^  -  j^^    l    Rep.  129    (Ky.  Super. 

Jack  V.   McKee,   9   Pa.  240;    Kauss  ^*  . 

V.  Rohner,  172  Pa.  481,  51  Am.  St.  '  .„' ..„.                „           „^  ^ 

rr^r.     T,T     XI            !->       1         i^rv  \TiT  46Silliman  V.  Gano,  90   lex.  63/. 

762;   Murtha  v.  Donohoo,   149  Wis. 

^gj  47  St.  Louis  S.  R.  Co.  V.  Thomp- 

«Whitehouse    v.     Staten     Island       ^o"-  ^02  Tex.  89. 
W.  S.   Co.,   101   App.   Div.    (N.   Y.)  48  Keuthan    v.    St.    Louis   T.    Co., 

112.  101  Mo.  App.  1. 


§    T9]  COMPENSATION.  289 

the  sale  of  goods  in  other  than  the  stipulated  manner  is  meas- 
urable by  the  difference  in  the  i)rice  realized  for  them  in  the 
way  in  which  they  were  sold  and  what  would  have  been  ob- 
tained if  they  had  been  sold  under  the  contract/^  On  i  li(>  l)rcach 
of  a  contract  to  treat  sheep  as  soon  as  they  became  diseased, 
the  disease  being  one  responsive  to  treatment,  there  may  be  a 
recovery  of  the  difference  in  their  value  when  they  were  treated 
and  what  that  value  would  have  been  if  they  had  been  treated 
without  delay.^°  The  breach  of  a  contract  to  extend  the  time 
for  the  payment  of  a  mortgage  is  followed  by  liability  for  the 
value  of  the  equity  of  redemption  in  the  property.*^  A  mort- 
gagee who  breaches  his  contract  not  to  exercise  his  power  of 
sale  for  a  stated  time  by  selling  the  property  at  an  insufficiently- 
advertised  sale  and  disclosing  the  reserved  price  before  the  sale, 
is  liable  to  the  mortgagor  for  the  difference  between  the  value 
of  the  property  and  the  price  at  which  it  was  sold.*^  The  in- 
creased price  paid  for  property  because  a  party  procured  the 
breach  of  a  contract  between  others  is  an  element  of  damage.^^ 
The  refusal  to  register  shares  of  stock  makes  the  wrongdoer 
liable  for  the  difference  between  their  value  at  the  time  their 
owner  contracted  to  sell  them  and  their  value  when  they  were 
subsequently  registered,  he  having  gone  into  the  market  and 
bought  to  fill  his  contract. ^^  The  damages  for  the  infringement 
of  a  ferry  franchise  are  equal  to  the  amount  of  tolls  lost  to 
the  owner  by  the  diminution  of  the  patronage  of  his  ferry.*^ 
The  breach  of  a  contract  to  forbear  bringing  suit  or  not  to  issue 
an  execution  is  to  be  compensated  for  to  the  extent  of  the  amount 
of  the  judgment  upon  which  execution  issued,  with  interest  on 
the  sum  paid,  and  the  costs  paid  or  due  in  satisfaction  thereof, 
including  those  incurred  in  obtaining  a  discharge  from  arrest.^'' 

MPaxton    v.    Vadbonker,  1    Neb.        (N.S.)    746. 

(Unof.)    776.  54Boultbee  v.   Wills,    15    Ont.    L. 

50  Burnham    v.    Meredith,  3    Neb.       j.    327 ;  Balkis  C.  Co.  v.  Tomkinson. 

(Unof.)    287.  [18!):5]    App.    Caa.    .S96;    Toinkiiis.m 


V.    lialkia    C.    Co..    |  I  Sill  |    -J.    i).    I'., 
(ill. 


51  Missouri     R.    E.    Syndieatf 
Sims,  121  Mo.  App.  ^'A]. 

52  Barns  v.  (Queensland  Nat.  Bank, 
.3  Aust.  Com.  L.  R.  925.  55  Blackwood   v.   Tann.-r.    112    Ky 

53  Knickerbocker  I.  Co.  v.  Oardi-       ^'72. 

ner  D.  Co.,   107  Md.  556,  16  L.R.A.  56  Smith  v.  Way,  (>  All.-n,  212. 

Suth.  Dam.  Vol.  1.— 19. 


290  SUTHERLAND    ON    DAMAGES.  [§    70 

Inconvenience  and  loss  occasioned  by  being  obliged  to  quit  busi- 
ness and  raise  money  to  pay  the  note  upon  which  it  was  agreed 
suit  should  not  be  brought  are  not  elements  of  the  damages ;  " 
the  consequences  of  a  forced  sale  are  also  too  remote.^*  But 
where  a  contract  stipulating  for  the  discontinuance  of  an  action 
and  the  vacation  of  an  attachment  was  broken  and  the  property 
sold  for  less  than  its  value  a  recovery  was  allowed  for  the  differ- 
ence between  such  value  and  the  amount  obtained  for  the  prop- 
erty at  the  sale.^^ 

A  lessor  may  recover  in  tort  against  a  water  company  which 
breaches  its  contract  to  supply  water,  which  he  had  bound  him- 
self to  furnish  his  lessee,  the  rent  lost  between  the  time  of  the 
discontinuance  and  resumption  of  the  service.^"  The  deprecia- 
tion in  the  value  of  adjoining  property  measures  the  liability 
for  the  breach  of  a  contract  to  leave  parts  of  lots  vacant.^^ 
Wrongfully  interfering  with  the  performance  of  a  contract 
lietween  third  parties  is  ground  for  imposing  liability  for  the 
resulting  loss.^^ 

§  80.  Same  subject;  labor  and  expenditures.  Second,  losses 
sustained  may  consist  of  labor  or  expenditures  prudently  in- 
curred in  preparation  to  perform  or  in  part  performance  of 
the  contract  on  the  part  of  the  plaintiff.^'  Where  a  contract  is 
partly  performed  by  one  party  and,  without  his  being  in  any 
default,  the  other  stops  him  and  prevents  further  performance 
such  part  performance,  in  addition  to  the  profits  which  could 
be  made  by  completing  the  contract,  will  enter  into  the  esti- 
mate of  damages  for  such  breach.  Should  a  vendor  who  had 
received  part  payment  for  goods  bargained  and  sold  refuse  to 
go  on  with  the  contract  the  vendee  would  be  entitled  to  re- 
cover, in  addition  to  the  profits — the  excess  of  the  value  of 
the  goods  above  the  contract  price — the  amount  which  he  had 

STDeyo   V.    Waggoner,    1!)    Johns.        W.  &  E.  L.  Co.,  165  Mo.  App.  454. 

241.  eiKnoch  v,  Haizlip,  ]fi3  Cal.  146. 

58  Indiana,  etc.  R.  Co.  v.  Scearce,  m  at     ^  t,      -j  ••   t     r<        no 

'  62  Mealey  v.   Beniidii   L.   Co.,   118 

23  Ind.  App.  223.  .  '' 

69  Cole   V.    Stearns,   23   App.   Div.       *'^^""-  ^^''• 
(N    Y.)    446  63Sperry  v.  O'Neill,  185  Fed.  231, 


60 


Phelpa   V.    Cape   Girardeau    W.       107  C.  C.  A.  337. 


80] 


COMPENSATION. 


201 


paid  towards  the  latter,  for  the  same  reason  wliich  supports 
his  claim  where  he  has  paid  the  whole  purchase  price  for  the 
value  of  the  property.^*  If  a  contract  for  particular  work  is 
partly  performed  and  the  employer  then  puts  an  end  to  the 
undertaking,  recovery  may  be  had  against  him,  not  only  for 
the  profits  the  contractor  could  have  made  by  performing  the 
contract,  but  compensation  also  for  so  much  as  he  has  done 
towards  performance.^*  Preparations  for  performance,  which 
were  a  necessary  preliminary  to  performance  or  within  the 
contemplation  of  the  parties  as  necessary  in  the  particular  case, 
rest  upon  the  same  principle.^®    Maintaining  a  shop  and  waiting 


64  Copper  Co.  v.  Copper  M.  Co., 
33  Vt.  92;  Woodbury  v.  Jones,  44 
N.  H.  206;  Owen  v.  Routh,  14  C. 
B.  327;  Bush  v.  Canfield,  2  Conn. 
485;  Loder  v.  Kekule,  3  C.  B.  (N. 
S.)  128;  Smith  v.  Berry,  18  Me. 
122;  Berry  v.  Dwinel,  44  Me.  255; 
Wyman  v.  American  P.  Co.,  8  Cush. 
168;  Pinkerton  v.  Manchester  &  L. 
R.,  42  X.  H.  424. 

65  McCullough  V.  Baker,  47  Mo. 
401;  Jones  v.  Woodbury,  11  B.  Mon. 
167;  Derby  v.  Jolmson,  21  Vt.  17; 
Chamberlin  v.  Scott,  33  Vt.  80; 
Friedlander  v.  Pugh,  43  Miss.  Ill; 
Polsley  V.  Ander.son,  7  W.  Va.  202, 
23  Am.  Rep.  613;  Danforth  v. 
Walker,  37  Vt.  239;   §§  713,  714. 

66  United  States  v.  Behan,  110 
U.  S.  338,  28  L.  ed.  168;  Hale  v. 
Hess,  30  Neb.  42,  58  (quoting  the 
two  preceding  propositions)  ;  Bern- 
stein V.  Meech,  130  N.  Y.  354;  Fried- 
land  V.  Myers,  139  N.  Y.  433;  Nel- 
son V.  Hatch,  70  App.  Div.  (N.  Y.) 
20(';  Griffin  v.  Sprague  E.  Co.,  116 
Fed.  749 ;  Masterton  v.  Mayor,  7  Hill 
61  (the  marble  at  the  quarry  was 
taken  into  account  in  the  estimate 
of  damages)  ;  Bryant  v.  Barton,  32 
Neb.  613;  McDaniel  v.  Ilutclierson, 
136  Ky.  412;  Hardaway-W.  Co.  v. 
Bradley,  163  Ala.  596;  McKenzie 
V,  Mitchell,  123  Ga.  72;  Mitchell  v. 


Vogt  Macli  Co.,  3  Ga.  App.  542; 
Enyart  v.  Inman-P.  L.  Co.,  54 
Wash.  38.  See  §  049;  Taylor  Mfg. 
Co.  V.  Hatcher  Mfg.  Co.,  3  L.R.A. 
587,  39  Fed.  440. 

The  loss  resulting  to  a  contractor 
where  the  employer  has  acted  in 
good  faith  has  been  apportioned  be- 
tween them.  Harris  v.  Faris-K.  C. 
Co.,  13  Idaho  211. 

In  Nurse  v.  Barnes,  T.  Raym.  77, 
the  defendant,  in  consideration  of 
10^,  promised  to  demise  a  mill  to 
the  plaintiff,  who  laid  in  a  large 
stock  to  employ  it,  which  he  lost 
because  the  defendant  refused  to 
give  him  possession.  A  verdict  of 
500?.  was  approved.  The  stock  sd 
procured  may  more  properly  be 
classed  as  an  expenditure  on  the 
faith  of  performance  by  the  other 
party.  See  §  81.  But  the  allow- 
ance of  a  loss  for  sucli  expenditures 
rests  on  a  similar  principle. 

In  Skinner  v.  Tinker,  34  Barb. 
333,  an  action  was  brought  to  re- 
cover damages  for  the  breach  of  a 
contract  for  a  partnership.  The 
plaintiff,  a  dentist  of  Brooklyn,  and 
the  defendant,  a  dentist  of  Havana, 
('ul)a,  enterefl  into  an  agreement  in 
writing  at  the  latter  place,  in 
Marcli,  1853,  by  wliidi  they  were  to 
do  a  joint  business  as  dentists  at 


292 


SUTHERLAND    ON    DAMAGES. 


[§  80 


for  orders  wliicli  are  due  imder  a  contract  is  the  equivalent  of 
an  expenditure  under  this  principle.^'  If,  by  partial  perfonn- 
ance  of  the  contract  a  contractor  has  enjoyed  a  part  of  the 
benefits  of  his  expenditure  for  full  performance  the  damages 


Havana,  to  begin  in  October  or  No- 
vember following,  if  the  plaintiff 
should  present  himself.  The  agree- 
ment was  silent  as  to  the  duration 
of  the  partnership.  Thereupon  the 
plaintiff  sold  his  business  at  Brook- 
lyn and  entered  into  bonds  not 
to  resume  practice  there,  and  made 
all  preparations  for  carrying  out  his 
agreement.  In  May  he  received  a 
letter  from  the  defendant  declining 
to  carry  out  the  agreement  on  his 
part.  On  the  trial  the  plaintiff 
proved  these  facts  and  his  readiness 
and  an  offer  to  fulfill,  and  recovered 
a  verdict  for  $4,000.  On  appeal  In- 
graham,  J.,  said:  "Performance  on 
the  part  of  the  plaintiff  by  appear- 
ing in  Havana,  in  October  or  No- 
vember, as  stated  in  the  contract, 
was  unnecessary  because  the  defend- 
ant had  given  notice  of  his  deter- 
mination not  to  form  a  partnership. 
The  plaintiff  was  then  entitled  to 
damages,  if  any  were  sustained,  up 
to  that  time,  but  not  to  prospective 
damages." 

Johnson  v.  Arnold,  2  Cush.  46, 
was  an  action  to  recover  damage? 
for  the  breach  of  a  special  contract 
by  which,  upon  certain  terms,  the 
defendant  agreed  to  furnish  and 
keep  the  plaintiff  supplied  with  a 
stock  of  goods  for  carrying  on  busi- 
ness in  the  defendant's  store  in  an- 
other state,  and  the  plaintiff  under- 
took to  carry  it  on  for  a  share  of 
the  profits  for  a  given  term.  It 
was  lu'ld  tliat  in  estimating  the 
damages  it  was  competent  to  allow 
the  plaintiff  compensation  for  the 
loss  of  his  time  and  for  the  expenses 
of  removing  his  family  to  and  from 


the  place  where  the  business  was  to 
be  carried  on. 

Noble  V.  Ames  Mfg.  Co.,  112  Mass. 
492,  is  apparently  not  consistent 
with  the  principle  stated.  The  de- 
fendant, doing  business  in  Massa- 
chusetts, wrote  the  plaintiff  in  the 
Sandwich  Islands:  "I  am  ready  to 
offer  you  a  foreman's  situation  at 
these  works  as  soon  as  you  may 
get  here;  pay,  $1,500  a  year."  The 
plaintiff  accepted  the  proposition 
and  came,  but  the  defendant  refused 
to  employ  him.  The  court  rejected 
the  claim  of  compensation  for  the 
time  and  expenses  in  coming  from 
the  Sandwich  Islands  on  the  ground 
that  those  items  preceded  the  tak- 
ing effect  of  the  contract,  and  were 
not  in  part  performance.  Morton, 
J.,  said :  "All  the  plaintiff  can  claim 
is  that  he  should  be  placed  in  as 
good  condition  as  he  would  have 
been  in  if  the  contract  had  been 
performed.  But  the  ruling  (allow- 
ing these  items)  puts  him  in  a  bet- 
ter condition."  On  the  trial  those 
were  the  only  items  claimed.  It 
was  stated  by  the  plaintiff's  coun- 
sel that  no  claim  was  made  for  busi- 
ness sacrifices  in  leaving  the  Islands 
and  coming  to  the  defendant  to  per- 
form the  contract,  and  none  for 
any  loss  of  time  or  other  loss  or 
damage  after  the  refusal  of  the  de- 
fendant to  employ  him. 

Tlie  contrary  view  is  expressed 
in  Moore  v.  Mountcastle,  72  Mo.  605, 
where  plaintiff  was  allowed  to  re- 
cover for  loss  of  time  and  expense 
in  going  to  perform  a  contract.  The 
expense  incurred  in  taking  another 
person  with    him    to    assist  in  the 


§  SIJ 


COMPENSATION. 


293 


he  is  entitled  to  arc  ])roportioiiate]y  lessened.^'  To  l)e  recover- 
able expenses  must  bo  incurred  in  pursuance  of  the  contract.^" 
§  81.  Same  subject;  damages  by  relying  on  performance. 
Third,  such  losses  uuiy  consist  of  expenditures  made  by  one 
party  to  a  contract  and  damages  from  his  own  acts  done  on 
the  faith  of  its  being  performed  by  the  other,  in  furtherance 
of  the  object  for  which  the  contract  purports  to  be  made,  or 
the  object  which  was  in  the  contemplation  of  the  parties  at 
the  time  of  contracting,"^"  as  the  price  paid  for  a  ticket  to  a  place 
of  amusement  and  expenses  incurred  preparatory  to  attending 


work  he  was  to  do  was  disallowed. 
His  personal  expenses  and  the  loss 
of  his  time  were  "such  damages  as 
may  be  presumed  necessarily  to 
have  resulted  from  the  breach  of 
the  contract,"  and  hence  did  not 
need  to  be  specially  pleaded. 

In  Smith  v.  Sherman,  4  Cusli. 
408,  it  was  held  that  loss  of  time 
and  expenses  incurred  in  prepara- 
tion for  marriage  are  directly  inci- 
dental to  the  bread)  of  the  marriage 
promise. 

In  Durkee  v.  Mott,  8  Barb.  423, 
on  a  contract  to  pay  a  certain  price 
for  rafting  logs  which  the  defend- 
ant put  an  end  to  before  the  labor 
began,  the  plaintiff  recovered  the 
immediate  loss  in  preparing  to  per- 
form the  contract  by  providing  men 
for  that  purpose. 

Woodbury  v.  Jones,  44  N.  II.  200, 
affirms  the  same  doctrine.  There 
the  defendant  proposed  to  the  plain- 
tiff, wlio  was  then  living  in  Minne- 
sota, that  if  he  would  come  back 
to  N.  B.  he  might  move  into  the  de- 
fendant's house,  and  he  would  give 
the  plaintiff  and  his  wife  a  year's 
board,  and  he  might  carry  on  tlie 
defendant's  farm  *on  any  terms  he 
might  elect.  He  accepted,  and  came 
back;  defendant  failed  to  make  his 
offer  good;  it  was  competent  for  the 
jury  to  take  into  consideration  tlie 
expenses  of-' removing  to  N.  B. 


In  an  action  against  the  pro- 
prietor of  a  school  for  the  breach 
of  a  contract  to  employ  the  plaintiff 
as  a  teacher,  made  for  her  liy  lier 
father  during  her  absence  in  Europe, 
the  plaintiff  was  held  not  entitled 
to  recover  as  part  of  her  damages 
the  expenses  of  lier  journey  home,  it 
not  appearing  that  they  were  in- 
curred in  consequence  of  the  con- 
tract, or  were  in  tbe  contemplation 
of  the  parties  when  it  was  made. 
Benziger  v.  Miller,  50  Ala.  206. 
See  Williams  v.  Oliphant,  .3  Ind. 
271;  Bulkley  v.  United  States.  ]!> 
Wall.  .37,  22  L.  ed.  02;  Dillon  v. 
Anderson,  43  N.  Y.  231;  llosnier  v. 
Wilson,  7  Mich.  294,  74  Am.  Dec. 
416. 

67Speirs  v.  Union  I).  F.  Co..  ISO 
Mass.  87,  90;  Sterling  O.  Co.  v. 
House,  25  W.  Va.  64. 

68  0'Connell  v.  Bosso.  .')(>  Ark. 
603;  May  v.  Breiinig  (X.  Y.  Misc.), 
120  Supp.  98;  M;iy  v.  I'oluboff,  65 
N.  Y.  Misc.  546;  sj  713:  McKcn:'.ic 
V.  Mitchell,  .supra. 

69Curran  v.  Smith,  149  Fed.  945. 
81  C.  C.  A.  537;  Ramsey  v.  Maberry, 
135  Mo.  App.  569;  Tucker  v.  Dcer- 
ing  S.  R.  Co.,  133  id.  122;  Kenerson 
v.  Colgan,  164  Mass.  166. 

70Curran  v.  Smith,  149  Fed.  945. 
81  C.  C.  A.  .■)37 :  Owdi  -v.  Cnited 
States,  44  Ct.  of  Cls.  440;  Choctaw, 
etc.  R.  Co.  v.  Rolfe,  76  Ark.  220; 


294 


SLTIIERLAXD    ON    DAMAGES. 


L§  ^1 


the  performance  which  was  prevented  by  the  defendant.'^  It 
is  not  cause  for  denying  a  recovery  that  the  contract  pursuant 
to  which  the  expenditures  were  mafle  was  void  under  the  statute 
of  frauds.'^  Such  losses  cannot  be  recovered  if  incurred  after 
notice  of  the  refusal  of  the  other  party  to  perform  the  contract," 


Kanson  v.  Ranaon,  233  111.  3G0 ;  San- 
itary Diet.  V,  McMahon,  110  111. 
App.  510;  King  v.  Perfection  B. 
Mach,  Co.,  81  Kan.  809;  Taylor  v. 
Spencer,  7-5  Kan.  1.52;  Illinois;  Cent. 
K.  Co.  V.  Do»8,  137  Ky.  6.59;  Mc- 
Daniel  v.  Hutcherson,  1.36  Ky.  412; 
Pennebaker  v.  Bell  City  Mfg.  Co., 
330  Ky.  592;  Seretto  \.  Pvockland, 
etc.  R.  Co.,  101  Me.  HO;  DctiIoti  v. 
Gill,  102  Md.  386,  3  L.R.A.(N.S.) 
465 ;  Garfield  4  P.  C.  Co.  v,  Pennsyl- 
vania C.  &  C.  Co.,  199  Ma»».  22; 
Boyden  v.  Hill,  198  Mass.  477;  Ald- 
erton  v.  Williams,  139  Mich,  296; 
Thorn  v.  Morgan,  135  Mich.  51 ; 
Crowlej-  V.  Burns  B.  &.  Mfg.  Co.,  100 
Minn.  178;  Ragland  v.  Conqueror  Z. 
Co.,  1.36  Mo.  App.  631 ;  Holt  v.  Unit- 
ed Security  L.  Ins.  Co.,  76  X.  J.  L. 
.585,  2]  L.R.A.rN.S.)  691,  citing  the 
text:  Fuldner  v.  Fieb  CS.  Y.  Misc.), 
127  Supp.  330;  American-H.  Pub. 
Co.  V.  Miles,  68  N.  Y.  Misc.  334; 
Ideal  W.  Co.  v.  Garvin  Mach.  Co., 
92  App.  Div.  (N.  Y.)  187;  Brown  v. 
East  Carolina  R.  Co.,  1.54  N.  C.  300; 
Pittsburg  S.  P'oundry  V.  Pittsburg  S. 
Co.,  223  Pa.  4.30;  Singer  Mfg.  Co. 
Christian,  211  Pa.  .534;  McMeekin 
V.  Southern  R.  Co.,  82  S.  C.  468; 
.Martin  v.  Seaboard  A.  L.  R.,  70  S. 
C.  8;  Gross  v.  Heckert,  120  Wis.  31 4: 
Hanes  v.  Idaho  I.  Co.,  21  Idaho 
512;  Sommerville  v.  Same,  21  Idaho 
546,  123  Pac.  .302;  Murphy  v.  Pitt 
C-  Co..  52  Pa.  Super.  316;  Hatties- 
bnrg  Lumber  Co.  v.  Herrick,  129 
C.  C.  A.  288,  212  Fed.  8.34;  Wolters 
V.  Schultz,  1  N.  Y.  Mi8<'.  196:  Gor- 
don v.  Constantine  H.  Co.,  1J7  Mich. 


620;  People's  B.  L.  A  S.  Ass'n  v, 
Pickerell,  21  Ky.  L.  Rep.  1386,  55 
S.  W.  194;  Kelly  v.  Davis,  9  Ky.  L. 
Rep.  647  (Ky.  Super.  Ct.)  ;  Dean  v. 
White,  5  Iowa,  266;  Grand  Tower 
Co.  V.  Phillips,  23  Wall.  471,  23  L. 
ed.  71;  Driggs  v.  Dwight,  17  Wend. 
71,  31  Am.  Dec.  283;  Bunney  v.  Hop- 
kinson,  1  L.  T.  (X.  S.)  53;  Smith 
V,  Green,  1  C.  P.  Div.  92;  Ran- 
dall v.  Xewson,  2  Q.  B.  Div.  102; 
Leffingwell  v.  Elliott,  10  Pick.  204; 
Milburn  v.  Belloni,  39  X.  Y.  53,  100 
Am.  Dec.  403;  Thomas  v.  Dingley, 
70  Me.  100,  35  Am.  Rep.  310;  Ran- 
dall V.  Raper,  E.  B.  &  E.  84;  Bor- 
radaile  v.  Brunton,  8  Taunt.  535; 
Brown  v.  Edgington,  2  M,  &  G.  279; 
French  v.  Vining,  102  Mass.  132,  3 
Am.  Rep.  440;  Johnson  v.  Meyer,  34 
.Mo.  2.55;  Rowland  v.  Shelt^m,  25 
Ala.  217;  Ferris  v.  OrmnUx-k,  33 
Conn.  513;  Zuller  v.  Rogers,  7  Hun, 
540;  Fisk  V.  Tank,  12  Wis.  276,  78 
Am.  Dec.  737;  Reggio  v.  Braggiotti, 
7  Cush.  166;  -Jet^-r  v.  Glenn,  9  Rich. 
374;  .Skagit  R.  &.  L.  Co.  v.  Cole,  2 
Wash,  57;  Bernstein  v.  Meech,  130 
X.  Y.  354.  .Sec  .Mas^>n  v,  Alalmma 
1.  Co.,  73  Ala,  270. 

71  IVople  v.  Flynn,  189  X.  Y.  180. 

72  Baldridge  v.  Centgraf,  82  Kan. 
240. 

73  Thorn  v.  .Morgan,  135  Mich,  51  ; 
Durham  v,  Hastings  P.  Co,,  95  App. 
I>iv.  (X.  Y,)  835;  Mendell  v.  Will- 
young,  42  X,  Y.  Misc.  210;  Kellogg 
V.  Malick,  125  Wis.  239;  Allington 
k  C.  ,Mfg.  Co,  V.  DHtoH  Rcl.  Co., 
133  .Mich.  427;  Rice  Co.  v.  Penn  P, 
G.  Co.,  88  111.  App.  407. 


§  82] 


COMPENSATION. 


295 


nor  unless  they  were  within  the  contemplation  of  such  party.^* 
They  must  have  been  actually  incurred.'*  If  the  profits  which 
would  have  resulted  from  performance  arc  recovered  there  can- 
not be  a  recovery  of  expenses.'^ 

§  82.  Same  subject;  liability  to  third  persons;  covenants  of 
indemnity.  Fourth,  such  losses  may  consist  of  sums  necessarily 
paid  to  third  persons,  or  of  sums  recovered  and  expenses  in- 
curred in  actions  brought  by  third  persons  in  consequence  of 
the  defendant's  breach  of  contract.  They  are  those  losses  which 
may  result  from  suretyship  or  the  breach  of  any  duty  or  obli- 
gation of  indemnity.'^'  In  such  cases  the  practical  question 
will  always  be  what  the  plaintiff  was  obliged  or  authorized  to 


74Bixby-T.  L.  Co.  v.  Evans,  167 
Ala.  431,  29  L.R.A.(X.S.)   194. 

75  Winston  C.  Mach.  Co.  v.  Wells- 
\V.  T.  Co.,  144  N.  C.  421. 

76  American-H.  Pub.  Co.  v.  Miles, 
US  N.  Y.  Misc.  334. 

77  Rogers  v.  Riverside  L.  &  I.  Co., 
132  Cal.  9;  Mowbray  v.  Merryweath- 
er,  [1895]  1  Q.  B.  57,  [1895]  2  id. 
640;  French  v.  Parish,  14  N.  H.  496; 
Newburgh  v.  Galatian,  4  Cow.  340; 
Holdgate  v.  Clark,  10  Wend.  215; 
Lincoln  v.  Blancliard,  17  Vt.  4(54; 
Chamberlain  v.  Godfrey,  30  Vt.  380, 
84  Am.  Dec.  690;  Westervelt  v. 
Smith,  2  Duer,  449:  lilies  v.  Fitz- 
gerald, 11  Tex.  417:  Braman  v. 
Dowse,  12  Cush.  227  ;  Spear  v.  Stacy, 
26  Vt.  61  ;  Howard  v.  Lovegrove,  L. 
R.,  6  Ex.  43;  Finckh  v.  Evers,  25 
Ohio  St.  82:  Webb  v.  Pond,  19 
Wend.  423;  Rockfeller  v.  Donnelly, 
8  Cow.  623;  Warwick  v.  Richardson, 
10  M.  &  W.  284;  Gerrish  v.  Smyth, 
10  Allen.  303;  Ray  v.  Clemens,  6 
Leigh,  600;  Kip  v.  Brigham,  6 
Johns.  158;  Colter  v.  Morgan,  12  B. 
Mon.  278;  Lowell  v.  Boston,  etc. 
R.  Co.,  23  Pick.  24;  Baynard  v.  Har- 
ritty,  1  Houst.  200:  Robbins  v.  Chi- 
cago. 4  Wall.  657,  18  L.  ed.  427,  16 
Am.  Neg.  Rep.  601;  Crawford  v. 
Turk,    24    Gratt.    176:    Duxbury    v. 


Vermont,  etc.  R.  Co.,  26  Vt.  751; 
Annett  v.  Terry,  35  N.  Y.  256; 
Spalding  v.  Oakes,  42  Vt.  343; 
Chamberlain  v.  Beller,  18  X.  Y.  115; 
Bridgeport  Ins.  Co.  v.  Wilson.  34  N. 
Y.  275 ;  Proprietors  of  L.  &  C.  v. 
Lowell  Horse  R.  Co.,  109  Mass.  221; 
Briggs  v.  Boyd,  37  Vt.  534;  Colburn 
V.  Pomeroy,  44  N.  H.  19;  Thomas  v. 
Beckman,  1  B.  Mon.  31;  Robertson 
v.  Morgan,  3  id.  309;  Littleton  v. 
Richardsdn,  32  N.  H.  59;  Gibson  v. 
Love,  2  Fla.  598;  Trego  v.  Rubovits, 
178  111.  App.  127:  Southern  R.  Co. 
V.  Lewis,  165  Ala.  451 ;  McArthor  v. 
Ogletree,  4  Ga.  App.  429;  Evans  v. 
Howell,  211  111.  85;  Senft  v.  Vanek, 
209  111.  361;  Cousins  v.  Pjixton,  122 
Iowa  465;  Bourke  v.  Spaight,  80 
Kan.  387 ;  Samson  v.  Zimmerman, 
73  Kan.  654;  Wellington  Nat.  Bank 
V.  Robbins,  71  Kan.  748,  114  Am. 
St.  523:  Louisville  &  N.  R.  Co.  v. 
Schmidt,  128  Ky.  229;  Pittsburg, 
etc.  R.  Co.  v.  Dodd,  115  Ky.  176: 
Stewart  v.  American  B.  Co.,  108  Md. 
200;  Chesapeake  S.  S.  Co.  v.  Mer- 
chants' Nat.  Bank,  102  :\Id.  589; 
Hetherington  &  Sons  v.  Firth.  210 
Mass.  8;  Schenk  v.  Forrester.  102 
Mo.  App.  124:  Brown  v.  Cowles.  72 
Neb.  896:  Hubbard  v.  Gould,  74  N. 
H.   25;    Fairfield   v.   Day,   71   N.   H. 


296  SUTHERLAND    ON    DAMAGES.  [§    82 

pay  both  in  respect  to  the  principal  and  incidental  costs  or 
expenses.  If  there  has  been  a  voluntary  payment  by  the  indem- 
nified party  or  a  compulsory  payment  resulting  from  a  suit 
by  which  the  indemnitor  is  not  bound  by  his  contract  or  in 
consequence  of  the  lack  of  notice  to  defend,  the  question  of 
the  liability  of  the  indemnified  party  to  make  such  payment  is, 
according  to  some  authorities,  open  in  his  action  for  indemnity.'* 
In  a  recent  case  ''^  a  contractor  for  machinery  supplied  an 
article  made  for  him  by  the  defendant.  It  was  defectively 
constructed  and  in  consequence  the  plaintiif  was  subjected  to 
a  judgment  for  damages  resulting  from  the  breaking  of  that 
article,  such  judgment  being  rendered  in  Canada.  No  offer  of 
the  defense  of  the  action  on  which  such  judgment  was  rendered 
was  made  to  the  plaintiff.  The  conclusion  of  the  court  was 
that  where  a  subvendee  or  a  subcontractor  has  a  legal  claim 
for  indemnification  and  has,  under  fear  of  the  consequences, 
made  an  adjustment  or  been  compelled  to  yield  to  a  judgment 
under  circumstances  indicating  good  faith  and  a  reasonable 
amount  of  resistance,  the  amount  thus  determined,  either  by 
the  adjustment  or  by  the  litigation,  becomes  evidence  of  the 
amount  of  damages  to  be  awarded  against  the  principal  con- 
tractor.®" This  conclusion  was  aside  from  the  question  whether 
the  judgment  should  stand  as  of  conclusive  effect  or  only 
■prima  facie  evidence  as  to  the  measure  of  damages.  If  there 
is  an  express  indemnity  against  the  result  of  a  particular  suit, 
whether  the  indemnitor  is  a  party  or  not,  the  judgment  binds 
him  for  the  purposes  of  that  contract.®^     But  under  a  general 

63;  Olmstead  v.  Rawson,  188  N.  Y.  Rapelye   v.   Prince,   4   Hill,    119,   40 

517;   Gallo  v.  Brooklyn  Sav.  Bank,  Am.  Dec.  267. 

129  App.  Div.   (N.  Y.)   698;  Brown-  79  Nashua  I.  &  S.  Co.  v.  Brush,  33 

ing  V.  Stillwell,  42  N.  Y.  Misc.  346;  q   C.  A.  456,  91  Fed.  213. 

Hughes  V.  Crocker,  148  N.  C.  318;  go  Citing  Smith  v.  Compton,  3  B. 

Mangold  V.  Isabelle  F.   Co     31    Pa.  ^^  ^^   ^^     ^^^  ^^^^  ^^^^ 

Super.  275.     See  Berlin  I.  B.  Co.  v. 

.         .    ■     r>    n       Ta  n     ^    1  ^^  Patton  v.  Caldwell,  1  Dail.  419, 

American  B.  Co.,  76  Conn.  1.  ' 

78  Seaboard  A.  L.  R.  Co.  v.  Main,  ^    ^^    ^'1-    204;    Rapelye    v.    Prince, 

132  N.  C.  445;  Douglas  v.  Rowland,  swp'a -•  Thomas  v.  Hubbell,  15  N.  Y. 

24  Wend.  35;   Lee  v.  Clark,  1  Hill,  405,  69  Am.  Dec.  619;   Chamberlain 

56;    Duffield  v.   Scott,   3  T.  R.   374;  v.  Godfrey,  36  Vt.  380,  84  Am.  Dec. 

Aberdeen  v.  Blackmar,  0  Hill,  324;  C90. 


§    82]  COMPENSATION.  297 

covenant  of  indemnity  against  yiiits  the  covenantor  has  a  right 
to  defend  either  in  the  action  against  the  indemnified  party  or 
in  the  latter's  action  upon  the  covenant  of  indemnity.  There 
is  a  marked  distinction  hetween  covenants  which  stipulate 
against  the  consequences  of  a  suit  and  those  which  contain  no 
such  undertalving.  In  the  latter  class  the  judgment  is  res  inter 
alios  acta,  and  proves  nothing  except  rem  ipsam  against  the 
indemnitor  unless  he  had  notice  and  an  opportunity  to  defend. 
The  want  of  notice  does  not  go  to  the  cause  of  action ;  the 
judgment  is  prima  facie  evidence  only  against  the  indemnitor 
and  he  is  at  liberty  to  defend  against  the  demand  on  which  it 
is  founded.®^  If  notice  is  expressly  stipulated  for  the  want  of 
it  will  defeat  the  action. ^^ 

As  to  the  right  to  costs  and  expenses  of  defending  a  former 
suit  brought  to  enforce  a  liability,  against  which  there  is  an 
agreement  or  duty  to  indemnify,  there  is  some  conflict  of  deci- 
sion. If  a  surety  for  a  liquidated  debt  is  sued  upon  it  he  is 
not  bound  to  pay  it  to  save  costs;  and  he  may  recover  of  the 
principal  the  costs  he  is  compelled  to  pay  as  incident  to  a  default 
judgment  and,  in  addition,  the  sum  he  is  obliged  to  pay  of 
the  debt.^*  And  where  the  action  is  founded  on  a  disputable 
liability  or  an  unliquidated  demand  the  rule  in  England,  and 
generally  in  this  country,  allows  the  surety  or  indemnified 
party  to  give  notice  of  the  suit  to  the  party  ultimately  liable 
and  abide  his  directions ;  if  he  gives  none,  to  made  no  defense ; 

82  Henry    v.    Heldraaier,    226    IlL  84  Hulett  v.  Soullard,  26  Vt.  295; 

152;  Grant  V.  Maslen,  151  Mich.  466,  Kemp  v.  Finden,  12  M.  &  W.  421; 

16     L.R.A.(N.S.)      910;      Clark     v.  Ex  parte  Marshall,  1  Atk.  262;  Bak- 

Clune,    172    Mich.    323 ;    Bridgeport  gr  v.  Martin,  3  Barb.  634 ;  Elwood  v. 


Ins.  Co.  V.  Wilson,  34  N.  Y.  275 
Smith  V.  Compton,  2  B.  &  Ad.  407 
Reggio  V.  Braggiotti,  7   Gush.  1G6 


Deifeiidorf,  5  Barb.  412;  Bleadon 
V.  Charles,  7  Bing.  246;  Holmes 
Weed,    24    Barb.    546;    Wynn    v. 


Campbell,    27    Mich.    497;     Wright 
V.  Whiting,  40  Barb.  240;   Wallace 


Marlatt  V.  Clary,  20  Ark.  251  ;  Boyd  ^  .    ^^^^,^^    ^^        ^^^^^^ 

V.  Whitfield,   19  Ark.  447;   Colling- 
wood  V.  Irwin,  3  Watts,  306;   Paul 

V.  Witman,  3  W.  &  S.  407;   Pitkin  ^    ^    . 

V.    Leavitt,    13    Vt.    379;    Train    v.  ^'-  Gilchrist,  24  Up.  Can.  C.  P.  40; 

Gold,  5  Pick.  380;  Bavnard  v.  Har-  ^raig  v.  Craig,  5  Rawle.  91;  Robert- 

rity,  1   Houst.  200.  ^o"  ^^  ^lorgan,  3  B.  Men.  307;  Col- 

83  Bridgeport  Ins.   Co.  v.  Wilson,  tor  v.  Same,  12  id.  278.     See  Pierce 

34  N.  Y.  275.  v.  Williams,  23  L.  J.   (Ex.)   322.  . 


298  SUTHERLAND    ON    DAMAGES.  [§    82 

or  if  the  facts  are  such  as  to  render  some  defense  reasonable 
and  judicious  and  there  is  a  probability  of  success  he  is  at  lib- 
erty to  defend;  and  such  costs  and  expenses  as  are  reasonable 
and  incurred  in  good  faith  he  will  be  entitled  to  recover  as  part 
of  his  indemnity,  lie  may  recover  not  only  the  costs  taxed 
against  him  by  the  prevailing  adverse  party,  but  the  costs  of 
his  defense.*^  A  man  has  no  right,  merely  because  he  has  an 
indemnity,  to  defend  a  hopeless  action  and  put  the  person  guar- 
antying to  useless  expense.^^  The  rule  formerly  laid  down  was 
that  if  the  defendant  in  the  first  action  placed  the  facts  before 
the  person  whom  he  sought  ultimately  to  charge  and  that  person 
declined  to  intervene  and  left  him  to  take  his  own  course,  it 
would  be  a  question  for  the  jury  whether  it  was  reasonable 
to  defend  or  whether  the  defense  was  conducted  in  a  fair  man- 
ner; in  deciding  that  question  the  jury  would  have  to  consider 
whether  it  was  more  prudent  to  settle  the  matter  by  compromise, 
pay  the  money  into  court  or  let  judgment  go  by  default.''  And 
this  is  still  probably  the  law.  An  agent,  surety,  or  one  expressly 
indemnified  in  respect  to  the  liability  sought  by  action  to  be 
fixed  on  him,  who  relies  on  the  indemnity  for  security  against 
loss,  has  no  personal  interest  to  defend  where  he  can  connect 
the  indemnitor  with  that  action  so  as  to  conclude  him.  But 
where  notice  cannot  be  given  or  for  any  reason  is  omitted  the 
defendant  who  depends  on  another  for  indemnity  must  neces- 

85  Hubbard  v.  Gould,  74  N.  H.  25 ;  unliquidated  demand  and  the  person 

Duxbury  v.  Vermont   Cent.   R.   Co.,  against    whom    judgment    has    been 

26   Vt.   751 ;    Smith   v.   Compton,   3  rendered  has  had  no  opportunity  to 

B.  &  Ad.  407 ;  Pitkin  v.  Leavitt,  13  defend   it   he   is   not   liable   for   the 

Vt.  379;  Hayden  v.  Cabot,  17  Mass.  costs    and   expenses   of   the    defense 

169 ;  Wynn  v.  Brooke,  5  Rawle,  106 ;  made  by  the  person   against  whom 

New  Haven  &  N.  Co.  v.  Hayden,  117  judgment  was  rendered.     Nashua  I. 

Mass.  433 ;  Bonney  v.  Seely,  2  Wend.  &  S.  Co.  v.  Brush,  33  C.  C.  A.  456, 

481;   Howard  v.  Lovegrove,  L.  R.  6  91  Fed.  213. 

Ex.  43;  Ottumwa  V.  Parks,  43  Iowa,  86  Wrightup     v.     Chamberlain,     7 

119;    Baxendale  v.   London,   etc.   R.  Scott,  598;   Kiddle  v.  Lovett,  16  Q. 

Co.,    L.    R.    10    Ex.    35;     Collen    v.  B.     Div.     605;     Gillett  ,  v.     Rippon, 

Wright,  7  El.  &  Bl.  30J  ;   Westfield  jNIoody  &  M.  406. 

V.  Mayo,  122  Mass.  100,  23  Am.  Rep.  87  Mayne  on  Dam..  8th  ed.,  p.  110; 

292;  Aguis  v.  Great  Western  C.  Co.,  Mors-le-Blanch  v.  Wilson,  L.  R.  8  C. 

[1899]  1  Q.  B.  413.  P.  227;  Detroit  v.  Grant,  135  Mich. 

But  if  the  action  is  to  enforce  an  626. 


§  83] 


COMPENSATION. 


299 


sarily  so  far  defend  the  action  as  to  obtain  the  best  practicable 
assurance  that  the  amount  which  he  pays  he  will  have  a  legal 
right  to  have  reimbursed. 

§  83.  Same  subject;  indemnity  to  municipalities;  counsel  fees. 
Municipal  corporations  charged  with  the  duty  of  keeping  pub- 
lic ways  in  repair  have  a  right  of  indemnity  against  parties 
contracting  to  perform  this  duty  if  they  fail  to  fulfill ;  and 
against  parties  who,  by  abuse  of  license  or  tortiously,  put  such 
ways  out  of  repair,  when  such  corporations  have  been  com- 
l>elled  to  pay  damages  to  some  person  injured  in  consequence 
of  such  defect  or  want  of  repair.**  The  corporation,  not  being 
in  pari  delicto,  is  not  subject  to  the  principle  which  excludes 
contribution  or  indemnity  between  wrong-doers,  and  has  a  right 
of  recovery  over  against  the  party  by  whose  fault  the  injury 
w^as  suffered.*^  Where  notice  has  been  given  to  the  person  pri- 
marily at  fault  to  take  upon  himself  the  defense,  he  is  bound  by 
the  judgment  as  to  the  damages  paid  and  costs.^"     In  such  cases 


88  Blocker  v.  Owensboro,  129  Ky. 
75;  Cambridge  v.  Hanscom,  186 
Mass.  54 ;  Ashley  Borough  v.  Lehigh, 
etc.  C.  Co.,  232  Pa.  425;  Rochester 
V.  Montgomery,  72  N.  Y.  65 ;  Port 
Jervis  v.  First  Nat.  Bank,  96  id. 
550;  Chicago  v.  Robbins,  2  Black, 
418,  17  L.  ed.  298;  Robbins  v.  Chi- 
cago, 4  Wall.  657,  18  L.  ed.  427; 
Woburn  v.  Henshaw,  101  Mass.  193, 
3  Am.  Rep.  333 ;  Stoughton  v.  Port- 
er, 13  Allen,  191;  Boston  v.  Worth- 
ington,  10  Gray,  496,  71  Am.  Dec. 
678;  Lowell  v.  Boston,  etc.  R.  Co., 
23  Pick.  24;  Brooklyn  v.  Brooklyn 
City  R.  Co.,  47  N.  Y.  475,  7  Am. 
Rep.  46D;  Ottumwa  v.  Parks,  43 
Iowa  119;  Duxbury  v.  Vermont 
Cent.  R.  Co.,  26  Vt.  751;  Littleton 
V.  Richardson,  32  N.  H.  59;  Pro- 
prietors of  L.  &  C.  V.  Lowell  H.  R. 
Co.,  109  Mass.  221 ;  Corsicana  v. 
Tobin,  23  Tex.  Civ.  App.  492. 

89  Baltimore  &  0.  R.  Co.  v.  How- 
ard County,  113  Md.  404. 

90  Cases  cited  in  first  note  to  this 


section;  Mayor  v.  Brady,  151  X.  Y. 
611;  Byne  v.  Americus,  6  Ga.  App. 
48;  Fleming  v.  Anderson,  39  Ind. 
App.  343;  Baltimore  &  O.  R.  Co.  v. 
Howard  County,  111  Md.  176,  40 
L.R.A.(N.S.)  1172;  New  York  v. 
Corn,  133  App.  Div.  (X.  Y.)  1;  Se- 
attle V.  Regan,  52  Wash.  262,  132 
Am.  St.  963 ;  Seattle  v.  Puget  Sound 
I.  Co.,  47  Wash.  22,  12  L.R.A.(N.S.) 
949,  125  Am.  St.  884;  Seattle  v. 
Saulez,  47  Wash.  365. 

In  Ottumwa  v.  Parks,  43  Iowa, 
119,  where  the  party  souglit  to  be 
made  liable  to  the  city  assumed  the 
defense  of  tlie  action  against  it  the 
taxable  costs  were  allowctl  so  fur  as 
they  were  paid  by  tlio  city;  })Ut  the 
costs  of  an  appeal  were  disallowed, 
there  being  no  evidence  that  it  was 
taken  at  the  defendant's  request. 

Notice  need  not  be  given  if  the 
party  sued  jointly  with  tlie  city  has 
procured  a  discontinuance  of  the  ac- 
tion as  to  himself.  Detroit  v.  Grant, 
135  Mich.  626. 


300  SUTHERLAND    ON    DAMAGES.  [§    83 

the  demands  for  damages  are  unliquidated  and  generally  dis- 
putable, and  a  defense  would  be  proper  and  judicious,  whether 
the  party  ultimately  liable  has  notice  and  assumes  it  or  not. 
The  costs  taxed  against  the  corporation,  where  a  reasonable  de- 
fense is  made,  in  case  of  recovery,  and  the  expense  of  the  de- 
fense, including  counsel  fees,  are  proper  items  for  damage  for 
which  it  may  claim  indemnity.  They  are  among  the  direct 
consequences  of  the  defendant's  fault  and  the  breach  of  the 
implied  promise  or  duty  to  save  harmless. 

In  a  Massachusetts  case  ^^  Lord,  J.,  said:  "The  difficulty  is 
not  in  stating  the  rule  of  damages,  but  in  determining  whether 
in  the  particular  case  the  damages  claimed  are  within  the 
rule.  E^atural  and  necessary  consequences  are  subjects  of  dam- 
ages ;  remote,  uncertain  and  contingent  consequences  are  not. 
Whether  counsel  fees  are  natural  or  necessary,  or  remote  and 
contingent,  in  a  particular  case,  we  think  may  be  determined 
upon  satisfactory  principles ;  and,  as  a  general  rule,  when  a 
party  is  called  upon  to  defend  a  suit  founded  upon  a  wrong  for 
which  he  is  held  responsible  in  law  without  misfeasance  on  his 
part,  but  because  of  the  wrongful  act  of  another  against  whom 
he  had  a  remedy  over,  counsel  fees  are  the  natural  and  reason- 
ably necessary  consequence  of  the  wrongful  act  of  the  other,  if 
he  has  notified  the  other  to  appear  and  defend  the  suit.  When, 
however,  the  claim  against  him  is  upon  his  own  contract  or  for 
his  own  misfeasance,  though  he  may  have  a  remedy  against 
another,  and  the  damages  recoverable  may  be  the  same  as  the 
amount  of  the  judgment  recovered  against  himself,  counsel 
fees  paid  in  defense  of  the  suit  against  himself  are  not  recov- 
erable." ^^     It  appears  to  the  wa-iter  that  such  expenses  being 

91  Westfield  v.  Mayo,  122  Mass.  defendant  was  liable  because  they 
]00,  23  Am.  Rep.  292.  were  not  the  natural  and  reasonable 

92  111  Chase  v.  Bennett,  59  N.  H.  consequence  of  his  neglect,  and  be- 
394,  an  action  for  neglect  of  a  clerk  cause  he  was  not  notified  to  defend 
to   index   a   mortgage,   whereby   the  that  suit. 

plaintiff  was  induced  to  take  a  mort-  Such     fees    are    not    recoverable 

gage   of   the   property   supposing   it  against  the  person  liable  over  for  a 

to  be  unincumbered,  it  was  held  that  defect  in  a  highway.     Corsicana  v. 

counsel  fees  paid  in  defending  a  suit  Tobin,  23  Tex.  Civ.  App.  492. 

by  the  prior  mortgagee  for  the  prop-  If   the   counsel   fees   are   paid  by 

erty  were  not  damages  for  which  the  a  third  party  for  its  benefit  and  the 


§    83]  COMPENSATION.  301 

recognized  as  not  remote  and  contingent,  the  test  here  given  for 
their  allowance  or  rejection  is  not  sound.  They  were  allowed 
in  that  ease,  the  plaintiff,  a  municipal  corporation,  haviug  de- 
fended a  suit  for  damages  brought  against  it  for  a  tlcfect  in 
a  sidewalk  caused  hj  the  defendant;  but  by  the  nde  hiid  down, 
an  innocent  agent  who  does  at  the  request  of  his  principal  a 
wrongful  and  injurious  act,  on  being  sued  therefor  would  have 
no  recourse  for  fees  of  counsel  employed  to  defend  that  action."' 
And  yet  in  this  opinion  the  learned  judge  says:  "Within 
this  rule  a  master  who  is  immediately  responsible  for  the  wrong- 
ful acts  of  a  servant,  though  there  is  no  misfeasance  on  his 
part,  might  recover  against  such  servant  not  only  the  amount 
of  the  judgment  recovered  against  him,  but  his  reasonable  ex- 
penses, including  counsel  fees,  if  notified  to  defend  the  suit." 
Where  there  is  an  implied  or  express  indemnity  which  covers 
the  consequences  of  being  sued  and  having  to  defend  an  action, 
all  the  usual  concomitants  of  such  a  situation  are  necessarily 
within  the  contemplation  of  the  parties ;  and  if  there  is  no 
objection  of  improvidence  or  bad  faith  the  expense  of  counsel 
is  obviously  as  proper  to  be  allowed  as  the  fees  of  witnesses, 

city  is  not  bound  to  reimburse  him  recover  their  taxable  costs.   See  Coo- 

they    are    not    recoverable.      Cam-  lidge  v.  Brigham,  5  Mete.    (Mass.) 

bridge  v.  Hanscom,  186  Mass.  54.  68.    But  the  counsel  fees  cannot  be  al- 

93  See  Howe  v.  Buffalo,  etc.  R.  Co.,  lowed.     They  are  expenses  incurred 

37  N.  Y.  297.  by  tlie  party  for  his  own   satisfae- 

In  Reggio  v.  Braggiotti,  7  Cush.  tion,  and  they  vary  so  much  with 
366,  the  defendant  sold  to  the  the  character  and  distinction  of  tlie 
plaintiff  an  article  which  he  war-  counsel  that  it  would  be  dangerous 
ranted  to  be  one  known  in  commerce  to  permit  him  to  impose  sucli  a 
as  opium,  with  a  view  of  its  being  charge  upon  an  opponent;  and  the 
sold  as  such;  but  it  was  not  opium,  law  measures  the  expenses  incurred 
or  of  any  value;  the  plaintiff  hav-  in  the  management  of  a  suit  by  the 
ing  sold  with  like  warranty,  relying  taxable  costs."  Counsel  fees  are 
on  tlie  defendant's  warranty,  had  here  treated  as  in  some  sense  iin- 
been  sued  by  his  vendee  and  com-  certain  in  amount,  and  for  this  rea- 
pelled  to  pay  damages  and  costs;  he  son  the  party  having  a  right  of  re- 
gave  the  defendant  notice  of  that  covery  over  should  not  impose  such 
suit  and  requested  him  to  defend  it,  a  charge;  but  it  is  not  correct  to 
and  incurred  large  expense  in  and  say  that  such  services  are  so  uncer- 
about  it.  Shaw,  C.  J.,  said:  "As  tain  in  value  as  to  be  incapable  of 
they  (the  plaintiffs)  gave  notice  to  being  estimated.  Nor  is  it  satisfac- 
the  defendants  of  the  pendency  of  tory  reasoning  that  because  the 
the  first  action,  they  are  entitled  to  charges   of   coimsel    vary   no  allow- 


302 


SUTHERLAND    ON    DAMAGES. 


[§   B3 


the  clerk  of  the  court  or  the  sheriff.^*  Davis,  J.,^'  said,  speak- 
ing generally:  ''All  the  cases  recognize  fnlly  the  liability  of 
the  principal  where  the  relation  of  master  and  servant  or  prin- 
cipal and  agent  exists ;  but  there  is  a  conflict  of  authority  in 
fixing  the  proper  degree  of  responsibility  where  an  independent 
contractor  intervenes."  '^ 

§  84.  Same  subject;  liability  for  losses  and  expenses.  In 
cases  of  express  indemnity  or  where  there  is  a  duty  of  that 
nature  springing  from  those  relations  the  obligation  is  directly 
to  reimburse  expenses  and  losses ;  they  are  the  immediate  sub- 
jects of  the  contract  or  duty  rather  than  the  damages  for  the 
breach  of  either.  But  in  many  other  cases  suits  against  one 
person  or  party  may  result  from  the  tort  or  breach  of  con- 
tract of  another ;  and  then,  whether  damages  therefor,  including 
the  costs  and  expenses,  may  be  recovered  for  such  wrong  or 
breach  of  contract  will  depend  on  whether  such  suits,  with  the 
consequences  and  incidents  in  question,  were  the  natural  and 
proximate  result  of  the  act  complained  of  or  were  within  the 
contemplation  of  the  parties.^'''     Where  a  person  falsely  pro- 


ance  whatever  should  be  made  for 
such  an  expense  when  it  is  among 
the  natural  and  proximate  conse- 
quences of  the  breach  of  contract. 
It  was  obviously  as  natural  and 
proximate  a  consequence  as  the  oth- 
er expenses  of  the  suit. 

94  Houser  v.  United  States,  39  Ct. 
of  Cls.  508,  quoting  the  text. 

85  Chicago  V.  Bobbins,  2  Black, 
418,  17  L.  ed.  298. 

96  See  Randell  v.  Trimen,  18  C.  B. 
786;  Moule  v.  Garrett,  L.  R.  7  Ex. 
101;  Baxendale  v.  London,  etc.  R., 
L.  R.  10  Ex.  35;  Fisher  v.  Val  de 
Travers  A.  Co.,  1  C.  P.  Div.  511; 
Mors-le-Blanch  v.  Wilson,  L.  R.  8 
C.  P.  227;  Randall  v.  Raper,  96  Eng. 
C.  L.  84;  Richardson  v.  Dunn,  8  C. 
B.  (N.  S.)  655;  Ronneberg  v.  Falk- 
land Islands  Co.,  17  id.  1;  Brown  v. 
Haven,  37  Vt.  439 ;  Neale  v.  Wyllie, 
3  B.  &  C,  533;  Lewis  v.  Peake,  7 
Taunt.   153;    Pennell   v,   Woodburn, 


7  C.  &  P.  117;  Penley  v.  Watts,  7 
M.  &  W.  601 ;  Jones  v.  Williams,  id. 
493;  Walker  v.  Hatton,  10  id.  249; 
Smith  v.  Howell,  6  Ex.  730. 

In  Kiddle  v.  Lovett,  16  Q.  B.  Div. 
605,  a  platform  put  up  under  con- 
tract for  the  plaintifT  by  the  defend- 
ant, to  enable  the  former  to  paint  a 
liouse,  fell  because  of  defective  con- 
struction and  hurt  a  workman  in 
the  plaintiff's  employ.  The  latter 
settled  an  action  brought  by  his 
employee,  and  then  sued  defendant. 
The  latter  was  held  liable  for  nomi- 
nal damages  for  the  breach  of  his 
contract;  but  inasmuch  as  the  plain- 
tiff had  employed  a  competent  con- 
tractor to  build  the  platform  and 
was  free  from  negligence  he  was  not 
liable  to  the  injured  man  and  the 
amount  paid  him  could  not  be  re- 
covered from  the  defendant. 

97  Smith  V.  Baker,  20  Fed.  709; 
Missouri,   etc.   R.   Co.   v.   Ranoy,   44 


§   «4] 


COMI'ENSATIUN. 


303 


fesses  to  act  as  an  agent  there  ia  an  implied  wairanty  that 
\\o.  is  such.  If  lie  have  no  anthority  and  his  pretense  is  false, 
either  the  party  whom  he  assumed  to  represent  ^'  or  the  party 
dealing  with  him  on  the  faith  of  his  being  an  agent '"  may 
hold  him  answerable  for  all  damages  resulting  from  his  un- 
authorized contracts ;  and  among  other  things  for  costs  of  actions 
brought  or  defended  in  conseipience  of  such  contracts.  So  a 
party  who  sells  property  with  an  express  or  implied  warranty 
of  title  is  liable  for  the  costs  of  a  successful  action,  as  well 
as  damages  recovered  therein  against  his  vendee,  by  which  such 
title  is  overthrown  and  the  vendee  dispossessed  or  compelled 
to  pay  for  the  property  to  another  person.^  The  wrongful 
sequestration  of  property  and  the  consequent  appointment  of 
a  receiver  involves  responsibility  for  the  expenses  of  the  receiv- 
ership.* A  tenant  who  incurs  expense  in  resisting  a  threatened 
forceful  eviction  may  claim  reimbursement.^ 

The  right  of  a  party  who  has  bought  property  with  a  war- 


Tex.  Civ.  App.  517;  Atlanta,  etc.  R. 
Co.  V.  Thomas,  60  Fla.  412;  Collins 
V.  Cochran,  121  Ga.  785  (expense 
resulting  from  failure  to  submit 
matter  to  arbitration)  ;  Birtman  v. 
Thompson,  136  111.  App.  621 ;  Hunt 
V.  Boston  E.  R.  Co.,  199  Mass.  220; 
Ellis  V.  Nowell,  198  Mass.  367; 
Stern  v.  Knowlton,  184  Mass.  29; 
Hillquit  V.  Sun  P.  &  P.  Ass'n,  49 
N.  Y.  Misc.  630;  Southern  Inv.  Co. 
V.  Postal  Tel.-C.  Co.,  156  N.  C.  259; 
Agincourt  S.  S.  Co.  v.  Eastern  Ex- 
tension, etc.  Tel.  Co.,  [1907]  2  K.  B. 
305.  See  Nortliern  Ohio  R.  v.  Akron 
C.  &  H.  Co.,  30  Ohio  C.  C.  51 ;  Agius 
V.  Great  Western  C.  Co.,  [1899]  1 
Q.  B.  413. 

98  Salvesen  v.  Rederi  Aktiebolaget 
Nordstjerman,  [1905]  App.  Cas. 
302;  Philpot  V.  Taylor,  75  111.  309, 
20  Am.  Rep.  241. 

99  Groeltz  v.  Armstrong,  125  Iowa, 
39;  CoUen  v.  Wright,  7  El.  &  B. 
301;  Hughes  v.  Graeme,  23  L.  J.  (Q. 
B.)    335. 


1  Houser  v.  United  States,  39  Ct. 
of  Cls.  508,  quoting  the  text ;  Staats 
V.  Ten  Eyck,  3  Caines  111;  Pitcher 
V.  Livingston,  4  Jolm.s.  1,  4  Am.  Dec. 
229;  Rickert  v.  Snyder,  9  Wend. 
410;  Bennet  v.  Jenkins,  13  Johns.  50; 
Harding  v.  Larkin,  41  111.  413:  Cris- 
field  V.  Storr,  36  Md.  129,  11  Am. 
Rep.  480;  Boyd  v.  Whitfield,  19  Ark. 
447;  Ryerson  v.  Chapman,  66  Me. 
557;  Williamson  v.  Williamson,  71 
Me.  442;  Brewster  v.  Countryman, 
12  Wend.  446;  Marlatt  v.  Clary,  20 
Ark.  251;  Giffert  v.  West,  33  Wis. 
617;  Eaton  v.  Lyman,  24  Wis.  438; 
Stewart  v.  Drake,  9  N.  J.  L.  139; 
Holmes  v.  Sinnickson,  15  id.  313,  29 
Am.  Dec.  687;  Morris  v.  Rowan,  17 
N.  J.  L.  .304 ;  Coleman  v.  Clark,  80 
Mo.  App.  339,  citing  the  text. 

2  Wills  Valley  M-  &  M.  Co.  v. 
Galloway,  15.")  Ala.  628.  See  French 
V.  Gifford,  31  Iowa.  428. 

SGrav  V.  Linton,  38  Colo.  175. 


304  SUTHERLAND    ON    DAMAGES.  [§    8'i 

raiity  of  title  to  defend  a  suit  brought  against  him  based  upon 
an  adverse  chiini,  after  he  has  given  notice  to  the  vendor  and 
requested  him  to  assume  the  defense,  and  his  faihire  to  reply  or 
■  efusal  to  defend,  stands  upon  somewhat  different  considerations 
from  those  which  apply  to  sureties  and  others  in  similar  situa- 
tions, A  vendee  has  a  right  to  the  property  he  has  purchased 
as  between  him  and  the  vendor;  and  unless  he  is  made  aware 
that  the  vendor's  title  was  defective  or  that  the  suit  of  a  third 
person  for  the  property  cannot  for  some  reason  be  defended, 
he  has  a  right  to  defend  in  reliance  upon  the  warranty  to  the 
-^•nd  that  he  may  have  and  enjoy  the  fruit  of  his  purchase.  So 
if  there  is  a  warranty  of  kind  or  quality  the  purchaser  has 
a  right  to  act  upon  the  assumption  that  such  warranty  is  true, 
and  sell  with  like  warranty  and  defend  suits  for  its  breach.* 
But  if  he  has  notice  that  his  title  is  bad  or  that  the  warranty 
cannot  be  maintained  he  is  under  the  same  restrictions  as  alt 
other  parties  who  have  a  right  of  recovery  over  against  unnec- 
essary expense  or  an  unrighteous  resistance  of  an  action  which 
cannot  be  defended.^  In  an  action  on  a  warranty  of  the  sound- 
ness of  a  horse  which  had  been  sold  with  like  warranty,  and 
•^.  '.vhich  the  plaintiff  had  been  beaten  in  a  suit  against  him  on 
his  warranty,  he  was  not  entitled  to  recover  as  special  damage 
the  cost  incurred  by  him  in  the  defense  of  the  former  action, 
for  the  jury  found  that  by  reasonable  examination  of  the  horse 
he  might  have  discovered  it  was  unsound  at  the  time  he  sold 
it.®  An  examiner  and  guarantor  of  titles  to  real  estate  em- 
ployed to  conduct  the  purchase  of  a  house  procured  from  its 
owner,  who  also  owned  the  adjoining  house,  a  deed  which 
through  its  negligence  covered  the  wrong  house;  the  grantee 
])rocured  the  reformation  of  such  deed  and,  on  obtaining  pos- 
session of  the  house  he  desired,  found  it  incumbered  by  a  mort- 
gage not  disclosed  to  him  by  the  examiner.  After  eviction 
by  foreclosure,  the  grantor  being  insolvent,  he  recovered  from 

4  Hammond   v.    Bussey,   20   Q.   B.  5  Short  v.  Kalloway,   11  A.  &  E. 

Div.  70,  stated  in  note  to  §  87 ;  Clare       28 ;     Wrightup    v.    Chamberlain,    7 
V.  Maynard,  7  C.  &  P.  741 ;  Curtis  v. 
Hannay,  3   Esp.   82;    Sweet  v.  Pat- 
rick, 12  Me.  9;  Ryerson  v.  Chapman, 
66  Me.  561.  6  Wrightup  v.  Chamberlain,  supra. 


Scott,  598:  Lunt  v.  Wrenn,  113  111. 
168. 


§    85]  OUAii'ENSAl'lOIM.  305 

the  examiner  the  munej  paid  on  the  purcliuse  price,  tliat  Ixuiig 
less  than  the  amount  of  the  undisclosed  mortg-age.''^  A  convey- 
ancer who  overlooks  a  covenant  in  a  deed  in  the  chain  of  title 
lecpiiring  the  land  owner  to  erect  and  maintain  a  fence  is  liahle 
for  the  cost  of  erecting  it  and  for  such  annual  sum  as  will  keei) 
it  in  repair  and  maintain  it.*  But  there  cannot  he  a  recovery 
because  of  losses  resulting  from  carrying  out  an  ohligatiou 
with  a  third  party;  they  are  not  the  consequence  of  the  conduct 
of  the  party  in  default.^  The  value  of  the  security  lost  by 
the  unauthorized  release  of  a  lien,  not  exceeding  the  amount 
of  the  debt  secured  or  the  balance  due,  may  be  recovered,^" 
as  may  the  expense  of  obtaining  the  reinstatement  of  a  race 
horse  wilfully  and  maliciously  suspended  by  the  judges  of  the 
race.^^ 

§  85.  Same  subject;  bonds  and  undertakings;  damages  and 
costs.  Upon  statutory  bonds  and  undertakings  to  pay  damages 
and  costs,  resulting  from  the  issue  of  certain  writs,  as  an  in- 
junction, sequestration  or  attachment  in  case  it  shall  be  decided 
that  the  party  obtaining  it  was  not  entitled  to  it,  the  recovery 
depends  onainly  upon  the  terms  of  the  instrument ;  but  "dam- 
ages and  costs"  include,  among  other  things,  the  costs  incident 
to  the  ]3flrticular  writ  and  of  the  proceedings  to  procure  its  dis- 
charge, including  counsel  fees,  except  in  the  federal  and  a 
few  state  courts/^     On  principle  and  the  weight  of  authority, 

I  Ehmer  v.  Title  G.  &  T.  Co.,  156  12  Corcoran  v.  Judson,  24  N.  Y. 
N.  Y.  10.                                                         106;  Hovey  v.  Rubber  T.  P.  Co.,  50 

Moneys  paid  by  a  corporation  to  N.   Y.   335;    Groat   v.   Gillespie,   25 

establish  the  business  in  which  it  is  Wend.  383;   Edwards  v.  Bodine,   11 

engaged  cannot  be  recovered  by  the  Paige,  223;   Rose  v.  Post,  56  N.  Y. 

shareholders    in    an    action    against  603;   Rosser  v.  Timbcrlake,  78  Ala. 

the  directors  for  negligence.     Bloom  162;  Pettit  v.  Mercer,  8  B.  Hon.  51 ; 

V.  National  United  B.  S.  &  L.  Co.,  Meshke  v.  Van  Dorcn,  16  Wis.  310; 

]52  N.  Y".  114.  Andrews  v.  Glenville  W.  Co.,  50  N. 

8  Bodine  v.  Wayne  T.  &  T.  Co.,  Y!  282;  Gear  v.  Shaw,  1  Pin.  G08; 
33  Pa.  Super.  68.  Barton  v.  Fiak,  30  N.  Y.  171;  Tama- 

9  Jester  v.  Bainbridge  State  Bank,  roa  v.  Southern  Illinois  University, 
4  Ga.  App.  460.  54  111.  334;   Elder  v.  Sabin,  66  111. 

lOBusch  v.  Brown  (Tex.  Civ.  126;  Wilson  v.  McEvoy,  25  Cal.  170; 
App.),  152  S.  W.  683.  Cummings  v.  Burleson,  78  111.  281; 

II  Carleton  v.  Fletcher,  109  Me.  Prader  v.  Grim,  13  Cal.  585;  Guild  v. 
576.  Guild,  2  Mete,  (ivlass.)  229;  Brown 

Suth.  Dam.  Vol.  I.— 20. 


306 


SUTHERLAND    ON    DAMAGES. 


i§  85 


where  the  prosecution  or  defense  of  suits  is  rendered  naturally 
and  proximately  necessary  by  a  breach  of  contract  or  any  wrong- 
ful act  the  costs  of  that  litigation,  reasonably  and  judiciously 
conducted,  paid  or  incurred,  including  reasonable  counsel  fees, 
are  recoverable  as  part  of  the  damages.^^ 

§  86.  Same  subject;  necessity  of  notice  to  indemnitor  to  fix 
liability.  Where  a  judgment  recovered  may,  by  notice  to  one 
ultimately  liable,  fix  the  amount  which  the  latter  is  liable  to  pay 
to  the  party  against  whom  the  judgment  is  obtained,  in  some 
states  notice  is  required  in  order  to  entitle  the  party  sued  to  the 


V.  Jones,  5  Nev.  374;  Baggett  v. 
Beard,  43  Miss.  120;  Raupman  v. 
Evansville,  44  Ind.  392 ;  Alexander  v. 
Colcord,  85  111.  323 ;  Steele  v.  Thatch- 
er, 56  111.  257 ;  Miller  v.  Garrett,  35 
Ala.  96;  Holmes  v.  Weaver,  52  id. 
516;  Noble  v.  Arnold,  23  Ohio  St. 
264;  Riddle  v.  Cheadle,  25  id.  278; 
McRae  v.  Brown,  12  La.  Ann.  181; 
Campbell  v.  Metcalf,  1  Mont.  378; 
Derry  Bank  v.  Heath,  45  N.  H.  524 ; 
Langworthy  v.  McKelvy,  25  Iowa 
48;  Behrens  v.  McKenzie,  23  Iowa 
333,  92  Am.  Dec.  428;  Wallace  v. 
York,  45  Iowa  81 ;  Bonner  v.  Cop- 
ley, 15  La.  Ann.  504;  Sandback  v. 
Thomas,  1  Stark.  306;  Pritchet  v. 
Boevey,  1  Cr.  &  M.  775;  Holloway 
V.  Turner,  6  Q.  B.  928;  Houser  v. 
United  States,  39  Ct.  of  Cls.  508, 
quoting  the  text;  Pruett  v.  Wil- 
liams, 156  Ala.  346;  People  v.  Bar- 
rett, 141  111.  App.  168  (costs  of  suit 
to  set  aside  a  judgment  based  on  a 
false  return) .  See  Manning  v.  Grin- 
stead,  121  Ky.  802;  Day  v.  Wood- 
worth,  13  How.  363.  14  L.  ed.  181; 
Oelrichs  v.  Spain,  21  L.  ed.  43;  §§ 
512,  524. 

Attorney  fees  are  not  allowed  in 
an  action  for  infringement  of  a 
patent.  Teese  v.  Pluntingdon,  23 
How.  2,  16  L.  ed.  479. 

Counsel  feee  for  services  rendered 
in  the  supreme  court  on  appeal  may 


be  recovered  for.  Boiling  v.  Tate, 
65  Ala.  417,  overruling  earlier  cases. 
13  Hughes  V.  Graeme,  33  L.  J.  (Q. 
B.)  335;  Ziegler  v.  Powell,  54  Ind. 
173 ;  Lawrence  v.  Hagerman,  56  111. 
68,  8  Am.  Rep.  674;  Krug  v.  Ward, 
77  111.  603;  Westfield  v.  Mayo,  122 
Mass.  100,  23  Am.  Rep.  292;  New 
Haven  &  N.  Co.  v.  Hayden,  117  Mass. 
433;  Noyes  v.  Ward,  19  Conn.  250; 
Pond  V.  Harris,  113  Mass.  114; 
White  V.  Madison,  26  N.  Y.  117; 
Henderson  v.  Squire,  L.  R.  4  Q.  B. 
170;  Webber  v.  Nicholas,  4  Bing.  16; 
Noble  v.  Arnold,  23  Ohio  St.  264; 
Alexander  v.  Jacoby,  id.  358 ;  God- 
win V.  Francis,  L.  R.  5  C.  P.  295; 
Ryerson  v.  Chapman,  66  Me.  557 ; 
Dubois  V.  Hermance,  56  N.  Y.  673  j 
Call  V.  Hagar,  69  Me.  521;  Bone- 
steel  V.  Bonesteel,  30  Wis.  511;  Ah 
Thaie  v.  Quan  Wan,  3  Cal.  216; 
Henay  v.  Hand,  36  Ore.  492,  citing 
the  text.  See  Barnard  v.  Poor,  21 
Pick.  378:  Rice  v.  Austin,  17  Mass. 
197;  Guild  v.  Guild,  2  Mete. 
(^lass.)  229;  Arcambel  v.  Wiseman, 
3  Dall.  306,  1  L.  ed.  613;  -Gould  v. 
Barratt,  2  Mood.  &  Rob.  171;  Mai- 
den V.  Fyson,  11  Q.  B.  292;  In  re 
United  Service  Co.,  L.  R.  6  Ch.  212 ; 
Tindall  v.  Bell,  11  M.  &  W.  228; 
Dixon  V.  Fawcas,  3  E.  &  E.  537; 
Hammond  v.  Bussey,  20  Q.  B.  Div. 
79;  Murrell  v.  Fysh,  1  Cab.  &  E. 
80;   §  58. 


§    86]  COMPKNSATION.  307 

ulterior  recourse  for  the  costs  of  defending;  because  the  defense 
is  to  be  made  or  not  solely  in  the  interest  of  the  party  who  must 
in  the  end  be  chargeable  with  the  proper  conse<piences  of  the 
liability  upon  which  the  judgment  is  founded;  therefore,  he  is 
entitled  to  be  consulted  and  to  have  no  expenses  incurred  and 
charged  to  him  except  at  his  request  or  with  his  sanction.  Con- 
fined to  cases  covered  by  an  obligation  of  indemnity  and  those 
where  there  is  no  right  of  the  immediate  defendant  or  party  to 
the  suit  peculiar  to  himself  to  be  asserted  in  the  action,  the  rule 
is  a  wholesale  one  and  rests  upon  sound  principles.  On  this 
class  are  actions  against  an  agent,  servant  or  surety  for  acts  of 
which  the  master  or  principal  must  bear  the  whole  responsi- 
bility; suits  against  which  there  is  an  express  indemnity  and 
those  in  which  the  party  proceeded  against  is  sought  to  be  made 
liable  without  actual  misfeasance  for  the  acts  of  another  who 
must  respond  for  the  consequences  of  that  liability.^*  The  ob- 
ject of  the  notice  is  not  to  give  a  ground  of  action.  If  a  demand 
be  sued  which  the  person  indemnifying  is  bound  to  pay  and  no- 
tice be  given  to  him  and  he  refuse  to  defend  the  action,  in  con- 
sequence of  which  the  person  to  be  indemnified  is  obliged  to  pay 
the  demand,  the  other  party  is  estopped  after  such  notice  from 
disputing  it  or  from  claiming  that  the  party  sued  was  not  bound 
to  pay  it."  Its  effect  is  to  let  in  the  party  who  is  bound  to  in- 
demnify to  defend  the  suit  against  the  indemnified  party  and  to 
preclude  the  former  from  showing,  when  sued  for  such  indem- 
nity, that  the  plaintiff  has  no  claim  for  the  alleged  loss,  or  not  to 
the  amount  alleged ;  that  he  made  an  improvident  bargain  and 
the  defendant  might  have  obtained  better  terms  if  the  oppor- 
tunity had  been  given  him.^^    It  is  not  necessary  to  the  produc- 

14  Schneider  v.  Augusta,   118  Ga.  son,  22  Conn.  299;  Holmes  v.  Weed. 

610;  Busell  Trimmer  Co.  v.  Coburn,  24   Barb.  ;)46 ;    Fislier  v.  Fallows,  ."> 

188  Mass.  254,  69  L.R.A.  821 ;  Great  Esp.  171:  Brooklyn  v.  Brooklyn  City 

Northern  R.  Co.  v.  Akeley,  88  Minn.  R.    Co..    57    Barb.    497 :     Finckh    v. 

237;     Hawes    v.    Birkholz     (N.    Y.  Evers,  25  Ohio  St.  82. 

Misc.),    114    Supp.    765;    Lowell   v.  15  May  v.  Poluhoff,  65  X.  Y.  Misc. 

Boston,    etc.    R.    Co.,   23    Pick.    24;  546;   Duffield  v.  Scott,  3  T.  R.  374. 

Proprietors  of  L.  &  C.  v.  Lowell  H.  16  Smith  v.  Compton,  3  B.  &  Ad. 

R.  Co.,  109  Mass.  221;  Ottumwa  v.  407:    French    v.    Parish,    14    N.    H. 

Parks,  43  Iowa  U9;   Apgar  v.  Hil-  496;  Port  .Tervia  v.  First  Nat.  Bank, 

er,  24  N.  J.  L.  812;  Beckley  v.  Mun-  96  N.  Y.  550. 


308  SUTHERLAND    ON    DAMAGES.  [§    8G 

tion  of  this  result  that  the  indemnitor  should  ha^e  notice  in 
writing,  or  even  express  notice,  of  the  action  ;  notice  may  be  im- 
plied from  his  knowledge  of  the  action  and  participation  in  its 
defense.^'  A  formal  request  that  he  assume  the  defense  of  the 
action  is  not  essential. '^^ 

In  such  actions  two  questions  arise:  first,  has  the  plaintiff  a 
legal  cause  of  action ;  second,  to  what  extent  has  he  been  dam- 
nified ?  The  indemnifying  party  is  entitled  to  his  day  in  court 
on  these  questions.  If  he  has  notice  to  defend  a  suit  brought 
against  another  who  has  a  right  of  reco^'ery  over  against  him 
that  opportunity  is  offered  him ;  and  the  right  to  defend  at  his 
expense  will  depend  on  his  answer,  and  he  cannot  be  charged 
with  costs  of  an  improvident  defense  or  one  made  contrary  to 
his  expressed  will.^®  If  notice  cannot  be  given  it  is  reasonable 
that  the  indemnified  party  should  exercise  some  judgment 
whether  to  defend  or  not  if  the  amount  is  unliquidated  or  the 
demand  disputable.  Where  he  does  so  without  notice  and  judg- 
ment is  recovered  against  him  it  is  res  inter  alios  acta  as  to  the 
first  of  these  questions,  and  prima  facie  evidence  on  the  second, 
though  the  contract  of  indemnity  is  general. 

§  87.  Same  subject.  There  are  not  the  same  reasons  for  no- 
tice to  the  party  ultimately  liable,  though  there  are  reasons, 
where  the  action,  the  costs  of  which  are  claimed,  is  brought  on 
some  independent  contract  or  is  the  alleged  result  of  a  tortious 
act  of  such  party;  and  where  the  party  claiming  for  the  costs 
of  defending  such  action  defended  it  to  maintain  his  own  legal 
rights  derived  from  that  party  and  does  not  make  the  defense 
in  his  interest  he  may  still  have  his  recourse  to  him  for  indem- 
nity.^" A  vendee,  having  a  warranty  of  title,  may  defend  a  suit 
brought  by  a  third  person  for  the  property  without  consulting 

17  Meyer  v.   Purcell,   214   111.   62;  19  See  New  York  State  M.  Ins.  Co. 

Barney    v.    Dewey,    13    Johns.    224,  v.  Protection  Ins.  Co.,  1  Story,  458. 

7   Am.   Dec.   372;    Beers   v.   Pinney,  Expenses  and  attorney's  fees  have 

12  Wend.  309;   Heiser  v.  Hatch,  86  ^^^^    recovered    though"'  the    vendor 


N.    Y.    614;    Port    Jervis   v.    Bank, 


protested   against  the   defense.    See 


supra. 

18  Heiser  v.  Hatch,  supra;  Nashua  §  *^^^  "°*^- 
I.  &  S.   Co.  V.   Brusli,   33   C.   C.  A.  ^0  Parsons  v.  District,  35  App.  D. 

456,  9]  Fed.  213.  C.  326. 


§    87]  COMPENSATION.  300 

his  vendor.  He  has  a  right,  as  between  himself  and  the  Latter, 
to  retain  the  property  and  maintain,  if  he  can,  the  title  war- 
ranted to  him;  he  is  not  obliged  to  content  himself  with  a 
remedy  on  his  warrant}^  and  acqniesce  in  any  adverse  claim  that 
may  be  set  up  unless  the  circumstances  show  that  it  cannot  be 
contested;  he  may  defend  a  suit  brought  on  his  own  warranty 
made  to  his  vendee  on  the  faith  of  the  warranty  of  his  vendor. 
A  person  purchasing  from  another  who  falsely  pretends  to  be 
an  agent  may  sue  the  supposed  principal  on  that  contract  to 
enforce  it.  In  case  of  defeat  the  expenses  of  such  litigation  are 
the  natural  and  proximate *result  of  the  breach  of  contract  and, 
if  not  improvidently  incurred,  are  recoverable  on  the  same  prin- 
ciple as  expenses  incurred  in  other  ways  after  a  breach  in 
furtherance  of  the  object  of  a  contract  or  to  lessen  the  damages 
which  would  otherwise  result  from  its  infraction.^^  And  such 
items  will  presently  be  considered  as  a  distinct  topic.^^ 

The  authorities  are  in  conflict  on  the  necessity  of  notice,  and 
no  clear  rule  or  principle  can  be  deduced  from  them;  but  the 
foregoing  views  appear  to  be  those  supported  by  the  best  con- 
sidered cases  and  most  in  harmony  with  the  principles  applied 
in  analogous  cases.  Under  certain  conditions  a  notice  may 
make  the  judgment  conclusive  evidence  against  the  party  noti- 
fied in  favor  of  one  giving  the  notice  and  having  a  right  of 
recovery  over  against  him.  This  is  the  case  where  notice  is 
given  to  a  vendor  by  his  vendee  of  proceedings  founded  upon  an 
adverse  title  which  becomes  paramount.^^  So  in  case  of  other 
warranties,  where  the  warrantee  has  acted  upon  them  in  such 
manner  as  was  within  the  contemplation  of  the  parties  at  the 
time  of  contracting,  as  by  giving  like  warranty  and  has  been 
sued  upon  it.^*    It  is  a  part  of  the  contract  of  warranty  that  the 

21  See  Baumgarten  v.  Chipman,  30  23  Thurston  v.  Spratt,  52  Me.  202; 
Utah,  466;  Nashua  I.  &  S.  Co.  v.  Boyd  v.  Whitfield,  10  Ark.  447; 
Brush,  33  C.  C.  A.  456,  91  Fed.  213;  Marlatt  v.  Clary,  20  Ark.  251;  Hard- 
Chase  V.  Bennett,  59  N.  H.  394.  ing  v.  I^rkin,  41  111.  413;  Caatleton 
Compare,  however,  Houser  V.  United  v.  Miner,  8  Vt.  209;  Crisficld  v. 
States,  .39  Ct.  of  Cls.  508.  Storr,  30  Md.  129,  11  Am.  Rep.  480. 

22  Hiighes  V.  Graeme,  39  L.  J.  (Q.  24  Reggio  v.  Braggiotti.  7  Cush. 
B.)  335;  Ryerson  v.  Cliapman,  66  166;  Collen  v.  Wright,  8  El.  &  B, 
Me.  561;  §  88.  647;    Randell   v.   Trimen,    18   C.   B. 


310 


SUTHERLAND    ON    DAMAGES. 


[§  87 


warrantor  shall  defend  the  title,  and  by  the  warrantee  giving 
notice  when  the  title  is  attacked  two  objects  are  attained :  first, 
it  gives  the  defendant  the  advantage  of  the  better  information 


786;  Brown  v.  Haven,  37  Vt.  439; 
Moule  V.  Garrett,  L.  R.  7  Ex.  101; 
Mors-le-Blanch  v.  Wilson,  L.  R.  8 
C.  P.  227,  overruled  in  the  case  next 
cited. 

In  Baxendale  v.  London,  etc.  R. 
Co.,  L.  R.  10  Ex.  35,  the  case  was 
that  H.  liaving  contracted  with  the 
plaintiffs  who  were  carriers  for  the 
carriage  of  two  pictures  from  Lon- 
don to  Paris,  the  plaintiffs  contract- 
ed with  the  defendants  for  the  car- 
riage by  them  of  the  pictures  over  a 
part  of  the  distance.  The  pictures 
were  damaged  on  the  journey  by  the 
defendants'  negligence.  H.  thereup- 
on brought  an  action  against  the 
plaintiffs,  who  gave  notice  of  it  to 
the  defendants  and  requested  them 
to  defend  it.  They  refused  and  told 
the  plaintiffs  to  take  their  own 
course.  The  latter  defended  the  ac- 
tion brought  against  them  by  H. 
without  success,  and  then  sued  the 
defendants  to  recover  not  only  the 
damages  found  by  the  jury  to  have 
been  sustained  by  H.,  but  also  the 
costs  of  the  unsuccessful  defense. 
The  court  held  that  the  costs  were 
not  recoverable,  inasmuch  as  they 
could  not  be  regarded  as  the  natural 
consequence  of  the  defendants"  de- 
fault, the  contracts  between  H.  and 
the  plaintiffs,  and  between  the 
plaintiffs,  and  the  defendants,  being 
separate  and  independent. 

The  latest  exposition  of  English 
law  upon  this  question  is  given  in 
Hammond  v.  Bussey,  20  Q.  B.  Div. 
79,  where  Baxendale  v.  London,  etc. 
R.  Co.,  L.  R.  10  Ex.  35,  is  dis- 
tinguished. The  question  decided 
is  thus  stated  by  the  reporter: 
"The  defendant  contracted  for  the 
sale    of    coal    of    a    particular    de- 


scription to  the  plaintiffs,  know- 
ing that  they  were  buying  such 
coal  for  the  purpose  of  reselling  it 
as  coal  of  the  same  description.  The 
plaintiffs  did  so  resell  the  coal.  The 
coal  delivered  by  the  defendant  to 
the  plaintiffs  under  the  contract  and 
by  them  delivered  to  their  sub-ven- 
dees did  not  answer  such  descrip- 
tion, but  this  could  not  be  ascer- 
tained by  inspection  of  the  coal,  and 
only  became  apparent  upon  its  use 
by  the  sub-vendees.  The  sub-ven- 
dees thereupon  brought  an  action 
for  breach  of  contract  against  the 
plaintiffs.  Tlie  plaintiffs  gave  no- 
tice of  the  action  to  the  defendant, 
who,  however,  repudiated  all  lia- 
bility, insisting  that  the  coal  was 
according  to  contract.  The  plain- 
tiffs defended  the  action  against 
them,  but  at  the  trial  the  verdict 
was  that  the  coal  was  not  accord- 
ing to  contract,  and  the  sub-vendees 
accordingly  recovered  damages  from 
the  plaintiffs.  The  plaintiffs  there- 
upon sued  the  defendant  for  breach 
of  contract,  claiming  as  damages  the 
amount  of  the  damages  recovered 
from  them  in  the  action  by  their 
sub-vendees,  and  the  costs  which  had 
been  incurred  in  such  action."  Lia- 
bility for  costs  was  denied.  Held, 
that  the  defense  of  the  previous  ac- 
tion being,  under  the  circumstances, 
reasonable,  the  costs  incurred  by  the 
plaintiffs  as  defendants  in  such  ac- 
tion were  recoverable  under  the  rule 
in  Hadley  v,  Baxendale  as  being 
damages  which  might  reasonably  be 
supposed  to  have  been  in  the  con- 
templation of  the  parties,  at  the 
time  when  they  made  the  contract, 
as  the  probable  result  of  a  breach 
of  it. 


§    88]  COMPKiNSATION.  IJ 1 1 

the  warrantor  is  supposed  to  possess  in  relation  to  tlic  title;  and 
second,  saves  the  necessity  of  trying  the  same  title  a.uaiii  in  an 
action  against  the  warrantor.  The  notice  to  the  latter  makes 
him  privy  to  the  record  and  he  is  hound  hy  it  to  the  extent  to 
which  his  rights  have  been  tried  and  adjudged;  and,  in  an 
action  against  him  at  the  suit  of  the  warrantee,  in  addition  to 
the  record,  all  that  is  necessary  to  be  shown  is  that  his  title  was 
in  issue  and  judgment  given  upon  it.^*  The  warrantor  is  at 
liberty  to  show  any  other  fact  not  involved  in  that  adjudication 
which  will  be  beneficial  to  his  defense,  as  that  the  defect  of  title 
arose  after  he  sold  the  property  and,  therefore,  that  he  had  no 
interest  in  the  determination  of  the  question  tried.^^ 

§  88.  Expenses  incurred  to  prevent  or  lessen  damages.  Fifth. 
such  losses  may  consist  of  labor  done  and  expenses  incurred  to 
prevent  or  lessen  damages  which  would  otherwise  result  from 
the  defendant's  default  or  misconduct.  The  law  imposes  upon 
a  party  injured  by  another's  breach  of  contract  or  tort  the  ac- 
tive duty  of  using  all  ordinary  care  and  making  all  reasonable 
exertions  to  render  the  injury  as  light  as  possible.  If  by  his 
negligence  or  wilfulness  he  allows  the  damages  to  be  unnecessa- 
rily enhanced  the  increased  loss,  that  which  was  avoidable  by 
the  performance  of  his  duty,  falls  upon  him.^'     This  is  a  prac- 

25  Jones  V.  Balsley,  154  N.  C.  61;  Allen  v.  Bear  Creek  C.  Co.,  43  Mont. 
Davis  V.  Wllbourne,  1  Hill  (S.  C),  269,  citing  the  text;  Caves  v. 
27,  26  Am.  Dec.  154;  Miner  V.  Clark,  Bartek,  85  Neb.  511;  Hocutt  v. 
15  Wend.  425;  Barney  v.  Dewey,  13  Western  U,  Tel.  Co.,  147  N.  C.  186, 
Johns.  225,  7  Am.  Dec.  372;  Pickett  quoting  the  text;  Edwards  v.  Same, 
V.  Ford,  4  How.  (Miss.)  246;  Col-  147  N.  C.  126;  Huntington  E.  P. 
burn  v.  Pomeroy,  44  N.  H.  19;  Shel-  Co.  v.  Parsons,  62  W.  Va.  26,  9 
by  v.  Missouri  Pac.  R.  Co.,  77  Mo.  L.R.A.(N.S.)  1130,  125  Am.  St.  954. 
App.  205,  citing  the  text.  quoting  the  text;   Northern  Colora- 

26  Thurston  v.  Spratt,  52  Me.  202.  do  I.  Co.  v.  Pouppirt,  22  Colo.  App. 

27  Mabb  V.  Stewart,  147  Cal.  413,  563,  quoting  the  text;  Tompkins  v. 
quoting  the  text;  Western  U.  Tel.  Monticcllo  C.  0.  Co.,  153  Fed.  817; 
Co.  v.  Truitt,  5  Ga.  App.  809;  Sapp  Southern  H.  &  S.  Co.  v.  Standard  E. 
V.  Bradfield,  137  Ky.  308,  136  Am.  Co.,  158  Ala.  506;  Southern  R  Co. 
St.  291,  citing  the  text;  Louisville  v.  Reeder,  152  Ala.  227.  126  Am.  St. 
&  N.  R.  Co.  V.  Mount,  125  Ky.  593;  23;  Syson  T.  Co.  v.  Dickons,  146 
Dooley  v.  Boston  E.  R.  Co..  201  Ala.  471  ;  Southern  R.  Co.  v.  Webb, 
Mass.  429;  Sullivan  v.  Old  Colony  143  Ala.  304;  Same  v.  Gilmer,  143 
St.  R.,  200  Mass.  303;  Glasgow  v.  Ala.  490;  Hartgrove  v.  Southern  C. 
Metropolian  St.  R.  Co.,  191  Mo.  347;  O.  Co.,  72  Ark.  31;  Vincent  v.  New 


312 


SUTJlEin.AND    OjN    UAMAOKS. 


[§  88 


tical  ()]iligatioii    under  a  great  variety  of  circumstances,  and  as 
the  damages  which  are  suffered  by  a  failure  to  perform  it  are 


York,  etc.  R.  Co.,  77  Conn.  431; 
Bernhard  v.  Curtis,  75  Conn.  476, 
citing  the  text;  Telfair  County  v. 
Webb,  119  Ga.  916;  Hey  v.  Hawkins, 
120  111.  App.  483;  Rilva  v.  Souza,  14 
Hawaii  46;  Cromer  v.  Logansport, 
38  Ind.  App.  061;  Helton  v.  Aslier, 
135  Ky.  751 ;  Fifty  Associates  v. 
Boston,  201  Mass.  585;  Atwood  v. 
Boston  F.  &  T.  Co.,  185  Mass.  557; 
Putz  V.  St.  Paul  G.  B.  Co.,  108  Minn. 
243;  Hilley  v.  Western  U.  Tel.  Co., 
85  Miss.  67;  Price  v.  St.  Louis,  etc. 
R.  Co.,  133  Mo.  App.  653,  (neglect 
of  duty  to  provide  farm  crossing)  ; 
Larson  v.  Calder,  16  N.  D.  248; 
Gardner  v.  Welch,  21  S.  D.  151, 
citing  the  text;  Missouri,  etc.  R.  Co. 
V.  Allen,  39  Tex.  Civ.  App.  236; 
Same  v.  Wetz,  38  id.  563;  Loehr  v. 
Dickson,  141  Wis.  332,  30  L.R.A. 
(N.S.)  495;  Kelley  v.  La  Crosse  C. 
Co.,  120  Wis.  84,  102  Am.  St.  971; 
Ohio  &  M.  R.  Co.  V.  McGehee,  47 
111.  App.  348;  Hartford  D.  Co.  v. 
Calkins,  186  III.  104,  quoting  the 
text;  Southern  R.  Co.  v.  Ward,  110 
Ga.  793;  McCarty  v.  Boise  City  C. 
Co.,  2  Idalio,  225;  Factors'  &  T.'s 
Ins.  Co.  V.  Werlein,  42  La.  Ann. 
1046,  11  L.R.A.  361;  Gniadck  v. 
Northwestern  I.  &  B.  Co.,  73  Minn. 
87,  Sweeney  v.  Montana  Cent.  R. 
Co.,  19  Mont.  163;  Boomer  v.  Thom- 
as, 38  Neb.  277,  quoting  the  text; 
Gulf,  etc.  R.  Co.  v.  Simonton,  2 
Tex.  Civ.  App.  558;  Southern  Kan- 
sas R.  Co.  v.  Isaacs,  20  id.  466 ; 
Austin  V.  Chicago,  etc.  R.  Co.,  93 
Wis.  496;  Cullerton  v.  Miller,  26 
Ont.  36,  45,  quoting  the  text;  Fuller- 
ton  V.  Fordyce,  144  Mo.  519,  3  Am. 
Neg.  Rep.  696;  Sherman  Center  T. 
Co.  V.  Leonard,  46  Kan.  354,  26  Am. 
St.  101;  Fowle  v.  Park,  48  Fed. 
789;   Pennsylvania  R.  Co.  v.  Wash- 


burn, 50  id.  335;  Hamilton  v.  Mc- 
Pherson,  28  N.  Y.  72,  84  Am.  Dec. 
330;  Rexter  v.  Starin,  73  N.  Y.  601; 
Costigan  v.  Mohawk,  etc.  R.  Co.,  2 
Denio,  609;  Taylor  v.  Read,  4  Paige, 
572;  Dillon  v.  Anderson,  43  N.  Y. 
231;  Dorvvin  v.  Potter,  5  Denio,  306; 
Hochster  v.  De  la  Tour,  2  El.  &  B. 
678;  Loker  v.  Damon,  17  Pick.  284; 
French  v.  Vining,  102  Mass.  132,  3 
Am.  Rep.  440;  Cherry  v.  Thompson, 
L.  R.  7  Q.  B.  573;  Driver  v.  Max- 
well, 56  Ga.  11;  Roper  v.  Johnson, 
L.  R.  8  C.  P.  167;  Simpson  v.  Keo- 
kuk, 34  Iowa  568;  Beymer  v.  Mc- 
Bride,  37  id.  114;  Frost  v.  Knight, 
L.  R.  7  Ex.  Ill;  Hecksher  v.  Mc 
Crea,  24  Wend.  304;  Davis  v.  Fish, 
1  G.  Greene,  406,  48  Am.  Dec.  387; 
AUender  v.  C.  R.  I.  &  P.  R.  R.  Co., 
37  Iowa  264;  Dobbins  v.  Duquid, 
65  111.  464;  Chamberlain  v.  Morgan, 
68  Pa.  168;  New  Orleans,  etc.  Co. 
V.  Echols,  54  Miss.  264;  Hatliorn  v. 
Richmond,  48  Vt.  557;  Pinney  v. 
Andrus,  41  Vt.  631 ;  Bradley  v.  Den- 
ton, 3  Wis.  557 ;  Gordon  v.  Brewster, 
7  Wis.  355;  Fitzpatrick  v.  Boston  & 
M.  R.,  84  Me.  33;  Williams  v.  Yoe 
19  Tex.  Civ.  App.  281;  Dietrich  v 
Hannibal,  etc.  R.  Co.,  89  Mo.  App 
36 ;  Webb  v.  Metropolitan  St.  R.  Co. 
id.  604;  Warren  v.  Stoddard,  105  U 
S.  224,  26  L.  ed.  1117;  Peck  v 
Kansas  City  M.  R.  &  C.  Co.,  96  Mo 
App.  212;  Atkinson  v.  Kirkpatrick 
90  Kan.  515;  Carthage  Stone  Co 
v.  Travelers'  Ins.  Co.,  186  Mo.  App 
318,  quoting  the  text;  National  Nas- 
sau Bank  of  New  York  v.  I.  M. 
Ludington's  Sons,  164  App.  Div.  (N. 
Y.)  466;  Smith  v.  Postal  Telegraph- 
Cable  Co.,  167  N.  C.  248,  quoting 
the  text;  A.  S.  Cameron  Steam 
Pump  Works  v.  Lubbock  L.  &  I.  Co., 
—  Tex.  Civ.  App.  — ,  167  S.  W.  256; 


§  88] 


COMPENSATION. 


313 


not  recoverable  it  is  of  imieli  importance.  Where  it  exists  tlie 
lalx)r  or  expense  which  its  performance  involves  is  chargeable  to 
the  party  liable  for  the  injury  thus  mitigated;  in  other  words, 
the  reasonable  cost  of  the  measures  which  the  injured  party  is 
bound  to  take  to  lessen  the  damages,  whether  adopted  or  not, 
will  measure  the  compensation  he  can  recover  for  the  injury  or 
the  part  of  it  that  such  measures  have  or  would  have  prevented.'^* 
This  is  on  the  principle  that  if  the  efforts  made  are  successful 
the  defendant  will  have  the  benefit  of  them;   if  thev   i»i-ovo 


Spokane  Casket  Co.  v.  Mitchell,  76 
Wash.  425. 

Failure  of  the  plaintiff  to  use  due 
care  to  reduce  or  avoid  damage  is 
a  matter  of  defense  distinct  from 
contributory  negligence  and  must  be 
pleaded  and  proved  by  the  defend- 
ant. Crosley  v.  Plummer,  111  Me. 
355. 

28  1(1.;  Coffman  V.  Saline  Val.  R. 
Co.,  183  Mo.  App.  622;  Thompson 
V.  Field,  —  Tex.  Civ.  App.  — ,  164 
S.  W.  1115;  Atlanta  &  B.  A.  L.  R. 
Co.  V.  Brown,  158  Ala.  607;  Mogol- 
lon  G.  &  C.  Co.  V.  Stout,  14  N.  M. 
245;  Sullivan  v.  Anderson,  81  S.  C. 
478;  Griffith  v.  Blackwater  B.  &  L. 
Co.,  55  W.  Ya.  604,  69  L.R.A.  124, 
quoting  the  preceding  part  of  this 
section;  Monroe  v.  Lattin,  25  Kan. 
351;  Boaid  of  Com'rs  v.  Arnett,  ]1G 
Ind.  438 ;  Texas  &  P.  R.  Co.  v.  Levi, 
59  Tex.  674;  Long  v.  Clapp,  15  Neb. 
417,  quoting  the  text;  Travis  v. 
Pierson,  43  111.  App.  579;  Hewson- 
H.  S.  Co.  V.  Minnesota  B.  Co.,  55 
Min.  530;  Monroe  v.  Connecticut 
River  L.  Co.,  68  N.  H.  89 ;  Hughes  v. 
Austin,  12  Tex.  Civ.  App.  178,  citing 
the  text;  Nading  v.  Denison  &  P.  R. 
Co.,  22  id.  173,  quoting  the  text; 
Nelson  v.  St.  Louis,  etc.  R.  Co.,  49 
Kan.  165;  Uhlig  v.  Barnum,  43  Neb. 
584,  594,  quoting  the  text;  Gal- 
breath  V.  Carnes,  91  Mo.  App.  512, 
quoting  the  text;  Armistead  v. 
Shreveport,  etc.  R.  Co.,  108  La.  171, 


citing  the  text;  Chicago,  etc.  R.  Co. 
v.  Word  (Tex.  Civ.  App.),  158  S. 
W.  561. 

A  father  from  wliom  a  minor  cliild 
has  been  abducted  may  recover  tlie 
reasonable  expenses  incurred  in  an 
efl'ort  to  obtain  the  child  though  tlie 
defendant  was  not  actuated  by  mal- 
ice. Rice  V.  Nickerson,  9  Alhii 
478. 

Where  servants  were  enticed  away 
from  their  master  he  recovered,  in 
addition  to  the  value  of  the  services 
lost,  the  expenses  necessarily  in- 
curred in  getting  them  back,  and 
damages  for  loss  of  time,  trouble 
and  injury  sustained.  Hays  v.  Bor- 
ders, 6  111.  46. 

"Legal  expenses  are  recoverable 
as  damages  when  incurred  in  pro- 
ceedings taken  by  the  injured  party 
to  prevent  or  reduce  the  damage 
which  he  would  incur  by  the  con- 
tinuance of  the  wrong  which  he  has 
abated  by  resort  to  such  proceed- 
ings." Clason  V.  Nassau  F.  Co.,  20 
N.  Y.  Misc.  315,  citing  this  section. 

In  an  action  to  punish  defendants 
for  contempt  in  violating  an  injunc- 
tion tlie  ('\|)ense  of  a  second  injunc- 
tion was  included  in  the  fine  im- 
posed on  tliem,  it  being  considered 
that  such  expense  was  incurred  in 
an  action  brought  expressly  to  re- 
strain a  continuance  of  the  damag*'. 
Jewelers'  M.  Agency  v.  Rotlischild, 
6    App.   Div.    (N.   Y.)    499.      S.'c   § 


314 


SUTHERLAND    ON    DAMAGES. 


[§     •'^^^ 


abortive  it  is  but  just  that  the  expense  attending  them  shall  be 
borne  by  him.'^^  When,  after  a  contract  has  been  entered  into, 
notice  is  given  by  one  of  the  parties  that  it  is  rescinded  on  his 
part  he  is  only  liable  for  such  damages  and  loss  as  the  other 
has  suffered  by  reason  of  such  rescinding;  and  it  is  the  duty 
of  the  latter,  upon  receiving  such  notice,  to  save  the  former, 
as  far  as  it  is  in  his  power,  all  further  damages  though  to  do  so 
may  call  for  affirmative  action.^"  If  a  person  hired  for  sendee 
for  a  given  term  is  wrongfully  dismissed  he  is  entitled  to  the 
stipulated  wages  for  the  term  of  his  engagement  if  that  is  his 
loss.  It  is  prima  facie  his  loss;  but  the  law  imposes  on  him 
the  duty  to  seek  other  e«nployment ;  and  to  the  extent  that  he 
obtains  it  and  earns  wages,  or  might  have  done  so,  his  dam- 
ages* will  be  reduced.^^  The  rule  as  stated  was  deemed  appli- 
cable where  the  owner  of  water  lots  upon  a  lake  front,  subject 
to  the  reservation  of  free  passage  thereon,  refused  to  allow  the 


46  as  to  the  rule  where  there  is  a 
failure  to  prosecute  a  suit  in  which 
a  writ  of  ne  exeat  has  been  issued. 

29  Watson  V.  Proprietors  Lisbon 
Bridge,  14  Me.  201,  31  Am.  Dec.  49; 
Summers  v.  Tarney,  123  Ind.  560. 
See  §  693.  In  Miller  v.  Mariner's 
Church,  7  Me.  51,  20  Am.  Dec.  341, 
is  a  sound  exposition  of  this  duty. 

In  Hogle  V.  New  York,  etc.  R.  Co., 
28  Hun,  363,  the  trial  court  refused 
to  charge  that  when  plaintiff  dis- 
covered a  fire  on  his  premises  he 
could  not  recover  for  subsequent 
damages  if  he  neglected  to  use  rea- 
sonable practicable  means  to  sup- 
press it,  on  the  ground  that  the  fire 
was  not  attributable  to  his  fault. 
This  was  considered  as  not  being  far 
from  saying  that  he  might  do  what 
he  could  to  increase  it.  He  was 
bound  to  use  all  reasonable  efforts 
in  his  power  to  stop  the  fire.  Bevier 
V.  D.  &  H.  C.  Co.,  13  Hun,  254: 
Milton  V.  Hudson  River  S.  Co.,  37 
N.  Y.  214.  See  O'Neill  v.  New  York, 
etc.    R.    Co.,    45    Hvm    458,    as    to 


an    excuse    for    nonperformance    of 
duty. 

30  Montgomery  v.  Arkansas  C.  S, 
&  I.  Co.,  93  Ark.  191;  Tradesman 
Co.  v,  Superior  Mfg.  Co.,  147  Mich. 
702;  Peyser  v.  Lund,  89  App.  Div. 
(N.  Y.)  195;  Hewson-H.  S.  Co.  v. 
Minnesota  B.  Co.,  55  Minn.  530, 
quoting  the  text;  Dillon  v.  Ander- 
son, 43  N.  Y.  231;  Grant  v.  Gallup, 
111  111.  487,  53  Am.  Rep.  638  (one 
who  has  learned  of  the  breach  of  a 
contract  to  insure  his  property  must 
try  to  obtain  insurance  elsewhere; 
failure  to  do  so  prevents  a  recovery 
for  the  loss)  ;  Sackville  v.  Storey 
(Tex.  Civ.  App.),  149  S.  W.  239, 
citing  the  text. 

31  Borden  M.  Co.  v.  Barry,  17 
Md.  419;  Sutherland  v.  Wyer,  67 
Me.  64;  Gillis  v.  Space,  63  Barb. 
177;  Heavilon  v.  Kramer,  31  Ind. 
241 ;  Heilbroner  v.  Hancock,  33  Tex. 
714;  Howard  v.  Daly,  61  N.  Y.  362, 
19  Am.  Rep.  285;  Williams  v.  Chi- 
cago C.  Co.,  60  111.  149;  Raleigh  v. 
Clark.  114  Kv.  732,  quoting  the  text. 


§  88] 


COMPENSATION. 


plaintiti"  to  haul  ice  cut  from  the  lake  over  such  lots,  when 
frozen,  to  the  wharf  from  which  the  plaintiff  desired  to  ship 
the  ice  for  the  purposes  of  hib  business,  unless  he  paid  toll, 
which  he  refused  to  do;  the  defendant  having  acted  without 
malice  and  under  a  bona  fide  mistake  as  to  his  rights  the  plain- 
tiff ought  to  have  paid  the  toll  under  protest,  and  because  he 
did  not  he  could  not  recover  for  the  loss  of  his  business  conse- 
quent on  the  failure  to  ship  ice.''    In  an  action  for  damages  re- 
sulting from  alleged  defects  in  the  construction  of  a  building 
so  that  the  roof  leaked  and  injured  the  interior  work  or  prop- 
erty therein,'^  or  for  breach  of  a  contract  to  repair  a  building 
from  which  similar  injuries  ensued ; '"  or  for  injury  to  crops 
through  default  of  the  defendant  in  not  building  or  repairing 
a  fence,  or  his  tortious  opening-  of  the  same,"  where  the  party 
suffering  from  the  injury  is  aware  of  the  fact  and  the  cause 
and  that  by  a  little  timely  labor  and  expense  the  damage  could 
be  avoided  the  law  imposes  the  duty  on  him  to  stay  the  injury, 
when  he  is  in  a  favorable  situation  to  do  it,  and  enforces  the 
duty  by  confining  his  redress  for  the  injury  thus  avoidable 
to  compensation  for  the  necessary  and  proper  means  of  pre- 
vention.^^    The  duty  in  such  cases  is  not  arbitrarily  imposed 
on  the  injured  party  and  exacted  of  him  in  all  cases  to  do  or 
amend  the  work  of  the  other  party  or  to  finish  it:  Imt  only 


32  Cullerton  v.  Miller.  26  Out.  36. 

33  Mather  v.  Butler  County,  28 
Iowa,  253;  Haysler  v.  Owen,  61  Mo. 
270. 

34Dorwin  v.  Potter,  5  Denio,  306: 
Cook  V.  Soule,  56  N.  Y.  420;  Thomp- 
•son  V.  Shattuck,  2  Mete.  (Mass.) 
6]5. 

35  Andrews  v.  Jones,  36  Tex.  149; 
Campbell  v.  Miltenberger,  26  La. 
Ann.  72;  Loker  v.  Damon,  17  Pick. 
284;  Fisher  v.  Goebel,  40  Mo.  475; 
Waters  v.  Brown,  44  Mo.  302;  St. 
Louis,  etc.  R.  Co.  v.  Ritz,  33  Kan. 
404;  Same  v.  Sharp,  27  id.  134; 
Smith  V.  C.  C.  &  D.  R.  Co.,  38  Iowa, 
518. 

36  Western  R.  E.  Trustees  v 
Hughes,  172  Fed.  206,  96  C.  C.  A. 


658,  citing  the  text;  Cromer  v.  Lo- 
gansport,  38  Ind.  App.  661,  citing 
the  text;  Sherman  Center  T.  Co  v. 
Leonard,  46  Kan.  .354,  26  Am.  St. 
101;  Dryer  v.  Lewis,  57  Ala.  551 
Itliere  cannot  bo  a  recovery  for  the 
loss  of  a  crop  because  of  the  breach 
of  a  contract  to  perform  service  un- 
less efforts  were  made  to  secure  an- 
other person  to  perform  tlie  service 
called  for  in  the  broken  contract). 

The  iinancial  condition  of  a  per- 
son whose  stocks  have  been  convert- 
ed is  immaterial  so  far  as  the  per- 
formance of  his  duty  to  replace 
tlicm  within  a  reasonable  time  is 
concerned.  Ling  v.  Malcom.  77 
Conn.  517. 


316  SUTHERLAND    ON    DAMAGES.  [§    88 

when  in  view  of  all  tlie  circumstances  of  the  particular  case  it 
is  a  reasonable  duty  whicli  he  ought  to  perform  instead  of 
passively  allowing  a  greater  damage.^'^  Where  the  nature  of  the 
case  is  such  as  to  allow  it,  the  test  of  reasonableness  on  the  part 
of  the  injured  person  is  the  ratio  of  his  expenditure  as  com- 
pared with  the  injury  which  might  follow  the  wrongdoer's  act 
or  neglect.^^  In  other  cases  the  law  will  take  notice  of  the 
relations  of  the  persons  whose  rights  are  involved:  A  father 
may  recover  for  physical  and  mental  suffering  in  consequence 
of  being  without  food  though  he  did  not  deny  food  to  his  wife 
and  children  in  order  to  appease  his  own  hunger.^^  Where 
the  party  whose  duty  it  is  primarily  to  do  the  work  necessary 
to  fulfill  the  contract  and  to  prevent  damage  from  past  failure 
or  to  stay  injuries  resulting  from  his  negligence  or  other  wrong 
is  in  possession  or  has  equal  knowledge  and  opportunity  he 
alone  may  be  looked  to  to  fulfill  that  duty,  and  it  will  not  avail 
him  to  say  the  injured  party  might  have  lessened  the  damages 
by  performing  the  duty  for  him.^°  It  is  not  required  that  the 
person  who  has  exerted  himself  to  lessen  the  injury  done  him 
should  have  paid  the  expenses  incurred  therefor.*^ 

§  89.  Same  subject;  between  vendor  and  vendee.  If  the  party 
claiming  damages  is  a  purchaser  he  can  recover  no  more  than 
it  would  cost  him,  with  reasonable  diligence,  to  supply  himself 
with  the  same  property  by   resort  to  the  market  ^^  or   other 

37  Cromer  v.  Logansport,  ."8  Ind.  475;  Green  v.  Mann,  11  111.  613; 
App.  661;  Armistead  v.  Shreveport,  \^aters  v.  Brown,  44  Mo.  302;  Smith 
etc.  R.  Co.,  108  La.  171,  quoting  the  v.  Chicago,  etc.  R.  Co.,  38  Iowa,  518; 
text;  Raleigh  v.  Clark,  (Ky.)  71  S.  Chicago,  etc.  R.  Co.  v.  Ward,  16 
W.  857,  quoting  the  text.  111.  522;   Flynn  v.  Trask,  11  Allen, 

38  Atlanta  &  B.  A.  L.  R.  Co.  v.  550;  Priest  v.  Nichols,  n6  Mass. 
Brown,  158  Ala.  607;  St.  Louis,  etc.  401;  Gardner  v.  Smith,  7  .^lich.  410, 
R.  Co.  V.  Ritz,  33  Kan.  404.  74  Am.  Dec.  722;   St.  Louis,  etc.  R. 

39  Western  U.  Tel.  Co.  v.  Mills,  50  Co.  v.  Mackie,  71  Tex.  491,  8  Am. 
Fla.  474,  2  L.R.A.(N.S.)  1072,  111  Neg.  Cas.  636,  10  Am.  St.  766,  1 
Am.  St.  129.  L.R.A.  667. 

40  Myers  v.  Biu-ns,  35  N.  Y.  269;  41  §  1250;  Logansport,  etc.  R.  Co. 
Hexter  v.  Knox,  63  id.  561;  Schwin-  v.  Wray,  52  Ind.  578. 

ger  V.  Raymond,  83  id.  102,  38  Am.  42  Parsons  v.  Sutton,  66  N.  Y.  92; 

Rep.  415;  Keys  V.  Western  Vermont  McHose    v.    Fulmer,    73    Pa.    365; 

S.  Co.,  34  Vt.  81;  Haysler  v.  Owen,  Gainsford  v.  Carroll,  2  B.  &  C.  624; 

61  Mo.  270;  Fisher  V.  Goebel,  40  Mo.  Barrow    v.    Arnaud,    8    Q.    B.    604; 


§89]  COiMi'ENSATION.  317 

source  or  means  of  supply.*^  So  where  pro])erty  is  sold  with  a 
warranty  of  fitness  for  a  particular  ])urpose,  if  it  be  of  siicii  a 
nature  that  its  defects  can  be  readily,  and  in  fact  are,  ascer- 
tained, yet  the  purchaser  persists  in  using  it,  wliereby  losses 
and  expenses  are  incurred,  they  come  of  his  own  wrong  and 
he  cannot  recover  damages  for  them  as  consequences  of  the 
breach  of  warranty.*^  A.  sold  to  B.  a  quantity  of  pork  in  bar- 
rels with  a  warranty  that  the  barrels  would  not  leak ;  13.  stored 
it  in  a  suitable  place,  but  found  afterwards  that  some  of  the 
barrels  were  leaking.  In  order  to  preserve  the  pork  he  tilled 
the  leaking  barrels  from  time  to  time  with  new  brine ;  but  they 
continued  to  leak  and  a  considerable  quantity  of  the  pork 
was  spoiled.  1].  did  not  give  notice  to  A.  of  the  condition  of 
the  barrels,  nor  offer  to  return  the  pork.  It  was  the  established 
practice  among  persons  dealing  in  pork,  of  which  B.  was  pre- 
sumed to  be  cognizant,  where  the  leaking  of  the  barrels  con- 
tinued after  they  had  been  filled  with  new  brine,  to  take  out 
the  pork  and  repack  it  in  new  barrels.  In  a  suit  brought  by 
A.  for  the  price  of  the  pork  B.  claimed  a  deduction  of  the  dam- 
ages for  breach  of  the  warranty ;  the  only  deduction  he  was 

Hassard-Short  v.  Haidisoii,   114  N.  contract.     Brown  v.  Muller,  L.  R.  7 

C.  482;   Creve  Coeur  Lake  I.  Co.  v.  Ex.  322. 

'J'amm,  90  Mo.  App.  189;  Lawrence  43  Josejjh  v.  ..Sulzberger,  13U  App. 

V.   Porter,   26    L.R.A.   167,    63   Fed.  Div.    (N.   Y.)    499;    Central   L.   Co. 

62;   Howard  S.  Co.  Wells,  176  Fed.  v.  Arkansas  Valley  L.  Co.,  86  Kan. 

532,  100  C.  C.  A.  70;  United  States  131;    Benton    v.    Fay,   64   111.    417; 

V.  Withers,  130  Fed.  696,  65  C.  C.  A.  Beymer   v.   McBride,   37    Iowa    114; 

16;   Czarnikow  v.  Baxter,  146  App.  Grand    Tower    Co.    v.    Phillips,    23 

Div.   (K  Y.)  81;  Tillinghast  v.  Cot-  yVall.   471,  23   L.   ed.   71;    Hinde   v. 

ton  Mills,  143  N.  C.  268;   Coal  Co.  Liddell,  L.  R.  10  Q.  B.  265. 

V.  Ice  Co.,  134  N.  C.  574,  citing  the  44  Carson   v.   Bunting,   154   N.   C. 

text:   Anderson  v.   Savoy,   142  Wis.  -3^.    bright  v.   Computing   S.   Co., 

127.      Some   cases    to    the    contrary  ^^   ^^,.^^,^_   ^^^ .    ^^^^^.^^^   g    Co.  v. 

are  cited  in  §  652.  Wangard,   123   Wis.   1,  107   Am.  St. 


!)84;  British  Westinghouae  E.  & 
Mfg.  Co.  V.  Underground  E.  R.  Co., 
[1011]  1   K.  B.  575;  Carter  v.  Fisch- 


A  vendor  need  not  sell  unaccepted 
goods  to  one  whose  checks  are  not 
being  paid.  Moss  T.  Co.  v.  Phelps, 
143  Ky.  839. 

There  is  no  duty  resting  upon  tbe  ">'■  i^-  Y.  Mi..c.).  121  Supp.  614; 
vendee  to  go  into  the  market  and  l^raper  v.  Sweet,  66  Barb.  145;  May- 
supply  himself  with  tliat  which  lie  nard  v.  Maynard,  49  Vt.  297;  Frick 
was    entitled    to    under    tlie    broken        Co.  v.  Falk,  50  Kan.  044. 


318  SUTIIEELAND    ON    DAMAGES.  [§    89 

entitled  to  was  the  sum  which  he  would  have  been  compelled  to 
pay  for  new  barrels  in  the  place  of  the  leaky  ones,  and  for  the 
repacking  of  the  pork  in  them.  If  B.,  without  knowledge  that 
the  barrels  were  leaky  and  without  care  in  informing  himself 
of  their  condition,  had  suffered  the  pork  to  remain  in  them 
for  a  reasonable  time  and  it  had  thereby  become  spoiled  he 
could  have  recovered  in  an  action  on  the  warranty  the  value 
of  the  pork  spoiled.  But  as  he  knew  that  the  barrels  were 
leaky  and  miglit  have  prevented  the  injury  by  procuring  new 
ones  and  repacking  the  pork,  the  loss  should  be  regarded  as 
attributable  to  his  own  want  of  care  rather  than  to  the  defect  of 
the  barrels.**  Expenses  incurred  in  the  exercise  of  reasonable 
judgment  and  in  good  faith  on  account  of  the  breach  of  a  war- 
ranty as  to  the  condition  of  property  may  be  recovered  though 
an  offer  to  rescind  the  contract  was  previously  made.*^  Expenses 
can  be  recovered  only  in  so  far  as  they  were  incurred  during  the 
life  of  the  contract ;  they  are  not  an  element  of  the  damages  if 
incurred  because  of  the  refusal  to  renew  a  contract.*' 

§  90.  Same  subject;  extent  of  the  duty.  The  principle  that 
the  injured  party  must  reasonably  exert  himself  to  prevent 
damage  applies  alike  to  many  (but  not  all)  cases  of  contract 
and  tort.*^    He  is  not  required  to  commit  a  tort  to  prevent  dam- 

45  Hitchcock    V.    Hunt,    28    Conn.  166    Mich.    276;    Ramsey    v.    Perth 

343;   Belcher  v.  Case  T.  M.  Co.,  78  Amboy   S.   &   E.   Co.,   72   N.   J.   Eq. 

Neb.  798.     See  Empire  State  B.  Co.  165;  Bleakley  v.  Sheridan,  120  App. 

V.  McDermott,  89  App.  Div.  (X.  Y.)  Div.    (N.   Y.)    471;   Brown  v.  Weir, 

234.  99  App.  Div.   (N.  Y.)   78;  Carter  v. 

46Sapp  V.  Bradfield,  137  Ky.  308,  Southern  R.,  75  S.  C.  355;   Factors' 

136  Am.  St.  291.  &   T.'s   Ins.   Co.   v.   Werlein,   42  La. 

47Givens  v.  North  Augusta  E.  &  Ann.   1046,   11   L.R.A.   361,   quoting 

I.  Co.,  91  S.  C.  417.  the   text;    Sutherland   v.    Wyer,    67 

48  Maddux  v.  Western  Union  Tel.  Me.  64. 
Co.,  92  Kan.  619;   Hamilton  v.  Me-  A  lower  proprietor  is  not  required 

Kenna,  95  Kan.  20,  7  L.R.A. 191 5E,  to   avoid    damages    to    his    land    by 

455;   Carthage  Stone  Co.  v.  Travel-  digging  ditclies  to  carry  off  surface 

ers'    Ins.    Co.,    186    Mo.    App.    318;  water  wrongfully  diverted  from  its 

Pope  V.  Graniteville  Mfg.  Co.,  1  Ga.  natural  flow  by  an  upper  proprietor. 

App.   176;   Citizens'  T.  &  G.  Co.  v.  Barcliff  v.  Norfolk  Southern  R.  Co., 

Ohio   Valley   T.    Co.,   138   Ky.   421;  168  N.  C.  268;   Roberts  v.  Baldwin, 

Ingraham  v.  Pullman  Co.,  190  Mass.  151    N.    C.    407,    nor    to    allow    the 

33,  2  L.R.A.  (N.S.)    1087;   Harring-  upper  proprietor  to  dig  ditches   on 

ton-W.  Co.  V.  Blomstrom  Mfg.   Co.,  his     (lower    proprietor's)     land    for 


90] 


COMPENSATION. 


110 


ages,*^  nor  to  anticipate  and  provide  against  a  threatened  tres- 
pass/" nor  to  assume  that  the  other  i)arty  will  not  keep  his 
promise  to  remedy  the  cause  of  the  damage  so  long  as  there 
is  reason  for  expecting  him  to  perform  it.^*  A  purchaser  of 
land  who  has  made  preparations  to  build  on  it  is  not  bound  to 
build  elsewhere.*'^  A  business  man  is  not  l>ound  to  suspend 
business  because  of  the  daily  loss  of  a  small  quantity  of  meat 
in  consequence  of  the  breach  of  the  warranty  of  a  refrigerator 
used  in  his  business,  the  vendor  attempting  from  time  to  time 
to  remedy  the  defects.^^  The  plaintifl'  had  a  lease  of  a  grazing 
farm  which  he  had  occasion  to  use  to  its  capacity  in  grazing 
his  cattle  intended  for  sale;  the  defendant  wrongfully  turned 
other  cattle  of  his  own  upon  the  farm  and  persisted,  against 
the  plaintiff's  remonstrance,  in  keeping  them  there ;  in  conse- 
quence the  plaintiff  suffered  serious  loss  to  his  stock  for  want 


such  purpose.     Waters  v.  Kear,  168 
N.  C.  246. 

Where  the  plaintiff  contracted  to 
saw  logs  for  the  defendant  who 
agreed  to  haul  them  to  the  plain- 
tiff's mill,  on  breach  by  defendant 
the  plaintiff  is  not  bound  to  liaul 
the  logs  himself.  Howard  v.  Brown, 
—  Iowa  — ,  148  N.  W.  987. 

Some  contracts  between  landlord 
and  tenant  afford  illustrations  of  ex- 
ceptions to  the  rule  stated  in  the 
text.     See  §   871. 

Where  a  joint  enterprise  failed 
and  one  of  the  parties  was  possessed 
of  unsalable  stock  and  confronted 
with  liability  which  would  render 
his  investment  a  total  loss,  it  was 
held  to  be  liis  duty  to  exercise  due 
diligence  to  minimize  his  loss  by 
disposing  of  his  stock;  he  might  also 
use  his  best  judgment  and  efforts  to 
promote  the  welfare  of  the  enter- 
prise by  disposing  of  the  joint  prop 
erty  to  tlie  best  advantage,  and  pay 
wliat  was  necessary  to  prevent  fur- 
ther loss.  Davidor  v.  Bradford,  120 
Wis.  524. 

49  Mansfield  v.  Tenney,  202  Mass. 


312,  25  L.R.A.(N.S.)  731;  Jones  v. 
Bondurant,  21  Colo.  App.  24;  Cin- 
cinnati, etc.  R.  Co.  V.  Ward,  120  111. 
App.  212;  Wolf  V.  St.  Louis  I.  W. 
Co.,  15  Cal.  319;  Hubbell  v.  Meigs, 
50  N.  Y.  480.  See  Wing  Chung  v. 
Los  Angeles,  47  Cal.  531. 

50  Garrett  v.  Winterich,  44  Ind. 
App.  322;  Payne  v.  Moore,  31  id. 
360:  Phillips  v.  Railroad,  138  N.  C. 
12;  Plummer  v.  Penobscot  L.  Ass'n 
67  Me.  363;  Reynolds  v.  Chandler 
River  Co.,  43  Me.  513.  See  Driver 
V.  Western  Union  R.  Co.,  32  Wis. 
569,  14  Am.  Rep.  726;  Chicago  & 
N.  R.  Co.  V.  Stroud,  129  111.  App. 
348. 

51  Hartford  D.  Co.  v.  Calkins,  109 
111.  App.  579;  Lillard  v.  Kentucky 
D.  &  W.  Co.,  134  Fed.  168,  67  C. 
C.  A.  74;  Kentucky  D.  &  W.  Co.  v. 
Lillard.  100  Fed.  34.  87  C.  C.  A. 
1!)0:  Kclley  v.  La  Crosse  C.  Co.,  120 
Wis.  84,   102  Am.  St.  971. 

62  Curtley  v.  Security  Sav.  Soc, 
46  Wasb.  50. 

63  National  R.  &  R.'s  S.  Co.  v. 
Parmalee,   9   Ca.    App.   725. 


320  SUTHERLAND    ON    DAMAGES.  [§    90 

of  sufficient  i)asturage.  It  was  not  the  duty  of  the  plaintiff 
under  such  circumstances  to  provide  other  pasturage  for  his 
cattle  to  lessen  damages  in  exoneration  of  the  defendant.^*  But 
that  duty  may  devolve  upon  a  tenant  in  favor  of  his  landlord.^^ 
The  rule  that  one  who  seeks  special  damages  for  the  breach  of 
a  contract  to  loan  money  must  allege  that  he  used  all  reasonable 
means  to  avoid  loss/^  does  not  govern  where  the  contract  would 
not  have  been  made  but  for  a  condition  in  it  essential  to  enable 
the  plaintiff  to  perform  it,  and  if  such  efforts  as  he  might  have 
made  would  not  have  made  him  whole. ^'  Under  the  Georgia 
Code  a  party  who  commits  a  continuous,  positive  tortious  act  to 
the  property  of  another  cannot  avoid  liability  for  all  the  conse- 
quences because  the  person  wronged  took  no  steps  to  lessen  the 
injury.^^  Such  is  probably  the  law  regardless  of  legislative 
declaration.  The  duty  under  consideration  devolves  upon  the 
party  who  has  broken  his  contract  or  obligation.  Such  a  party 
may  not  demand  that  the  other  shall  continue  to  run  his  factory 
for  a  series  of  years  in  order  that  his  liability  for  the  breach 
of  his  contract  to  buy  the  entire  product  of  it  shall  be  lessened.^^ 
The  measure  of  the  duty  is  such  care  and  diligence  as  a  man  of 
ordinary  prudence  would  use  under  the  circumstances.  One 
may  not  have  done  the  very  thing  nor  used  the  very  means  that 
should  have  been  used,  as  developed  by  subsecpient  information, 
and  yet  not  be  in  fault.  One  is  not  bound  to  inquire  as  to  the 
means  of  getting  what  his  vendor  has  deprived  him  of  unless 
he  knew  such  facts  as  would  put  a  prudent  man  upon  inquiry.^" 

54  Gilbert  v.  Kennedy,  22  Mich.  58  Price  v.  High  Shoals  Mfg.  Co., 
117;  Shannon  v.  McNabb,  29  Okla.  132  Ga.  246,  22  L.R.A.(N.S.)  684. 
829,  38  L.R.A.(]Sr.S.)  244;  Price  v.  59  Allen  v.  Field,  130  Fed.  641,  65 
High  Shoals  Mfg.  Co.,  132  Ga.  246,  c.  C.  A.  19.  A  party  whose  rights 
22  L.R.A.(N.S.)  684,  citing  local  j^^,,^  ^^^  ^^^^^  violated  is  not  bound 
cases.  Compare  Hughes  v.  Austin,  ^^  j^^^^^^  ^j^^  j^^^  ^^  another.  Stoom- 
12  Tex.  Civ.  App.  178.  See  Lawson  ^^^^  Maatschaffy  Nederlansche 
V.  Price,  45  Md.   123. 

55  Kellogg    V.    Malick,    125    Wis 
23!). 

56  Lowe  V.  Turpie,  147  Ind.  652,  6°  Waco  A.  W.  Co.  v.  Caublo,  19 
37  L.R.A.  233;  Western  U.  Tel.  Co.  ^ex.  Civ.  App.  417;  Scott  v.  Long- 
V.  Hearne,  7  Tex.  Civ.  App.  67.  well,  139  Mich.  12. 

57  Bixby-T.  L.  Co.  v.  Evans,  167  Pteasonable  effort  and  moderate 
Ala.  431,  29  L.R.A.  (N.S.)    194.  expenses  are  the  measure  of  a  plain- 


Lloyd  V.  Lind,   170  Fed.   918,  06   C. 
(\  A.  134. 


90] 


COMPENSATION. 


321 


An  injured  person  is  not  required  to  forego  any  of  his  legal 
rights  for  the  benefit  of  the  wrongdoer.®^  A  lessee  is  not  bound 
to  go  to  an  expenditure  of  $300  in  constructing  a  ditch  to  pro- 
tect his  ])roperty  from  injury  resulting  from  negligence  in  the 
construction  of  a  railroad.^^  The  efforts  made  to  reduce  the 
effects  of  the  wrong  must  be  confined  to  such  as  are  reasonable 
and  made  in  good  faith.^^  The  expense  resulting  from  them 
can  be  recovered  only  to  the  extent  that  it  is  within  the  loss 
which  would  otherwise  have  been  sustained.^*  If  the  courts 
can  protect  the  rights  of  the  injured  party  he  nnist  resort  to 


tiflf's    duty.      Chattanooga   C.    &    F. 
Co.  V.  Lefebvre,  113  La.  487. 

61  §  693. 

A  passenger  is  not  bound  to  leave 
a  coach  because  he  suffered  from  the 
cold.  Atlantic  C.  L.  R.  Co.  v.  Pow- 
ell, 127  Ga.  805,  9  L.R.A.(N.S.)  769. 

62  Yazoo  &  M.  V.  R.  Co.  v.  Sul- 
tan, —  Miss.  — ,  49  L.R.A.(N.S.) 
760,  63  So.  672,  quoting  the  text; 
Galveston,  etc.  R.  Co.  v.  Borsky,  2 
Tex.  Civ.  App.  545.  Compare  Ma- 
honey  V.  Kansas  City,  106  Mo.  App. 
39.     See  §  871. 

63  Murphy  v.  McGraw,  74  Mich. 
318,  Ellis  v.  Hilton,  78  Mich.  150, 
18  Am.  St.  438,  6  L.R.A.  454;  Mt. 
Sterling  v.  Crummy,  73  111.  App. 
572;  Lodge  Holes  C.  Co.  v.  Wed- 
nesbury,  [1908]  App.  Cas.  323.  The 
Lord  Chancellor  said:  "When  a 
road  is  let  down  or  land  let  down, 
those  entitled  to  have  it  repaired 
find  themselves  saddled  with  a  busi- 
ness they  did  not  seek,  and  for 
which  they  are  not  to  blame.  Er- 
rors of  judgment  may  be  committed 
in  this  as  in  other  affairs  of  life. 
It  would  be  intolerable  if  persons 
.so  situated  could  be  called  to  ac- 
count by  the  wrongdoer  in  a  minute 
scrutiny  of  the  expense,  as  though 
they  were  his  agents,  for  any  mis- 
take or  miscalculation,  provided 
they    act   honestly    and    reasonably. 

Suth.  Dam.  Val.  I.— 21. 


In  judging  whether  they  have  acted 
reasonably,  I  think  a  court  should 
1)0  very  indulgent  and  always  bear 
in  mind  who  was  to  blame.  Accord- 
ingly, if  the  case  of  the  plaintiffs 
had  been  that  they  had  acted  on 
the  advice  of  competent  advisers  in 
the  work  of  reparation  and  had 
chosen  the  course  they  were  advised 
was  necessary  it  would  go  a  very 
long  way  with  me;  it  would  go  the 
whole  way  unless  it  became  clear 
that  some  quite  unreasonable  course 
had  been  adopted."  Because  the  au- 
thorities did  not  consider  whether  a 
road  whose  subsidence  the  defend- 
ant had  caused  could  be  restored 
without  unnecessary  expense  it  was 
held  that  the  cost  of  raising  it  to 
its  former  level  could  not  be  re- 
covered.    S.  C.   [1905]  2  K.  B.  823. 

Expenses  incurred  in  appreliension 
of  damage,  if  based  upon  mere 
rumors,  are  not  recoverable.  Holt 
V.  Silver,  169  Mass.  435,  456. 

64  Murphy  v.  McGraw,  Ellis  v. 
Hilton,  supra;  Keyes  v.  Minneapo- 
lis, etc.  R.  Co.,  36  Minn.  290;  St. 
Louis,  etc.  R.  Co.  v.  Ritz,  33  Kan. 
404.  Contra.  Gulf,  etc.  R.  Co.  v. 
Keith,  74  Tex.  287,  12  Am.  Neg. 
Cas.  600. 

In  an  action  against  a  railroad 
company  which  had  failed  to  con- 
struct cattle-guards,  as  required  by 


322 


SUTHERLAND    ON    DAMAGES. 


[§   90 


them  instead  of  using  his  individual  efforts  to  counteract  the 
wrong  being  done.^^ 

A  surety  is  not  bound  to  pay  his  principal's  debt  as  a  duty 
to  prevent  the  costs  incident  to  a  suit  for  its  collection.^^  Any 
loss  or  expense  occasioned  by  an  attempt  to  avoid  payment  of 
an  obligation  cannot  be  contemplated  by  the  parties  as  a  subject 
of  indemnity,  the  true  meaning  of  the  contract  being  that  if 
the  surety  pays  voluntarily  he  shall  be  reimbursed;  if  he  is 
compelled  by  suit  to  pay  he  shall  also  be  indemnified  for  his 
costs  and  expenses.  Flight  to  avoid  payment  of  the  debt  is  an 
accident  wholly  unforeseen,  and  its  consequences  cannot  be  con- 
sidered as  provided  for.  The  principal  had  a  right  to  calculate 
upon  the  surety's  ability  to  pay,  and  did  not  stipulate  to  save 
him  harmless  from  anything  but  the  payment  of  money.  If 
the  surety  were  put  in  prison  or  if  his  goods  were  sold  at  a  sacri- 
fice these  would  not  be  legal  grounds  of  a  suit  for  indemnity 


statute,  the  plaintiflf  was  entitled  to 
recover  for  services  in  herding  his 
cattle  up  to,  but  only  up  to,  the 
value  of  the  things  belonging  to 
himself  and  others  which  might 
have  been  injured  by  the  cattle  if 
they  had  been  permitted  to  run  at 
large,  and  which  things  the  plaintiff 
had  the  right  to  protect,  or  which 
he  was  under  obligation  to  protect 
from  the  depredations  of  his  cattle. 
In  answer  to  the  contention  tliat 
the  defendant  was  liable  for  the 
value  of  the  herding  only  up  to 
the  amount  of  the  damages  which  the 
cattle  would  have  committed  if  they 
had  been  permitted  to  run  at  large, 
it  was  said  that  it  would  be  in  a 
degree  correct  if  it  could  be  ascer- 
tained with  any  degree  of  certainty 
just  the  amount  of  the  damage 
which  would  have  resulted  in  tliat 
event.  But  it  was  not  shown  how 
much  or  how  little  damage,  or  how 
much  or  how  little  injury  the  cattle 
might  have  done  if  they  had  been 
permitted  to  run  at  large.     Besides, 


if  the  plaintiff  is  to  recover  for  the 
herding  only  up  to  the  amount  of 
the  damages  which  the  cattle  might 
have  done  if  they  had  been  per- 
mitted to  run  at  large,  then  how 
is  the  plaintiff  to  obtain  compen- 
sation for  tlie  loss  of  his  pasture 
and  the  possible  loss  of  his  cattle 
and  the  possible  shrinkage  in  their 
value  because  of  a  possible  loss  of 
proper  food,  and  how  is  he  to  ob- 
tain compensation  for  his  time  and 
trouble  and  expense  in  hunting  for 
and  recovering  his  cattle?  Chicago, 
etc.  R.  Co.  V.  Behney,  48  Kan.  47. 
In  so  far  as  it  is  intimated  that  a 
recovery  might  be  had  for  possible 
loss,  the  language  used  is  contrary 
to  the  fundamental  idea  governing 
the  law  of  compensation. 

65Bowen  v.  King,  146  N.  C.  385; 
Brown  v.  Weir,  99  App.  Div.  (N. 
Y.)  78;  Fowle  v.  Park,  48  Fed.  789. 
Contra,  Cole  v.  Stearns,  20  N.  Y. 
Misc.  502,  505. 

66McKee  v.  Campbell,  27  Mich. 
497 ;  Holmes  v.  Weed,  24  Barb.  546. 


§90]  COMPENSATION.  323 

because  they  iiiiij,lit  be  avoided  by  payment,  wliicb  he  luust  be 
considered  as  stipuhiting  he  could  luakc.^' 

If  work  is  improperly  done  or  is  not  done  within  the  agreed 
time,  but  is  of  use  to  and  appropriated  by  the  employer,  the 
quantum  meruii  claim  for  it  is  reducible  by  allowance  of  the 
damages  for  failure  to  perfomi  the  contract  in  manner  and 
time;  but  in  such  a  case  if  the  employer  can  protect  himself 
from  damage  by  reason  of  the  defective  or  dilatory  work  at  a 
moderate  expense  or  by  ordinary  and  reasonable  efforts  he  is 
bound  to  do  so,  and  can  charge  the  delinquent  party  therefor 
and  with  the  damages  which  could  not  be  thus  avoided.®'  A 
vendor  is  not  bound  to  resell  the  goods  his  vendee  has  refused  to 
accept ;  he  may  carry  forward  as  many  contracts  as  he  may  make 
and  realize  the  profits  on  them.®^  It  is  not  required  that  a 
party  shall  submit  to  coercion,  as  by  paying  what  the  other  is 
not  entitled  to  receive;  he  may  go  elsewhere  and  sui)ply  him- 
self with  that  he  was  entitled  to  under  his  contract.'" 

In  case  of  wrongful  injury  to  person  or  property  the  injured 
party  is  required  to  use  reasonable  exertion  to  lessen  or  moderate 
the  resulting  damage.'^  Land  adjacent  to  a  railroad  was  flooded 
by  water  turned  on  to  it  by  the  construction  of  the  road;  it 

67Hayden  v.  Cabot,  17  Mass.  169.  rections    of    the    physician)  ;     Rail- 

68  Northwestern  S.  B.  &  Mfg.  Co.  road  Co.  v.  Hardware  Co.,  143  N.  C. 

V.  Great  Lakes  E.  Works,  181  Fed.  54;    Cason  v.   Western  U.   Tel.   Co., 

38,  104  C.  C.  A.  52;   Davis  v.  Fish,  77   S.  C.  157;   Missouri,  etc.  R.  Co. 

1  G.  Greene,  406,  48  Am.  Dec.  387;  v.   Ilogan,   42   To.\.   Civ.   App.    ]33; 

Mather  v.  Butler  County,  28  Iowa,  Texas  P.  C.  Co.  v.  Poe,  32  id.  460; 

259.  Central  R.  Co.  v.  Steverson,  3  Ala. 

69Hollenbach    C.   Co.   v.    Wllkins,  App.   313;    Western   U.   Tel.   Co.   v. 

130  Ky.  51.  Ivy,  102  Ark.. 246,  citing  the  text; 

70  Rollins  V.  Bowman  C.  Co.,  96  Hunter  v.  Southern  R.  Co.,  90  S.  C. 
App.  Div.  (N.  Y.)  365;  Sun  Mfg.  507;  French  v.  Vining,  102  Mass. 
Co.  v.  Egbert,  37  Tex.  Civ.  App.  132,  3  Am.  Rep.  440;  Allender  v. 
512.  C.  R.  I.  &  P.  R.  Co.,  37  Iowa,  264; 

71  Hay  V.  Long,  78  Wash.  616;  The  Baltimore,  8  Wall.  377,  19  L. 
Lillard  v.  Kentucky  D.  &  W.  Co.,  ed.  463,  1  Am.  Neg.  Gas.  419;  Little 
134  Fed.  168,  67  C.  C.  A.  74;  Max-  v.  McGuire,  43  Iowa,  447;  Fuller- 
well  V.  Speth,  9  Ga.  App.  745;  Davis  ton  v.  Fordyce,  144  Mo.  519,  3  Am. 
V.  Poland,  102  Me.  192,  10  L.R.A.  Neg.  Rep.  696;  Webb  v.  Metropoli- 
(N.S.)  212,  120  Am.  St.  480;  Wise  tan  St.  R.  Co.,  89  Mo.  App.  604. 
V.    Wabash    R.    Co.,    135    Mo.    App.  Sec  ch.  36. 

230,   (by  substantially  observing  di-  One  whose  property  has  been  wil- 


324  SUTHERLAND    ON    DAMAGES.  [§    90 

got  into  the  cellar  of  the  house  thereon  and  injured  the  walls. 
It  was  held  that  the  owner  was  bound  to  use  reasonable  care, 
skill  and  diligence,  adapted  to  the  occasion,  to  prevent  this 
consequence,  notwithstanding  the  wrongful  agency  of  the  com- 
pany in  turning  the  water  upon  the  premises.'^  Recovery  can- 
not be  had  against  a  notary  for  negligent  omission  to  give  notice 
of  protest  to  an  indorser  where  the  holder  could,  but  would  not, 
resort  to  other  grounds  for  charging  the  latter.''^  Persons  whose 
goods  are  destroyed  by  a  riotous  mob  are  not  entitled  to  recover 
from  the  city  their  value  unless  such  persons,  if  they  knew  of 
the  impending  peril,  used  reasonable  diligence  to  notify  the 
mayor  or  sheriff  of  the  threatened  riot  and  the  apprehended 
danger  to  their  property.'^  The  owner  of  land  on  which  a  per- 
sonalty tax  has  been  irregularly  charged  by  a  tax  collector  will 
be  denied  any  remedy  against  him  therefor  if  it  is  in  the  power 
of  the  former,  with  very  little  trouble  and  expense,  to  appear 
before  the  board  or  tribunal  having  authority  in  the  ]>remises 
and  procure  a  correction/^  A  party  interested  in  a  decree  for 
a  fund  invested  can  claim  no  indemnity  for  depreciation  of  the 
fund  during  his  delay  to  enforce  the  decree,  it  being  his  duty 
to  apply  seasonably  to  the  court  for  its  enforcement.''^^  A  claim- 
ant of  damages  is  bound  to  accept  reasonable  offers  of  the  other 
party  or  a  third  person  having  direct  reference  to  the  subject  of 
the  loss  which  would  have  the  effect  of  reducing  or  preventing 
damage ;  '^  and  it  has  been  said  that  it  is  the  duty  of  a  vendee 

fully  destroyed  is  not  bound  to  col-  reasonably  refused  to  follow  tbe  lat- 

lect   the   fragments,   but   may   leave  ter's  instructions.     Roanoke  R.  &  E. 

them  where  the  defendant  left  them  Co.  v.  Sterrett,  111  Va.  293. 

and  recover  their  value.     Eisele  v.  72  Chase    v.    New    York    Cent.    R. 

Oddie,  128  Fed.  941.     In  Georgia  a  Co.,  24  Barb.  273;   Louisville  &  N. 

person   deprived   of   the   fullest   en-  R.    Co.   v.   Goodin,   14   Ky.   L.   Rep. 

joyment  of  his  property  by  a  posi-  622;   Same  v.  Finley,  7  id.   129. 

tive  tort  is  not  bound  to  take  any  73  Franklin    v.    Smith,    21    Wend. 

action  to  lessen  the  consequences  of  624. 

the    wrong.      Athens    Mfg.    Co.    v.  74  Wing  Chung  v.  Los  Angeles,  47 

Rucker,    80    Ga.    291;    Holbrook    v.  Cal.  531. 

Norcross,  121   Ga.  319.  75  state   v.    Powell,   44   Mo.    436; 

An   injiu'ed  person  who  has  been  Wright  v.  Keith,  24  Me.  158. 

attended  by  a  physician  of  his  own  76  Carson  v.  Jennings  1  Wash.  C. 

choice  and   also  by  the  defendant's  C.  129. 

physician  may  recover  unless  he  un-  77  Dobbins  v.  Duquid,  65  111.  464 ; 


§90]  COMPENSATION.  325 

who  has  broken  his  contract  to  point  out  to  the  vendor  the  means 
by  which  his  damages  may  be  mitigated.'*  Where  damages  can 
be  thus  saved  by  timely  preventive  measures  by  the  injured 
party  it  is  his  duty  to  exert  himself  for  that  purpose;  but  he 
has  a  correlative  right  in  similar  cases  to  employ  other  means 
to  attain  the  object  of  the  contract  broken  which  was  within 
the  contemplation  of  the  parties  at  the  time  of  contracting,  or 
to  extricate  himself  from  any  predicament  in  which  the  wrong 
complained  of  may  have  placed  him.'^ 

In  an  action  to  recover  for  personal  injuries  the  defendant 
insisted  that  the  plaintiff  should  submit  to  a  surgical  o[)erati<>n, 
the  testimony  as  to  the  certainty  of  a  cure  in  that  event  being 
that  it  would  probably  be  effected.  The  court  said :  While 
the  person  who  inflicts  the  damage  has  the  right  to  say  that 
sure  and  safe  means  to  diminish  the  evil  results  of  the  accident 
must  be  used,  that  is  the  extent  of  his  right.  Whether  further 
means  should  be  resorted  to  is  for  the  plaintiff  to  determine. 
In  making  that  determination  the  plaintiff  has  the  right  to  con- 
sider the  nature  of  the  means  used  to  effect  a  cure,  and  the 
possible  or  probable  effect  upon  himself.  In  any  given  case  it 
may  be  that  the  treatment  which  is  given  to  the  plaintiff  is  not 
the  best  that  could  be  devised,  but  he  is  not  the  less  entitled  to 
his  damages  on  that  account  if,  in  taking  that  treatment,  he 
has  consulted  such  a  physician  as  a  reasonably  prudent  man 
would  consult.  Having  done  that,  he  is  entitled  to  his  damages. 
If  he  did  not,  and  the  jury  can  say  that  some  other  treatment 

Parsons  v.  Sutton,  66  N.  Y.  92;  commodity  at  a  recognized  world 
Beymer  v.  McBride,  37  Iowa,  114;  market  is  generally  of  much  greater 
Bisher  v.  Richards,  0  Ohio  St.  405;  value  than  the  right  to  call  for  de- 
Ashley  V.  Rocky  Mountain  Bell  Tel.  Hvcry  at  a  place  where  tiiere  is  no 
Co.,  25  Mont.  286,  296,  quoting  tlie  ,.,'c<.gniz("(l  market."  is  not  hoviiid  to 
text;  Lawrence  v.  Porter,  63  Fed.  ^^^^^  .  ,„opertv  at  the  latter  phuv 
62,  11  C.  C.  A.  27,  26L.R.A.  167;  ^^..^,^  ^^^  equalisation  of  freight. 
Borden  v.  Vinegar  Bend  L.  Co.,  2  ^^^^^^^^  ^^^  ^.  ^^^^j^.,^  ,_j,,  ^^..^ 
Ala.  App.  354.     See  Rudell  v.  Grand  ' 

Rapids  C.  S.  Co.,  136  Mich.  .528.  •^-    ' 

i;,  ,        .  .  i-        •  78  Parks  v.  Elmore.  ti9  Wash.  584. 

The   vendee   m    a   transaction    in 

,,  ,    .      .  +,         „^i J    «„.i,ov.,  if  ''^  Hoflrnian  v.  Union  F.,  68  N.  Y. 

the  market  of  the  world,     wheie  it 

is  well  known  that  certificates  and  •'^S-'^;  Kelsey  v.  Remer,  43  Conn.  129, 
bills  of  lading  are  generally  used  to  21  Am.  Rep.  638;  Williams  v.  Van- 
discharge  contracts,  and  that  the  derbilt,  28  N.  Y.  217,  84  Am.  Dec. 
right  to  call  for  delivery  of  a  staple  333;  James  v.  Hodsden,  47  Vt.  127. 


326 


SUTHERLAND    ON    DAMAGES. 


[§   90 


would  have  brought  about  a  cure,  and  that  treatment  was  one 
that  a  reasonably  prudent  man  would  have  submitted  to,  then 
they  must  say  that  he  has  not  used  the  care  Avhich  he  ought  to 
have  used  and  must  take  that  into  consideration  in  reaching 
their  verdict.*"  An  injured  person  is  not  affected  by  the  mis- 
take of  the  physician  chosen  by  him  in  the  exercise  of  ordinary 
care,*^  and  the  question  of  good  faith  in  rejecting  the  advice  of 


80  Blate  V.  Third  Ave.  R.  Co.,  44 
App.  Div.  (N.  Y.)  163;  Leitzell  v. 
Delaware,  etc.  R.  Co.,  232  Pa.  475; 
Birmingham  R.,  L.  &  P.  Co.  v.  An- 
derson, 163  Ala.  72,  citing  the  text; 
Missouri,  etc.  R.  Co.  v.  Schilling,  32 
Tex.  Civ.  App.  417.  See  Beattie  v. 
Detroit,  137  Mich.  319;  Maroney  v. 
Minneapolis  &  St.  L.  Ry.  Co.,  123 
Minn.  480,  49  L.R.A.(N.S.)  756,  cit- 
ing the  text.     §  1244. 

The  principle  is  that  if  a  patient 
refuses  to  submit  to  an  operation 
which  it  is  reasonable  that  he  should 
submit  to,  the  continuance  of  the 
malady  or  injury  which  such  opera- 
tion would  cure  is  due  to  his  re- 
fusal and  not  to  the  original  cause. 
Whether  such  refusal  is  reasonable 
or  not  is  a  question  to  be  decided 
upon  all  the  circumstances  of  the 
case.  If  the  medical  attendant  of 
the  person  injured  be  competent, 
and  no  attack  be  made  upon  his 
honesty,  Tutton  v.  Majestic,  [1909] 
2  K.  B.  54,  is  authority  for  saying 
that  it  is  not  unreasonable  to  re- 
fuse to  submit  to  an  operation 
against  the  advice  of  the  attendant. 
Bateman  v.  Middlesex,  24  Ont.  L. 
R.  84. 

In  McNamara  v.  Metropolitan  St. 
R.  Co.,  133  Mo.  App.  645,  it  is  said: 
We  do  not  think  plaintiflF  should  be 
criticized  and  punished  on  account 
of  his  failure  to  undergo  a  surgical 
operation.  He  should  be  accorded 
the  right  to  choose  between  suffering 
all  his  life  or  taking  the  risk  of 
an   unsuccessful  outcome  of  a  seri- 


ous surgical  operation.  Certainly 
defendant,  whose  negligence  pro- 
duced the  unfortunate  condition,  is 
in  no  position  to  compel  plaintiff 
again  to  risk  his  life  in  order  that 
the  damages  may  be  lessened. 

It  is  for  the  jury  to  say  whether 
a  reasonable  person  would  submit 
to  etherization  in  order  that  a  limb 
may  be  manipulated  to  improve  its 
condition.  O'Donncll  v.  Rhode  Is- 
land Co.,  28  R.  I.  245. 

"An  allowance  of  damages  in 
cases  of  traumatic  neurasthenia 
touches  the  border  of  speculation  at 
best,  and  it  is  manifestly  unfair,  for 
one  who  seeks  a  recovery,  to  put 
a  defendant  to  the  hazard  of  a  fur- 
ther speculation  by  refusing  the  aids 
which  science  affords  and  which  are 
available,  or  by  postponing  the  time 
of  treatment  until  after  a  trial  and 
a  verdict."  Mickelson  v.  Fischer,  81 
Wash.  423. 

Reasonable  and  prudent  self-treat- 
ment is  sufficient  compliance  with 
the  rule  requiring  the  party  injured 
to  endeavor  to  reduce  damage.  Mis- 
souri, K.  &  T.  Ry.  Co.  of  Texas  v. 
McCormick,  —  Tex.  Civ.  App.  — , 
160  S.  W.  429. 

81  Suelzer  v.  Carpenter,  —  Ind. 
— ,  107  N.  E.  467;  Lyons  v.  Erie 
R.  Co.,  57  N.  Y.  489,  9  Am.  Neg. 
Cas.  618;  Sauter  v.  New  York,  etc. 
R.  Co.,  66  N.  Y.  50,  6  Am.  Neg. 
Cas.  208,  23  Am.  Rep.  18;  Caven 
V.  Troy,  15  App.  Div.  (N.  Y.)  163, 
2  Am.  Neg.  Rep.  221;  Bethany  v. 
Lee,  124  111.  App.  397;  Goss  v.  Goss, 


§  91] 


COMPENSATION. 


327 


a  physician  is  for  the  jury.^^  Inability  to  secure  the  best 
medical  attendance  will  not  bar  a  recovery.*^  The  recovery 
by  an  injured  infant  will  not  be  affected  by  the  neglect  of  his 
parents  to  secure  medical  treatment  for  him.**  The  defendant 
must  show  that  the  plaintiff  failed  to  exercise  proper  diligence 
to  mitigate  his  loss.®^ 

§  91.  Same  subject;  employer  may  finish  work  at  contractor's 
expense.  On  the  failure  of  a  contractor  to  iiiiish  his  contract 
the  employer  may  cause  it  to  be  done  by  others  and  the  reason- 
able sum  required  to  be  paid  therefor  may  be  recovered  of  the 
delinquent  party.*^  One  who  has  contracted  for  the  shipment 
of  goods  or  to  be  carried  as  a  passenger  may  employ  other 
reasonable  means  of  transportation  if  the  carrier  fails  to  fulfill 
his  contract,  and  recover  the  excess  of  cost  as  well  as  other  dam- 
ages.*'    The  question  whether  the  expense  of  the  substituted 


102  Minn.  346;  Scholl  v.  Grayson, 
147  Mo.  App.  652;  Pyke  v.  James- 
town, 15  N.  D.  157;  O'Donnell  v. 
R.  I.  Co.,  28  R.  I.  245;  Rowe  v. 
Whatcom  County  R.  &  L.  Co.,  44 
Wash.  658;  Chicago  City  R.  Co.  v. 
Saxby,  213  111.  274,  68  L.R.A.  164, 
104  Am.  St.  218;  Variety  Mfg.  Co. 
V.  Landaker,  227  III.  22.  See  also, 
Ross  V.  City  of  Stamford,  88  Conn. 
260,  where  the  physician  employed 
omitted  to  apply  the  remedy  most 
approved  in  similar  cases. 

82  Sullivan  v.  Tioga  R.  Co.,  112 
N.  Y.  643,  8  Am.  St.  793,  16  Am. 
Neg.  Cas.  820;  Hope  v.  Troy  &  L. 
R.  Co.,  40  Hun,  438. 

83  Albert!  v.  New  York,  etc.  R. 
Co.,  118  N.  Y.  77,  9  Am.  Neg.  Cas. 
664,  6  L.R.A.  765;  Pecos,  etc.  R. 
Co.  v.  Williams,  34  Tex.  Civ,  App. 
100.  See  Glasgow  v.  Metropolitan 
St.  R.  Co.,  191  Mo.  347. 

84  Louisville  &  N.  R.  Co.  v.  Wil- 
kins,  143  Ky.  572.     See  §  27. 

85  Cromer  v.  Logansport,  38  Ind. 
App.  661;  Howard  S.  Co.  v.  Wells, 
176  Fed.  512,  100  C.  C.  A.  70. 

86  Pittsburgh,  etc.  R.  Co.  v.  Wil- 


son, 34  Ind.  App.  324 ;  Rowe  v.  Pea- 
body,  207  Mass.  226;  National  C. 
Co.  V.  Hudson  River  W.  P.  Co.,  118 
App.  Div.  65,  quoting  the  text;  Clark 
V.  Russell,  130  Mass.  133;  Smeed 
V.  Foord,  1  E.  &  E.  602;  Paine  v. 
Sherwood,  21  Minn.  225;  Ilinde 
V.  Liddel,  L.  R.  10  Q.  R.  265. 

In  Wigsell  v.  School  for  Indigent 
Blind,  8  Q.  B.  Div.  357,  the  grantee 
of  land  covenanted  with  his  grantor 
that  the  land  should  be  and  be  kept 
inclosed  with  a  brick  wall.  In  an 
action  to  recover  damages  for  the 
breach  of  this  covenant  it  was  shown 
that  the  value  of  the  adjoining 
lands  of  tlie  plaintiff  was  not  di- 
minished by  the  nonobservance  of 
the  covenant  to  anything  like  the 
sum  which  it  would  have  cost  to 
build  the  wall.  Tlie  measure  of 
damages  was  held  to  be  the  differ- 
ence between  the  plaintiff's  position 
with  and  without  the  wall,  and  the 
cost  of  building  it  was  not  the 
standard  to  be  applied. 

87  Hamlin  v.  Great  Northern  R. 
Co.,  1  H.  &  N.  408;  Denton  v.  Same, 
5   El.   &   B.   860;    Cranston   v.   Mar- 


328  SUTHERLAND    ON    DAMAGES.  [§    91 

mode  of  conveyance,  as,  indeed,  whether  any  expense  for  a 
substituted  performance  or  to  counteract  the  injurious  effect 
of  the  act  complained  of  may  be  recovered,  will  depend  on 
whether  the  act  done  for  which  such  expense  was  incurred  was 
a  reasonable  thing  to  do  considering  all  the  circumstances.  A 
party  to  a  contract  which  has  been  broken  by  the  other  has  a 
right  to  fulfill  it  for  himself,  as  nearly  as  may  be,  but  he  must 
not  do  this  unreasonably  as  regards  the  other  party,  nor  ex- 
travagantly,^^ but  he  may  expend  such  sum  as  will  give  him 
what  he  was  entitled  to  under  his  contract  though  that  be  more 
than  the  price  for  which  the  contractor  was  to  have  done  the 
work.^^  On  breach  of  a  contract  to  carry  by  vessel  an  ordinary 
article  of  merchandise  the  shipper  will  not  be  justified  in  pro- 
curing shipment  by  rail  if  the  railroad  prices  would  render  it 
unprofitable.  A  person  has  no  right  to  put  others  to  an  expense 
of  such  a  nature  as  he  would  not,  as  a  reasonable  man,  incur  on 
his  own  account.^" 

§  92.  May  damages  for  breach  of  contract  include  other  than 
pecuniary  elements?  In  actions  upon  contracts  the  losses  sus- 
tained do  not,  by  reason  of  the  nature  of  the  transactions  which 
they  involve,  ordinarily  embrace  any  other  than  pecuniary  ele- 
ments. There  is,  however,  no  reason  why  other  natural  and 
direct  injuries  may  not  justify  and  require  compensation.  Con- 
tracts are  not  often  made  for  a  purpose  the  defeat  or  impair- 
ment of  which  can,  in  a  legal  sense,  inflict  a  direct  and  natural 
injury  to  the  feelings  of  the  wronged  party.  A  breach  of 
promise  of  marriage  is  an  instance  of  such  a  contract,  in  which 
such  considerations  enter  into  the  estimate  of  the  damages.^^ 

shall,  5  Ex.  395;  Ogden  v.  Marshall,  61  Mo.  276;   Hirt  v.  Hahn,  61  Mo. 

8  N.  Y.  349;   Collins  v.  Baumgard-  496. 

ner,  52  Pa.  461 ;  Le  Blanche  v.  Lon-  90  Simmons  v.  Wittmann,  113  Mo. 

don,  etc.  R.  Co.,  1  C.  P.  Div.  286;  App.  357,  quoting  the  text;  Ward's 

Ward's  Central  &  P.  L.  Co.  v.   El-  Central  &  P.  L.  Co.  v.  Elkins,  supra. 

kins,    34    Mich.    439,    22    Am.    Rep.  91  Wells  v.  Padgett,  8  Barb.  323; 

544;   Williams  v.  Vanderbilt,  28  N.  Tobin  v.  Shaw,  45  Me.  331,  71  Am. 

Y.  217,  84  Am.  Dec.  333.  Dec.    547;    Wilbur    v.    Johnson,    58 

88  Le  Blanche  v.  R.  Co.,  supra.  Mo.  600 ;  Wadsworth  v.  Western  U. 

89  Spink  V.  Mueller,  77  Mo.  App.  Tel.  Co.,  86  Tenn.  695,  6  Am.  St. 
85,  citing  the  text;  Wright  v.  San-  864,  quoting  the  text.  There  can- 
derson,  20  id.  524 ;  Haysler  v.  Owen,  not  be  a  recovery  for  the  results  of 


§    92]  COMPENSATION.  329 

The  action  for  such  a  cause  is  often  referred  to  as  an  exceptional 
one.  In  a  certain  sense  it  is  so ;  but  only  in  the  particular  under 
consideration.  It  is  an  action  upon  contract;  the  damages  al- 
lowed are  such  as  will  adequately  compensate  the  person  in- 
jured, the  nature  and  benefits  of  the  thing  promised  being 
considered.  Being  of  a  personal  nature  the  damages  cannot 
be  wholly  measured  by  a  pecuniary  standard;  the  cause  of 
action,  for  the  same  reason,  dies  with  the  person,  as  all  demands 
for  personal  injuries  do.  The  damages  are  recoverable  by  the 
injured  party  because  they  proceed  directly  and  naturally  from 
the  breach.  Other  actions  upon  contract  may  embrace  like 
damages.^^  Blackburn,  J.,^^  said:  "Where  there  is  a  contract 
to  supply  a  thing  and  it  is  not  supplied,  the  damages  are  the 
difference  between  that  which  ought  to  have  been  supplied  and 
that  which  you  have  to  pay  for  it,  if  it  be  equally  good ;  or  if 
the  thing  is  not  obtainable  the  damages  would  be  the  difference 
between  the  thing  which  you  ought  to  have  had  and  the  best 
substitute  you  can  get  upon  the  occasion  for  the  purpose.  It 
was  urged  that  though,  when  the  plaintiff  was  .  .  .  (left  by 
a  carrier  short  of  his  destination),  .  .  .  if  he  had  been  able 
to  hire  a  fly  or  obtain  a  carriage  and  paid  money  for  it,  it  was 
admitted  he  could  recover  that  money, — yet  inasmuch  as  he 
could  get  no  carriage,  and  was  compelled  to  walk  under  penalty 
of  staying  where  he  was  all  night  he  was  not  entitled  to  get 
anything.  .  .  .  Now,  as  I  have  said,  what  the  passenger  is 
entitled  to  recover  is  the  difference  between  what  he  ouffht  to 


a  venereal  disease  communicated  by 
the  defendant  to  the  plaintiff 
Churan  v.  Sebesta,  131  111.  App.  330 
92  Lignante  v.  Panama  R.  Co.,  147 
App.  Div.  (N.  Y.)  97;  El  Paso  &  N 
E.  Co.  V.  Sawyer,  54  Tex.  Civ.  App 


this  section ;  Pullman  Co.  v.  Willett 
27  Ohio  C.  C.  649,  7  Ohio  C.  C.  (N 
S.)  173,  affirmed  without  opinion 
72  Ohio  690,  (compensation  for  men 
tal  suffering  accompanied  by  physi 
cal  inconvenience  and  pain   in  con 


sleeping  car)  ;  Browning  v.  Fies,  4 
Ala.  App.  580;  Hale  v.  Bonner,  82 
Tex.  33,  27  Am.  St.  850,  14  L.R.A. 
336;  Western  U.  Tel.  Co.  v.  Simp- 
son, 73  Tex.  422.     See  ch.  22. 

As  to  the  right  to  recover  dam- 


387,  quoting  the  preceding  part  of       ages  resulting  from   deprivation   of 


the  use  of  an  article  of  luxury  or 
pleasure,  see  Banta  v.  Stamford 
Motor  Co.,  —  Conn.  — ,  92  Atl.  6G5 ; 
Cook  v.  Packard  Motor  Car  Co.,  of 
New  York,  88  Conn.  590,  L.R.A. 
1915C  319. 


sequence  of  the  breach  of  a  contract  93  In  Hobbs  v.  London,  etc.  R.  Co., 

to    supply    a    drawing    room    in    a       L.  R.  10  Q.  B.  111. 


330  SUTHEKLAND    ON    DAMAGES.  [§    92 

have  had  and  what  he  did  have ;  aud  when  he  is  not  able  to  get 
a  conveyance  at  all,  but  has  to  make  the  journey  on  foot,  I  do 
not  see  how  you  can  have  a  better  rule  than  that  .  .  .  the 
jury  were  to  see  what  was  the  inconvenience  to  the  plaintiffs  in 
having  to  walk,  as  they  could  not  get  a  carriage."  While  it  is 
true  that  if  the  breach  causes  no  actual  injury  beyond  vexation 
and  annoyance,  as  all  breaches  of  contract  do  more  or  less,  they 
are  not  subjects  of  compensation  unless  to  the  extent  that  the 
contract  was  made  specially  to  procure  exemption  from  them, 
nevertheless  to  the  extent  that  a  contract  is  made  to  secure  relief 
from  a  particular  inconvenience  or  annoyance  or  to  confer  a 
special  enjoyment,  the  breach,  so  far  as  it  disappoints  in  re- 
spect of  that  purpose,  may  give  a  right  to  damages  appropriate 
to  the  objects  of  the  contract.^*  Inconvenience,  in  the  case 
quoted  from,  was  a  prominent  element  of  damage;  that  con- 
sisted in  a  disagreeable  walk  of  three  miles  when  the  contract 
entitled  the  injured  party  to  be  carried  in  a  railway  car  a  greater 
portion  of  the  distance.  It  was  a  rainy  night,  and  he  had  with 
him  his  wife  and  small  children.  Sickness  ensued  to  some  of 
them  from  taking  cold ;  damages  for  this  were  excluded  by  per- 
haps too  rigid  an  application  of  the  rule  that  they  must  be  the 
natural  and  proximate  consequence  of  the  breach,^®  but  a  verdict 
allowing  lOZ.  damages  for  the  inconvenience  was  sustained.^® 
In  an  action  for  breach  of  a  contract  to  convey  the  plaintiff  on 
a  steamship  from  London  to  Sheerness,  where  the  breach  con- 

94  As  for  the  breach  of  a  contract  96  See  Mclnturf  v.  Western  U.  Tel. 
not  to  molest  a  person.  Fearon  v.  Co.,  81  Kan.  476;  Dalton  v.  Kansas 
Earl  of  Aylesford,  14  Q.  B.  Div.  City,  etc.  R.  Co.,  78  Kan.  232,  17 
792;  Silberman  v.  Silbennan,  10  L.R.A.d^.S.)  122G;  Miller  v.  Balti- 
New  South  Wales  St.  Rep.  554.  more    &    0.    R.    Co.,    89    App.    Div. 

Compensatory    damages    are    not  (N.   Y.)    457;    Ward   v.    Smith,    11 

limited    to   mere    pecuniary    loss    if  Price    19;    Williams   v.   Vanderbilt, 

the  broken  contract  was  made  with  28    N.    Y.    217,    84    Am.    Dec.    333; 

reference  to  a  different  standard,  as  Jones  v.   Steamship  Cortes,  17   Cal. 

where    it    contemplates    service    to  487,   79   Am.   Dec.   142;    Wadsworth 

avoid  inconvenience  and  annoyance.  v.    Western    U.    Tel.    Co.,    86    Tenn. 

Carmichael  v.  Bell  Tel.   Co.   157  N.  695,    6    Am.    St.    864,    quoting    the 

C.    21.      They   include    all   damages  text. 

which  are  not  punitive.     Osborn  v.  If  a  contract  is  broken  in  a  way 

Leach,  135  N.  C.  628,  66  L.R.A.  648.  and  by  such  acts  as  constitute  an 

95  See  §§  48,  49.  offense    against    the    law    the    jury 


§    92]  COMPENSATION.  331 

sisted  in  putting  the  plaintiff  off,  without  just  cause  and  with 
circumstances  of  aggravation,  short  of  his  destination,  it  was 
proper  to  show  these  circumstances,  and  Parke,  B.,  thus  re- 
marked upon  their  admissibility:  ''Suppose,  instead  of  a  man 
landed  at  Gravesend  from  a  steamboat,  this  had  been  the  case 
of  a  passenger  in  a  ship  bound  to  the  West  Indies  and  he  were 
put  ashore  on  a  desert  island,  without  food,  and  exposed  to  the 
burning  sun  and  danger  of  wild  beasts,  or  even  landed  among 
savages,  would  not  evidence  be  receivable  to  show  the  state  of 
the  island  where  he  was  left  and  the  circumstances  attending  the 
violation  of  the  contract  ?  ^'  Inconvenience  and  annoyance  are 
grounds  of  damage  for  shutting  off'  water  from  premises  in  «n 
action  for  breach  of  the  contract  to  supply  it.^*  But  in  such  a 
case  there  cannot  be  a  recovery  for  distress  and  outraged  feel- 
ings; these  terms  being  synonymous  with  mental  suffering.^' 
But  a  different  view  prevailed  where  there  was  a  failure  to  fur- 
nish a  wedding  trousseau  for  a  bride  of  wealth  and  high  social 
standing;  damages  were  allowed  for  her  disappointment,  morti- 
fication and  humiliation  on  account  of  going  to  her  husband 
without  it  and  because  of  the  foregoing  of  entertainments 
planned  for  her.^ 

The  views  expressed  in  the  opening  part  of  this  section  have 
found  acceptance  in  a  well-considered  case  sustaining  the  right 
to  recover  damages  for  mental  suffering  resulting  from  delay 
in  delivering  a  telegram  announcing  the  time  of  holding  the 
funeral  of  the  plaintiff's  mother,  and  determining  that  there 

may    consider    the    outrage    to    the  875.     See  Rose  v.   Beattio,   2  X.   & 

feelings    of    the    plaintiff,    although  McC.  538. 

the    acts    done    were    not    directed  98  Eirmingham  W.  W.  Co.  v.  Fer- 

against  him   in  person,  but  against  guson,    104    Ala.    494.      The    incon- 

his  son   and  employees.      Enders  v.  venience   (the  majority  of  the  court 

Skannal,  35  La.  Ann.  1000.  thought  there  was  no  material  dif- 

In  O'Meallie  v.  Moreau,  116  La.  ference  between  inconvenience  and 
1020,  a  place  rented  by  a  picnic  annoyance)  consisted  in  being  de- 
party  was  occupied  by  another  such  prived  of  the  use  of  the  bath  tub 
party;  the  defendant  tendered  the  and  liaving  to  procure  water  else- 
use  of  a  less  desirable  place,  whicli  where. 

was    not    accepted;     damages    were  99  Uirmingliam  \V.  W.  Co.  v.  Vin- 

awarded  for  disappointment,  annoy-  ter,  104  Ala.  490. 

ance,  vexation  and  mortification.  i  Lewis  v.  Holmes,    100   La.   1030, 

97Coppin   V.   Braithwaite,   8   Jur.  Gl  L.R.A.  274. 


332  SC^THERLAND    ON    DAMAGES.  [§    92 

might  be  a  recovery  eitlier  ex  contractu  or  ex  delicto:  AVe  find 
a  well-recognized  exception  to  the  general  rule  that  damages 
cannot  be  had  for  mental  anguish  in  cases  of  breach  of  con- 
tract, in  the  action  for  breach  of  promise  of  marriage,  and  the 
reason  for  this  exception  is  quite  applicable  here.  In  such 
cases  the  defendant,  in  making  his  contract,  is  dealing  with 
the  feelings  and  emotions.  The  contract  relates  almost  wholly 
to  the  affections,  and  one  is  not  allowed  to  so  trifle  with  an- 
other's feelings.  He  knows  at  the  time  he  makes  the  contract 
that  if  he  breaks  it  the  other  will  suffer  great  mental  pain,  and 
the  courts,  without  exception,  have  allowed  recovery  in  such 
a  case.^  In  another  and  similar  case  the  text  is  quoted,  and  it 
is  said  that  it  serves  the  purpose  of  showing  that  in  the  ordi- 
nary contract  only  pecuniary  benefits  are  contemplated  and 
that  therefore  the  damages  resulting  from  the  breach  of  such 
a  contract  must  be  measured  by  pecuniary  standards,  and  that 
where  other  than  pecuniary  benefits  are  contracted  for  other 
than  pecuniary  standards  will  be  applied  in  the  ascertainment 
of  the  damages  flowing  from  the  breach.  The  case  before  us 
(so  far  as  it  is  an  action  for  breach  of  contract)  is  subject  to 
the  same  general  rule,  and  the  defendant  is  answerable  in  dam- 
ages for  the  breach  according  to  the  nature  of  the  contract, 
and  the  character  and  extent  of  the  injury  suffered  by  reason 
of  its  non-performance.^  If,  in  addition  to  physical  incon- 
venience and  discomfort,  there  results  from  the  breach  of  a 
contract  to  carry  vexation,  worry  or  mental  distress  as  the 
natural,  proximate  and  reasonably  to  be  expected  consequence, 
these  injuries  afford  cause  for  the  recovery  of  increased  com- 
];)ensation.^    The  failure  to  secure  a  stateroom  for  a  bridal  party 

2Mentzer  v.  Western  U.  Tel.  Co.,  Carmichael  v.  Bell  Tel.  Co.,  157  N. 

93  Iowa  752,  762,  57  Am.   St.  294,  c.  21,  39  L.R.A.(N.S.)    651;   §§  77, 

28    L.R.A.    72,    citing   Holloway    v.  9^5^  942 

Griffiith,    32    Iowa    409;    Royal    v.  4'Taxicab    Co.    v.    Grant,    3    Ala. 

Smith,    40    Iowa    615,    and    saying  ^^^      ^^^  ^^^  ^^^^^^  ^    j^^^^^ 
that  the  distinction  pomted  out  is 

well  stated  in  the  text.  ^^^  N.  Y.  Supp.  387    denymg  a  re- 

3Wadsworth   v.   Western   U.   Tel.  «"^^^.y   ^^^   ^"Ju^e'i  ^^^^^^S^  ^^^  *^« 

Co.,  86  Tenn.   695,  6  Am.   St.   864;  breach    of    a   contract   to   bury   the 

Western  U.  Tel.  Co.  v.  Crawford,  29  body  of  the  plaintiff's  husband  in  a 

Okla.  143,  35  L.R.A.  (N.S.)  930.    See  specified  manner. 


I 
I 


§    93]  COMPENSATION.  333 

involves  liability  for  the  worry  and  mental  distress  of  the  bride, 
and  the  fact  that  the  plaintiff  was  a  bride  is  material  as  to  the 
extent  of  the  distress  endured.^  A  person  whose  ticket  of  admis- 
sion to  a  bathhouse  is  revoked  may  recover  for  the  indignity 
put  upon  him  at  the  time  and  by  the  method  of  the  revocation 
though  the  sale  of  the  ticket  could  not  be  demanded  as  of  right.'' 
Inconvenience  is  a  ground  of  damage  for  the  breach  of  a  contract; 
to  construct  a  private  railroad  crossing. ''  The  failure  to  supply 
medical  and  hospital  assistance  is  attended  with  liability  for 
the  resulting  physical  and  mental  suffering;  ''the  subject-matter 
of  the  contract  was  the  health  and  physical  condition  of  the" 
defendant's  employee.®  Fraud  in  substituting  a  pine  box  in 
lieu  of  the  coffin  purchased,  said  box  being  too  small  to  contain 
the  remains  of  the  deceased,  and  in  failing  to  furnish  a  robe  as 
agreed,  is  ground  for  the  recovery  of  damages  based  on  mental 
suffering  by  his  next  of  kin.^  The  breach  of  a  contract  to  supply 
a  carriage  to  convey  the  plaintiff'  and  others  to  a  church  where 
he  was  to  be  married  is  cause  for  awarding  compensation  for 
the  inconvenience,  annoyance,  mental  embarrassment  or  dis- 
tress, as  well  as  mental  pain  the  plaintiff  endured,  the  purpose 
for  which  the  carriage  was  required  being  made  known  to  the 
defendant  when  the  contract  was  made.^° 

§  93.  Elements  of  damage  for  personal  torts.  In  actions  for 
torts  and  personal  injuries  damages  to  relative  rights  are  fre- 
quently in  question ;  then  every  particular  and  phase  of  the 
injury  may  enter  into  the  consideration  of  the  jury  in  estimat- 
ing compensation,^^  loss  of  time,  with  reference  to  the  injured 
party's  condition  and  ability  to  earn  money  in  his  business  or 

5  Central  R.  Co.  v.  Knight,  3  Ala.  injured  person  ahould  be  treated  by 
App.  436.  a  physician  named). 

6  Aaron  v.  Ward,  203  N.  Y.  351,  9  Dunn  v.  Smith  (Tex.  Civ.  App.), 
38  L.R.A.(N.S.)    204.                                   74  S.  W.  570. 

1  Big   Sandy   R.   Co.   v.   Rice,   146  10  Browning  v.   Pies,  4  Ala.  App. 

Ky.  619.  580.    But  compare  Gatzow  v.  Buen- 

8  Galveston,  etc.  R.  Co.  v.  Rubio,  ing,  106  Wis.  1,  49  L.R.A.  475,  80 

(Tex.    Civ.   App.)    65   S.   W.    1126;  Am.  St.  17,  stated  in  note  to  §  96. 

McDaniel  v.  United  R.  Co.,  165  Mo.  n  Grimes  v.  Bowerman,  92  Midi. 

App.   678    (breach   of   contract  that  258,  quoting  the  text. 


334 


SUTHERLAND    ON    DAMAGES. 


[§  93 


calling;  ^^  impairment  of  ability  of  a  married  woman  to  per- 
form duties  personal  to  herself  not  constituting  a  claim  for 
loss  of  time ;  ^^  damage  to  reputation ;  ^*  loss  from  permanent 
impairment  of  faculties,  mental  and  physical  pain  and  suffering, 
disfigurement  and  expenses. ^^     Where  injury  to  a  young  girl 


18  Miller  v.  Delaware  River 
Transp.  Co.,  85  N.  J.  L.  700;  Wye- 
man  V.  Deady,  79  Conn.  414;  Math- 
re  V.  Story  City  D.  Co.,  130  Iowa, 
111;  Welch  v.  Ware,  32  Mich.  77; 
Whalen  v.  St.  Louis  R.  Co.,  60  Mo. 
323,  12  Am.  Neg.  Cas.  204;  Penn- 
sylvania R.  Co.  V.  Books,  57  Pa. 
339,  10  Am.  Neg.  Cas.  217,  98  Am. 
Dec.  229;  Ward  v.  Vanderbilt,  4 
Abb.  App.  Dec.  521 ;  Walker  v.  Erie 
R.  Co.,  63  Barb.  260,  9  Am.  Neg. 
Cas.  666;  McKinley  v.  Chicago,  etc. 
R.  Co.,  44  Iowa,  314,  8  Am.  Neg. 
Cas.  253,  24  Am.  Rep.  748;  Pitts- 
burg, etc.  R.  Co.  V.  Andrews,  39 
Md.  329,  9  Am.  Neg.  Cas.  421,  17 
Am.  Rep.  568;  Toledo,  etc.  R.  Co.  v. 
Baddeley,  54  111.  19,  5  Am.  Rep.  71  ; 
Southern  R.  Co.  v.  Myers,  32  C.  C. 
A.  19,  87  Fed.  149.     See  ch.  36. 

In  Keller  v.  Chicago,  W.  &  V. 
Coal  Co.,  184  111.  App.  248,  an  in- 
jured motorman  recovered  for  suf- 
fering and  loss  of  time  and  for  any 
future  suffering,  though  the  specific 
amount  awarded,  $3,400,  was  held 
excessive. 

13  Wood  v.  Louisville  &  N.  R.  Co., 
183  111.  App.  543. 

l4DeMinico  v.  Craig,  207  Mass. 
593,  as  where  an  unjustifiable  strike 
was  instituted  to  get  rid  of  a  fore- 
man. 

15  Girardo  v.  Wilmington  &  P. 
Trac.  Co.,  —  Del.  — ,  90  Atl.  476; 
Reynolds  v.  Clark,  —  Del.  — ,  92 
Atl.  873;  Travers  v.  Hartman,  — 
Del.  — ,  92  Atl.  855 ;  Chicago,  S.  B. 
&  N.  I.  Ry.  Co.  v.  Roth,  —  Ind. 
App.  — ,  107  N,  E.  689;  Felker  v. 
Bangor  Ry.  &  Electric  Co.,  112  Me. 


255;  Rhodes  v.  Rapid  T.  Co.,  16 
Hawaii  319;  Lutterman  v.  Romey, 
143  Iowa  233;  Memphis  &  C.  R. 
Co.  v.  Whitfield,  44  Miss.  466,  4 
Am.  Neg.  Cas.  268;  Johnson  v 
Wells,  etc.  Co.,  6  Nev.  224,  3  Am. 
Rep.  245;  Muldowney  v.  Illinois, 
etc.  R.  Co.,  36  Iowa,  462,  14  Am. 
Neg.  Cas.  612,  618;  Mason  v.  Ells- 
worth, 32  Me.  271;  Morse  v.  Au- 
burn, etc.  R.  Co.,  10  Barb.  621; 
Lucas  V.  Flinn,  35  Iowa,  9;  Stew- 
art V.  Ripon,  38  Wis.  584;  West 
V.  Forrest,  22  Mo.  344;  Filer  v. 
New  York  Cent.  R.  Co.,  49  N.  Y. 
42,  5  Am.  Neg.  Cas.  147;  Donnell 
V.  Sandford,  11  La.  Ann.  645;  Lynch 
V.  Knight,  9  H.  of  L.  Cas.  577; 
Steiner  v.  Moran,  2  Mo.  App.  47; 
Ashcraft  v.  Chapman,  38  Conn.  230; 
Seger  v.  Barkhamsted,  22  id.  290; 
Pennsylvania  &  0.  C.  Co.  v.  Gra- 
ham, 63  Pa.  290,  3  Am.  Rep.  549; 
Smith  V.  Overby,  30  Ga.  241 ;  Smith 
v.  Holcomb,  99  Mass.  552;  Ford  v. 
Jones,  62  Barb.  484;  Hamilton  v. 
Third  Ave.  R.  Co.,  8  Am.  Neg.  Cas. 
552,  53  N.  Y.  25 ;  Holyoke  v.  Grand 
Trunk  R.  Co.,  48  N.  H.  541;  Ripon 
v.  Bittel,  30  Wis.  614;  Moore  v. 
Central  R.,  47  Iowa,  688,  14  Am. 
Neg.  Cas.  657;  Ballou  v.  Farnum, 
11  Allen,  73;  Nones  v.  Northouse, 
46  Vt.  587 ;  Johnson  v.  Holyoke,  105 
Mass.  80;  Blackman  v.  Gardiner 
Bridge,  75  Me.  214;  Bovee  v.  Dan- 
ville, 53  Vt.  183;  Mayor,  etc.  v. 
Lewis,  92  Ala.  352;  Montgomery  & 
E.  R.  Co.  V.  Mallette,  92  Ala.  209; 
Gibney  v.  Lewis,  68  Conn.  392; 
Louisville  &  N.  R.  Co.  v.  Logsdon, 
71  S.  W.  905;    (Ky.);  Newbury  v. 


§    94]  COMPENSATION.  335 

results  in  lier  permanent  disfie,nrernent  the  jury  niiiy  consider 
what  the  effect  will  probably  be  on  the  prospects  of  her  marriage 
when  she  reaches  the  age  of  womanhood  and  how  far  the  money 
value  of  her  life  may  be  damaged  by  that  circumstance.  Such 
an  element  of  damages  is  not  speculative  because  it  is  difficult 
to  estimate,  nor  in  any  other  sense  than  almost  every  element 
of  damages  is  speculative  where  the  ascertainment  depends  on 
what  the  jury  or  other  trior  of  the  fact  shall  deem  fair  and 
just,  and  where,  being  uncertain  and  indefinite,  the  damages 
are  not  capable  of  adjustment  with  precision  and  accuracy.  In 
such  a  case  there  may  be  a  recovery  on  account  of  that  loss 
without  a  special  allegation  of  damage,  the  loss  being  a  gen- 
eral prospect  and  not  a  particular  one.^^  As  a  general  rule  if 
only  compensatory  damages  may  be  recovered  there  may  not 
be  a  recovery  on  account  of  the  plaintiff's  attorney's  fees.^' 

§  94.  Character  as  affecting  damages  for  personal  injuries, 
and  in  actions  for  death.  In  an  action  to  recover  for  personal 
injuries  sustained  while  traveling  as  a  passenger  on  a  railroad 
the  question  arose  as  to  the  effect  of  the  plaintiff's  character 
for  chastity  upon  the  measure  of  damages.  The  trial  court 
charged  that  the  fact  that  the  plaintiff  is  an  unchaste  woman 
has  nothing  to  do  with  the  damages ;  that  she  is  entitled  to  re- 
cover the  same  damages  for  injuries  received  as  a  chaste  woman. 
The  appellate  court,  Cole,  C.  J.,  writing  the  opinion,  says  it 
thinks  the  charge  had  a  tendency  to  mislead  the  jury:  "We  do 
not  wish  to  intimate  that  an  unchaste  woman  who  is  maimed  and 

Gctclioll   &   M.   L.   &   Mfg.   Co.,   100  Co.,    184   111.   App.    ISS,   holding   an 

Iowa   441,   457,    14   Am.   Nog.    Cas.  instruction    crroncoiLs    wliieli    called 

568,  62  Am.  St.  582,  citing  the  text.  attention    to    the    disfigurement    of 

See  ch.  36.  the  plaintiff  as  a  basis  for  estimat- 

But  see,   Lake   Street   El.   R.   Co.  jj^,,  Yiqt  dama^'cs. 
V.  Gormley,  108  III.  App.  59,  where-  ^6  Smith    v."  Pittsburgh   &    W  .    I!, 

in  it  is  said:     "The  marring  of  per-  ^^  ^  g^  ^^^    ^g.^.   ^^^.^  ^.    q^^^,^^^..^ 

sonal    appearance    and    humiliation  ^^    ^    ^^^  ^^  ^^^    ^    ^    209   (court 


of  appeal),  citing  the  text.     Contra, 
Price  V.  Wright,  35  New  Bruns.  26. 


resulting  from  contemplation  of 
bodily  disfigurement  are  not  ele- 
ments entering  into  the  computation 
of  pecuniary   damages   for   personal       '  f'*"  s     -     • 

injuries;"  Trzetiatowski  v.  Evening  17  United   P.   Co.   v.   Matheny,   81 

American    Pub.    Co.,    185    111.    App.       Ohio  204,  28  L.R.A.(N.S.)   761,  and 
451;    Taylor  v.   Peoria,   B.  &   C.   T.       cases  cited. 


336  SUTHERLAND    ON    DAMAGES.  [§    94 

disabled  by  an  accident  on  the  railroad  may  not  suffer  as  mucb 
pain  of  body  or  anxiety  of  mind  as  a  virtnous  woman  would 
from  a  like  injury;  but  still,  when  it  comes  to  a  question  of 
awarding  damages,  it  may  be  that  a  jury  Avould  not  give — 
})crhaps  ought  not  to  give — the  same  damages  for  injuries  to  an 
unchaste  woman  that  they  would  allow  a  virtuous,  intelligent 
and  industrious  woman,  who  could  command  good  wages  or  take 
care  of  a  family.  The  fact  of  chastity,  as  well  as  other  personal 
virtues  and  business  qualifications,  would  be  proper  matters  for 
a  jury  to  consider  in  making  up  their  verdict  as  to  what  dam- 
ages should  be  given  as  a  compensation  for  the  injury  received, 
in  view  of  all  the  facts."  ^*  The  opposing  view  is  expressed  by 
Judge  Deady  in  a  case  ^^  where  it  might  have  been  omitted 
(if  the  Wisconsin  case  announces  the  law  under  any  circum- 
stances) with  more  propriety  than  in  the  case  stated.  He 
charged  that  compensatory  damages  for  physical  pain  and 
mental  anguish  are  not  to  be  diminished  by  the  fact  that  the 
plaintiff  is  an  obscure  man,  a  bartender,  a  professional  gambler 
or  even  a  vagrant.  In  another  case,  brought  by  the  next  of 
kin  to  recover  damages  for  the  negligent  killing  of  the  deceased, 
Shiras  and  Brewer,  JJ.,  held  that  proof  of  the  good  or  bad 
reputation  of  the  plaintiff's  could  not  be  received.^"     In  Texas 

18  Abbot  V.   Tolliver,   71    Wis.   tJ4.       passenger,  was  not  sufficient  ground 

It  is  to  be  observed  of  this  case  that       for  exchiding  her  therefrom. 

it  would  doubtless  have  been  decided  The  character  of  a  minor's  mother 

as  it  was  independently  of  this  pro-       is  immaterial  in  an  action  by  him 

position.      Compare    Lowe   v.    Eing,       ^o  recover  for  a  personal  injury,  no 

W      107  allegation  as  to  his  social  position 

being  made.     South  Omaha  v.   Sut- 

liffe,  72  Neb.  746. 

„         ^,_  In  an  action  for  assault  and  bat- 

Nev.    224,    240,    3    Am.    Rep.    24o;  j     •     i       +•  n     +i 

'  terv  and  civil  actions  generally  the 

Hardy   v.   Minneapolis,  etc.   R.   Co.,  ^^^^^.^^^^^  ^^  ^^j^j^^j.  ^^^^.y  -^  -^  j^. 

36  l^ed.  Do7.  g^^g  ^^^^  cannot  be  attacked  unless 
In  Brown  v.  Memphis  &  C.  R.  Co,,  j^  j^  ^^^^  supported  by  the  adver- 
7  Fed.  51,  5  id.  499,  8  Am.  Neg.  ^^^^.^  ^j.  ^^^^^^  ^^  jg^^^g  ^y  ^^^  ^^_ 
Cas.  705,  Hammond,  J.,  ruled,  after  ^^j.^  ^j  ^^le  proceeding  itself.  Stew- 
full  consideration,  that  the  presence  ^rt  v.  Watson,  133  Mo.  App.  44. 
of  an  alleged  prostitute  in  a  ladies'  in  Louisville  &  N.  R.  Co.  v.  Dan- 
car,  no  misconduct  being  indulged  iel,  122  Ky.  256,  3  L.R.A.(N.S.) 
in  there  and  the  immorality  being  1190,  evidence  was  received  to  show 
confined  to  the   private   life  of   the  the   plaintiff's   character   for   indus- 


19  Boyle  V.  Case,  18  Fed.  880. 

20  Johnson    v.    Wells,    etc.    Co.,    6 


§    04]  COMrKNSATION.  337 

evidence  of  the  general  eliaracter  of  the  deceased  is  not  admis- 
sible in  an  action  by  his  wife  and  child  to  vo.covor  for  his 
death.2^ 

We  think  that  a  carrier  cannot  refuse  to  transport  a  person 
who  presents  himself  as  a  passenger  and  who  is  properly  dressed 
and  whose  conduct  is  not  snch  as  to  enhance  the  risk  of  car- 
rying him  or  endanger  the  comfort  or  safety  of  his  feUow 
passengers  on  the  ground  that  he  is  immoral  or  vicious  in 
some  of  the  relations  of  life.  The  right  to  be  carried  exist- 
ing, a  necessary  result  of  it  is  that  the  rights  and  obligations 
of  passenger  and  carrier  attach.  These  cannot  be  affected  by 
the  character  of  the  passenger  so  long  as  his  conduct  as  such 
is  correct.  The  law  does  not  discriminate  as  to  the  rights  of 
persons  to  redress  for  wrongs  to  their  physical  being  or  their 
property.  If  bad  character  should  be  ground  for  reducing 
damages  good  character  would  be  reason  for  increasing  them. 
Rights  given  by  statute  are  not  denied  because  of  the  character 
of  the  citizen  if  there  is  no  exception  made  by  the  legislature. 
A  homestead  right  is  not  lost  because  the  owner  uses  the  prop- 
erty for  an  immoral  and  unlawful  purpose.^^  Another  reason 
for  disapproving  the  Wisconsin  case  is  that  the  introduction  of 
such  a  question  opens  up  too  wide  a  field  for  the  consideration 
of  courts  and  juries,  and  adds  vast  elements  of  uncertainty  to 
verdicts.  So  far  as  we  have  been  able  to  ascertain  the  character 
of  a  plaintiff  is  not  material  when  he  seeks  to  recover  for  an 
injury  to  his  person  or  property  unless  it  contributed  to  provoke 
the  wrong  complained  of ;  ^^  except  in  so  far  as  it  may  affect  the 
probable  loss  of  earnings  in  consequence  of  inability  to  secure 

try    and    sobriety    as    affecting    his  trorkiced  properly  as  impeaching  evi- 

earning    capacity.      Tlie    court    said  dence  or  in  rebuttal  of  it." 

tlie  admission  of  all     such  evidence  21  Holland    v.    Closs,     (Tex.    Civ. 

should  be   accompanied  by   a  strict  •'^PP)    ^^^  ^-  W.  671. 

admonition    as   to   the    purpose   for  ^'^Frince   v.    Hake,   75    Wis.    638. 

which   it  is   admitted.     Nor   should  ,/' ^^^'^^    "''    ^^'"Tl    ^^*'''    ^^^ 

Mo.,  678;  Breen  v.  St.  Louis  T.  Co., 

It,    when    it    goes    directly    to    the  ^^^  ^^^    ^^^    ^^g.    Cameron  M.  & 

moral  reputation  of  the  plaintiff,  be  y.     ^o.    v.    Anderson,    34    Tex.    Civ. 

admitted  at  all,  as  whether  he  is  a  App.  229.     See  Colburn  v.  Marble, 

moral  person  or  immoral,  unless  in-  196  Mass.  376. 
Suth.  Dam.  Vol.  I.— 22. 


338 


SUTilEKLAND    ON    DAMAGES. 


[§  94 


employment  after  the  injury.^*  It  has  been  held  relevant  in 
an  action  for  assault  and  battery  to  show  the  plaintiff's  quarrel- 
some disposition  as  bearing  upon  the  award  for  his  injured 
feelings,^^  and  been  intimated  that  the  standing  of  the  plaintiff 
in  the  community  may  aifect  the  recovery  for  mental  pain, 
wounded  pride  and  self  respect.^" 

§  95.  Mental  suffering.  There  has  been  a  marked  develop- 
ment of  the  law  concerning  liability  for  mental  anguish  since 
the  publication  of  the  first  edition  of  this  work.  It  was  then 
well  settled  that  such  pain,  when  it  resulted  from  physical 
injury,  was  an  element  of  damages.  There  was  formerly  a 
little  hesitancy  on  the  part  of  some  courts  in  reaching  that 
conclusion,^'''  but  there  is  now  no  dissent  from  it.^*     The  dam- 


24  Carlton  v.  St.  Louis  &  S.  R. 
Qo.,  128  Mo.  App.  451;  Kingston 
V.  Ft.  Wayne  &  E.  R.  Co.,  112  Midi. 
40,  40  L.R.A.   131. 

Where  the  plaintiff  was  unem- 
ployed when  injured  and  the  testi- 
mony tended  to  show  tliat  his  habits 
were  dissolute,  that  he  kept  a  house 
of  doubtful  character  and  had,  be- 
fore his  injury,  been  discharged  from 
several  employments,  it  was  con- 
tended that  the  defendant  had  the 
right  to  lay  before  the  jury  any 
facts  concerning  the  plaintiff's  con- 
duct, habits,  character  or  repute 
which  might  throw  light  on  the 
probability  of  his  securing  employ- 
ment, and  the  character  and  contin- 
uity of  the  same.  The  answer  was 
that  the  doctrine  could  not  be  car- 
ried to  that  extent.  The  defend- 
ant undoubtedly  had  the  right  to 
lay  before  the  jury  any  facts  con- 
cerning the  plaintiff's  habits  or  con- 
duct which  might  throw  light  on 
the  probability  of  his  securing  em- 
ployment, and  the  character  and 
continuity  of  the  same,  but  we  know 
of  no  rule  which  would  permit  the 
defendant  to  go  into  proof  of 
the   plaintiff's   character   or   repute. 


Kingston  v.  Fort  Wayne  &  E.  R. 
Co.  1  Am.  Neg.  Rep.  467,  supra. 

It  may  be  shown  that  the  plain- 
tiff was  sober  and  industrious,  his 
earning  power  being  an  element  of 
damages.  Metropolitan  St.  R.  Co. 
V.  Kennedy,  82  Fed.  158. 

If  the  injuries  for  which  a  re- 
covery is  sought  were  the  result  of 
a  life  of  dissipation  or  commonly 
follow  such  a  life,  the  fact  may  be 
shown.  State  v.  Detroit,  113  Mich. 
643. 

In  a  civil  action  for  an  assault 
with  intent  to  ravish  the  defendant 
may  show  in  mitigation  of  actual 
damages  that  the  plaintiff  was  vul- 
gar and  obscene  in  conduct  and  lan- 
guage. Parker  v.  Coture,  63  Vt. 
155,  25  Am.  St.  750.  But  in  such 
an  action  the  general  good  char- 
acter of  the  defendant  cannot  be 
shown,  nor  can  the  general  repu- 
tation of  the  defendant  as  to  chas- 
tity. Sayen  v.  Ryan,  9  Ohio  C.  C. 
631.     See  ch.  36. 

25  Lowe  V.  Ring,  123  Wis.  107. 

26  Matson  v.  Matson,  105  Me.  152. 

27  Johnson  v.  Wells,  etc.  Co.,  6 
Nev.  224,  3  Am.  Rep.  245. 

28  Baisdrenghien    v.    Missouri,    K. 


§  95] 


COMPENSATIOIf. 


339 


ages  allowed  therefor  are  purely  compensatory.^  The  mental 
suffering  which  can  thus  be  recovered  for  must  proceed  from 
and  be  caused  by  the  act  or  neglect  which  produced  the  physical 
injury;^"  hence  there  cannot  be  a  recovery  by  one  who  has 
suffered  a  miscarriage  for  the  loss  of  the  anticipated  society  of 
the  prospective  child.^^  The  bodily  hurt  which  gives  a  right 
of  recovery  for  the  resulting  mental  suffering  may  be  very 
small;  if  it  is  a  ground  of  action  it  is  enough, ^^  In  actions  for 
assault  and  battery  the  jury  may  consider,  not  only  the  mental 
distress  which  accompanies  and  is  a  part  of  the  bodily  pain, 
but  that  other  condition  of  the  mind  of  the  injured  person  wliidi 
is  caused  by  the  insult  of  the  l)lows  received.^'    The  same  state 


&  T.  Ey.  Co.,  91  Kan.  730;  Adams 
V.  Brosius,  69  Ore.  513,  51  L.R.A. 
(N.S.)  36;  Folk  V.  Seaboard  Air 
Line  Ry.,  99  S.  C.  284;  Big  Sandy 
E.  Co.  V.  Blankenship,  133  Ky.  438, 
23  L.E.A.(N.S.)  345;  Bovee  v.  Dan- 
ville, 53  Vt.  183;  Ferguson  v.  Davis 
County,  57  Iowa,  601;  Porter  v. 
Hannibal,  etc.  E.  Co.,  71  Mo.  66, 
16  Am.  Neg.  Cas.  455,  36  Am.  Eep. 
454;  Indianapolis,  etc.  E.  Co.  v. 
Stables,  62  111.  313;  Salina  v.  Tros- 
per,  27  Kan.  544.     See  eh.  36. 

29  Morris  v.  Duncan,  126  Ga.  467, 
115  Am.  St.  105. 

30  Bovee  v.  Danville,  supra;  Chi- 
cago City  E.  Co.  V.  Taylor,  170  111. 
49;  Looniis  v.  Hollister,  75  Conn. 
275;  Haupt  v.  Swenson,  125  Iowa, 
694. 

31  Finer  v.  Nichols,  158  Mo.  App. 
539,  §  1244. 

If  injury  done  to  the  person  re- 
sults in  a  miscarriage  the  physical 
and  mental  suffering  connected 
therewith  is  to  be  considered;  but 
injured  feelings  following  the  mis- 
carriage and  not  part  of  the  pain 
naturally  attending  it  are  too  re- 
mote. ,  Western  U.  Tel.  Co.  v.  Coop- 
er, 71  Tex.  507,  1  L.E.A.  728. 

32  Curtis  v.  Sioux  City,  etc.  R.  Co., 
87  Iowa,  622,  8  Am.  Neg.  Cas.  252; 


Birmingham  E.  &  E.  Co.  v.  Ward, 
124  Ala.  409;  Canning  v.  Williams- 
town,  1  Cusli.  452,  48  Am.  Dec.  613; 
Voss  V.  Bolzenius,  147  Mo.  App. 
375:  Kurpgeweit  v.  Kirby,  88  Neb. 
72. 

33  Prentiss  v.  Shaw,  56  Me.  427, 
96  Am.  Dec.  475;  Wadsworth  v. 
Treat,  43  Me.  163;  Smith  v.  IIol- 
comb,  99  Mass.  552;  Birmingham 
E.  &  E.  Co.  V.  Ward,  supra;  Levi- 
dow  V.  Starin,  77  Conn.  600;  Flem- 
ing V.  Loughren,  139  Iowa,  517; 
Parriconi  v.  Greco,  115  La.  558  ( it 
is  an  aggravating  circumstance  that 
a  man  assaulted  a  woman)  ;  Robin- 
son V.  Stimer,  154  Mich.  244;  John- 
son V.  Daily,  136  Mo.  App.  534; 
Stewart  v.  Watson,  133  id.  44. 

In  Warner  v.  Talbot,  112  La.  817. 
66  L.R.A.  336,  104  Am.  St.  460.  the 
court  said:  To  the  mental  angnisli, 
termor  and  distress  plaintiff  suffered 
whilst  the  defendants  held  him  in 
custody,  there  is  to  be  added  some 
physical  suffering,  beyond  which 
there  is  to  be  added  the  sense  of 
humiliation  and  disgrace  with  whicli 
he  must  ever  in  the  future  remem- 
ber that  with  a  rope  around  his 
neck  or  fastened  upon  his  arm,  he 
was  for  hours  led  about,  rather  like 
a   dog   than   even   a   criminal,   with 


340 


SUTIIEKLAND    ON    DAMAGES. 


[§  95 


of  mind  is  an  element  of  damage  when  an  assault  lias  been 
maliciously  made,^^  though  no  actual  physical  harm  was  done.'^ 
Thus,  according  to  some  courts  and  for  good  reasons,  one  who 
assaults  a  woman  with  criminal  intent,  "though  her  body  be  not 
touched,  except  by  his  foul  breath  and  speechj  should  respond 
in  damages  for  an  outrage  to  her  feelings  which  proceeds  so 
directly  from  his  concurrent  criminal  purpose  and  act."  ^®  In 
an  action  of  tort  for  a  wilful  injury  to  tlie  person  the  manner 
and  manifest  motive  of  the  act  may  be  given  in  evidence  as 
affecting  the  question  of  damages,  for  when  the  mere  physical 
injury  is  the  same  it  may  be  more  aggravated  in  its  effects  upon 
the  mind  if  it  is  done  in  wanton  disregard  of  the  rights  and 
feelings  of  the  plaintiff  than  if  it  is  the  result  of  mere  careless- 
ness.^' This  may  also  be  the  case  when  a  ticket  is  converted.^' 
Mental  suffering  is  an  element  of  damage  in  suits  for  malicious 
prosecution,  independent  of  other  injury,^^  for  false  imprison- 
ment,*" and  in  some  jurisdictions  for  the  malicious  issuance  of 
an  attachment  against  property.*^  A  husband  may  recover 
exemplary  damages   for  injury  to  his  feelings  in   an   action 


occasional  demonstrations  of  hang- 
ing or  actual  hanging,  as  suited  the 
humor  of  his  captors.  No  amount 
of  money  could  fully  compensate  a 
self-respecting  man  for  such  treat- 
ment, but  $5,000  will  perhaps  come 
nearer  doing  so  than  $500,  and 
we  fix  the  damages  at  the  former 
sum. 

34  McKinley  v.  C.  &  N.  W.  R.  Co., 
44  Iowa  314,  24  Am.  Rep.  748. 

35  Ford  V.  Jones,  62  Barb.  484; 
Goddard  v.  Grand  Trunk  R.,  57  Me. 
202,  8  Am.  Neg.  Gas.  316;  Beach  v. 
Hancock,  27  N.  H.  223,  59  Am.  Dec. 
373;  Craker  v.  Chicago  &  N.  R.  Co., 
36  Wis.  657,  8  Am.  Neg.  Cas.  665,  17 
Am.  Rep.  504;  Cooper  v.  Hopkins, 
70  N.  H.  271;  Henderson  v.  Agon, 
148  Mich.  252;  Carmody  v.  St. 
Louis  T.  Co.,  122  Mo.  App.  338. 

36  Leach  v.  Leach,  11  Tex,  Civ. 
App.  699;  Pye  v.  Gillis,  9  Ga.  App. 


725.  Contra,  Reed  v.  Maley,  115 
Ky.  816,  62  L.R.A.  900;  Davis  v. 
Richardson,   76  Ark.  348. 

37  Hawes  v.  Knowles,  114  Mass. 
518,  19  Am.  Rep.  383;  Henderson 
V.  Agon,  supra. 

38  Harris  v.  Delaware,  etc.  R.  Co., 
77  N.  J.  L.  278. 

39Parkhurst  v.  Masteller,  57 
Iowa  474;  Fisher  v.  Hamilton,  49 
Ind.  341. 

40  Stewart  v.  Maddox,  63  Ind. 
51;  Gibney  v.  Lewis,  68  Conn.  392; 
Davidson  v.  Lee  (Tex.  Civ.  App.), 
139  S.  W.  904. 

41  Byrne  v.  Gardner,  33  La.  Ann. 
6;  City  Nat.  Bank  v.  Jeffries,  73 
Ala.  183;  Ahearn  v.  Connell,  72  N. 
H.  238.  Contra,  McGill  v.  Fuller, 
45  Wash.  615 ;  Tisdale  v.  Major,  106 
Iowa  1,  68  Am.  St.  263;  Travick 
v.  Martin-B.  Co.,  79  Tex.  640. 


4 


§    95]  COMPENSATION.  341 

against  one  who  has  had,  or  attempted  to  have  while  com- 
mitting a  trespass,  criminal  conversation  with  his  wife.*''  Ilis 
right  grows  out  of  the  marital  relation  and  is  independent  of 
her  rights  to  recover  damages  for  the  same  wrong  in  an  action 
by  her.*^  A  parent  may  recover  for  mental  suffering  resulting 
from  the  abduction,**  seduction,*^  or  the  harboring  and  secreting 
of  a  minor  daughter.**^  These  actiuns  are  brought  upon  the 
legal  principle  or  fiction  which  imports  the  loss  of  sei'vice  as 
the  ground  upon  which  a  recovery  is  had.  The  damages  award- 
ed in  them,  however,  are  largely  given  as  ci)m])ensation  for 
wounds  inflicted  on  the  mind.  Such  actions  are  distinguish- 
able from  another  class  in  which  mental  distress  is  an  element 
of  damage  becanse  the  facts  out  of  which  they  arise  affect  the 
social  and  business  standing  of  the  parties  plaintiff,  and  in 
many  ways  tend  to  harass  and  annoy  and  even  degrade  them 
in  the  eyes  of  the  community.  To  some  extent  this  is  the  effect 
of  various  indignities,  and  because  of  it  a  passenger  who  is 
wrongfully  and  publicly  ejected  from  a  train  may  recover  for 
the  effect  of  the  insult  and  indignity  to  his  feelings  though  the 
case  does  not  warrant  the  imposition  of  punitory  .damages,*'  as 

42  Powell  V.  Strickland,  163  N.  Co.,  118  N.  Y.  Supp.  1022;  Quigley 
C.  393,  79  S.  E.  872.  See  §§  392,  v.  Central  Pac.  R.  Co.,  11  Nev.  350, 
1285.  8  Am.  Nog.  Cas.  501,  21  Am.  Rep. 

43  Johnston  v.  Disbrow,  47  Mich.  757 ;  Hays  v.  Houston,  etc.  R.  Co., 
59,  Stark  v.  Johnson,  43  Colo.  243,  46  Tex.  272;  Smith  v.  Leo,  92  Hun, 
16  L.R.A.(N.S.)  674,  127  Am.  St.  242;  Mabry  v.  City  E.  R.  Co.,  116 
114;  Brame  V.  Clark,  148  N.  C.  364,  Ga.  624,  59  L.R.A.  590;  Curtis  v. 
19  L.R.A.(N.S.)   1033.  Sioux   City,   etc.   R.    Co.,   87    Iowa, 

44Magee  v.  Holland,  27  N.  J.  L.  622. 
86,  72  Am.  Dec.  341.  In  the  last  case  a  girl  was  eject- 

45  Lunt  V.  Philbrick,  59  N.  H.  59 ;  ^^  j^  ^he  presence  of  her  schoolmates 

Barbour  v.  Stephenson,  32  Fed.  66;  ^^^j     ^^]^^,^    acquaintances     without 

Stevenson  v.  Belknap,  6  Iowa,  97.  ^^jj^^  ^^.  unnecessary  rudeness,  not- 

46Stowe    V.    Haywood,    7     Allen,  „,ithstandincr  there  was  both  indig- 

118  ' 

.  ,  nitv  and  insult  in  the  sense  that  the 

47  Gillespie    v.    Brooklyn    Heights  "                ,         •,.,..           j 

E.    Co.,    178    N.   Y.    347,   66   L.R.A.  wrong  was  done  m  a  humilatmg  and 

618,    102    Am.    St.    503;    Smith    v.  "^^^^'^'^  ™^""^^-'    ^^''  "^^"^^^   P'^^" 

Pittsburgh,  etc.  R.  Co.,  23  Ohio  St.  resulting   was   an    element   of   com- 

10,  8  Am.  Neg.  Cas.  572;  Lake  Erie,  pensatory    damages.      Contra,    Ilh- 

etc.   R.   Co.   V.   Fix,   88   Tnd.   381,   8  ""is   R-   Co.  v.   Sutton,   53  111.  397, 

Am.    Neg.    Cas.    224,    45    Am.    Rep.  in  the  absence  of  wilfulness  or  nial- 

464;    Harrison  v.   Pennsylvania   R.  ice.     See  §  943. 


342 


SUTHERLAND    ON    DAMAGES. 


[§  95 


may  persons  ejected  from  public  or  semi-public  places  if  they 
have  qualified  themselves  for  admission  thereto.^*  It  is  other- 
wise where  admission  to  a  public  place  of  entertainment  is  re- 
fused ;  the  sum  paid  may  be  recovered,  but  there  may  not  be 
a  recovery  for  disappointment  or  humiliation.*^  Where  con- 
tracts made  for  the  purpose  of  securing  exemption  from  worry, 
anxiety  and  disappointment  are  broken  there  may  be  a  recovery 
of  compensation  for  these  results  if  they  proximately  follow.^" 
In  Texas  mental  suffering  is  an  element  of  damage  where  it 
results  from  the  breach  of  a  carrier's  contract.*^  The  authorities 
generally  do  not  go  so  far  as  to  allow  damages  for  the  disap- 
pointment, annoyance  and  vexation  which  result  from  the  breach 
of  such  a  contract.^^  There  cannot  he  a  recovery  for  mental 
suffering  resulting  from  the  eviction  of  a  tenant,  the  action  being 
on  the  lease,^^  but  it  is  otherwise  if  the  eviction  was  accom- 
panied by  the  conversion  of  the  tenant's  goods.^*  Such  element 
of  damage  is  not  involved  in  an  action  for  fraud.^*     A  bank 


48  Aaron  v.  Ward,  203  N.  Y.  351, 
38  L.R.A.(N.S.)  204,  136  App.  Div. 
(N.  Y.)  818;  Smith  v.  Leo,  92  Hun 
243;  Davis  v.  Tacoma  R.  &  P.  Co., 
35  Wash.  203,  66  L.R.A.  82. 

49  People  V.  Flynn,  189  N.  Y.  180; 
Purcell  V.  Daly,  19  Abb.  N.  C.  301 ; 
Luxemberg  v.  Keith  &  P.  Am.  Co., 
64  N.  Y.  Misc.  69;  Taylor  v.  Cohn, 
47  Ore.  538;  Horney  v.  Nixon,  213 
Pa.  20,  1  L.R.A.(N.S.)  1184n; 
Buenzle  v.  Newport  Am.  Ass'n,  29 
R.  I.  23,  14  L.R.A.  (N.S.)  1242,  and 
cases  cited. 

50  §  92. 

51  St.  Louis,  etc.  R.  v.  Berry,  15 
S.  W.  48.  The  extra  expense  in- 
curred by  the  plaintiff  on  account 
of  his  delay  and  the  failure  to  re- 
ceive his  baggage  was  $90;  a  ver- 
dict for  $500  was  sustained.  See 
§§  943,  953. 

52  Walsh  V.  Chicago,  etc.  R.  Co., 
42  Wis.  23,  24  Am.  Rep.  376;  Ham- 
lin V.  Great  Northern  R.  Co.,  1  H. 
&  N.  408;  Smith  v.  Pullman  Co., 
138  Mo.  App.  238.    See  ch.  21. 


Mental  suffering  is  not  to  be  con- 
sidered in  an  action  for  the  mere 
negligent  breach  of  a  carrier's  con- 
tract in  transporting  a  corpse  be- 
yond the  point  to  which  it  was  to 
be  delivered  to  a  connecting  carrier, 
thus  causing  delay  in  the  arrange- 
ments for  the  funeral.  Beaulieu  v. 
Great  Northern  R.  Co.,  103  Minn. 
47,  19  L.R.A. (N.S.)  564.  Compare 
Louisville  &  N.  R.  Co.  v.  Wilson, 
123  Ga.  62,  where  other  damages 
were  alleged,  and  it  is  intimated 
that  such  suffering  might  be  re- 
covered for. 

53  Harris  v.  Cleghorn,  121  Ga. 
314;  Shelton  v.  Bornt,  77  Kan.  1. 
In  the  last  case  a  recovery  for  hu- 
miliation, fright  and  disgrace  was 
denied  though  the  tenant's  goods 
were  removed,  no  injury  thereto  or 
to  his  person  being  shown. 

54  Mathews  v.  Livingston,  86 
Conn.  263. 

55  Walsli  v.  Meyer,  40  Wash.  650. 


§    95]  COMPENSATIOISr.  3-13 

which  maliciously  and  wilfully  refuses  to  lioiinr  ils  depositor's 
checks  is  liable,  in  addition  to  actual  money  damages,  for  "sncli 
substantial  damages  for  the  impairment  of  his  credit  and  for 
his  feelings  and  mental  anxiety  over  tlie  matter  as  directly  and 
proximately  resulted  from"  its  acts.*® 

Injured  feelings  are  not  to  be  regarded  in  awarding  damages 
for  wrongs  done  to  pro})erty  through  gross  carelessness,  no  ;ict 
or  word  of  insult  or  contumely  or  any  intentional  violation  of 
the  plaintiif's  rights  being  shown.*'''  Thus,  in  an  action  grow- 
ing out  of  negligence  in  blasting  rocks  and  throwing  them  upon 
the  plaintiff's  land  and  buildings,  his  mental  anxiety  concerning 
his  personal  safety  or  that  of  his  family,  no  harm  lacing  done 
to  his  or  their  persons,  is  not  an  clement  of  damage.  The  court 
was  unable  to  find  any  case  which  held  that  mental  suffering 
alone,  caused  by  simple  actionable  negligence,  can  sustain  an 
action.*^  But  if  property  is  injured  in  wilful  disregard  of  the 
rights  of  its  owner  or  the  person  in  possession  injuries  to  his 
feelings  may  be  compensated ;  *^  as  where  the  remains  of  a 
deceased  child  are  removed  from  a  burial  lot  in  which  they  are 
rightfully  interred,®"  or  the  right  to  inter  a  dead  body  is  denied 
after  all  preparations  for  the  burial  have  been  made,®^  or  the 
corpse  of  a  relative  is  wilfully  mutilated  before  burial,®^  or  where 
such  mutilation  results  from  negligence,®^  or  there  has  been 

56  Davis  V.  standard  Nat.  lUnk,  58  Wyman  v.  Loavitt,  71  Me.  227; 
50  App.  Div.  (N.  Y.)  210.  Contra,  Trigg  v.  St.  Louis,  etc.  1{.  Co.,  74 
Smith  V.  Sanborn  State  Bank,  147  Mo.  147;  Ewing  v.  Pittsburgh,  etc. 
Iowa   640,   30   L.R.A.(N.S.)    517.  R.  Co.,  147  Pa.  40,  14  L.R.A.  606. 

This    class    of    cases    has    always  69  Mattingly    v.    Houston,    supra; 

been  regarded  as  exceptional.     Ad-  McClure  v.  Campbell,  42  Wash.  252. 

dis  V.  Gramophone  Co.,  [1909]  App.  60  Meagher   v.   DriscoU,   99    Mass. 

Cas.  488.  281,   96   Am.   Dec.   759;    Jacobus  v. 

57  White  V.  Dresser,  135  Mass.  Cliildren  of  Israel,  107  Ga.  522,  73 
150,    46   Am.    Pvep.    454;    Mattingly  Am.  St.  141. 

V.  Houston,  167  Ala.  167,  citing  the  61  Wright  v.  Hollywood  Cem.  Co., 

text;     Applegate    v.    Franklin,    109  112    Ga.    884,    52    L.R.A.    621.      Sec 

Mo.  App.  293 ;   Henderson  v.  Weid-  §  943. 

man,    88    Neb.    813;     Buchanan    v.  62  Koerber  v.  Patek,  123  Wis.  453, 

Stout,   123  App.  Div.    (N.  Y.)    648;  68  L.R.A.  956;   Wilson  v.  St.  Louis 

Wheeler  v.  Aberdeen,  45  Wash.  63.  etc.  R.  Co.,  160  Mo.  App.  04!).     Sec 

See  §  943,  and  Orr  v.  Dayton  &  M.  §  1095. 

T.  Co.  178  Ind.  40,  48  L.R.A. (N.S.)  63  Kyles   v.   Southern   H.   Co.,   147 

474.  N.  C.  394,  16  L.R.A. (N.S.)    405. 


344 


SUTHERLAND    ON    DAMAGES. 


[§  95 


a  wrongful  and  improper  burial  of  the  dead,®*  or  a  home  has 
been  maliciously  entered  for  the  purpose  of  searching  for 
stolen  propertv.^^  Where  a  trespasser  acts  under  color  of 
process  the  sureties  on  his  official  bond  must  answer  for  the 
mental  suffering  of  the  person  whoso  home  has  been  entered 
and  goods  levied  upon.^®  Mental  pain  cannot  be  compensated 
for  in  an  action  for  forcible  entry  and  detainer,®'  nor  in  an 
action  to  recover  for  adding  to  the  height  of  a  division  fence 
and  refusing  to  remove  it.®^  Inconvenience,  unaccompanied  by 
jiecuniary  loss,  is  not  an  element  of  damage  for  being  deprived 
of  the  use  of  property.®^  Annoyance  and  vexation,  though  ac- 
companied by  the  expenditure  of  money  in  consequence  of  the 
wrongful  issue  of  a  distress  warrant,  are  not  ground  for  com- 
pensatory damages ;  '"  and  so  where  they  result  from  the  in- 
vasion of  a  privilege,  though  such  invasion  was  accompanied 
by  pecuniary  loss.'^^  A  person  who  refuses  to  correct  a  mistake 
which  leads  to  the  discharge  of  an  employee  must  compensate 
him  for  the  perplexity  of  mind  concerning  the  course  to  be 
pursued  to  vindicate  his  rights  and  to  prevent  the  impending 
loss  of  his  situation.'^ 

§  96.  Same  subject.  lu  some  jurisdictions  mental  suffering 
which  occurs  independently  of  physical  harm,  as  the  result  of 
mere  negligence,  is  too  remote  to  be  the  ground  of  an  action.'^ 


64  Wright  V.  Beardsley,  46  Wash. 
16. 

65  Krchbiel  v.  Henkle,  152  Iowa, 
604. 

66  People  V.  Schwcrtz,  151  111. 
App.  100. 

67  Anderson  v.  Taylor,  56  Cal. 
131,  38  Am.  Eep.  52. 

68  Wolf  V.  Stewart,  48  La.  Ann. 
1431. 

69  Detroit  G.  Co.  v.  Moreton  T. 
&  S.  Co.,  m  Mich.  401;  Williams 
V.  Yoe,   19  Tex.  Civ.  App.  281. 

70  Smith  V.  Jones,  11  Tex.  Civ. 
App.  18. 

71  Mason  v.  Dewis,  (Ky.)  71  S. 
W.  434. 

72  Lopes  V.  Connolly,  210  Mass. 
487,  88  L.R.A.(N.S.)   986. 


73  Spade  V.  Lynn  &  B.  R.  Co.,  168 
Mass.  285,  38  L.R.A.  512,  5  Am. 
Neg.  Rep.  367,  60  Am.  St.  393; 
White  V.  Sander,  168  Mass.  296,  2 
Am.  Neg.  Rep.  573,  60  Am.  St.  390 
(the  last  case  was  one  of  a  wilful 
attempt  to  injure  property,  and  the 
claim  for  damages  for  mental  suf- 
fering grew  out  of  such  attempt)  ; 
Gulf,  etc.  R.  Co.  V.  Trott,  86  Tex. 
412,  40  Am.  St.  866;  Lynch  v. 
Knight,  9  H.  of  L.  Cas.  577 ;  Ewing 
V.  Pittsburgh,  etc.  R.  Co.,  147  Pa. 
40,  14  L.R.A.  666,  30  Am.  St.  709; 
Mitchell  V.  Rochester  R.  Co.,  151  N. 
Y.  ie7,  34  L.R.A.  783,  56  Am.  St. 
605;  Washington  &  G.  R.  Co.  v. 
Dashiell,  7  D.  C.  App.  Cas.  507; 
Rock    V.    Denis,    4    Montreal    L.    R. 


§    96]  COMPENSATION.  ,  345 

Aud  this  rule  has  been  applied  where  the  wTongdoer  acted 
affirmatively,'''^  and  even  wantonly.'''^  The  rule  extends  to  sick- 
ness resulting  from  the  purely  internal  operation  of  fright  the 
latter  being  caused  by  gross  negligence  and  the  defendant  ought 
to  have  known  that  the  result  which  ensued  would  follow.  The 
question  whether,  if  the  resnlt  was  actually  foreseen  and  intend- 
ed, the  rule  would  be  otherwise,  was  left  undecided.'^  The 
rule  of  non-liability  has  been  applied  where  the  defendant, 
without  malice  or  evil  intent,  dressed  himself  in  a  woman's 
clothes  and  went  at  dusk  to  the  plaintiif' s  home  with  the  result 
that  she  was  frightened  and,  later,  had  a  miscarriage ; ""  and 
where  the  defendant,  the  landlord  of  the  plaintiff's  sister,  went 
to  the  house  to  collect  rent,  found  the  door  ajar,  opened  it, 
walked  up  stairs,  went  inside  the  bedroom  door,  saw  plaintiff 
in  the  room,  asked  what  she  was  doing,  waved  his  arms  and  in 
a  loud  and  apparently  angry  voice  said :  "I  forbid  you  moving. 
If  you  attempt  to  move  I  will  have  a  constable  here  in  five 
minutes.  I  refuse  to  take  possession  of  these  premises."  As 
a  result  of  the  plaintiff's  excitement  and  fright  St.  Vitus  dance 
was  produced.     The  opinion  contains  this  language:     Under 

(Super.  Ct.)    356;   Russell  v.  West-  ery  of  damages  for  mental  aiiguisli 

em  U.   Tel.   Co.,  3  Dak.   315;    Dor-  or   suffering  produced   either  inten- 

rah  V.  Illinois  Cent.  R.  Co.,  65  Miss.  tionally  or  negligently.     A  recovery 

14,  7  Am.  St.  629;   Salina  v.  Tros-  was  denied  in  deference  to  Chapman 

per,  27  Kan.  544;   West  v.  Western  v.  Western  U.  Tel.  Co.,  88  Ga.  703, 

U.   Tel.    Co.,    39   id.    93,   7    Am.   St.  17  L.R.A.  430.     See  also,  Central  of 

530;    Canning    v.    William stown,   1  Georgia  Ry.  Co.  v.  Wallace,  141  Ga. 

Cush.   452;    Johnson   v.    Wells,   etc.  51,  51  L.R.A.  (N.S.)    429. 

Co.,   6   Nev.   224,   3   Am.   Rep.   245;  74  Green    v.    Shoemaker,    111    Md. 

The  Queen,   40   Fed.   694;    Chicago,  69,  23  L.R.A. (N.S.)    667. 

etc.   R.   Co.   V.  Moss,   89   Ark.   187;  75  St.  Louis,  etc.  R.  Co.  v.  Taylor, 

Cole   V.   Gray,   70   Kan.    705;    Pull-  84  Ark.  42,  13  L.R.A.  (N.S.)   159. 

man    Co.    v.    Kelly,    86    Miss.    87;  76  Smith  v.  Postal  Tel.-C.  Co.,  174 

Heiberger  v.  Missouri  &  K.  Tel.  Co.,  Mass.  576,  7  Am.  Neg.  Rep.  54,  75 

133  Mo.  App.  452;   Porter  v.  Dela-  Am.  St.  374,  47  L.R.A.  323;    Atch- 

ware,  etc.  R.  Co.,  73  N.  J.  L.  405.  ison,    etc.    R.    Co.    v.    McGinnis,    46 

See  §§  21-23a.  Kan.  109;   Kagy  v.  Western  U.  Tel. 

In  Georgia  R.  &  E.  Co.  v.  Baker,  Co.,  37  Ind.  App.  73.     Rut  see  §§  21 

1  Ga.  App.  832,  it  is  said:  We  think  et   seq.    and   Green     v.     Shoemaker, 

that  the  peace  of  mind,  the  feelings  supra. 

and    the    happiness    of    every    one  77  Nelson  v.  Crawford,   122   :\Iich. 

should  be  guarded  by  giving  recov-  466,  80  Am.  St.  577. 


346  SUTHERLAND  ON  DAMAGES.  [§  96 

the  pleadings  mere  words  and  gestures  are  sought  to  be  made 
actionable  because  of  the  nervous  temperament  of  the  plaintiff, 
without  which  such  words  and  gestures  would  not  be  action- 
able. This  would  introduce  and  incorporate  in  the  law  a  new 
element  of  damage — a  new  cause  of  action — by  which  a  re- 
covery might  be  had  for  an  injury  resulting  to  one  of  a  peculiar- 
ly nervous  temperament,  while  no  injury  would  result  to  another 
in  identically  the  same  position.  Of  such  a  cause  of  action 
and  liability  for  damage  a  dangerous  use  could  be  made.  No 
such  recovery  is  authorized  under  the  common  law  and  no  stat- 
ute gives  it.'*  A  different  view  has  been  taken  where  the  de- 
fendant, knowing  that  one  of  the  plaintiifs  was  well  advanced 
in  pregnancy,  came  to  their  house  and  in  their  yard,  in  the 
presence  of  such  plaintiff,  assaulted  two  negroes  in  a  boisterous 
and  violent  manner,  using  profane  language,  the  assault  being 
accompanied  by  the  drawing  of  blood  and  causing  the  fright 
of  the  female  plaintiff  which  was  followed  by  a  miscarriage  and 
impairment  of  health.  These  facts  gave  the  plaintiffs  a  cause 
of  action,  though  it  was  recognized  that  the  case  was  a  novel 
one.'^ 

It  is  not  necessary  that  a  wrongful  act,  if  inhuman  and 
done  wilfully,  should  directly  result  in  physical  injury  in  order 
that  the  sufferer  may  recover  for  mental  pain.*°  A  wanton 
insult  and  humiliation  is  ground  for  the  recovery  of  compensa- 
tion for  such  pain.*^  Under  some  civil  damage  statutes  the 
mortification,  shame  and  disgrace  sustained  by  a  wife  in  conse- 
quence of  the  intoxication  of  her  husband  may  be  recovered 
for.*^  The  invasion  of  the  right  of  privacy  by  unauthorizedly 
displaying  a  photograph,  contrary  to  statute,  in  connection  with 
a  catch-penny  scheme  has  been  classed  as  a  willful  tort  which 
sustains  an  award  for  mental  distress,  humiliation  and  mortifi- 
cation.®^   The  needless  invasion  of  the  room  of  a  female  guest 

78  Braim  v.  Craven,  175  111.  401,  81  Smith  v.  Atchiaon,  etc.  R.  Co., 
42  L.R.A.  199,  5  Am.  Neg.  Rep.  15.  ]99  Mo    App    85 

79  Hill  V.  Kimball,  76  Tex.  210,  7  82  Friend  v.  Dunks,  37  Mich  25 
L.R.A.  618.  o      c                 . 

QA  TT     1  e     ii        i.   TVT-  •       ^Pe  Spray  v.  Ayotte,  161  Mich.  593. 

80  Harless  v.   Southwest  Missouri  ^      •'  J        '  ^*^"-  ^'"^' 

E.  R.  Co.,   123  Mo.  App.  22,  citing  83  Rhodes    v.    Sperry,     120    App. 

local  cases.  Div.   (N.  Y.)   467. 


§    96]  COMPENSATION.  347 

by  the  servants  of  the  proprietor  of  u  liotcl  is  a  breacli  of  his 
duty  for  which  he  must  answer  for  her  injured  feelings  and 
humiliation.^*  A  woman  decoyed  from  home  by  fraud  and 
deceit  under  circumstances  which  unfavorably  affected  her  repu- 
tation, the  defendant  using  language  derogatory  thereto,  and 
interfering  with  her  liberty,  may  recover  for  mental  suffering.'^ 
The  illegal  expulsion  of  a  member  of  a  voluntary  unincorporated 
association,  in  connection  with  the  loss  of  the  use  and  enjoy- 
ment of  the  society's  property  and  the  privileges  of  membership, 
is  cause  for  the  recovery  of  compensation  for  mental  anguish.*^ 
Under  the  Georgia  code  exemplary  damages  arc  recoverable  as 
compensation  for  wounded  feelings  or  to  deter  the  wrongdoer 
from  repeating  the  wrong;  hence  there  cannot  be  a  recovery, 
in  addition  thereto,  for  wounded  feelings.^' 

On  many  questions  respecting  the  recovery  of  damages  for 
mental  suffering  the  law  is  in  a  very  unsatisfactory  state,  it 
being  impossible  to  harmonize  the  decisions  or  formulate  any 
rule  based  on  them.  Many  of  the  objections  to  recovery  arc 
devoid  of  real  weight,  assuming  that  the  suffering  is  the  natural 
and  proximate  result  of  the  wrong  done,  as  it  clearly  was  in 
some  of  the  cases  noted  in  this  section — notably  the  Michigan 
case  and  the  Illinois  case.  The  objection  that  an  action  for 
such  a  purpose  is  without  precedent  might  have  been  urged  to 
defeat  many  causes  of  action  which  are  now  recognized ;  such 
an  objection,  generally  acquiesced  in,  would  have  prevented  the 
development  of  the  law  and  denied  protection  to  many  of  the 
most  valued  rights  which  are  now  protected.  Occasionally  a 
court  asserts  that  the  recognition  of  the  right  of  recovery  in 
cases  of  this  class  would  crowd  calendars  and  open  the  door  to 
fraud.  It  may  not  be  asserted  with  much  confidence  that  such 
results  have  been  experienced  in  jurisdictions  in  which  the  right 
is  recognized.  But  if  the  first  result  should  follow,  it  may  be 
pertinent  to  inquire  what  are  the  reasons  for  cstablisliing  and 

84  De  Wolf  V.  Ford,  193  N.  Y.  397,  86  LahifT  v.  St.  Joseph's  T.  A.  Soc, 

21    L.R.A.(N.S.)    860,    127    Am.   St.  76  Conn.  648,  100  Am.  St.  1012,  65 

969.  L.R.A.  92. 

85Kurpgeweit  v.   Kirby,   88   Neb.  87  Southern  R.  Co.  v.  Jordan,  129 

72,  33   L.R.A.(N.S.)    98,  Ga.  665. 


348  SUTHERLAND    ON    DAMAGES.  [§    96 

maintaining  tlie  judicial  establishments  ?  Are  they  not  intend- 
ed to  protect  the  rights  of  citizens  and  to  redress  their  wrongs  ? 
And  citizens  of  all  classes  have  the  right  to  resort  to  them  for 
such  purposes.  There  is  as  good  reason  for  denying  redress  to 
a  citizen  with  a  weak  body  which  has  been  tortiously  injured 
as  there  is  in  denying  it  to  one  with  a  weak  nervous  organiza- 
tion whose  rights  have  been  disregarded.  The  effects  of  phys- 
ical injury  on  different  persons,  though  the  injury  may  be  the 
same  so  far  as  external  appearances  go,  vary  greatly.  But  no 
court  has  refused  redress  for  that  reason.  Mental  suffering  is 
an  element  of  damages  in  many  classes  of  actions,  and  it  has 
not  been  seriously  contended  that  the  common  sense  of  jurors 
has  erred  grievously,  if  at  all,  in  aAvarding  compensation  for 
it.  The  field  of  uncertainty  is  not  wider  in  cases  of  this  class 
than  in  some  others,  and  the  corrective  control  which  the  courts 
exercise  over  verdicts  can  be  relied  upon  to  prevent  the  fraud 
concerning  which  such  serious  apprehensions  are  seemingly 
entertained  in  some  tribunals.^^ 

The  courts  are  ahnost  agreed  in  denying  redress  for  sym- 
pathetic mental  suffering.^^  Thus,  a  father  cannot  recover  for 
grief  and  anxiety  on  account  of  mere  physical  injuries  sus- 
tained by  a  child,^°  nor  because  of  solicitude  for  his  own  and 
his  child's  personal  safety  or  welfare.^^  An  injured  woman 
may  not  recover  for  the  suffering  caused  by  the  loss  of  her  child 
because  it  was  born  prematurely.^^  Without  proof  of  substan- 
tial harm,  incapacity  to  pursue  his  ordinary  employment  or 
some  expense  incurred,  a  seaman  thrown  from  a  boat  into  the 

88  See  Underwood  v.  Gulf  Ref.  Co.,  Cowdcn  v.  Wright,  24  Wend.  429, 
128  La.  068,  quoting  much  of  this  35  Am.  Dec.  6.3.3.  Contra,  Trimble 
section;  Bowers  v.  Tel.  Co.,  135  N.  v.  Spiller,  7  Mon.  (Ky.)  394,  18 
C.  504.  Am.  Dec.  180.     See  Owen  v.  Brock- 

89  Adams  v.  Brosius,  60  Ore.  513,  schmidt,   54   Mo.   285. 

51   L.R.A.  (N.S.)    36;    Woodstock  I.  91  Ferebee  v.  Norfolk  Southern  R. 

Works  V.   Stockdale,   143   Ala.   550.  Co.,     163     N.     C.     351;    Wyman   v. 

See  §§  21-24.  Leavitt,  71  Me.  227;  Keyes  v.  Min- 

90  Flemington  v.  Smithers,  2  C.  &  neapolis,  etc.  R.  Co.,  36  Minn.  290 ; 
P.  292:  Black  v.  Carrollton  R.  Co.,  Texas  Mexican  R:  Co.  v.  Douglass, 
10   La.    Ann.    33;    Pennsylvania   R.  69  Tex.  694. 

Co.   V.    Kelly,   31   Pa.   372,    12   Am.  92  Morris  v.  St.  Paul  City  R.  Co., 

Neg.    Cas.    534,    72    Am.    Dec.    745;        105  Minn.  276,  17  L.R.A.  (N.S.)  598. 


§    90]  COMPENSATION.  349 

water  in  case  of  a  collision  can  recover  no  damages  for  the  re- 
sulting f right. ^^  As  long  ago  as  1808  Lord  Ellenborough 
charged  a  jury  in  an  action  brought  bj  a  husband  to  recover 
for  the  loss  of  the  comfort,  fellowship  and  assistance  of  his  wife 
and  the  grief,  vexation  and  anguish  of  mind  he  had  undergone 
by  reason  of  her  injuries  and  subsequent  death  that  they  could 
only  take  into  consideration  the  bruises  which  he  had  himself 
sustained,  the  loss  of  his  wife's  society  and  the  distress  of  miTid 
he  suffered  on  her  account  from  the  time  of  the  accident  till 
the  moment  of  her  dissolution.^*  In  an  action  brought  by  a 
husband  to  recover  for  mental  suffering  resulting  from  surgical 
malpractice  upon  his  wife  the  difficulties  in  the  way  of  the  rule 
suggested  were  considered  by  Christiancy,  J.^^  The  chief  cause 
of  plaintiff's  distress  of  mind  must  have  been  the  death  of  his 
wife  in  which  the  injury  resulted  rather  than  the  pain  she  suf- 
fered during  the  operation  and  prior  to  her  death ;  and  it  would 
be  very  difficult  for  a  jury  to  apportion  his  mental  agony  or  to 
determine  how  much  of  it  was  attributable  to  one  of  these  causes 
and  how  much  to  the  other.  If  the  plaintiff  has  a  right  of  ac- 
tion on  account  of  his  wife's  suffering,  why  may  not  another  of 
her  relatives  who  may  have  sustained  as  much  mental  agony  on 
the  same  account  as  the  husband  ?  These  considerations,  it  is 
said,  show  the  propriety  and  good  sense  of  the  rule  which  re- 
stricts the  right  of  action  for  mental  suffering  to  the  person  who 
has  received  the  physical  injury.  Had  the  wife  survived,  this 
right  of  action  would  have  been  hers,  and  neither  the  husband 
in  his  own  right  nor  any  other  person  could  have  sustained  an 
action  for  it;  her  death  does  not  transfer  it  to  him.  Damages 
for  such  suffering  in  actions  for  malpractice  are  not  favored; 
when  allowed  they  are  to  be  based  upon  a  consideration  by  the 
jury  of  all  the  facts  and  circumstances  and  not  upon  statements 
made  by  witnesses  as  to  their  amount.^^ 

The  rule  in  England  and  in  most  of  the  American  courts  is 
that  only  compensation  for  the  pecuniary  loss  which  has  been 
sustained  by  the  death  of  a  husband,  father,  child,  or  other  rel- 

93  The   Queen,   40   Fed.   694.  95  Hyatt  v.  Adams,  10  Mich.  180. 

94  Baker  v.  Bolton,  1  Camp.  4n;i.  96  Stone  v.  Evans,  32   Minn.  24:5. 


350  SUTHERLAND    ON    DAMAGES.  [§    1)6 

ative  can  be  recovered  against  the  wrong-doer.^'  The  Scotch 
law  alloA\s  a  recovery  for  wonnded  feelings.^^  In  some  states, 
owing  to  the  language  of  the  statutes,  other  than  pecuniary  loss 
may  be  recovered  for,  as  where  it  is  expressed  that  the  jury  may 
award  such  damages  "as  to  it  may  seem  fair  and  just."^^  The 
mental  and  physical  pain  of  the  deceased  is  not  to  be  considered 
by  the  jury  in  finding  the  injury  which  results  from  his  death 
to  the  family.'^  But  it  is  otherwise  where  the  right  of  action 
of  the  person  who  dies  survives  to  his  representatives.^  There 
must,  however,  be  proof  that  mental  suffering  was  endured  by 
the  deceased.^ 

A  review  of  the  decisions  of  the  last  decade  leads  to  the  con- 
clusion that  there  has  been  a  marked  advance  in  the  direction  of 
the  recognition  of  the  right  of  the  individual  to  protection  from 
mental  disturbance,  especially  if  that  is  caused  by  a  wilful  act 
or  default.  The  courts  are  coming  to  recognize  that  peace  of 
mind  is  as  much  a  legal  right  as  freedom  from  physical  inter- 
ference. Hence,  as  has  been  seen,  contracts  entered  into  to 
secure  exemption  from  annoyance  and  discomfort  are  being  en- 
forced by  imposing  upon  the  parties  who  breach  them  liability 
for  the  inconvenience,  humiliation  and  discomfort  which  re- 
sult, with  the  required  certainty,  from  their  breach.  And  the 
progress  along  this  line  has  extended  in  several  courts  to  the  rec- 

97  Blake  v.  Midland  R.  Co.,  18  Q.  Keever  v.  Market  St.  R.  Co.,  59  id. 
B.  93;  Railroad  v.  Wyrick,  99  294;  Cleary  v.  City  R.  Co.,  76  id. 
Teiin.  500,  511,  quoting  the  text.  240.  See  Munro  v.  Dredging,  etc. 
See  ch.  37.  Co.,   84   Cal.   515,   525,    18   Am.   St. 

A  wife  may  not  recover  for  the  248. 
loss  of  her  husband's  consortmm  as  l  Cotton  Press  Co.  v.  Bradley,  52 
the  result  of  negligence,  such  loss  jex.  587,  001;  Donaldson  v.  Missis- 
being  the  indirect  consequence  of  gipp^  &  jyi,  r.  Co.,  18  Iowa,  280, 
the  wrong.  Stout  v.  Kansas  City  ^^  ^^^  ^  ^^^  gQ^^  g-  ^^  jy^^ 
T.  R.  Co.,  172  Mo.  App.  113.  gg^ 

98  Paterson   v.    Wallace,    1    Macq.  o^t     i    -n     o    <-■    -r.    ri  t>  • 

^  2  Nashville  &  C.  R.  Co.  v.  Prince, 

748 

„„„,.      ,         r-x        r   Ti     ,        u  2  Heisk.  580;   Same  v.  Smith,  6  id. 

99  Wigal  V.   City   of  Parkersburg, 

74  W.  Va.  25,  52  L.R.A.(N.S.)   465;  ^^'*'   ^°"'"^  ^-  ^"^^^  Tennessee,  etc. 

Matthews  v.  Warner,  29  Gratt.  570,  ^-  ^°-'  ^  ^^-  '^4^- 

26   Am.   Rep.   396;    Baltimore  &   0.  3  Kennedy  v.  Standard  S.  R.,  125 

R.  Co.  V.  Noell,  32  Gratt.  394;  Bee-  Mass.  90,  15  Am.  Neg.  Cas.  660,  28 

son   V.   Green  Mountain   G.  M.   Co.,  Am.   Rep.   214;    Moran  v.   Rollings, 

57    Cal.    20     (ruled    by    a    divided  ]25   Mass.    93,    15    Am.   Neg.   Cas. 

court),  13  Am.  Neg.  Cas.  461;   Mc-  660. 


§    97]  COMPENSATION.  351 

ognitioii  of  the  right  to  compensation  for  the  conseqnences  of 
nervous  shock  or  fright.  In  some  courts  the  progress  has  been 
more  marked  tlian  in  others,  and  it  is  especially  true  of  the 
courts  which  most  strictly  follow  the  English  cases  that  they 
have  not  kept  pace  with  othoi-s.  While  the  English  courts  are 
not  agreed  upon  mam'  phases  of  the  law  bearing  upon  this  topic 
the  higher  of  them  are  not  much  inclined  to  move  forward  along 
the  lines  many  of  the  state  courts  in  this  country  have  adopted. 
The  colonial  courts  are  also  more  inclined  to  take  advaiiccd 
ground  than  those  of  the  mother  country,  especially  the  l*ri\'y 
Council,  the  decisions  of  which  are  not  authority  in  the  English 
courts,  but  are  binding  on  the  colonial  courts.  Because  there  is 
no  uniform  ground  on  which  liability  for  wrongs  of  the  kind  re- 
ferred to  is  rested  or  denied  it  has  been  necessary  to  state  the 
cases  in  more  detail  than  would  otherwise  be  advisable;  but  in 
view  of  the  importance  of  the  suliject  and  the  discordant  opin- 
ions concerning  it  this  may  be  the  best  way  of  presenting  it  for 
practical  purposes. 

§  97.  Same  subject;  liability  of  telegraph  companies.  Dur- 
ing the  period  between  1883  and  1893  there  was  a  marked 
development  of  judicial  sentiment  in  the  direction  of  holding 
telegraph  companies  liable  for  mental  suffering  caused  by  negli- 
gent delay  in  delivering  messages  announcing  the  serious  illness, 
death  or  burial  of  a  near  relative  of  the  sender  or  addressee. 
Since  1893  the  trend  of  judicial  sentiment  has  changed,  largely 
because  the  highest  court  of  jSTew  York,  the  circuit  courts  of 
appeals  of  the  United  States  and  some  other  eminent  courts  have 
denied  such  liability.  The  courts  (with  the  exception  of  that 
of  Indiana)  which  declared  the  existence  of  the  liability  have 
adhered  to  that  doctrine,  if  the  rule  has  not  been  changed  by 
statute,  but  most  of  those  which  have  considered  it  for  the  first 
time  in  the  last  twenty  years  have  ranged  themselves  in  opposi- 
tion to  it.  The  Iowa  court  is  an  exce})tion.*  According  to  the 
view  of  the  courts  holding  in  accordance  with  the  latter  if  a 
message  delivered  to  a  telegraph  company  apprises  the  agent  who 
receives  it,  or  if  he  is  otherwise  informed,  that  it  is  of  immediate 

4Mentzer   v.   Wostern   U.   Tel.   Co.,   03   Towa,   752,   f)?   Am.   St.   294,   28 
L.R.A.  72. 


352  SUTHERLAND    ON    DAMAGES.  [§    97 

importance  to  the  party  to  whom  it  is  addressed  and  relates  to 
the  ilhiess,  death,  or  burial  of  some  near  member  of  his  family 
the  negligent  failure  to  deliver  it  makes  the  company  liable  to 
him  for  such  mental  distress  as  he  may  sustain  in  consequence,  or 
to  the  sender  as  may  be  endured  by  him  if  the  person  who  is 
summoned  by  it  fails  to  duly  arrive  by  reason  of  neglect  to  de- 
liver it  to  him.  A  husband  may  recover  for  such  suffering  as 
he  bears  as  the  result  of  the  non-delivery  of  a  message  summon- 
ing a  physician  to  attend  his  sick  wife;^  and  there  may  be  a  re- 
covery for  the  increased  physical  and  mental  suffering  the  wife 
endures  on  account  of  the  non-attendance  of  a  physician,^  or  the 
absence  of  her  husband  ;'^  and  for  the  husband's  disappointment 
and  suffering  in  being  kept  away  from  the  bedside  of  his  sick 
wife;^  for  a  sister's  grief  at  being  prevented  from  attending  a 
brother  in  his  last  illness  and  arranging  for  his  burial.^  Form- 
erly, in  Indiana,  a  husband  who  telegraphed  his  brother-in-law 
that  his  wife  w^as  not  expected  to  live  could  recover  for  his  men- 
tal suffering  arising  from  the  fact  that  the  person  to  whom  the 
message  was  sent  failed  to  come.^°  Other  cases  in  harmony  with 
those  considered  are  cited  in  the  note,^^  as  also  some  which  are 
opposed.'^^  If  anxiety  or  distress  exists  because  of  knowledge 
of  the  illness  of  a  relative,  its  continuance  as  the  result  of  the 
negligent  failure  to  deliver  a  message  which  would  remove  or 
alleviate  it  is  not,  in  some  courts,  an  element  of  damage.''^    Nei- 

5  Western  U.  Tel.  Co.  v.  Hender-  H  So  Reele  v.  Western  U.  Tel.  Co., 
son,   89   Ala.   510,   18   Am.   St.   148.  55    Tex.    310,   40     Am.     Rep.     805; 

6  Western  U.  Tel.  Co.  v.  Cooper,  Stuart  v.  Same,  66  Tex.  580,  59  Am. 
71  Tex.  507,  1  L.R.A.  728,  10  Am.  Rep.  623;  Gulf,  etc.  R.  Co.  v.  Levy, 
St.  772.  59  Tex.  542,  46  Am.  Rep.  269 ;  West- 

7  Thompson  v.  Western  U.  Tel.  ern  U.  Tel.  Co.  v.  Wilson,  69  Tex. 
Co.,  107  N.  C.  449.  739;   Same  v.  Adams,  75  id.  531,  16 

8  Beasley  v.  Western  U.  Tel.  Co.,  Am.  St.  920,  6  L.R.A.  844 ;  Same  v. 
39  Fed.  181;  Young  v.  Same,  107  Feegles,  75  Tex.  537;  Chapman  v. 
N.  C.  370,  9  L.R.A.  669,  22  Am.  St.  Western  U.  Tel.  Co.,  90  Ky.  265; 
883.  Western  U.  Tel.  Co.  v.  Broesehe,  72 

sWadsworth    v.   Western    U.   Tel.  Tex.  654,  13  Am.  St.  843.     See  eh. 

Co.,  86  Tenn.  695,  8  Am.  St.  864.  22. 

10  Reese   v.   Western   U.   Tel.   Co.,  12  West   v.    Western    U.   Tel.    Co., 

123   Ind.   294,   7   L.R.A.   583;    over-  39  Kan.  93,  7  Am.  St.  530;  Russell 

ruled  in  Western  U.  Tel.  Co.  v.  Fer-  v.  Same,  3  Dak.  315.     See  ch.  22. 
guson,  157  Ind.   64,  54  L'.R.A.  846.  13  Rowell  v.  Western  U.  Tel.  Co., 

See  §  977.  75   Tex,   26,   2  Am.   Neg.   Rep.   807. 


§  97] 


COMPENSATIOX. 


}5;j 


ther  is  niciital  distress  wliicli  has  its  orii:;!!!  in  alai'm  at  aiul 
sympathy  for  another's  siitVerinti's.^*  It"  a  tcK'iiraph  conijiaiiy 
undertakes  to  transmit  money,  with  knowlodiic  tliat  a  faihire 
to  do  so  with  promptness  will  cause  mental  distress,  it  is  liahlo 
for  its  neglect  to  be  prompt.^* 

In  order  that  a  c()ni[)any  sliall  he  liahlo  fni-  mental  snlTerinij 
occasioned  by  noiiliiicnt  failure^  to  transmit  or  deliver  the  an- 
nouncement of  the  illness  oi-  death  of  the  ])erson  who  may  Ik; 
named  therein  it  must  l)e  shown  that  the  message  disclosed,  or 
that  tlio  opcratni'  was  informed  of,  the  relation  of  the  ])ai'ties 
or  the  importance  of  promptness  in  its  delivery. ^°  It  is  enough 
to  establish  such  liability  if  the  language  of  the  message  is  rea- 
sonably sutHcient  to  put  the  company  upon  inquiry  as  to  the  re- 
lationship, and  inform  it  that  its  object  is  to  afford  the  person 
to  whom  it  is  addressed  an  opportunity  to  attend  upon  his  rel- 
ative in  his  last  sickness,  or  to  be  present  at  the  funeral  in  case 
of  death.^^  A  different  view  was  taken  in  Indiana.  The  mes- 
sage delivered  read  "my  wife  is  very  ill,  not  expected  to  live.'' 


14  Western  U.  Tel.  Co.  v.  Wells, 
50  Fla.  474,  2  L.R.A.(N.S.)  1072, 
111  Am.  St.  129;  Same  v.  Cooper, 
71  Tex.  507,  1  L.R.A.  728,  10  Am. 
St.  772. 

15  Barnes  v.  Western  U.  Tel.  Co., 
27  Nev.  438,  65  L.R.A.  G6G,  10.3 
Am.  St.  776;  Western  U.  Tel.  Co. 
V.  Simpson,  73  Tex.  422. 

A  telegram  Avas  received  at  G., 
Texas,  by  the  agent  of  a  woman  who 
sent  it  from  L.,  California,  inform- 
ing him  that  her  husband  had  died 
at  L.,  and  that  she  would  leave 
there  the  next  day,  and  requesting 
him  to  send  her  $200.  When  re- 
ceived at  G.  the  message  purported 
to  have  been  sent  from  S.  It  was 
not  repeated.  The  woman's  agent 
expressed  to  the  company's  agent 
his  belief  that  the  message  was  sent 
from  L.,  but  after  being  assured 
that  there  was  no  mistalce  in  this 
respect  applied  for  the  transfer  of 
Suth.  Dam.  Vol.   1.— 23. 


the  money  to  S.,  which  was  (Jone, 
without  any  effort  on  defendant's 
part  to  ascertain  whether  an  error 
had  been  made.  The  money  did  not 
reach  the  applicant.  The  company 
was  liable  for  her  mental  sufiFering. 
Where  tlie  company  knew  the 
financial  circumstances  of  a  traveler 
to  Avhom  it  was  directed  to  pay 
money  it  was  liable  for  tlie  bodily 
and  mental  sutTering  he  endm-ed  in 
going  without  food  while  traveling. 
Western  U.  Tel.  Co.  v.  Wells, 
supra. 

16  Russell  V.  Western  V.  Tel.  Co., 
3  Dak.  315;  Western  U.  Tel.  Co.  v. 
Brown,  71  Tex.  723,  2  L.R.A.  700; 
Same  v.  Kirkpatriek,  7t>  Tex.  217. 
18  Am.  St.  37. 

17  Western  U.  Tel.  Co.  v.  Moore, 
70  Tex.  06,  18  Am.  St.  25;  Same  v. 
Adams,  75  Te.\.  531,  10  Am.  St. 
5)20,  0  L.R.A.  844;  Same  v.  Feegles, 
75  Tex.  537. 


354  SUTHEKLAIN-D    ON    DAMAGES.  [§98 

In  an  action  by  the  sender  to  recover  for  mental  suffering  it  was 
ruled  that  the  langnage  was  not  a  hindrance  thereto.^^ 

§  98.  Right  to  compensation  not  affected  by  motive.  So 
far  as  pecuniary  elements  of  damage  and  full  compensation  for 
injury  are  concerned,  either  in  actions  of  tort  or  for  breach  of 
contract,  the  right  of  recovery  is  wholly  independent  of  the  mo- 
tive which  induced  the  act  or  omission  which  constitutes  the 
cause  of  action. ^^  In  tort  the  motive  may  increase  the  injury 
and  give  a  right  to  greater  compensation;  but  in  actions  upon 
contract  this  can  seldom  occur  because  contracts  are'  not  often 
made  for  such  objects  that  a  breach  can  be  committed  in  such 
manner  as  to  involve  other  than  pecuniary  consequences.^"  In 
cases  of  tort,  if  the  defendant's  motive  does  not  enhance  the 
actual  injury,  it  cannot  necessitate  the  allowance  of  larger  dam- 
ages to  compensate  it;  though,  by  possibility,  it  may  afford 
cause  for  imposing  exemplary  damages. 

§  99.  Distinction  made  for  bad  motive;  contracts.  Impor- 
tant distinctions,  however,  are  made  against  parties  who  break 
their  contracts  as  well  as  against  wrong-doers  where  the  cause 
of  action  originates  in  a  bad  motive.^^  On  executory  contracts 
for  the  sale  of  land  the  vendor  who  wilfully  breaks  his  contract 
or  is  unable  to  fulfill  for  causes  known  to  him  when  he  entered 
into  it  will  be  subject  to  damages  for  the  loss  of  the  bargain  ;^^ 

18  Reese  v.  Western  U.  Tel.  Co.,  stitute  an  offense  against  the  law 
123  Ind.  294,  300,  7  L.R.A.  583.  the  damages  are  not  limited  to  the 

19  Sparks  v.  McCreary,  156  Ala.  actual  pecuniary  loss.  See  §§  77, 
382,        22        L.R.A.  (N.S.)         1224;  390  and  note. 

O'Meallie  v.  Moreau,  116  La.  1020;  21  Champlain  S.  &  S.  Co.  v.  State, 

Krom  V.  Schoonmaker,  3  Barb.  647 ;  60    N".    Y.    Misc.    434,    quoting    the 

Bridgewater  G.  Co.  v.  Home  G.   F.  text,   and  applying  it  to  a  case  in 

Co.,   7    C.    C.   A.    652,   59    Fed.    40;  which   land  was    leased    after    con- 

Bromfield  v.  Jones,  4  B.  &  C.  380.  demnation     proceedings    against    it 

See  §  43.  were  instituted. 

20  Knickerbocker  I.  Co.  v.  Gardi-  22  Underwood  T.  Co.  v.  Century 
ner  D.  Co.,  107  Md.  556,  16  L.R.A.  R.  Co.,  165  Mo.  App.  131;  Pum- 
(N.S.)  740;  Magnolia  M.  Co.  v.  pelly  v.  Phelps,  40  N.  Y.  59;  Bush 
Gale,  189  Mass.  124.  v.  Cole,  28  id.  261,  84  Am.  Dec.  343; 

In    Enders    v.    Skannal,    35    La.  -Drake  v.   Baker,   34  N.   J.   L.   358; 

Ann.    1000,    it    is    ruled    that    if    a  Plummer  v.  Rigdon,  78  111.  222,  20 

breach  of  contract  is  made  in  a  way  Am.   Rep.   201  ;    Stephenson  v.  Har- 

and  accompanied  by  acts  which  con-  rison,    3    Litt.     170;     Hammond  v. 


99] 


COMrKNSATKJN. 


355 


while  a  vendor  who,  in  i>r)0(l  faith  and  without  fault,  linds  him- 
self unexpectedly  niiahk>  to  fulfill  is  only  lialdo  to  rcruiid  the 
consideration  with  interest  and  expenscs.^^  The  general  rule 
undoubtedly  is  that  in  actions  upon  contracts  the  motives  which 
induce  breaches  of  them  cannot  be  considered  in  awarding  dam- 
ages.^* In  addition  to  the  cases  above  stated  and  those  indicated 
in  the  next  paragraph  of  this  section,  as  coming  within  the  ex- 
ception to  this  rule,  actions  for  breach  of  marriage  promise  may 
be  added. ^^  There  is  a  probability  that,  owing  to  the  complete 
obliteration  of  the  distinction  formerly  existing  as  to  the  forms 
of  actions,  some  misunderstanding  may  arise  on  this  question. 
The  rule  prevails  in  some  states  that  where  the  injuries  com- 
plained of  grew  out  of  a  contract,  though  a  tort  was  connected 
with  it,  if  the  claims  for  both  wrongs  are  so  related  that  they 
may  be  conveniently  and  appropriately  tried  together,  this  may 
be  done.^^  An  action  so  tried  cannot  be  said,  with  any  regard  to 
legal  accuracy,  to  be  an  action  upon  contract.  It  is  an  action 
brought  upon  the  theory  that  legal  rights  growing  out  of  a  con- 
tract have  been  violated  or  legal  duties  resting  thereon  neglected. 


Hannin,  21   Mich.  374,  4  Am.  Eep. 
490;  Foley  v.  McKeegan,  4  Iowa,  1, 

66  Am.  Dec.  107;   Engel  v.  Fitch,  9 
B.  &  S.  85,  10  id.  738.     See  §  581. 

23Flureau  v.  Thornhill,  2  W.  Bl. 
]078;  Walker  v.  Moore,  10  B.  &  C. 
416;  Sikes  v.  Wild,  1  B.  &  S.  587/ 
4  id.  421;  Bain  v.  Fothergill,  L.  R. 
6  Ex.  59,  L.  R.  7  H.  of  L.  158;  Mc- 
Nair  v.  Compton,  35  Pa.  23;  Conger 
V.  Weaver,  20  N.  Y.  140.     See  §  578. 

24Carbondale    I.    Co.    v.    Burdick, 

67  Kan.  329. 

25Diiche  V.  Wilson,  37  Hun,  519; 
IToiLston,  etc.  R.  Co.  v.  Shirley,  54 
Tex.  ]25,  142,  148.  Sec  Addis  v. 
Gramophone  Co.,  [1909]  App.  Cas. 
488. 

The  standard  writer  on  the  law 
of  damages  in  England  says:  '"With 
the  single  exception  of  actions  for 
breach  of  promise  of  marriage  I  am 
not  aware  of  anv  cases  in  which  it 


has  been  held  in  England  that  the 
motives  or  conduct  of  a  party  break- 
ing a  contract,  or  any  injurious  cir- 
cumstance not  flowing  from  the 
breach  itself,  could  be  considered  in 
damages  where  the  action  is  on  the 
contract."  Mayne's  Dam.  (Sth  ed.) 
p.  49.  Sec  Jenkins  v.  Kirtiey,  70 
Kan.  801. 

In  such  an  action  motive  does  not 
affect  compensatory  damages.  Fish- 
er V.  Barber  (Tex.  Civ.  App.),  130 
S.  W.  871. 

26  Houston,  etc.  R.  Co.  v.  Sliirley, 
54  Tex.  125,  148;  Ball  v.  Britton, 
58  id.  57;  O.,  C.  &  S.  F.  R.  Co.  v. 
Levy,  59  id.  542,  46  Am.  Rep.  269; 
New  Orleans,  etc.  R.  Co.  v.  Hurst, 
36  Miss.  660,  8  Am.  Neg.  Cas.  456; 
Wadsworth  v.  Western  U.  Tel.  Co., 
86  Tenn.  695,  6  Am.  St.  864;  Mentz- 
er  V.  Sanie,  93  Iowa  752,  57  Am. 
St.  294,  28  L.R.A.  72. 


356  SUTHERLAND    ON    DAMAGES.  [§    99 

As  applied  to  a  carrier  the  contract  it  makes  with  a  passenger 
gives  him  the  right  to  be  carried  safely  and  put  down  at  the  place 
he  has  designated ;  the  failnre  to  do  either  is  a  tort.  The  car- 
rier is  engaged  in  an  employment  which  devolves  a  duty  upon 
him ;  an  action  on  the  case  will  lie  for  a  breach  of  that  duty  al- 
though it  may  consist  in  doing  something  contrary  to  an  agree- 
ment made  in  the  course  of  such  employment  by  the  party 
upon  whom  the  duty  is  cast.^''^  A  distinction  may  very  properly 
be  made  as  to  the  measure  of  damages  for  the  breach  of  a  con- 
tract where  the  manner  of  the  party  in  the  wrong  is  offensive 
or  such  as  to  cause  reasonable  apprehension  of  danger  to  the 
other.2« 

A  quantum  meruit  claim  for  services  rendered  in  part  per- 
formance of  a  special  contract  has  been  made  in  some  jurisdic- 
tions to  depend  on  the  motive  of  the  servant  or  contractor  in 
his  abandonment  of  the  contract ;  and  compensation  for  such 
performance  has  been  allowed  only  to  the  laborer  or  contractor 
who  has  acted  in  good  faith ;  has  broken  his  contract  through 
inability  or  mistake,  and  has  been  denied  to  the  party  who  has 
wilfully  and  selfishly  abandoned  it.^^    Other  cases  may  be  cited 

27  Jarvis,   C.   J.,   in   Courtenay  v.  gue,   30   Vt.    357 ;    Cullen   v.    Sears, 

Earle,  10  C.  B.  73,  S3,  interpreting  112  Mass.  299;  Cardell  v.  Bridge,  9 

Brown  v.  Boorman,  11   CI.  &  F.  1;  Allen    355;    Walker    v.    Orange,    IG 

Trout  V.  Watkins  L.  &  U.  Co.,  148  Gray   193;    Patnote   v.    Sanders,    41 

:\ro.  App.  621,  citing  the  text;   Ma-  Vt.    66,    98    Am.    Dec.    564;    Veazie 

Iioning  Valley  E,.  Co.  v.  De  Pascale,  v.    Bangor,    51    Me.    509;    Laton    v. 

70  Ohio,  179,  65  L.E.A.  860.  King,    19    N.    H.    280;    Bertrand    v. 

28Enders  v.  Skannal,  35  La.  Ann.  Byrd,  5  Ark.  651;  Wilson  v.  Wagar, 

1000.     See  Beanlieu  v.  Great  North-  26  Mich.  452;    Horn  v.  Batchelder, 

ern  R.  Co.,  103  Minn.  47,  19  L.R.A.  4^    n.  H.   86;    Tait  v.   Sherman,  10 

(N.S.)    564.  Iowa,  60;   Baltimore  &  0.  R.  Co.  v. 

29  Yeats    V.     Ballentine,     56     Mo.  Lafferty,  2  W.  Va.  104;   Gleason  v. 

530;  _Kelly  v.  Bradford,  33  Vt.  35 ;  ^^^-^^^^ ^  ^ush.  484,  57  Am.  Dec.  62; 


Thornton  v.  Place,  1  M.  &  R.  218; 
Newman  v.  McGregor,  5  Ohio,  349, 


Austin  V.  Austin,  47  Vt.  311;   Brit- 
ton  V.  Turner,  6  N.  H.  495 ;  Sinclair 

V.    Tallmadge,    35    Barb.    602;    Hay- 

,         T  1     -   15-  1      1Q1       4+         24  Am.  Dec.  293;   Carroll  v.  Welch, 

ward  V.   Leonard,    i    lick.   181;    At-  ' 

kins   V.   Barnstable,   97    Mass.   428;  26  Tex.   147;    Hillyard  v.   Crabtree, 

Snow  V.  Ware,  13  Mete.  (Mass.)  42;  H  Tex.  264,  62  Am.  Dec.  475;  Der- 

McKinney   v.   Springer,   3   Ind.   59;  mott  v.  Jones,  23  How.  220,   16  L. 

Porter  v.  Woods,  3  Humph.  56,  39  ed.  442;   Norris  v.  School  Dist.,   12 

Am.  Dec.  153;  McDonald  v.  Monta-  Me.  293,  28  Am.  Dec.  182. 


§    100]  COMPENSATION.  357 

where  a  more  liberal  scope  is  allowed  in  estiiiiatiiiii,'  daniaii'es  for 
a  fraudulent  or  Avantou  violation  of  contract  than  is  ordinarily 
given  in  the  absence  of  the  element  of  frand.^°  Thus,  the  arbi- 
trary refusal  to  furnish  water  for  land  on  which  crops  have 
been  planted  is  cause  for  the  recovery  of  the  value  of  the  crops 
at  the  time  of  the  breach,  with  the  right  to  irrigate  them  from 
then  until  the  end  of  the  season,  less  their  value  without  such 
right.^^  And,  besides,  less  certainty  of  proof  may  be  suthcient 
where  there  is  a  wnlful  breach. ^^ 

§  100.  Motives  in  tort  actions.  The  motive  with  which  a 
wrong  is  done  in  some  cases  affects  the  rule  by  which  compen- 
sation is  measured  or  losses  estimated.  Where  there  is  fraud  or 
other  intentional  wrong  compensatory  damages  are  given  with 
a  more  liberal  hand  by  juries,  and  their  verdicts  in  such  cases 
are  less  closely  scanned  by  courts  than  in  cases  where  that  ele- 
ment is  absent.  There  is  a  tendency,  too,  to  be  less  strict  in  the 
exclusion  of  remote  and  uncertain  damages,  though  for  this 
there  is  doubtful  warrant.^^  Where  the  damages  are  certain, 
as  for  the  taking  or  destruction  of  property  having  a  well-known 
and  provable  value,  the  rule  of  compensation  is  generally  the 
same,  whether  the  loss  is  by  tort  or  by  breach  of  contract,^*  and 
whether  the  wrong  was  wilful  or  not.  But  there  is  a  more  liberal 
allowance  of  damages  where  the  tort  is  an  aggressive  one  and 
the  entire  damages  or  some  part  of  them  are  not  capable  of 
measurement  by  some  standard  of  value  or  definite  rule.       This 

30Ishcrwood  V.  Salone,  61  Oro.  32CliiiIiiim  v.  L.  Co.  .supra. 
572,  40  L.R.A.(N.S.)  299;  Dewint  33  See  S§  4:5,  9(i.  If  iii.Mital  dia- 
V.  Wiltse,  9  Wend.  325;  Jeffrey  v.  turbance  or  nervous  sliock  results 
Bigelow,  13  id.  518,  28  Am.  Dec.  from  a  spiteful,  reveiififul.  wroiig- 
476;  Sondes  v.  Fletcher,  5  B.  &  Aid.  ful  and  malicious  act  and  tliat  con- 
835 ;  Rose  V.  Beattie,  2  Nott  &  :\rcC.  dition  produces  injury  t..  health 
538;  Nurse  v.  Barns,  T.  Raym.  77:  and  happiness  there  may  l>e  a  re- 
Stuart  V.  Wilkins,  1  Doug.  18;  Wil-  covery  for  these  elemc-nts  of  damage 
liamson  v.  Allison,  2  East,  446;  though  the  person  of  the  plaintiff 
Ferrand  V.  Bouchell,  Harp.  83;  Mul-  was  not  touched.  Shellabarger  v. 
lett  V.  Mason,  L.  R.  1  C.  P.  559;  Morris,  115  Mo.  App.  560. 
Smith  V.  Thompson,  8  C.  B.  44.  34  Skinner  v.  Gibson,  SO  Kan.  431, 
See  §  77.  citing  the  text. 

31  Peden  V.  Platte  Valley  F.  &  Co.,  35  Krehbiel    v.    Ilenkle,    152    Iowa. 

93   Neb.   141;    Chalupa   v.   Tri-Stato  604.     So  where  election  officers  wil- 

L.  Co.,  92  Neb.  477.  fully  refuse  to  permit  a  challenged 


358  SUTHERLAND    ON    DAMAGES.  [§    100 

is  justified  not  only  on  the  ground  that  the  wrong  was  wilful  or 
malicious,  but  on  certain  considerations  which  emphasize  the 
distinction  between  uncertain  damages  caused  by  torts  and  by 
breaches  of  contracts  generally.  Contracts  are  made  only  by 
the  mutual  consent  of  the  respective  parties ;  and  each  party  for 
a  consideration  thereby  consents  that  the  other  shall  have  certain 
rights  as  against  him  which  he  would  not  otherwise  possess. 
In  entering  into  the  contract  the  parties  are  supposed  to  under- 
stand its  legal  effect,  and  consequently  the  limitations  which 
the  law  for  the  sake  of  certainty  has  fixed  for  the  recovery  of 
damages  for  its  breach.  If  not  satisfied  with  the  risk  which 
these  rules  impose  the  parties  may  decline  to  contract  or  may  fix 
their  own  rule  of  damages,  when  in  their  nature  the  amount 
must  be  uncertain.  Hence  when  suit  is  brought  upon  such  con- 
tract and  it  is  found  that  the  entire  damages  actually  sustained 
cannot  be  recovered  without  a  violation  of  such  rules  the  de- 
ficiency is  a  loss  the  risk  of  which  the  party  voluntarily  assumed 
on  entering  into  the  contract  for  the  chance  of  benefit  or  ad- 
vantage which  it  would  have  given  him  in  case  of  performance. 
His  position  is  one  in  which  he  has  voluntarily  placed  himself 
and  in  which,  but  for  his  own  consent,  he  could  not  have  been 
placed  by  the  Avrongful  act  of  the  opposite  party  alone.  Again, 
in  a  majority  of  cases  upon  contract  there  is  little  difficulty 
from  the  nature  of  the  subject  in  finding  a  rule  by  which  sub- 
stantial compensation  may  be  readily  estimated;  and  it  is  only 
in  those  cases  where  this  cannot  be  done  and  where,  from  the 
nature  of  the  stipulations  or  the  subject-matter,  the  actual  dam- 
ages resulting  from  a  breach  are  more  or  less  uncertain  in  their 
nature  or  difficult  to  be  shown  with  accuracy  by  the  evidence 
under  any  definite  rule  that  there  can  be  any  great  failure  of 
justice  by  adhering  to  such  rule  as  will  most  nearly  approximate 
to  the  desired  result.  And  it  is  precisely  in  these  classes  of  cases 
that  the  parties  have  it  in  their  power  to  protect  themselves 

elector  to  qualify.    Lane  v.  ^Mitchell,  pared    with    an    honest   interference 

]53  Iowa,  139.     Another  instance  ia  by    the    parents   of   either    of    them 

furnished     where    an     intermoddler  with    a    proper    motive.      Holtz    v. 

breaks  up  the  relations  existing  be-  Dick,  42  Ohio  St.  23,  51  Am.  Rep. 

tween  a  man  and  his  wife  as  com-  791.     See  ch.  38. 


§    100]  COMPENSATION.  359 

against  any  loss  to  arise  from  such  nncertainty  by  estimating 
their  own  damages  in  the  contract  itself  and  providing  for  them- 
selves the  rules  by  which  the  amonnt  shall  be  measured  in  ease 
of  a  breach;  and  if  they  neglect  this  they  may  be  presumed  to 
have  assented  to  such  damages  as  nuiy  be  measured  by  the  rules 
which  the  law,  for  the  sake  of  certainty,  has  adopted,  Xone 
of  these  considerations  have  any  bearing  in  an  action  purely 
of  tort.  The  injured  party  has  consented  to  enter  into  no  rela- 
tion to  the  wrong-doer  by  which  any  hazard  of  loss  should  bo 
incurred;  nor  has  he  received  any  consideratifui  or  chance  of 
benefit  or  advantage  for  the  assumption  of  such  hazard;  nor 
has  the  wrong-doer  given  any  consideration  or  assumed  any 
risk  in  consequence  of  any  act  or  consent  of  his.  The  injured 
party  has  had  no  opportunity  to  protect  himself  by  contract 
against  any  uncertainty  in  the  estimate  of  damages ;  no  act  of 
his  has  contributed  to  the  injury ;  he  has  yielded  nothing  by 
consent ;  and,  least  of  all,  has  he  consented  that  the  wrong-doer 
might  take  or  injure  his  property  or  deprive  him  of  his  right 
for  such  sum  as,  by  the  strict  rules  which  the  law  has  established 
for  the  measurement  of  damages  in  actions  upon  contract,  he 
may  be  able  to  show  with  certainty  he  has  sustained  by  such 
taking  or  injury.  Especially  would  it  be  unjust  to  presume  such 
consent  and  to  hold  him  to  the  recovery  of  such  damages  only 
as  may  be  measured  with  certainty  by  fixed  and  definite  rules 
when  the  case  is  one  which,  from  its  very  nature,  affords  no 
elements  of  certainty  by  which  the  loss  he  has  actually  suffered 
can  be  shown  with  accuracy  by  any  evidence  of  which  the  case 
is  susceptible.  Xor  is  he  to  blame  because  the  case  happens  to 
be  one  of  this  character.  He  has  had  no  choice,  no  selection. 
The  nature  of  the  case  is  such  as  the  wrong-doer  has  chosen  to 
make  it;  and  upon  every  consideration  of  justice  he  is  the  party 
who  should  sustain  all  the  risk  of  loss  which  may  arise  from 
the  uncertainty  pertaining  to  the  nature  of  the  case  and  the 
difficulty  of  accurately  estimating  the  results  of  his  own  wrong- 
ful act.^®     Motive  is  material  where  liabilitv  for  duuble  dam- 


36  Per   Christiancy,  J.,  in  Allison  234;   Catc  v.  Gate,  fiO  X.  H.   141, 

V.   Chandler,  11   Mid..  552;   Sharon  ^^^  ^^^       ^^,^^    ^^.^.^__^^^^^ 

V.  Mosher,  17  Barb.  518;   Guille  v.  ' 

Swan,   19  Johns.   381,   10   Am.  Dec.  Deady,  7n  Conn.  414. 


360  SUTHERLAND    ON    DAMAGES.  [§    101 

ages  is  involved,  it  resting  on  the  intent  with  which  the  act  is 
done.^^ 
§  101.  How  motive  affects  consequences  of  confusion  of  goods. 

In  case  of  a  wrongful  confusion  of  goods,  that  is,  where  one 
fraudulently  or  wrongfully  intermixes  his  money,  corn  or  hay 
with  that  of  another  man,  without  his  approliation  or  knowl- 
edge, or  casts  gold  in  like  manner  into  another's  melting  pot 
or  crucible,  the  law,  to  guard  against  fraud,  allowed  no  remedy 
in  such  case  according  to  the  older  authorities,  but  gave  the 
entire  property  without  any  account  to  him  whose  original  do- 
main was  invaded. ^^  There  is  a  tendency  in  the  later  adjudica- 
tions, however,  to  confine  the  forfeiture  to  cases  where  other- 
wise the  innocent  owner  of  property  so  mixed  cannot  be  ade- 
quately protected.  It  accords  with  the  preceding  views  to  charge 
the  party  whose  fraudulent  or  tortious  act  caused  the  confusion 
with  the  duty  of  separating  and  identifying  his  own  and  with 
any  loss  resulting  from  his  inability  to  do  so.^^  And  greater 
loss  cannot  properly  be  charged  to  him  for  the  purpose  of  com- 
pensation. A  person  is  not  damnified  by  mixing  his  property 
in  a  mass  if  from  it  he  can  withdraw  what  will  be  substantially 
and  to  all  intents  and  purposes  identical  with  it ;  and  where  a 
man  can  obtain  all  that  he  is  entitled  to,  in  order  to  be  in  full 
enjoyment  of  his  own,  the  law  should  not  bestow  on  him  the 
property  of  another.*"  A  reasonable  rule,  which  has  much  au- 
thority to  support  it,   is  that  one  who  has  confused  his  own 

37  Long  V.  Cummings,  156  Ala.  Co.  v.  City  Nat.  Bank,  92  Tex. 
.577;  St.  Louis,  etc.  E.  Co.  v.  Bates-       J  87. 

ville  &  W.  Tel.  Co.,  80  Ark.  499.  40  Per  Campbell,  .J.,  in  Stephenson 

38  2   Black.   Com.   404;    Warde   v.  v.    Little,    10    Mich.    433;    Hart    v. 
Eyre,  2  Bulst.  323;  Ryder  v.  Hatli-  Ten  Eyck,  2  Johns.  Ch.  62;  Roth  v. 
away,  21  Pick.  298;  Willard  v.  Rice,  Wells,  29  N.  Y.  486;  Nowlen  v.  Colt, 
11  Mete.    (Mass.)   493,  45  Am.  Dec.  6  Hill  461,  41  Am.  Dec.  756;   Sam- 
296;  Hesseltine  v.  Stockwell,  30  Me.  son  v.  Rose,  65  N.  Y.  411;  Bracken- 
237,   50   Am.   Dec.   627;    Stephenson  ridge  v.  Holland,  2  Blackf.  377,  20 
V.   Little,    ]0   Mich.   433;    Claflin   v.  Am.  Dec.  123;  Ringgold  v.  Ringgold, 
Continental   J.   Works,   85   Ga.   27;  1  Har.  &  Gill  11,  18  Am.  Dec.  2.50 
First   Nat.    Bank    v.    Sehween,    127  Bryant     v.     Ware,     30     Me.     295 
111.   573,  11   Am.  St.   174;   Franklin  Stearns   v.    Raymond,    26    Wis.    74 
V.  Gumersell,  9  Mo.  App.  84.  Single    v.     Barnard,     29     id.     463 

39  Ayre  v.  Hixson,  53  Ore.  19,  133  Sehulenburg  v.  Harriman,  2  Dill. 
Am.  St.  819;  Lightner  M.  Co.  v.  39S,  21  Wall.  44,  22  L.  ed.  551 ;  The 
Lane,    161    Cal.    689;    Holloway    S.  Distilled   Spirits,   11   Wall.   356,   20 


§  101] 


COMrENSATlON. 


nc.i 


property  with  that  of  other  pcrstms  shall  lose  it  whcMi  there  is 
a  concurrence  of  these  two  things;  first,  that  he  has  fraiidulputly 
caused  the  confusion;  and  second,  that  the  rights  of  the  either 
party  after  the  confusion  are  not  capable  otherwise  of  complete 
protection.^^  JUit  the  principle  of  forfeiture,  except  when  neces- 
sary to  save  the  rights  of  tli(»  innocent  owner,  if  there  has  been 
a  fraudulent  admixture,  cannot  be  said  to  be  eliminated  from 
our    jurisprudence.*^       The    purpose    of    the    doctrine    is    to 


L.  ed.  167;  Robinson  v.  Holt,  30  N. 
H.  557,  75  Am.  Dec.  233;  Stuart 
V.  Phelps,  39  Iowa,  14;  Moore  v. 
Bowman,  47  N.  H.  494;  Goodenow 
V.  Snyder,  3  G.  Greene,  599;  Wood 
V.  Fales,  24  Pa.  246,  64  Am.  Dec. 
655;  Wooley  v.  Campbell,  37  N.  J. 
L.  163:  Bond  v.  Ward,  7  Mass.  J23, 
5  Am.  Dec.  28;  Smith  v.  Sanborn,  6 
Gray,  134;  Armstrong  v.  McAlpin, 
18  Ohio  St.  184;  Holbrook  v.  Hyde, 
1  Vt.  286 ;  Treat  v.  Barber,  7  Conn. 
274;  Tufts  v.  McClintock,  28  Me. 
424,  48  Am.  Dec.  501;  Colwill  v. 
Beeves,  2  Camp.  575 ;  Albee  v.  Web- 
ster, 16  N.  H.  362;  Weil  v.  Silver- 
stone,  6  Bush,  698;  Wellington  v. 
Sedgwick,  12  Cal.  469;  Shumway  v. 
Butter,  8  Pick.  443,  19  Am.  Dec. 
340;  Ames  v.  Mississippi  B.  Co.,  8 
Minn.    467;    Bartlett    v.    Hamilton, 

46  Me.    435;    Leonard    v.    Belknap, 

47  Vt.  602;  Wyly  v.  Burnett,  43  Ga. 
438;  Griffith  v.  Bogardus,  14  Cal 
410;  Frey  v.  Demarest,  16  N.  J. 
Eq.  236;  Elmer  v.  Lopcr,  25  id. 
475;  Alley  v.  Adams,  44  Ala.  609; 
Adams  v.  Wildes,  107  Mass.  123; 
Cochran  v.  Flint,  57  N.  H.  514; 
Gray  v.  Parker,  38  Mo.  160;  Fowler 
V.  Hoffman,  31  Mich.  215;  Follows 
v.  Mitchel,  1  P.  Wms.  81 ;  Taylor  v. 
Plumer,  3  M.  &  S.  562;  Reed  v. 
King,  11  Ky.  L.  Rep.  615;  Stone  v. 
Quaal,  36  Minn.  46 ;  Osborne  v.  Car- 
gill  E.  Co.,  62  Minn.  400;  Blodgett 
v.    Seals,    78    Miss.    522;    Clark    v. 


Monroe  Co.,  127  Mich.  300:  IMIintt 
V.  llawley,  34  Wash.  585;  St.  Paul 
B.  Co.  v.  Kemp,  125  Wis.  138;  Mc- 
Clendon  v.  McKissack,  143  Ala. 
188;  Nasliville  L.  Co.  v.  Barefield, 
93  Ark.  353. 

«Id.;  Wright  V.  Skinner,  34 
Fla.  453;  Clafiin  v.  Beaver,  55  Fed. 
576;  Mugge  v.  Jackson,  53  Fla.  323; 
Stone  V.  Marshall  O.  Co.,  208  Pa. 
85,  65  L.R.A.  218,  quoting  the  te.\t; 
Johnson  v.  Emery,  31  Utah,  126; 
Lamb  v.  Kincaid,  38  Can.  Sup.  Ct. 
516;  Union  Naval  S.  Co.  v.  United 
States,  202  Fed.  491,    (C.  C.  A.). 

42  Lance  v.  Butler,  135  N.  C.  419; 
Mengal  B.  Co.  v.  Moore,  114  Tenn. 
596;  Rabe  v.  Jourdan,  46  Tex.  Civ. 
App.  456;  Osborne  v.  Cargill  E. 
Co.;  Holloway  S.  Co.  v.  City  Xat. 
Bank,  supra;  Ryder  v.  Hatliaway, 
21  Pick.  298;  The  Idaho,  93  U.  S. 
575,  23  L.  ed.  978;  Jenkins  v. 
Stcanka,  19  Wis.  126,  18  Am.  Doc. 
675;  Root  V.  Bonnoma,  22  Wis.  539; 
Stephenson  v.  Little,  10  .Mich.  433; 
Johnson  v.  Ballon,  25  Mich.  460; 
Willard  v.  Rice,  11  Mete.  (Ma-ss.) 
493,  45  Am.  Dec.  226;  Lupton  v. 
White,  15  Ves.  442;  Wingato  v. 
Sjnith,  20  Me.  287;  Dole  v.  01m- 
stead,  36  111.  150,  85  Am.  Dec.  397; 
Loomis  V.  Greer,  7  Me.  386;  Mc- 
Dowell V.  Rissoll,  37  Pa.  164;  Beach 
V.  Schmultz,  20  111.  185;  Jewett  v. 
Dringer,  30  X.  J.  Eq.  291;  Wooley 
v.   Campl)ell,  37   N.  J.   L.   163;    (la- 


3G2  SUTIIEKLAND    ON    DAMAGES.  [§    101 

prevent  fraud. *^  The  rule  favoring  the  innocent  in  case  of 
confusion  of  property  so  that  it  cannot  be  separated  according 
to  ownership  should  not  be  applied  to  the  prejudice  of  the  rights 
of  third  parties  if  full  protection  can  be  given  to  the  innocent 
person  whose  goods  have  been  thus  wrongfully  used.^^ 

§  102.  Where  property  sued  for  improved  by  wrong-doer. 
In  another  class  of  cases,  closely  analogous  to  those  relating 
to  confusion  of  goods,  where  a  tortious  taker  of  property  has 
by  his  labor  enhanced  its  value,  the  owner's  title  not  being 
divested,  the  latter  may  retake  the  same,  subject  to  certain 
limitations,  in  its  improved  condition.*^  He  is  precluded  from 
exercising  this  right  when  property  so  taken  has  lost  its  identity. 
But  the  change  which  will  be  deemed  to  destroy  identity  where 
the  wrong-doer  took  the  property  in  good  faith,  supposing  it  to 
be  his  own  or  through  some  other  mistake  or  inadvertence,  will 
not  so  destroy  it  as  to  determine  the  owner's  title  and  put  him 
to  his  action  for  damages  if  the  taking  was  an  intentional  wrong. 
While  the  authorities  are  in  great  confusion  on  this  subject, 
there  is  a  manifest  discrimination  against  the  wilful  wrongdoer. 
By  the  civil  law  and  the  common  law  alike  the  owner  of  the 
original  materials  is  precluded  from  following  and  reclaiming 
the  property  after  it  has  undergone  a  transmutation  which  con- 
verts it  into  an  article  substantially  different  ^^  as  by  making 
wine  out  of  another's  grapes,  oil  from  his  olives,  or  bread  from 
his  wheat ;  but  the  product  belongs  to  the  new  operator,  who  is 
only  to  make  satisfaction  to  the  former  proprietor  for  the  ma- 
terials converted.^'     And  a  very  large  increase  in  the  value  of 

flin  V.  Continental  J.  Works,  85  Ga.  Groat,    G    Johns.    168;     Halleck    v. 

27 ;  First  Nat.  Bank  v.  Scliween,  127  Mixer,    16    Cal.    574,    76    Am.    Dec. 

111.  573,  11  Am.  St.  Rep.  174;  Frank-  ^gj .  Moody  v.  Whitney,  34  Me.  563; 

lin  V.  Gumersell,  9  Mo.  App.  84.  Chandler   v.    Edson,   9   Johns.   362; 

43  Wooley  V.   Campbell,  supra.  ^.^^^^  ^,   ^^.^^^^    ^^  ^j^   ^^,0.  ^^^^ 

44  National  Park  Bank  v.  God-  ^l  Barb.  92;  Dunn  v. 
dard,  9  N.  Y.  Misc.  626.     See  Hall  ,           '       ,     .^^     ^^    a        t^ 

'          ,.      T,r  T     TA  r.     n.        oo       Oneal,    ]    Sneed,    106,   60   Am.   Dec. 

V.    Hargadine-McK.    D.  G.    Co.,    23                 '                   '       .  .^           „   ^t    ^^ 

„."       .          ,.„  140;    Silsburv  v.  McCoon,   3   N.   Y. 
Tex.   Civ.   App.    149. 

45  Final  V.  Backus,  18  Mich.  218:       ^'^'  ^^  -'^"^-  'D'^^-  '^^^■ 
Brown  v.  Sax,  7  Cow.  95;   Bennett  *^  2  Bl.  Com.  404. 

V.   Thompson,   13   Ired.   146;    Smith  47  Id.;    Wethorbee     v.     Green,    22 

V.    Gonder,    22    Ga.    353;    Curtis   v.       Mich.  311,  7  Am.  Rep.  653;  Forsyth 


103] 


CO:MrEXSATION. 


.363 


the  property  by  labor  has  been  held  to  have  the  same  ctTcet  in 
favor  of  such  an  involuntary  wrong-doer.*^  The  law  allows  him 
in  such  cases  to  make  title  by  his  own  wrong,  it  not  being  wilful, 
to  prevent  his  suilering  the  loss  of  his  laboi-,  and  not  because  of 
the  supposed  impossibility  of  tracing  the  original  materials  into 
the  more  valuable  property  made  therefrom.  The  authorities, 
however,  are  so  much  in  conflict  that  no  test  can  be  deduced  from 
them  by  which  it  can  be  determined  what  change  will  suffice  to 
destroy  the  identity  of  property  so  as  to  prevent  the  owner  from 
retaking  it.  It  is  not  enough  that  trees  are  converted  into 
saw-logs  or  timber,*^  into  rails  or  posts,^°  into  railroad  ties, 
staves,  fire  wood,^^  or  shingles ;  ^^  that  saw-logs  are  made  into 
boards,^^  fire  wood,^*  or  coal.^^ 

§  103.  Same  subject.  There  is  not  the  same  difficulty  under 
the  authorities  in  determining  when  the  identity  of  the  property 
is  lost  where  the  tortious  taking  and  conversion  were  fraudulent. 
In  such  a  case  it  is  well  settled  in  jSTew  York  that  the  wrong- 
doer is  not  permitted  to  acquire  property  in  the  goods  of  another 
by  any  change  wrought  in  them  by  his  labor  or  skill,  however 
great  the  change  may  be,  provided  it  can  be  proven  that  the 
improved  article  was  made  from  the  original  material.^®  The 
action  was  trover  in  which  this  doctrine  was  first  held,  and  the 


V.  Wells,  41  Pa.  29],  80  Am.  Dec. 
617;  Swift  V.  Barnum,  23  Conn. 
523. 

48  Wetherbee  v.  Green,  supra. 
See  §  1154. 

49  Pierrepont  v.  Barnard,  5  Barb. 
364;  Symes  v.  Oliver,  13  Mich.  9; 
Grant  v.  Smitli,  26  id.  201;  Gates 
V.  Rifle  B.  Co.,  70  id.  309;  Arpin  v. 
Biirch,  68  Wis.  619. 

50  Snyder  v.  Vaux,  2  Rawle,  423, 
21  Am.  Dec.  466;  Millar  v.  Hum- 
phries, 2  A.  K.  Marsh.  446. 

51  Smith  V.  Gonder,  22  Ga.  353; 
Heard  v.  James,  49  Miss.  236; 
Brewer  v.  Fleming,  51  Pa.  102; 
Moody  v.  Whitney,  34  Me.  563. 

52  Betts  V.  Lee,  5  Johns.  348 ; 
Chandler  v.  Edson,  9   id.  362. 

53  Brown     v.     Sax,     7     Cow.     95; 


Baker    v.    Wheeler,    8    Wond.    505; 
Davis  v.  Easley,  13  HI.  192. 

54  Eastman  v.  Harris,  4  La.  Ann. 
193. 

55  Riddle  v.  Driver,  12  Ala.  590; 
Curtis  v.  Groat,  6  Johns.  168. 

In  Silsbury  v.  ^IcCoon  and 
Wetherbee  v.  Green,  supra,  the 
means  of  identifying  improved  prop- 
erty is  discussed.  See  also  Herdic 
V.  Young,  55  Pa.  176,  93  Am.  Dec. 
739:  Single  v.  Schneider,  30  Wis. 
570. 

56  Silsbury  v.  McCoon,  supra ; 
Baker  v.  Hart,  52  Hun,  363;  Guck- 
enheimer  v.  Angevine,  81  N.  Y.  394. 
See  Silsbury  v.  McCoon,  6  Hill,  42.5, 
41  Am.  Dec.  753,  4  Denio,  3.32; 
Hvdc  v.  Cookson,  21  Barb.  92. 


364 


SU'THERLAND    ON    DAMAGES. 


[§  103 


value  of  whisky  was  recovered  by  the  owner  of  the  corn  from 
which  it  was  made.  There  is  a  general  inclination  elsewhere  to 
find  some  middle  ground  upon  which  the  rights  of  the  owner 
may  be  maintained  and  yet  moderate  the  unjust  conse- 
quences of  even  a  wilful  trespass  more  nearly  to  the  standard 
of  comj)ensation,  especially  where  there  is  not  an  actual  taking 
of  the  property  and  the  owner  by  choice  or  otherwise  seeks  to 
recover  the  value  in  damages."  And  if  an  actual  retaking  is 
impossible  or  does  not  take  place  and  the  question  is  one  of  mere 
compensation  for  the  })roperty  the  law  is  not  quite  settled  that 
the  improved  value  may  be  recovered  even  of  the  party  who 
intentionally  converted  it.^^  In  such  actions  the  question  whether 
the  property  has  so  changed  as  to  be  no  longer  capable  of  identi- 
fication is  not  important.  The  wrong-doer  who  has  taken  and 
converted  another's  property  through  mistake  is  chargeable 
with  its  value  at  the  time  of  conversion ;  and  the  wilful  wrong- 
doer by  that  standard,  or  the  value  at  same  intermediate  point,  or 
the  final  value  of  the  improved  article,  according  to  the  views  of 
the  particular  court.^^  The  liability  of  the  innocent  purchaser 
of  property  from  a  wilful  trespasser  whose  labor  has  improved 
it  is  the  value  of  the  property  when  it  was  taken  from  the  orig- 
inal owner.     The  defendant  in  such  a  case  is  not  the  proper 


57  See  Single  v.  Schneider,  24 
Wis.  301,  30  Wis.  570;  Weymouth 
V.  Chicago  &  N.  R.  Co.,  17  W'is. 
550,  84  Am.  Dec.  763;  Silsbury  v. 
McCoon,  4  Denio  332;  Herdic  v. 
Young,  supra. 

58  Id.;  Moody  v.  Whitney,  34  Me. 
563;  Reid  v.  Fairbanks,  14  C.  B. 
729;  Cushing  v.  Longfellow,  26  Me. 
306. 

If  the  owner  brings  trespass  or 
trover  instead  of  replevin  he  elects 
to  take  damages  according  to  the 
measure  awarded  in  such  actions — 
a  just  and  fair  compensation  for 
his  property  as  it  was  before  the 
trespass.  Gates  v.  Rifle  B.  Co.,  70 
Mich.  309. 

59  Martin  v.  Porter,  5  M.  &  W. 
351  ;  Morgan  v.  Powell,  3  Q.  B.  278; 


Llynvi  Co.  v.  Brogden,  L.  R.  11 
Eq.  188;  Maye  v.  Tappan,  23  Cal. 
306:  Goller  v.  Fett,  30  Cal.  481; 
Nesbitt  V.  St.  Paul  L.  Co.,  21  Minn. 
491;  Foote  v.  Merrill,  54  N.  H. 
490,  20  Am.  Rep.  151 ;  Adams  v. 
Blodgett,  47  N.  H.  219;  Dresser  Mfg. 
Co.  V.  Waterston,  3  Mete.  (Mass.) 
0;  Stockbridge  I.  Co.  v.  Cone  I. 
Works,  102  Mass.  80;  Winchester 
v.  Craig,  33  Mich.  205;  Bennett  v. 
Thompson,  13  Ired.  146;  Smith  v. 
Gonder,  22  Ga.  353;  Wood  v.  More- 
wood,  3  Q.  B.  440,  note;  Hyde 
V.  Cookson,  21  Barb.  92;  Heard 
V.  James,  49  Miss.  239;  Riddle  v. 
Driver,  12  Ala.  590;  Greeley  v. 
Stilson,  27  Mich.  153.  See  Isle 
Royale  M.  C.  Co.  v.  Horton,  37 
Mich.  332. 


§    103]  COMPEXSATION.  3G5 

subject  of  pimishmeiit ;  the  ])laiiitiff's  loss  is  no  greater  tlian  it 
would  have  been  if  the  trespasser  had  been  free  from  intentional 
wrong;  nor  is  the  defendant's  culpability  increased  thereby.^" 
To  allow  the  owner  of  the  original  materials  to  recover  the  value 
increased  by  the  subsequent  labor  of  the  wrong-doer  is  to  antag- 
onize two  fundamental  rights ;  tlu^  right  of  ])roperty,  and  the 
right  to  due  compensation  for  injury.  The  law  gives  its  sanction 
to  the  former  l)y  allowing  the  owner  to  retake  his  ])roperty  by 
his  own  act  or  by  the  legal  process  of  replevin  if  it  still  exists 
and  can  be  found,  C^ertain  changes  made  in  it  or  its  annexation 
to  something  else  which  the  law  regards  as  the  principal,  as  to 
certain  wrong-doers  at  least,  have  been  accepted  as  putting  an 
end  to  the  owner's  right  to  retake  the  property  though  it  may 
in  fact  exist,  or  what  was  obtained  from  or  for  it  is  still  in  the 
hands  of  the  wrong-doer  and  ascertainable  by  testimony.  There 
is  no  more  necessity  for  severe  consequences  to  discourage  tres- 
])ass  or  tortious  conversion  of  property  which  the  wrong-doer 
im])roves  than  where  he  destroys  it  or  retains  it  in  the  same 
condition.  The  owner  is  entitled  to  no  greater  measure  of  re])- 
aration  in  the  one  case  than  in  the  other.  The  wrong-doer  is  no 
more  culpable  when  he  improves  the  property  than  when  he 
does  not.  Therefore,  since  there  is  a  recognized  though  in- 
definite limit  to  the  owner's  right  to  reclaim  his  property  with 

60  Railroad    Co.    v.    Hutchins,    37  der  a   hotia  fide   belief  of  riglit  tlm 

Ohio  St.  282,  32  id.  571.  damages  are  the  fair   value  of  tlie 

And  if  he  purchases  part  only  of  mineral    as    if    the    mine    had    been 

the  property  converted  his  liability  purchased.      Wood   v.   ISIorcwood,    3 

is  limited  to  the  value  of  such  part.  Q.   B.   440,  note;    Hilton  v.   Wood.s, 

Moody  V.  Whitney,  34  Me.  563.  L.  R.  4  Eq.  433;   Forsyth  v.  Wells, 

WHiere  minerals  are  mined  fraudu-  4]    p^.   291     80   Am.   Dec.   017.     In 

lently  the  trespasser    is    liable    for  ^^  ^^^^^^   between  tenants   in   com- 

their   value   after   they   are   severed  ^^^^^^  plaintifT  being  out  of,  and  do- 

from  the  earth  without  any  deduc-       c      1     ^   •  •        ai       i 

■'  fendant  in,  possession,  the  damages 

tion     for     the     expense    of    mining.  .  ,  .  ,,11 

^  "  for    working   an    opened    and    (lev<'I- 

Martin  v.  Porter,   5   M.  &   W.   351;  ,       .       °        „    '       .  ,    .   ,  , 

._     ,        ^    ^  ^         r.^  T,,i    1     -^  oped   mine  are  tlie   fair   marketaljle 

Barton  C.  Co.  v.  Cox,  39  Md.  1,17         ' 

Am.  Rep.  525;    Coleman's   App.,   02  ^'^'"^^  °^  ^^^^  "^'"^'"''^^   '"   I'l'^^'^^the 

Pa.  252;   Ege  v.  Kille,  84  id.  333;  '"0-^«lt>'  ^"«^  ^^r  the  privilege  of  re- 

the  last  two  cases  are  distinguished  moving    and    manufacturing    it    in 

and   limited   in    Fulmer's   App.    128  view  of  all  the  special  oircumatan- 

id.   24,   15    Am.    St.    662.       If    the  ces.     Fulmer's   App.,   supro ;   Xeel'a 

mining  is  done  inadvertently  or  un-  App.,  3  Penny.   (Pa.)   00. 


366  SUTHERLAND  ON  DAMAGES.  [§  103 

any  accession,  and  this  limit  is  short  of  the  ultimate  point  to 
which  testimony  wonld  enable  him  to  trace  it,  there  is  no  more 
violation  of  the  fundamental  right  of  property  by  fixing  that 
limit  at  the  point  of  the  first  change  than  at  any  subsequent  one. 
But  when  the  redress  which  is  given  to  the  owner  in  his  suit 
is  the  value  or  damages  to  compensate  him  for  the  wrong  of 
depriving  him  of  his  property  the  question  is  not  one  of  allow- 
ing him  to  retake  it,  but  solely  of  compensation  for  the  loss  of 
it.  What  is  due  compensation  in  such  a  case  is  to  be  ascertained 
on  the  same  principles  as  in  all  other  cases:  the  injured  party 
is  to  be  made  good  for  the  loss  he  has  sustained.  If  his  corn 
has  been  taken  he  is  to  be  compensated  for  corn ;  he  is  no  more 
entitled  to  have  its  value  estimated  by  the  amount  of  whisky 
which  has  been,  than  by  the  amount  of  whisky  that  can  be,  made 
from  it,  with  no  deduction  for  the  manufacture,  or  than  the 
amount  the  defendant  has  subsequently  sold  it  for  in  conse- 
quence of  the  general  appreciation  of  the  commodity." 

§  104.  Distinctions  in  the  matter  of  proof.  In  cases  of  tort 
the  principles  governing  the  measurement  of  compensation  are 
not,  as  a  general  thing,  diiferent  from  those  which  apply  in 
actions  upon  contract  if  the  tort  be  not  wilful ;  there  are,  as  we 
have  just  seen,  some  exceptions;  and  in  certain  cases  within 
the  influence  of  considerations  mentioned  in  a  preceding  sec- 
tion,^^  where  the  injury  is  of  such  a  nature  or  committed  under 
such  circumstances  that  the  damages,  or  some  part  of  them, 
cannot  be  ascertained  by  any  definite  or  certain  proof  the  investi- 
gation is  conducted  by  such  rules  in  respect  to  the  quantity, 
quality  and  burden  of  proof  that  the  injured  party  may  suffer 
no  irreparable  loss  from  the  stealth,  secrecy  or  complexity  of 
the  wrong.  The  purpose  of  the  law  is  thus  facilitated.  Lord 
Brougham  interrogatively  expressed  it:^^  "When  did  a  court 
of  justice,  whether  administered  according  to  the  rules  of  equity 
or  law^,  ever  listen  to  a  wrong-doer's  argument  to  stay  the  arm  of 

61  Railroad    Co.    v.    Hutcliins,    37  62  §  lOO.     See  Chicago,  etc.  R.  Co. 

Ohio  St.  282,  294.     See  the  opinion  v.   Word    (Tex.   Civ.   App.),   158   S. 

of   Bronson,   C.   J.,   in  the   reversed  W.    501. 

case  in  New  York   ( Silsbury  v.  Mc-  63  in  Docker  v.   Somes,  2  Myl.  & 

Coon,  4  Denio  336,  337).  K.  674. 


§     105]  COMPENSATION.  3G7 

justice  groimdcd  on  the  stops  lie  liiiiis(>lf  linil  siH-fessfully 
taken  to  prevent  liis  inicpiity  from  hein^'  traocd  '.  Katlior,  lot 
me  ask,  when  did  any  wrong-doer  over  yet  possess  the  liardiliood 

to  plead  in  aid  of  his  escape  from  jnstico  the  oxtro dillicultios 

he  had  contrived  to  throw  in  the  way  of  pursuit  and  detection, 
saying,  you  had  better  not  make  the  attempt,  for  you  will  find 
I  have  made  the  search  very  troublesome.  The  answer  is,  'the 
court  will  try.'  "  The  intrinsic  nature  of  many  wrongs  j)re- 
cludes  any  estimate  by  witnesses  of  damages  upon  the  items 
which  a  jury  may  consider,  such  as  bodily  or  mental  pain,  dis- 
figurement or  impaired  faculties ;  but  the  jury  in  many  cases 
involving  elements  of  this  nature  may  be  aided  by  proof  of 
extrinsic  facts  showing  the  status  of  the  injured  party.  Either 
a  tort  or  a  breach  of  contract  which  destroys  or  injures  anything 
of  a  lawful  nature  belonging  to  another  is  a  wrong  and  injury 
for  which,  in  some  reasonable  and  practicable  manner,  the  law 
will  enable  the  injured  party  to  measure  and  recover  adequate 
compensation.  Any  such  act  which  directly  and  injuriously 
affects  an  established  business,  as  by  destruction  of  the  build- 
ing in  which  it  is  conducted,  obstructing  the  approaches  neces- 
sary to  it,  fraudulently  diverting  custom  where  there  was  a  duty 
to  maintain  the  good  will,  by  enticing  away  servants,  or  by 
slander  or  the  breach  of  any  agreement  of  which  the  profits  of 
a  business  are  the  consideration  or  inducement  may  require  the 
estimate  of  a  very  uncertain  loss;  but  the  party  whose  miscon- 
duct or  default  has  necessitated  the  inquiry  cannot  object  to  it 
on  the  ground  of  the  uncertainty,  though  a  court  will,  in  such 
a  case,  proceed  with  caution  and  will  not  award  damages  upon 
mere  conjecture.^* 

§  105.  Value  of  property.  The  value  of  property  constitutes 
the  measure  or  an  element  of  damages  in  a  great  variety  of  cases 
both  of  tort  and  of  contract,  and  where  there  are  no  such  aggra- 
vations as  call  for  or  justify  exemplary  damages,  in  actions  in 
which  such  damages  are  recoverable,  the  value  is  ascertained 
and  adopted  as  the  measure  of  compensation  for  being  deprived 
of  the  property  the  same  in  actions  of  tort  as  in  those  upon  con- 
tract.    In  both  cases  the  value  is  the  legal  and  fixed  measure 

64  Shoemaker  v.  Acker,  116  Cal.  239. 


368 


SUTHERLAND    ON    DAMAGES. 


[§   105 


of  damages  and  there  is  no  discretion  with  the  jury.  It  is  so 
between  vendor  and  vendee  on  the  failure  of  either  to  fulfill  a 
contract  of  sale  and  purchase;  between  employer  and  employee 
on  a  contract  for  the  manufacture  of  specific  articles;  where 
there  is  a  departure  from  instructions  by  an  agent  or  a  loss 
through  his  negligence  or  misconduct,  or  that  of  a  bailee  or 
trustee,^^  as  well  as  where  there  is  a  tortious  taking  or  con- 
version by  one  standing  in  no  contract  relation  to  the  owner. 
And,  moreover,  the  value  is  fixed  in  each  instance  on  similar 
considerations  at  the  time  \\'hen,  by  the  defendant's  fault,  the 
loss  culminates.^®     And  a  party  who  is  entitled  to  recover  and 


65  Where  securities  have  been  di- 
verted by  a  trustee  his  liability  is 
based  on  the  assumption  that  they 
would  have  been  sold  at  the  best 
price  obtainable.  If  the  wrong  was 
done  by  one  wliose  duty  it  was  to 
deliver  them  pursuant  to  contract 
his  liability  is  measured  by  the  sell- 
ing price  of  the  securities  when  de- 
livery was  due.  McNeil  v.  Fultz, 
38  Can.  Sup.  Ct.  198. 

A  trustee  may  be  liable  at  the 
option  of  the  cestui  que  trust  for 
the  amount  lost  or  the  amount  of 
profit  made  by  the  breach.  Pro- 
prietors of  Eastern  New  Jersey  v. 
Force,  72  N.  J.  Eq.  56. 

Under  a  special  contract  to  re- 
turn property  in  as  good  condition 
as  when  it  was  received  a  bailee  may 
show  the  effect  of  repairs  made  upon 
it.  Smith  V.  Stratton,  34  Tex.  Civ. 
App.  171. 

66  Watson  V.  Lougliran,  112  Ga. 
837,  6  Am.  Neg.  Rep.  484;  Western 
Union  C.  S.  Co.  v.  Ermeling,  73 
111.  App.  394;  Sanderson  v.  Read, 
75  id.  190,  quoting  the  text;  Bank 
V.  Reese,  26  Pa.  143;  Owen  v. 
Routh,  14  C.  B.  327;  Day  v.  Per- 
kins, 2  Sandf.  Ch.  359;  Shaw  v. 
Holland,  15  M.  &  W.  136;  Rand  v. 
White  Mts.  R.  Co.,  40  N.  H.  79; 
Pinkerton  v.  Manchester    &    L.    R. 


Co.,  42  N.  H.  424;  Bull  v.  Douglass, 
4  Munf.  303,  6  Am.  Dec.  518;  End- 
ers  v.  Board  of  Public  Works,  1 
Gratt.  364;  Dana  v.  Fiedler,  12  N. 
Y.  48,  62  Am.  Dec.  130;  Clement  & 
H.  Mfg.  Co.  V.  Meserole,  107  Mass. 
362;  Danforth  v.  Walker,  37  Vt. 
239;  Girard  v.  Taggart,  5  S.  &  R. 
19,  539,  9  Am.  Dec.  327;  Gan- 
son  V.  ]\Iadigan,  13  Wis.  67 ;  Hale 
V.  Trout,  35  Cal.  229;  Springer 
V.  Berry,  47  Me.  330;  Dustan  v.  Mc- 
Andrew,  44  N.  Y.  72;  Marshall  v. 
Piles,  3  Bush,  249;  Camp  v.  Ham- 
lin, 55  Ga.  259;  Bozeman  v.  Rose, 
40  Ala.  212;  Grand  Tower  Co.  v. 
Phillips,  23  Wall.  471,  23  L.  ed. 
71;  Underbill  v.  Gaff,  48  111.  198; 
Bicknall  v.  Waterman,  5  R.  I.  43; 
West  v.  Pritchard,  19  Conn.  212; 
Gregg  V.  Fitzhugh,  30  Tex.  127; 
Busli  V.  Holmes,  53  Me.  417;  Rider 
V.  Kelley,  32  Vt.  268,  76  Am.  Dec. 
176;  Kribs  v.  Jones,  44  Md.  396; 
:\roorehcad  v.  Hyde,  38  Iowa,  382; 
Whitesett  v.  Forehand,  79  N.  C. 
230;  Bell  v.  Cunningham,  3  Pet. 
69;  Farwell  v.  Price,  30  Mo.  587; 
Schmertz  v.  Dwyer,  53  Pa.  335; 
Heinemann  v.  Heard,  50  N.  Y.  27 ; 
Hancock  v.  Gomez,  id.  668;  Parsons 
V.  Martin,  11  Gray,  111;  Scott  v. 
Rogers,  31  N.  Y.  676;  Stearine,  etc. 
Co.    V.    Heintzmann,    17    C.    B.    (N. 


§   105] 


COMPENSATIOX. 


369 


must  accept  its  value  in  place  of  the  property  itself  should 
always  be  allowed  interest  on  that  value  from  the  date  at  which 
the  property  was  lost  or  destroyed  or  converted.  Whether  he 
recovers  the  value  for  the  failure  of  a  vendor  or  bailee  to  de- 
liver, or  by  reason  of  the  destruction,  asportation  or  conversion 
of  the  property  by  a  wrong-doer  interest  is  as  necessary  to 
complete  indemnity  as  the  value  itself.^'  The  injured  partv 
ought  to  be  put  in  the  same  condition,  so  far  as  money  can  do  it, 
in  which  he  would  have  been  if  the  contract  had  been  fulfilled 
or  the  tort  had  not  been  committed,  or  the  loss  had  been  in- 
stantly repaired  when  compensation  was  due.^* 


S.)  56;  Hutchings  v.  Ladd,  16  Mich. 
494;  Suj'dam  v.  Jenkins,  3  Sandf. 
641 ;  Kennedy  v.  Whitwoll,  4  Picl\. 
466;  Adams  v.  Sullivan,  100  Ind. 
8;  Hartgrove  v.  Southern  C.  0.  Co., 
72  Ark.  31,  citing  the  text;  In  re 
Lake,  [1903]  1  K.  B.  439.  See  §§ 
45,  1109  for  an  exception  in  case 
of  conversion. 

In  Ingram  v.  Rankin,  47  Wis. 
406,  32  Am.  Rep.  762,  the  court  say: 
"The  rule  fixing  the  measure  of 
damages  in  actions  for  breaches  of 
contract  for  the  delivery  of  cliattels, 
and  in  all  actions  for  the  wrongful 
and  unlawful  taking  of  chattels, 
whether  such  as  would  formerlj' 
have  been  denominated  trespass  dc 
bonis  or  trover,  at  the  value  of  the 
chattels  at  the  time  when  delivery 
ought  to  have  been  made,  or  at  the 
taking  or  conversion,  with  interest, 
is  certainly  founded  upon  principle. 
It  harmonizes  with  the  rule  whicli 
restricts  the  plaintifT  to  compensa- 
tion for  his  loss  and  is  as  just  and 
equitable  as  any  other  general  rule 
which  the  courts  have  been  able  to 
prescribe,  and  has  greatly  the  ad- 
Suth.  Dam.  Vol.  I.— 24. 


vantage   of   certainty   over   all   otli- 
ers." 

A  director  and  subscriber  fcjr 
sliares  who  joins  with  other  direct- 
ors in  voting  that  stock  but  partial- 
ly paid  for  is  fully  paid  is  liable 
for  the  market  value  of  the  sliares 
allotted  him  at  the  date  they  were 
allotted.  In  re  Manes  T.  Co.,  IH 
Ont.  L.  R.  572   (court  of  appeal). 

67  Keith  V.  Booth  Fisheries  Co., 
—  Del.  Super.  Ct.  — ,  87  Atl.  715; 
Hartgrove  v.  Southern  C.  0.  Co., 
supra;  Young  v.  Extension  D.  Co., 
13  Idaho  174,  citing  the  text;  iJoiso 
Valley  C.  Co.  v.  Kroeger,  17  id. 
384,  28  L.R.A.(N.S.)  968;  Livesley 
V.  Johnston,  4S  Ore.  40,  citing  tlie 
text;  Watson  v.  Loughran,  112  (Ja. 
837,  6  Am.  Neg.  Rep.  484;  Sander- 
son V.  Read,  75  111.  App.  190,  quot- 
ing tlie  text;  Chapman  v.  Chicago, 
etc.  R.  Co.,  26  Wis.  295,  7  Am.  Re|). 
81  ;  McCormick  v.  Pennsylvania 
Cent.  n.  Co.,  49  N.  Y.  303;  Ilamer 
V.  Hathaway,  33  Cal.  117;  Arpin 
V.  Burch,  68  Wis.  619. 

68  Suydam  v.  Jenkins,  3  Sandf. 
620. 


370  SUTIIEKLAND    ON    DAMAGES. 

CHAPTER  IV. 

ENTIRETY  OF  CAUSES  OF  ACTION  AND  DAMAGES. 

Section  1. 

general  principles. 

§   106.  Cause  of  action  not  divisible. 

107.  Present  and  future  damages. 

108.  What  is  an  entire  demand? 

109.  Entire  demand  may  be  severed. 

110.  Contracts   to   do   several   things   successively   or   one   thing   contin- 

uously. 

111.  Items  of  account. 

112.  Continuing  obligations. 

113.  Damages  accruing  subsequent  to  tlie  action. 
114-116.  Damage  to  real  property. 

117.  Contracts  of  indemnity. 

118.  Damage  to  property  and  injury  to  person,  and  injury  to  the  person 

and  damage  to  reputation  by  same  act. 

119.  What  is  not  a  double  remedy. 

120.  Prospective  damages. 

121.  Certainty  of  jjroof  of  future  damages. 

122.  Same  subject;   action  for  enticing  away  apprentice,  servant  or  son, 

or  procuring  discharge  of  servant. 

123.  Future  damages  for  personal  injuries. 

124.  Only  present  worth  of  future  damages  given. 

125.  Continuous  breach   of  contract  or   infraction   of   rights  not  an  en- 

tirety. 

126.  Continuance  of  wrong  not  presumed. 

127.  Necessity  and  advantage  of  successive  actions. 

Section  2. 
parties  to  sue  and  be  sued. 

128.  Damages  to  parties  jointly  injured  entire. 

129.  Actions  under  statutes. 

130.  Must  be  recovered  by  person  in  whom  legal    interest  is  vested. 

131.  Not  joint  when  contract  apportions  the  legal  interests. 

132.  Implied  assumpsit  follows  the  consideration. 

133.  Effect  of  release  by  or   death  of  one  of  several  entitled   to   entire 

damages. 

134.  Misjoinder  of  plaintiffs,  when  a  fatal  objection. 

135.  Joinder  of  defendants;  effect  of  non-joinder  and  misjoinder. 

136.  How  joint  liability  extinguished  or  severed. 


106] 


ENTIRETY    OF    DAMAGES. 


371 


137.  Prineiples  on  which  joint  riglit  or  liability  for  tort  dctcriiiincd. 

138.  Tortious  act  not  an  entirety  as  to  parties  injured. 

139.  General  and  special  owners. 

140.  Joint  and  several  liability   for  torts. 

141.  Same   subject. 

142.  Same  subject;   civil  damage  statutes;   acts  of  menib.Ts  oi'   partiier- 

ship. 

Sectio.x  1. 
general  principles 

§  106.  Cause  of  action  not  divisible.  A  cause  of  action  and 
the  damages  recoverable  therefor  are  an  entirety.  Tlu;  i)arty 
injured  must  be  plaintiff,  and  must  demand  all  the  damages 
he  has  suffered  or  which  he  will  suffer  from  the  injury,  griev- 
ance or  cause  of  action  of  which  he  complains.  He  cannot  split 
a  cause  of  action  and  bring  successive  suits  for  parts  because 
he  may  not  be  able  at  first  to  prove  all  the  items  of  the  demand, 
or  because  all  the  damages  have  not  been  suffered.  If  he  at- 
tempt to  do  so  a  recovery  in  the  first  suit,  though  for  less  than 
his  whole  demand,  will  be  a  bar  to  a  second  action.^     The  fail- 


1  Willingham  v.  Buckeye  Cotton 
Oil  Co.,  13  Ga.  App.  253;  McKnight 
V.  Minneapolis  St.  Ry.  Co.,  127 
Minn.  207 ;  Lynch  v.  St.  Louis,  K.  C. 
&  C.  Ey.  Co.,  180  Mo.  App.  169; 
Atkins  V.  Trowbridge,  162  App.  Div. 
(N.  Y.)  161;  Nixon  v.  Fidelity  &  D. 
Co.,  80  C.  C.  A.  336,  150  Fed.  574; 
Watkins  v.  American  Nat.  Bank,  134 
Fed.  36,  67  C.  C.  A.  110;  Abbott  v. 
76  L.  &  W.  Co.,  161  Cal.  42,  citing 
the  text;  Doherty  v.  Schipper,  250 
111.  128,  34  L.R.A.(N.S.)  557;  Chi- 
cago V.  Duffy,  117  111.  App. 
261 ;  Jackson  v.  Morgan,  167  Ind. 
528;  James  v.  Parsons,  70  Kan. 
156;  Burdge  v.  Kelchner,  66  Kan. 
642;  McGaw  v.  O'Beirne,  126  La. 
583;  Whitcomb  v.  Waterville,  99  Me. 
75;  Sibley  v.  Nason,  196  Mass.  125, 
12  L.R.A.(N.S.)  1173,  124  Am.  St. 
520;  Almquist  v.  Wilcox,  115  Minn. 
37;  Bunker  v.  Hanson,  99  Minn.  426; 
Myrick  v.  Purcell,  99  Minn.  457; 
Yazoo,  etc.  R.  Co.  v.  Payne,  92  Miss. 
126;    Birchler  v.  Boemler,  204   Mo. 


554;  Vanloon  v.  Vanlooii,  1,')!)  Mo. 
App.  255 ;  Kennedy  v.  New  York, 
196  N.  Y.  19,  25  L.R.A.(N.S.)  847; 
Painter  v.  Norfolk  &  W.  R.  Co.,  144 
N.  C.  436;  Porter  v.  Scranton  City, 
36  Pa.  Super.  218;  McClure  v. 
Campbell,  42  Wash.  252;  Flinn  v. 
Keefe,  37  Nova  Scotia,  67;  Binns  v. 
Vitagraph  Co.,  147  App.  Div.  (N. 
Y. )  783;  (violation  of  civil  rights 
and  libel)  ;  Pierce  v.  Tennessee  C,  I. 
&  R.  Co.,  173  U.  S.  1,  5  Am.  Neg. 
Rep.  747,  43  L.  ed.  591;  Trabing  v. 
California  N.  &  I.  Co.,  121  Cal.  137; 
Sloane  v.  Southern  California  R. 
Co.,  Ill  Cal.  685,  8  Am.  Neg. 
Cas.  76,  32  L.R.A.  193:  Kapisch- 
ki  V.  Koch,  180  111.  44;  Tet^l  v. 
Miles,  51  Neb.  542;  Wadleigh  v. 
Buckingham,  SO  Wis.  230;  Wells 
V.  National  L.  Ass'n,  53  L.R..A. 
33,  39  C.  C.  A.  476,  99  Fed. 
222;  Alie  v.  Nadeau,  93  Me.  282, 
74  Am.  St.  346;  Reynolds  v.  Jones, 
63  Ark.  259;  Thisler  v.  Miller,  53 
Kan.  515,  42  Am.  St.  302;  Cockley 


3Y2 


SUTHERLAND    ON    DAMAGES. 


[§  lOG 


ure  of  a  party  to  recover  because  he  has  mistaken  his  remedy 
does  not  prechide  him  from  asserting  his  rights  in  a  proper 
proceeding.     Thus,  the  failure  of  a  mortgagee  of  chattels  to 


V.  Brucker,  54  Ohio  St.  214;  Porter 
V.  Mack,  50  W.  Va.  581,  592;  North 
British  &  M.  Ins.  Co.  v.  Cohn,  17 
Ohio  C.  C.  185;  State  v.  Morrison, 
60  Miss.  74;  Walton  v.  Ruggles,  180 
Mass.  24;  Deering  v.  Johnson,  86 
Minn.  172;  Macdougall  v.  Knight, 
25  Q.  B.  Div.  1 ;  Commerce  Exch. 
Nat.  Bank  v.  Blye,  123  N.  Y.  132; 
Bracken  v.  Atlantic  T.  Co.,  167  N. 
Y.  510;  Baird  v.  United  States,  96 
U.  S.  430,  34  L.  ed.  703;  Zirker  v. 
Hughes,  77  Cal.  235;  Colvin  v.  Cor- 
win,  15  Wend.  557;  Wagner  v.  Ja- 
coby,  26  Mo.  532;  Smith  v.  Jones,  15 
Johns.  229;  Butler  v.  Wright,  2 
Wend.  369;  Cornell  v.  Cook,  7  Cow. 
310;  Ross  V.  Weber,  26  111.  221; 
Logan  V.  Caffrey,  30  Pa.  196 ;  Mason 
V.  Alabama  I.  Co.,  73  Ala.  270; 
Howard  College  v.  Turner,  71  id. 
429,  46  Am.  Rep.  326;  Richardson 
V.  Eagle  Mach.  Works,  78  Ind.  422, 
41  Am.  Rep.  584;  North  Vernon  v. 
Voegler,  103  Ind.  314,  quoting  the 
text;  Wichita  &  W.  R.  Co.  v.  Beebe, 
39  Kan.  465;  Van  Meter  v.  Crews, 
(Ky.)    148  S.  W.  40. 

A  statute  providing  that  "succes- 
sive actions  may  be  maintained  up- 
on the  contract  or  transaction  when- 
ever, after  the  former  action,  a  new 
cause  of  action  has  arisen  thereon," 
does  not  apply  to  actions  for  addi- 
tional damages  happening  or  dis- 
covered because  of  some  particular 
breach  of  a  contract.  Russell  v. 
Polk  County  A.  Co.,  87  Iowa,  233, 
43  Am.  St.  381. 

Various  tests  have  been  suggested 
for  determining  whether  the  judg- 
ment recovered  in  one  action  is  a  bar 
to  a  subsequent  action.  "The  prin- 
cipal consideration  is  whether  it  be 
precisely  the  same  cause  of  action 
in  both,  appearing  by  proper  aver- 


ments in  a  plea,  or  by  proper  facts 
stated  in  a  special  verdict  or  a  spe- 
cial case.  And  one  great  criterion 
of  this  identity  is  that  the  same 
evidence  will  maintain  both  ac- 
tions." Kitchen  v.  Campbell,  2  W. 
Bl.  827;  Martin  v.  Kennedy,  2  B.  & 
P.  69,  71;  Brunsden  v.  Humphrey, 
14  Q.  B.  Div.  141. 

"The  question  is  not  whetlier  the 
sum  demanded  might  have  been  re- 
covered in  the  former  action,  the 
only  inquiry  is  whether  the  same 
cause  of  action  has 'been  litigated 
and  considered  in  the  former  ac- 
tion."   Seddon  v.  Tutop,  6  T.  R.  607, 

"Though  a  declaration  contain 
counts  under  which  the  plaintiff's 
whole  claim  might  have  been  recov- 
ered, yet  if  no  attempt  was  made  to 
give  evidence  upon  some  of  the 
claims  they  might  be  recovered  in 
another  action."  Thorpe  v.  Cooper, 
5  Ring.  129. 

"It  is  evident,  therefore,  that  the 
application  of  the  rule  depends,  not 
upon  any  technical  consideration  of 
the  identity  of  the  forms  of  action, 
but  upon  matter  of  substance." 
Brimsden  v.  Humphrey,  supra. 

"It  is  not  a  test  of  the  right  of  a 
plaintiff  to  maintain  separate  ac- 
tions that  all  the  claims  might  have 
been  prosecuted  in  a  single  action." 
Perry  v.  Dickerson,  85  N.  Y.  345, 
350,  39  Am.  Rep.  663. 

If  different  allegations  are  re- 
quired in  the  pleading  and  different 
evidence  on  the  hearing,  the  cause 
of  action  is  not  split.  Stark  v. 
Starr,  94  U.  S.  477,  485,  24  L.  ed. 
276,  278. 

But  as  the  rule  against  splitting 
causes  of  action  exists  merely  for 
the  defendant's  benefit  he  waives  all 
objections  to  such  splitting  by  fail- 


§    106]  ENTIRETY    OF    DAMAGES.  373 

recover  them  by  replevin  from  an  officer  In-  wliom  they  were 
seized  imder  execution,  becanse  the  law  provided  a  different 
remedy,  does  not  bar  a  proper  proceeding.^  Nor  is  a  judg- 
ment for  the  defendant  in  replevin,  becanse  of  the  statute  of 
limitations,  a  bar  to  an  action  in  trover  not  affected  by  that 
statute.^  Where  a  sheriff'  recovers  the  value  of  goods  taken 
from  him  in  replevin,  because  it  was  not  the  proper  remedy, 
the  owner  may  recover  their  value  in  trover,*  W  one  fails  to 
replevy  a  chattel  because  the  defendant  is  only  a  tenant  in 
common  that  does  not  affect  his  title.^  A  judguient  against 
the  plaintiff"  in  replevin,  rendered  because  he  failed  to  pi-ove  a 
demand,  does  not  bar  a  subsequent  action  of  that  kind.^  The 
obtaining  of  a  judgment  for  the  recovery  of  personal  property 
and  damages  for  its  wrongful  detention  up  to  the  verdict  does 
not  prevent  the  bringing  of  another  action  for  further  deten- 
tion pending  an  unsuccessful  appeal.''^  One  whose  property  has 
been  wrongfully  levied  upon,  as  the  property  of  another,  is  not, 
by  the  prosecution  to  judgment  of  an  action  to  determine  his 
right  of  property  and  acceptance  of  the  benefits  thereof,  pre- 
cluded from  thereafter  bringing  an  action  against  the  officer 
for  damages  sustained  on  account  of  the  wrongful  levy.®  The 
principle  forbidding  the  splitting  of  causes  of  action  does  not 
prevent  one  whose  property  is  taken  by  a  single  trespass  from 
maintaining  replevin  for  so  much  of  it  as  was  his,  and  trover 
for  the  remainder,  of  which  he  was  a  joint  owner,^  nor  does 
it  prevent  the  bringing  of  separate  actions  by  a  stockholder 

ure     to     demur.       National     Union  wrong    in   one  action ;    tlie  ilaniages 

Fire  Ins.  Co.  v.  Denver  &  R.  G.  R.  are  not  separable.     Harding  v.  Os- 

Co.,  44  Utah,  2G.  trander  R.  &  T.  Co.,  04  Wash.  224. 

A   single   action  may  be   brouglit  2  Conn    v.    Bernlieinier,    07    Miss, 

to  recover  for  the  same  slander  ex-  ^^^ 

pressed  to  different  persons  at  dif-  3  Johnson  v.  White,  21  Miss.  .VS4. 

ferent  times.     Fred  v.  Traylor,   llo  ,  Kittredge  v.  Holt,  58  N.  H.  101. 

^\\  "*■.  .  .     r       .     .  ^  GJaar  v.  Htfrd,  92  111.  315. 

If  injury  arises  out  of  a  tort,  as 

where  it  is  inflicted  through  negli 


6  Roberts  v.   Norris,   07   Ind.   3S0. 


,,,.,,,  7  Chestnut  v.  Sales,  49  Mont.  318, 

gence,  and  there   is   subsequently  a  _                                                                 ' 

breach  of  contract  toward  the  person  ^-  L.R.A.(N.S.)    1109. 

injured    in    failing    to    afford    him  8  Wright  v.  Cermak,  1S(i  111.  App. 

transportation   to   a   hospital   there  41. 

may   be    a   recovery    for   the   whole  9  liullniaii  v.  Knight,  'Mi  Ore.  581 


374  SUTHERLAND    ON    DAMAGES.  [§    lOG 

against  a  corporation  to  compel,  respectively,  the  transfer  of 
stock  on  its  books  and  the  acceptance  by  it  of  the  holder's  sub- 
scription to  new  stock  to  which  he  would  have  been  entitled 
to  subscribe,  as  a  holder  of  record,  had  he  been  properly  regis- 
tered,^" nor  does  it  require  a  lienor,  holding  two  coexistent  but 
separate  liens  on  the  same  property,  to  present  them  in  the  same 
suit." 

§  107.  Present  and  future  damages.  If  one  party  to  a  con- 
tract prevents  the  other  from  performing  and  thereby  earning 
wages  or  realizing  profits  the  latter  in  an  action  brought  at 
once  after  the  breach  may  recover  damages  which  will  com- 
pensate him  for  his  loss.^^  Although  by  performance  the 
benefits  of  the  contract  would  accrue  at  a  future  time,  yet,  upon 
a  breach  by  which  such  future  advantages  will  be  prevented, 
the  injured  party  may  immediately  thereafter  recover  dam- 
ages equivalent  to  the  loss,  so  far  as  he  can  prove  it.  And  to 
facilitate  the  proof  the  court  will  not  oblige  him  to  anticipate 
the  future  state  of  the  market,  but  will  give  the  plaintiff  the 
benefit  of  market  rates  at  the  time  of  the  breach.  Thus,  in  the 
leading  case  in  ]^ew  York  ^^  it  was  argued  that  inasmuch  as  the 
furnishing  of  the  marble  would  run  through  a  period  of  five 
years,  of  which  only  about  one  year  and  a  half  had  expired  at  the 
time  of  the  breach,  the  benefits  which  the  contractor  might  have 
realized  from  the  execution  of  the  contract  must  be  speculative 
and  conjectural,  the  court  and  jury  having  no  certain  data  upon 
which  to  make  the  estimate.  The  court  say :  ''Where  the  con- 
tract ...  is  broken  before  the  arrival  of  the  time  for  full 
performance  and  the  opposite  party  elects  to  consider  it  in  that 
light,  the  market  price  on  the  day  of  the  breach  is  to  govern  in 
the  assessment  of  damages.    In  other  words,  the  damages  are  to 

10  Bates  V.  United  Shoe  Machinery  118  Ga.  603;  Crowell  v.  Northwest- 
Co.,  132  C.  C.  A.  216  Fed.  140.  orn  Nat.  L.  Ins.  Co.,  99  Minn.  214; 

11  Union    Cent.    Life    Ins.    Co.    of       Martin  v.  Seaboard  A.  L.  R.,  70  S. 

Cincinnati,   Ohio,  v.   Drake,    131   C.       r^    o     n     ^  -Mt  t-  -p  ^^j. 

'  '  '  C.  8;   Parker  v.  McKannon,   /6  Vt. 

C.  A.  214  Fed.  536. 

12  Standard  0.  Co.  v.  Denton,  24 
Ky.  L.  Rep.  906,  quoting  the  text; 
Webster   v.   Casein   Co.,   206   N.   Y.  ^^  Masterton  v.  Mayor,  7  Hill,  61 
506;    Watson   v.    Columbia   M.   Co.,       71. 


96.     See  Jamison  v.  CuUom,  ]]0  La. 

781.     . 


§    108]  ENTIRETY    OF    DAM.UiKS.  375 

be  settled  and  ascertained  accordinii'  to  tlio  exist iny;  state  of  the 
market  at  the  time  the  eanse  of  action  arose  and  not  at  tlic  tiino 
fixed  for  full  performance."  ^*  l>nt  the  parties  are  entitled  to 
the  benefit  of  any  facts  transpiring  subsequently  to  the  bringing 
of  the  action  which  show  more  clearly  the  gains  prevented  by 
the  breach  of  contract  complained  of,  or  the  damages  sustained 
from  such  a  cause  of  action,  or  any  other,  the  injurious  effects 
of  which  extend  into  the  future.  This  point  will  recteive  fur- 
ther elucidation  when  we  come  to  speak  of  prospective  damages. 
§  108.  What  is  an  entire  demand?  The  reader's  attention 
is  now  directed  to  what  constitutes  an  entire  demand  or  cause 
of  action.  Whether  a  contract  be  single  and  entire  or  apportion- 
able,  if  there  is  a  total  abandonment  or  breach  by  one  party  the 
other  has  a  single  cause  of  action  upon  the  entire  contract  if  he 
think  proper  to  act  upon  the  breach  as  a  total  one;  the  better 
opinion  is  that  he  is  obliged  to  do  so.  A  party  has  a  right  to 
break  his  contract  on  condition  of  being  liable  for  the  damages 
which  will  accrue  therefrom  at  the  time  he  elects  to  do  so.  And 
it  is  the  duty  of  the  other  party  when  notified  thereof  to  exert 
himself  to  make  the  damages  as  light  as  possible.^*  What  de- 
fault a  party  may  treat  as  a  total  breach  of  a  contract  is  not  al- 
ways an  easy  question,  and  its  solution  should  be  looked  for  in 
works  upon  contracts  rather  than  damages,  for  it  depends  upon 
interpretation.  Like  most  other  questions  of  construction  it 
rests  upon  the  intention  of  the  parties  and  must  be  discovered 
in  each  case  by  considering  the  language  and  the  subject-matter 

i4\Yolcott  V.  Mount,  36  N.  J.  L.  ford  v.  Waters,  67  N.  Y.  80:   Crab- 

262,13  Am.  Rep.  438:  McAiidrews  v.  tree  v.  Hagenbaugii,  2;j  111.  233,  7!» 

Tippett,  39  N.  J.  L.  105;  Burrell  v.  Am.     Dec.     324;     James     v.     Allen 

New  York  &  S.  S.  S.  Co.,  14  Mich.  County,   44   Ohio   St.   226:    Kasteni 

34;  Roper  v.  Johnson,  L.  R.  8  C.  P.  Tennessee,   etc.   R.   Co.   v.   Slauh,    7 

167;   Frost  v.  Knight,  L.  R.  5   Ex.  Lea  307;  Litchenstein  v.  Rrook.s,  7.1 

325;    Sutherland   v.    Wyer,   67    Me.  Tex.   196;    Kahn   v.   Kahn,   24   Neb. 

64;  Dugan  v.  Anderson,  36  IMd.  567,  209.     See  McEvoy  v.  Bock,  37  :Minn. 

11  Am.  Rep.  509:   Schell  v.  Plumb,  402. 

55  N.  Y.  592;    Sibley  v.  Rider,   54  15  KalkhofT    v.    Nelson.    (10    Minn. 

Me.    463:    Fales   v.    Ilemenway,    64  284:    Parker   v.    Russell,    133   Mass. 

Me.  373:  Richmond  v.  Dubuque,  etc.  74:    Dillon    v.   Ander.^on,   43    N.   Y. 

R.    Co.,    40    Iowa,    264:    Tippin    v.  231;     llartland    v.    General    Exch. 

Ward,  5  Ore.  450;  Howard  v.  Daly,  l^ank,   14   L.  T.    (N.  S.)    863;   Will- 

61  N.  Y.  363,  19  Am.  Rep.  285;  Gif-  oughby  v.  Thomas,  24  Gratt.  522. 


376 


SUTHERLAND    ON    DAMAGES. 


[§   108 


of  the  contract.^®  If  it  is  single  and  entire,  or  to  the  extent  that 
it  is  so,  it  can  be  the  subject  of  but  one  action  against  the  de- 
faulting party  and  the  plaintiff  must  have  performed  all  preced- 
ent conditions  to  place  the  other  in  default. ^'^  After  the  re- 
nunciation of  a  continuing  agreement  by  one  of  the  parties  the 
other  may  consider  himself  absolved  from  its  obligations  and 
may  sue  for  damages;  his  recovery  will  be  based  on  what  he 
would  have  lost  by  the  continued  breach  down  to  such  time  as 
the  contract  would  be  fully  performed,  less  any  benefit  result- 
ing to  the  other  party  by  advantages  the  plaintiff  may  reason- 


16  sterling  v.  Gregory,  149  Cal. 
117;  Bamberger  v.  Burrows,  145 
Iowa,  441;  Canton  L.  Co.  v.  Liller, 
]07  Md.  146;  Ganong  v.  Brown,  88 
Miss.  53,  117  Am.  St.  731;  Clark  v. 
West,  137  App.  Div.  (N.  Y.)  23; 
Cully  V.  Isliam,  125  id.  97;  Berlin 
Mach.  Works  v.  Miller,  59  Wash. 
572. 

Demands  resting  on  contracts 
with  separate  parties,  though  the 
party  liable  for  part  of  them  has  as- 
sumed liability  for  the  others,  are 
not  entire.  Gottlieb  v.  Wolf  Co.,  75 
Md.  126. 

When  the  consideration  is  single 
and  entire  the  contract  is  so  tliough 
the  subject  of  it  consists  of  two  or 
more  distinct  and  independent 
items.  Cockley  v.  Brucker,  54  Ohio 
St.  214;  Miner  v.  Bradley,  22  Pick. 
457 :  Fish  v..  Folley,  6  Hill,  54. 

l7Menihan  Co.  v.  Hopkins,  129 
Tenn.  24;  New  York  Nat.  Exch. 
Bank  v.  Reed,  232  111.  123;  Hancock 
V.  White  Hall  T.  W.  Co.,  102  Va. 
239,  citing  the  text;  Shinn  v.  Bo- 
dine,  60  Pa.  182,  100  Am.  Dec.  560; 
Withers  v.  Reynolds,  2  B.  &  Ad. 
882;  Shaw  v.  Turnpike  Co.,  2  P.  & 
W.  454;  Davis  v.  Maxwell,  12  Mete. 
(Mass.)  286;  Harris  v.  Ligget,  1 
W.  &  S.  301:  Hopf  V.  Meyers,  42 
Barb.  270 ;  Crips  v.  Talvande,  4  Mc- 
Cord  20;  Herriter  v.  Porter,  23  Cal. 
385 ;  Brown  v.  Smith,  12  Cush.  366 ; 


Messick  v.  Dawson,  2  Harr.  50 ;  Fol- 
som   V.    Clemence,    119    Mass.    473; 
Brannenburg  v.  Indianapolis,  etc.  R. 
Co.,  13  Ind.  103,  74  Am.  Dec.  250; 
Hutchinson  v.  ^^■etmo^e,  2  Cal.  310, 
56  Am.  Dec.  327;   Camp  v.  Morgan, 
21   111.  255;    Morgan  v.   McKee,   77 
Pa.  228;  Casselberry  v.  Forquer,  27 
111.   170;    Larkin   v.   Buck,   11   Ohio 
St.  561;  Hall  V.  Clagett,  2  :\ld.  Ch. 
151 ;  White  v.  Brown,  2  Jones,  403 
Wagner  v.  Jacoby,  26  Mo.  532;  Wal 
ter    V.    Richardson,    11    Rich.    466 
Quigley   v.    De   Haas,    82   Pa.   267 
Sweeny  v.  Daugherty,  23  Iowa,  291 
Stevens  v.  Lockwood,  13  Wend.  644 
Biakeney^  v.  Ferguson,  18  Ark.  347 
Pinney    v.    Barnes,    17    Conn.    420 
Farrington  v.  Payne,  15  Johns.  432 
Phillips  V.  Berick,  16  id.  136,  8  Am. 
Dec.  299;   Cunningham  v.  Jones,  20 
N.   Y.   486 ;    James   v.   Lawrence,    7 
Harr.    &   J.    73;    Shaffer   v.   Lee,    8 
Barb.  412 ;  Campbell  v.  Hatchett,  55 
Ala.    548;    Parker    v.    Russell,    133 
Mass.  74;   Norris  v.  Harris,  15  Cal. 
226,    256,    76    Am.    Dec.    480;    Mc- 
Grath  v.    Cannon,    55    Minn.    457; 
Reynolds  v.  Jones,  63  Ark.  259. 

An  action  to  recover  money  de- 
posited to  secure  the  performance  of 
a  contract  and  for  damages  for  a 
breach  thereof  cannot  be  severed. 
Royal  Live  Fish  Co.  v.  Central  Fish 
Co.,  159  App.  Div.   (N.  Y.)    151. 


109] 


ENTIRETY    OF    DAMAGES. 


ably  enjoy  by  reason  of  his  release  from  performance.  The 
latter  may  defer  his  action  for  the  breacli  until  the  expiration 
of  the  time  for  the  fnll  performance  of  the  contract.^® 

§  109.  Entire  demand  may  be  severed.  A  contract  originallv 
entire  may  be  severed  afterwards  by  the  parties  so  as  to  give  a 
right  of  action  for  a  part  performance."  This  was  the  case 
where  there  was  an  entire  contract  for  the  delivery  of  logs,  and 
on  delivery  of  a  part  the  purchaser  paid  therefor  j)aiily  in  uioncv 
and  gave  notes  for  the  residue  delivered.  It  was  held  tli.it  tlir 
notes  could  be  collected  notwitlistanding  any  default  in  the  de- 
livery of  other  logs  to  fultill  the  contract,  but  subject  to  recoup- 
ment of  the  damages  for  such  breach.^"  Under  an  agreement 
that  if  the  creditor  would  forbear  suing  upon  the  whole  (.f  his 
demand  and  sue  upon  a  part  of  it  only,  and  in  case  of  a  recovery 
upon  that  part  the  debtor  would  pay  the  balance,  such  agree- 
ment was  a  waiver  of  the  rule  in  his  favor  concerning  the  di- 
vision of  actions,  and  the  recovery  upon  the  part  sued  upon  was 


18  Allen  V.  Field,  130  Fed.  641,  65 
C.  C.  A.  19;  Ford  v.  Lawson,  133  Ga. 
237 ;  O'Neill  v.  Supreme  Council,  70 
N.  J.  L.  410;  Smith  v.  Lumber  Co., 
142  N.  C.  26;  Pennsylvania  S.  Co. 
V.  New  York  City  E.  Co.,  198  Fed. 
721,  il7  C.  C.  A.  503;  Roehm  v. 
Horst,  178  U.  S.  1,  44  L.  ed.  953; 
following  Hochster  v.  De  la  Tour,  2 
El.  &  Bl.  678.  Contra,  Clark  v. 
National  B.  &  C.  Co.,  67  Fed.  222: 
Daniels  v.  Newton,  44  Mass.  530,  19 
Am.  Rep.  384.  The  argument  in  the 
latter  case  is  said  to  have  been  well 
and  sufficiently  answered  by  Judge 
Lowell  in  Dingley  v.  Oler,  11  Fed. 
372,  where  the  question  is  examined 
and  cases  cited.  To  the  same  effect 
as  Roehm  v.  Horst,  supra,  are  sev- 
eral cases  in  the  federal  courts 
earlier  than  the  decision  therein: 
Dingley  v.  Oler,  supra :  Foss-S.  B. 
Co.  V.  Bullock,  8  C.  C.  A.  14,  59  Fed. 
83;  Edward  Hines  L.  Co.  v.  Alley, 
19  C.  C.  A.  599,  73  Fed.  603:  Horat 
V.   Roehm,   84   Fed.   565.     Speirs  v. 


Union  D.  F.  Co.,  180  :\lasa.  87.  91, 
is  in  liarmony  with  Roeiim  v.  Horst. 

19  O'Beirne  v.  Lloyd,  43  X.  Y.  251  ; 
Lee  V.  Kendall,  56  Hun,  610;  Fourtli 
Nat.  'Bank  v.  Noonan,  88  Mo.  372; 
Ryall  v.  Prince,  82  Ala.  264.  See 
Ebersole  v.  Supreme  Council,  146 
Ala.  506,  119  Am.  St.  52:  Dreyer  v. 
McCormack  Real  Estate  Co..  1G4 
App.  Div.    (N.  Y.)    41. 

The  defendant's  consent  to  tlie 
splitting  of  a  demand  is  presumed 
unless  he  raises  tlie  ol)jection. 
Southern  Pac.  R.  Co.  v.  United 
States,  ]86  Fed.  737,  108  C.  C.  A. 
007. 

A  person  who  lias  been  paid  for 
tlic  full  pcrfoiinanie  oi  an  entire 
contract  whicii  is  easily  severable 
and  has  been  severed  to  his  advan- 
tage may  not  avoid  lialiility  Ix'cause 
tlie  act  of  the  t)tlier  has  |)reveiited 
full  performance.  Williams  v.  .Ar- 
nold, 139  Wis.  177. 

zOFessler  v.  Love,  43  Pa.  313. 


378  SUTHERLAND  ON  DAMAGES.  [§  109 

not  a  bar  to  an  action  upon  the  balance  of  the  chiim.^^  So  a 
quantuni  meruit  claim  may  arise  for  a  part  performance  on 
account  of  the  benefit  derived  from  it.*^^  A  city  splits  up  a  de- 
mand against  it  by  drawing  warrants  on  account  of  it  in  differ- 
ent amounts,  and  cannot  defend  an  action  on  one  of  them  on 
the  ground  that  it  had  previously  been  sued  on  another.^^  "In 
such  cases  the  rights  of  the  plaintiff  as  assignee  serve  as  the 
consideration  for  the  new  contract,  which  becomes  the  ground 
of  the  action.  The  action  is  on  the  defendant's  promise  to  the 
plaintiff,  and  not  upon  the  assignment  or  upon  any  right  grow- 
ing out  of  it."  ^^  While  a  general  assigimient  for  the  benefit 
of  creditors  does  not  usually  effect  a  rescission  or  termination 
of  an  executory  contract  of  the  assignor  ^^  it  may  be  otherwise 
where  the  subject-matter  of  the  contract  establishes  a  relation 
of  confidence  between  the  parties  and  the  exercise  of  peculiar 
skill  or  knowledge  is  required.  In  such  a  case  the  plaintiff 
should  not  be  compensated  for  what  he  cannot  perform.^® 

§  110.  Contracts  to  do  several  things  successively  or  one 
thing  continuously.  A  contract  to  do  several  things  at  different 
times  is  divisible  in  its  nature  and  an  action  will  lie  upon  each 
default.^'''  The  defendant,  the  keeper  of  an  office  for  procuring 
crews  of  vessels,  in  consideration  of  the  plaintiff's  agreement  to 
furnish  such  supplies  and  advances  as  might  be  necessary  in  the 
business  promised  to  pay  the  latter  a  certain  sum  for  each  man 
shipped  and  to  repay  the  advances;  the  undertaking  was  sev- 

21  Mills  V.  Garrison,  3  Keyes,  40;  25  New  England  I.  Co.  v.  Gilbert 

Mandeville  v.  Welch,  5  Wheat.  277,  E.  R.  Co.,  91  N.  Y.  153;  Vandegrift 

288,  5  L.  ed.  87,  90;   Secor  v.  Stur-  v.  Cowles  E.  Co.,  161  N.  Y.  435,  48 

gis,  16  N.  Y.  548.     See  Bliss  v.  New  L.R.A.   685. 

York   Cent.   etc.   E.   Co.,   160   Mass.  26  United   Press   v.   Abell   Co.,   79 


447. 


App.  Div.    (N.  Y.)    550. 


22  See  §  90.  27  Puckett   v.   National   A.   Ass'n, 

23  Little  V.  Portland,  26  Ore.  235 


134   Mo.  App.   501;    Wheless   v.   Se- 
rano,  121  id.  17;   Harstad  v.  Olson, 


Grain   v.   Aldrich,    38   Cal.   514,   99 
Am.  Dec.  423;  National  Exch.  Bank 

V.  McLoon,  73  Me.  498,  40  Am.  Rep.  ^'    ^^^-  ^64;    Badger  v.   Titcomb, 

ogg  15   Pick.  409;    Easier  v.  Nichols,   8 

24  Little      V.      Portland,      supra;  ^n^^-  260;   Terry  v.  Beatrice  S.  Co., 

Getchell    v.    Maney,    69    Me.    442;  43  Neb.  866 ;  Coleman  v.  Hudson,  2 

James  v.  Newton,  142  Mass.  366,  56  Sneed,  465 ;   North  Shore  L.   Co.  v. 

Am.  Rep.  692.  South  Side  L.  Co.,  176  111.  App.  96. 


§    110]  ENTIKETY    OF    DAMAGES.  ,'57 J) 

eral.^^  But  when  a  party  has  distinct  dcnnmds  or  existing; 
causes  of  action  growing  out  of  the  same  contract  or  resting  in 
matter  of  account,  which  may  be  joined  and  sued  for  in  the  same 
action,  they  must  be  joined ;  tliey  constitute  an  entire  cause  of 
action  or  demand;  and  if  they  be  split  up  and  a  suit  brought 
for  a  part  only  and  subsequently  a  second  suit  for  the  residue 
the  first  action,  if  determined  on  the  merits,  will  be  a  bar.*' 
This  is  not  to  be  carried  so  far  as  to  bar  an  action  on  the  con- 
tract because  judgment  has  been  obtained  against  the  party  who 
failed  to  perform  for  a  tort  resulting  from  the  breach.  Claims 
for  a  wrongful  dismissal  from  employment  and  to  recover  wages 
earned  prior  thereto  are  separate  and  distinct  causes  of  action. 
The  right  to  wages  is  the  result  of  the  contract ;  the  right  to 
damages  grows  out  of  the  wrongful  termination  of  it.  The 
amount  due  under  the  contract  was  definite  or  ascertainable  at 
the  time  of  its  breach,  and  was  then  payable ;  the  damages  were 
incapable  of  exact  ascertainment  until  the  period  covered  by  the 
contract  expired,  as  they  might  be  mitigated  by  the  acts  of  the 
plaintiff.^"  But  if  a  servant  performs  no  labor  after  his  dis- 
charge he  can  maintain  but  one  action  for  the  breach  of  the 
contract.^^    Where  an  employee  who  was  permanently  disabled 


sr  V.  Titcomh,  supra.  v.  Stern,  —  Misc.    (N.  Y.)   — ,  148 

29  Smith  V.  Lumber  Co.,  142  N.  C.  X.  Y.  Supp.   1 . 

26,    5    L.R.A.(N.S.)     439;    Dock    v.  Whore     a     phintation     overseer's 

Pratt,  30  Pa.  Super.  598;   Hancock  compensation    was   to    consist   of    a 

V.   White  Hall   T.   W.   Co.,   102  Va.  salary   and   a   share  of  the  crop  to 

239;  Bendernagle  v.  Cocks,  19  Wend.  ^^e  g''o^^"'  '^  j"dsmcnt  in  an  action 

207;  James  v.  Lawrence,  7  Harr.  &  ^^^  salary,  after  wrongful  discharge, 

J.   73;   Atwood  v.  Norton,  27  Barb.  '^'^  "«<^  ^^'  ^  subsequent  action  for 

^„„     ,,        ,,                „               o-  Til  his  share  of  the  crop,  as  the  amount 

638;   Casselberry  v.  Forquer,  2/   111.  ,,,,,,                     ,                 ^.,, 

of   the   latter   was   only   susceptible 


170;  Geiser  T.  M.  Co.  v.  Farmer,  27 
Minn.   428;    Bowe  v.  Minnesota  M. 


of  definite  ])roof  after  maturity  of 

the   crop.      Shari)    v.    McBride,    134 
Co.,  44  Minn.  460;   Hodge  v.  Shaw,       ^_^    ^^j^' 

85  Iowa,  137,  29  Am.  St.  290;   Gil-  'giOrnstein   v.Yabr  &   L.   1).  Co., 

bert  V.  Boak  F.  Co.,  86  Minn.  365,  „j,  ^^j^   ^i^O;  Wakiron  v.  Hendrick- 

58  L.R.A.  735;  Olmstead  V.  Bach,  78  ^^^^     ^q      i^.^^      ^y^y      ^\^_     y.)      7; 

Md.   132,  22  L.R.A.  74,  44  Am.   St.  Barnes  v.  Coal  Co.,  101  Tenn.  354; 

273.     Compare  Williams  v.  Luckett,  Olmstead   v.   Bach,   78   Md.   142,   44 

77  Miss.  394.  Am.  St.  273,  22  L.R.A.  74;   Wright 

30  Perry    v.    Dickerson,    85    N.    Y.  v.  Turner,   1    Stew.  29,    IS  Am.  Det-. 

345,  39  Am.  Rep.  663;   Smith  Bros.  35. 


380  SUTIJEIILAND    ON    DAMAGES.  [§    110 

in  the  service  of  his  employer  compromised  his  claim  for  dam- 
ages in  consideration  of  an  agreement  that  he  should  receive  cer- 
tain Visages  monthly  and  be  furnished  with  specified  supplies  so 
long  as  his  ability  to  work  should  continue  and  the  plaintiff,  on 
his  part,  was  to  do  for  the  defendant  such  work  as  he  was  able 
to  do  and  release  the  defendant  from  liability  for  damages,  and 
the  defendant  denied  its  obligation  to  pay  the  stipulated  wages 
and  entirely  abandoned  the  contract,  the  plaintiff  was  entitled  to 
consider  the  contract  as  entirely  broken  and  recover  all  that  was 
due  him  when  the  action  was  brought  and  all  that  might  become 
due  under  it,  which  would  be  its  value  to  him  at  the  time  of  the 
breach.^^  A  contract  to  issue  or  procure  the  issuance  of  an  an- 
nual railroad  pass  to  be  renewed  from  year  to  year  during  the 
pleasure  of  the  promisee  is  divisible. ^^ 

In  an  action  on  a  lease  which  contained  distinct  covenants  to 
pay  for  manure  and  for  work  and  labor  the  defendant  pleaded 
in  abatement  that  a  prior  action  brought  for  the  breach  of  cer- 
tain of  the  covenants  was  still  pending.  The  plaintiff  replied 
that  the  covenants  upon  which  that  suit  was  brought  were  dis- 
tinct and  different  from  those  involved  in  the  pending  action. 
The  defendant's  demurrer  to  this  replication  was  sustained  and 
he  obtained  judgment.^^  It  is  observed  of  this  ruling  that  if  it 
is  subject  to  any  criticism  it  is  because  of  its  application  to  the 
facts  involved.  It  may  be  inferred  from  the  opinion  of  Judge 
Cowen  that  all  the  covenants  in  the  lease  were  for  the  payment 
of  different  amounts  of  money  by  the  lessee  to  the  lessor;  and 
he  seemed  to  regard  it  like  the  case  of  a  contract  to  pay  money 
in  instalments,  and  in  this  way  reached  the  conclusion  that  the 

32  Pierce  v.  Tennessee  C.  I.  &  R.  Barb.  550;  Grand  Valley  I.  Co.  v. 
Co.,   173   U.   S.   ],   43  L.  ed.   591,  5       Fruita  I.  Co.,  37   Colo.  483. 

Am.  Neg.  Eep.  747 ;  Eastern  Tennes-  The   recovery   of   past-due   instal- 

see,  etc.  R.  Co.  v.  Staub,  7  Lea,  307.  ments  of  rent  which  accrued  under 

33  Kansas,  etc.  R.  Co.  v.  Curry,  6  a  lease  for  a  term  at  a  fixed  month- 
Kan.  App.  561;  Curry  v.  Kansas,  ly  rental  does  not  bar  another  action 
etc.  R.  Co.  58  Kan.  6.  for    instalments   which   became   due 

34  Bendernagle  v.  Cocks,  19  Wend.  subsequently.  Barnes  v.  Coal  Co., 
207.  See  Badger  v.  Titcomb,  15  101  Tenn.  354;  State  v.  Pittinger, 
Pick.    409;    Mcintosh    v.    Lawn,   47  37  Wash.  384. 


§    110]  ENTIEETY    OF    DAMAGES.  381 

different  breaches  constituted  a  single  cause  of  actioii.^^  Hut 
it  is  now  established  in  New  York  that  the  breach  of  an  agree- 
ment to  pay  money  in  instalments  is  not  a  breach  of  the  entire 
contract,  and  will  not  permit  a  recovery  of  all  the  daiuages  in 
advance.^^  ''There  seems  to  be  a  distinction,  whether  well 
grounded  in  principle  or  not,  between  a  contract  for  the  pay- 
ment of  money  in  future  instalments  and  a  contract  for  the  de- 
livery of  goods  in  future  instalments  "  as  well  as  a  contract  for 
future  employment  and  service."  ^®  A  contract  which,  for  an 
entire  consideration,  stipulates  for  the  performance  of  several 
acts  for  the  benefit  of  the  same  person  at  the  same  time  is  en- 
tire.^^ 

The  principle  is  settled  beyond  dispute  that  a  judgment  con- 
cludes the  rights  of  the  parties  in  respect  to  the  cause  of  action 
stated  in  the  pleadings  on  which  it  is  rendered,  whether  the  suit 
embraces  the  whole  or  only  a  part  of  the  demand  constituting 
the  cause  of  action.  It  results  from  this  principle,  and  the  rule 
is  fully  established,  that  an  entire  claim  arising  either  upon  a 
contract  or  from  a  wrong  cannot  be  divided  and  made  the  sub- 
ject of  several  suits ;  *°  and  if  several  suits  be  brought  for  differ- 
ent parts  of  such  a  claim  the  pendency  of  the  first  may  be  plead- 
ed in  abatement  of  the  others  and  a  judgment  upon  the  merits 

35  Perry  v.  Dickerson,  85  N.  Y.  taincd  on  successive  instalnu-nls  of 
345,  39  Am.  Kep.  663.  rent   as  they  become  due. 

36  Wharton  v.  Winch,  140  N.  Y.  37  Nichols  v.  Scranton  S.  Co.,  137 
287;    McCready  v.   Lindenborn,   172  N.  Y.  471. 

N.  Y.  400,  408;   Davis  v.  Hibbs,  73  38  Howard  v.  Daly,  61  X.  Y.  362, 

Wash.    315;    IHectrelle    Co.    v.    Ma-  1!)  Am.  Rep.  285. 

guire,    215    Mass.    550;    Jacoby    v.  39  jjieliardo   v.   Ontai,   20   Hawaii, 

Peck,  23  Cal.  App.  363.  335.  Ailing  v.  Trevor,  25  N.  Y.  :Misc. 

Where  the  reputed  father  of  a  ^90  (contract  for  pul)lication  of  ad- 
bastard  child  has  contracted  with  vertisement  in  designated  newspa- 
its  mother  to  pay  her  a  stipulated  ^^.^^  ^^  ^^^^^^  intervals  for  a  gross 
sum  each  month  for  a  period  of  ^^^^  ._  indianapoliis,  etc.  R.  Co.  v. 
years  the  mother  may  sue  for  each 
instalment  as  due  or  wait  until  the 

expiration    of    the    period    and    sue  

for  the  entire  amount.     Franklin  v.  'Hankenship,  158   Ky.  270;    Eller  v. 

Ford,  13  Ga.  App.  469.  '--^i'-^d,   140   N.   C.   140,   3   L.R.A. 

See  also.  Luce  v.  Minard,  87  Vt.  (N.S.)     225;     Standard    0.    Co.    v. 

177,   holding   that,  contrary   to  the  Denton,  24  Ky.   L.   Rep.  966,  (piot- 

former  rule,  actions  may  be  main-  ing  the  te.xt. 


Koons,  105  Ind.  507. 

40  ( hesapeake    &    0.    Ry.    Co.    v. 


382 


SUTIIEKLAND    ON    DAMAGES. 


[§   110 


of  either  will  be  available  as  a  bar  in  the  others.  But  it  is  en- 
tire claims  only  which  cannot  be  divided  within  this  rule :  those 
which  are  single  and  indivisible  in  their  nature.  The  cause  of 
action  in  the  different  suits  must  be  the  same.  The  rule  does 
not  prevent,  nor  is  there  any  principle  which  precludes,  the  pros- 
ecution of  several  actions  upon  distinct  causes  of  action.  The 
holder  of  a  number  of  promissory  notes  may  maintain  an  ac- 
tion on  each ;  a  party  upon  whose  person  or  property  successive 
and  distinct  trespasses  have  been  committed  may  bring  a  sep- 
arate suit  for  every  trespass,  and  all  demands  of  whatever  na- 
ture arising  out  of  independent  transactions  may  be  sued  upon 
separately.  It  makes  no  difference  that  the  causes  of  action 
might  be  united  in  a  single  suit ;  the  right  of  the  party  in  whose 
favor  they  exist  to  separate  suits  is  not  affected  by  that  circum- 
stance.*^ The  true  distinction  between  demands  or  rights  of 
action  which  are  single  and  entire,  and  those  which  are  several 
and  distinct,  is  that  the  former  immediately  arise  out  of  one  and 
the  same  act  or  contract  and  the  latter  out  of  different  acts  or 


contracts 


42 


41  Secor  V.  Sturgis,  IG  N.  Y.  554, 
overruling  Colvin  v.  Corwin,  15 
Wend.  557,  and  disapproving  the 
reasoning  in  C4uernsey  v.  Carver,  8 
id.  492.  See  Perry  v.  Dickerson, 
85  X.  Y.  345,  39  Am.  Rep.  063. 

42ThisIer  v.  Miller,  53  Kan.  515; 
Nixon  V.  Fidelity  &  D.  Co.,  150  Fed. 
574,  80  C.  C.  A.  336,  citing  the  text. 
See  Manley  v.  Park,  68  Kan.  400, 
66  L.R.A.  967. 

Where  the  grade  of  a  street  has 
been  established  and  the  plaintiff 
has  made  improvements  upon  prop- 
erty abutting  thereon  in  conformity 
with  such  grade,  and  subsequently 
the  city  provides  by  ordinance  for 
changing  the  grade,  and  in  fact  al- 
ters it  from  curb  to  curb,  and  after- 
wards adapts  the  sidewalk  to  the 
grade  as  finally  established,  an  ac- 
tion for  changing  the  sidewalk  can- 
not be  maintained  after  recovery 
has  been  had  for  cutting  down  the 


grade  from  curb  to  curb.  Hemp- 
stead V.  Dea  Moines,  63  Iowa,  36; 
Stickford  v.  St.  Louis,  7  Mo.  App. 
217  (injury  to  fee  of  one  lot  and 
to  leasehold  interest  with  rent  of 
adjoining  lot) . 

1  f  goods  are  sold  on  credit  at  vari- 
ous times  each  sale  is  separate  and 
distinct  and  an  independent  cause 
of  action  arises  on  the  expiration  of 
the  agreed  period  of  credit  and  as 
the  several  amounts  become  due. 
Zimmerman  v.  Erhard,  83  N.  Y.  74, 
38  Am.  Rep.  396. 

Where  property  is  purchased  in 
several  quantities  at  different  times 
in  the  execution  of  a  conspiracy  the 
damage  done  to  the  vendor  is  the 
gist  of  the  action;  each  purchase  is 
a  distinct  and  several  fraud  for 
which  a  separate  action  lies.  Lee 
V.  Kendall,  56  Hun,  610. 

Where  a  train  was  in  motion  and 
a  mare  and  colt  were  running  on  the 


110] 


ENTIRETY    OF    DAMAGES. 


383 


Perhaps  as  simple  and  safe  a  test  as  the  subject  admits  of  by 
which  to  determine  whether  the  case  belongs  to  one  class  or  the 
other  is  by  inquiring  whether  it  rests  upon  one  or  several  acts 
or  agreements.  In  the  case  of  torts  each  trespass,  conversion 
or  fraud  gives  a  cause  of  action,  and  but  a  single  one  *^  in  re- 


track  in  front  of  it  and  the  colt  was 
struck  and  killed,  and  tiie  train 
after  running  on  five  hundred  feet 
struck  and  killed  the  mare,  tlie  kill- 
ings were  separate  and  independent 
acts;  causes  of  action  based  upon 
them  were  necessarily  composed  of 
different  elements,  because,  while  the 
killing  of  the  colt  might  have  been 
prevented  by  the  prompt  exercise  of 
ordinary  care,  the  last  killing  was 
the  result  of  gross  negligence.  Mis- 
souri Pac.  R.  Co.  v.  Scammon,  41 
Kan.  521.  See  Bricker  v.  Missouri 
Pac.  R.  Co.,  83  Mo.  391;  Pucket  v. 
St.  Louis,  etc.  R.  Co.,  25  Mo.  App. 
650. 

The  seizure  on  the  same  day  and 
under  the  same  writ  of  two  distinct 
lets  of  animals  in  different  places, 
though  they  are  owned  by  the  same 
person,  constitutes  distinct  tres- 
passes. Millikin  v.  Smoot,  71  Tex. 
759,   10  Am.  St.  814. 

43  Roberts  v.  Moss,  127  Ky.  657, 
17  L.R.A.(N.S.)  280  (trespass  and 
conversion)  ;  Werner  v.  Cincinnati, 
3  Ohio  C.  C.  (N.  S.)  276,  affirmed 
by  the  supreme  court  without  opin- 
ion; Munro  v.  Pacific  Coast  D.  &  R. 
Co.,  84  Cal.  515,  18  Am.  St.  248; 
Lee  V.  Kendall,  56  Hun,  610;  Secor 
V.  Sturgis,  16  N.  Y.  554;  Binicker  v. 
Hannibal,  etc.  R.  Co.,  83  Mo.  660; 
Steiglider  v.  Missouri  Pac.  R.  Co., 
38  Mo.  App.  511 ;  Knowlton  v.  New 
York,  etc.  R.  Co.,  147  Mass.  606, 
1  L.R.A.  625;  Brannenburg  v.  In- 
dianapolis, etc.  R.  Co.,  13  Ind.  103, 
74  Am.  Dec.  250;  Hicenbothem  v. 
Lowenbein,  6  Robert.  557 ;  Marble 
v.  Keyes,  9  Gray,  221 ;   Eastman  v. 


Cooper,  15  Pick.  276;  lUiinetl  v. 
Hood,  1  Allen,  47,  7!)  Am.  Dee.  70.> : 
Trask  v.  Hartford,  etc.  R.  Co.,  2 
Allen,  331;  Doty  v.  Hrown.  1  X.  V. 
71. 

But  one  cause  of  action  arises 
from  the  conversion  of  various  chat- 
tels at  the  same  time;  after  judg- 
ment for  the  plaintilf  for  some  of 
those  converted  an  action  cannot  be 
maintained  for  the  others,  altiiough 
he  was  unable  to  include  them  in  the 
first  action  becaiise  of  the  defend- 
ant's fraudulent  conduct  ( McCaffrey 
v.  Carter,  125  Mass.  330);  or  be- 
cause of  the  accidental  failure  to  sue 
for  them  in  the  first  action ;  Folsom 
v.  Clemence,  119  Mass.  473;  Hcrri- 
ter  V.  Porter,  23  Cal.  385;  Farring- 
ton  V.  Payne,  15  Johns.  432;  Funk 
V.  Funk,  35  Mo.  App.  246.  See  ]!o>v- 
ker  F.  Co.  v.  Cox,  106  X.  V.  5."..-). 
This  is  the  rule  although  part  of  tlie 
property  taken  was  held  by  tiie 
plaintiff  as  a  trustee  and  pnrt  in 
liis  own  right.  O'Neal  v.  Brown,  21 
Ala.  482.  A  tenant  who  sues  for 
damage  to  his  crops  may  recover 
for  the  whole  injury  done.  Texas 
&  P.  R.  Co.  v.  Bayliss,  62  Tex.  570. 
Injuries  to  distinct  pieces  of  prop- 
erty owned  by  the  same  person,  by 
a  single  act,  must  be  sued  for  to- 
gether. Beronio  v.  Southern  Pac. 
R.  Co..  86  Cal.  415.  21   Am.   St.  57. 

If  the  plaintilf  has  inlcn'sts  in 
possession  and  reversion  he  may 
recover  in  the  same  action  for  an 
injury  affecting  both.  Irving  v. 
Media,  10  Pa.  Super.  132.  alllrmrd 
without  opinion,    r.i}    I'a.  (Us. 


384 


SUTHERLAND    ON    DAMAGES. 


[§  110 


spect  to  contracts,  express  or  implied,  each  affords  one  and  only 
one  cause  of  action.*^  The  case  of  a  contract  containing  several 
stipulations  to  be  performed  at  different  times  is  no  exception; 
although  an  action  may  be  maintained  upon  each  stipulation  as 
it  is  broken  before  the  time  for  the  performance  of  the  others 
the  ground  of  action  is  the  stipulation  which  is  in  the  nature  of 
a  several  contract.^^  The  same  rule  governs  in  torts  arising 
from  contracts  and  those  which  have  their  origin  in  official  mis- 


44  American  S.  Co.  v.  Fidelity  T. 
Co.,  103  C.  C.  A.  29,  179  Fed.  099, 
affirming  175  Fed.  200;  Abbott  v.  70 
L.  &  W.  Co.,  161  Cal.  42,  citing  the 
text;  Alderson  v.  Houston,  154  Cal. 
1 ;  Central  Georgia  B.  Co.  v.  Caro- 
lina P.  Co.,  136  Ga.  693;  Epperson 
V.  Epperson,  108  Va.  471;  Shires 
V.  O'Connor,  4  Pa.  Super.  465;  Hu- 
yett  &  S.  Mfg.  Co.  v.  Cliicago  Edison 
Co.,  167  111.  233,  59  Am.  St.  272, 
Samuel  v.  Fidelity  &  C.  Co.,  76  Hun, 
308 ;  Siebert  v.  Dunn,  157  App,  Div. 

(N.  Y.)   387. 

45  Alkire  G.  Co.  v.  Tagart,  60  Mo. 
App.  389 ;  Gentles  v.  Finck,  23  N.  Y. 
Misc.  153;  Secor  v.  Sturgis,  16  N. 
Y.  554;  Ryall  v.  Prince,  82  Ala.  264; 
Wilkinson  v.  Black,  80  Ala.  329; 
Strauss  v.  Meerteif,  64  id.  299 ;  Wil- 
cox V.  Plummer,  4  Pet.  172,  7  L.  ed. 
821;  Moore  v.  Juvenal,  92  Pa.  484: 
Reformed,  etc.  Church  v.  Brown,  54 
Barb.  191;  Campbell  v.  Hatchett, 
55  Ala.  548;  O'Beirne  v.  Lloyd,  43 
N.  Y.  248;  Pinney  v.  Barnes,  17 
Conn.  420;  Rudder  v.  Price,  1  H. 
Black.  550;  Cobb  v.  I.  C.  R.,  38 
Towa,  601;  Clayes  v.  White,  83  111. 
540;  Blakeney  v.  Ferguson,  18  Ark. 
347;  Kendall  v.  Stokes,  3  How.  87, 
11  L.  ed.  506.  Burgle  v.  Hicks,  203 
Fed.  340;  Gayton  v.  Day,  101  C.  C. 
A.  600,  178  Fed.  249;  Audubon  B. 
Co.  V.  Andrews,  111  C.  C.  A.  92, 
187  Fed.  254;  Stauff  v.  Bingenheim- 
er,  94  Minn.  309;  Power  v.  Brown, 
2  Ohio  C.  C.   (N.  S.)   320;  Krebs  H. 


Co.  V.  Livesley,  59  Ore.  574,  quoting 
tlie  text ;  Bradford  v.  Montgomery  F. 
Co.,  115  Tenn.  610,  9  L.R.A.(N.S.) 
979;  Hurxthal  v.  Boom  Co.,  53  W. 
Va.  87,  97  Am.  St.  954.  See  Willis 
V.  Jarrett  C.  Co.,  152  N.  C.  100. 

A  contract  for  the  delivery  of 
several  distinct  articles  separately 
priced,  is  separable.  Barlow  Mfg. 
Co.   V.   Stone,   200   Mass.    158. 

In  Mcintosh  v.  Lown,  49  Barb. 
550,  it  was  held  that  the  lease  in 
question  contained  seven  distinct 
and  independent  covenants,  the  third 
of  which  was  to  keep  the  buildings 
and  fences  in  repair,  and  the  seventh 
to  build,  during  the  continuance  of 
the  lease,  one  hundred  and  twenty- 
five  rods  of  fence.  It  was  held  that 
a  former  action  bj'  the  lessor  upon 
the  covenant  for  not  building  the 
fence  was  not  a  bar  to  an  action 
subsequently  brought  upon  the  cove- 
nant to  repair ;  tliat  the  two  cove- 
nants were  distinct  and  had  no  con- 
nection with  each  other,  except  that 
they  were  contained  in  the  same  in- 
strument; that  the  former  action 
must  have  been  to  recover  for  the 
same  identical  cause  of  action,  or 
for  some  part  thereof,  as  the  plain- 
tiff seeks  to  recover  in  the  second 
in  order  to  be  a  bar.  See  Warner 
V.  Bacon,  8  Gray,  497,  69  Am.  Dec. 
253;  Clark  v.  Baker,  5  Mete. 
(  Mass.)   4.52. 

The  services  of  a  regularly  ap- 
pointed   or    permanently    employed 


§    111]  ENTIRETY    OF    DAAfAGES.  385 

feasance.     The  cause  of  action  arises  when  the  breach  of  dutv 
occurred,  not  on  the  discovery  of  the  effects  thereof.*' 

§  111.  Items  of  account.  Where  there  is  an  account  for  i^oo. Is 
sold  or  labor  performed,  where  money  has  been  lent  to  or 
paid  for  the  use  of  a  party  at  difToreut  times,  or  several  items 
of  claim  springing  in  any  way  from  contract,  wlielher  one  or 
separate  rights  of  action  exist  will,  in  each  case,  depend  on 
whether  the  case  is  covered  by  one  or  by  several  or  separate  con- 
tracts. The  several  items  may  have  their  origin  in  one  con- 
tract, as  an  agreement  to  sell  and  deliver  goods,  pei-forni  work 
or  advance  money;  and  usually,  in  case  of  a  running  a(;count, 
it  may  be  fairly  implied  that  it  is  in  pursuance  of  an  agreement 
that  an  account  may  be  opened  and  continued  either  for  a  defi- 
nite period  or  at  the  pleasure  of  one  or  both  of  the  parties.  But 
there  must  be  either  an  express  contract  or  the  circumstances  be 
such  as  to  raise  an  implied  contract  embracing  all  the  items  to 
make  them,  where  they  arise  at  different  times,  a  single  or  en- 
tire demand  or  cause  of  action.^''^  The  very  fact  that  there  is  a 
running  account  imports  that  the  parties  have  not  been  accus- 
tomed to  treat  every  separate  matter  of  charge  as  a  distinct  debt, 
but  on  the  contrary  to  enter  it  in  the  account  to  become  a  part 
thereof  and  going  to  make  up  the  debt  which  consists  of  the  en- 
tire balance  due.^*     A  creditor  cannot  bring  an  action  for  an 

attorney  are  usually   rendored  pur-  The  Pennsylvania  case  cited  holds 

suant  to  some  general  contract  and  that  if  several   noto=;  are  given  for 

whatever    is    due    therefor    at    the  the   amount   of   an    entire   hook   ac- 

termination    of   the    service   or    em-  count,    without    being   taken    as   an 

ployment  must  he  recovered   in  one  extinguishment    of    the    deht    or    as 

action.     Hughes  v.  Dundee  Mort.  T.  consideration    for    an    exten.^ioii    of 

I.  Co.,  26  Fed.  831.  time,  tliat  a  suit  brought  upon   the 

46  Owen  V.  Western  Saving  Fund,  account  after  some  of  the  notes  lie- 
97  Pa.  47,  39  Am.  Rep.  794.  came   due,    in    which   judgment    for 

47  Secor  V.  Sturgis,  16  N.  Y.  554 ;  the  amount  of  those  due  was  given, 
Borngesser  v.  Harrison,  12  Wis.  bars  a  subsequent  suit  upon  the 
544;  Walter  V.  Richardson,  11  Rich.  same  account  for  tlic  ntiiount  of 
466;  Magruder  v.  Randolph,  77  N.  the  notes  which  bwame  due  after 
C.  79;  American  B.  &  S.  M.  Co.  v.  the  suit  was  l)rought.  Contra,  Bad- 
Thornton,  28  Minn.  418;  Oliver  v.  ger  v.  Titcomb,  15  Pick.  400.  26 
Holt,  11  Ala.  574,  46  Am.  Dec.  228;  Am.  Dec.  611;  Oummiiigton  v. 
Buck  V.  Wilson,  113  Pa.  423:   Wren  Wareliam,  8  Cush.  590. 

v.    Winter,    6    Ohio   Dec.    176.  M  jMemmer    v.    Carey,    30     Minn. 

Suth.  Dam.  Vol.  I.— 25. 


386  SUTHERLAND    ON    DAMAGES.  [§    111 

amount  admittedly  due  upon  an  account  resulting  from  a  single 
contract,  the  whole  debt  being  mature,  enforce  payment  of  that 
amount  and  maintain  a  second  action  for  a  sum  alleged  to  be  due 
on  the  same  account  in  excess  of  that  first  sued  for ;  the  fact  that 
the  petition  in  the  first  case  recited  that  the  right  to  bring  such 
second  action  was  reserved  was  immaterial.*'  If  bills  are  payable 
at  the  end  of  every  month  an  action,  brought  after  two  months, 
to  recover  the  sum  due  at  the  end  of  the  first  month  does  not  bar 
an  action  to  recover  the  amount  due  at  the  end  of  the  second 
montli.^°  The  business  of  ship  carpenters  was  carried  on  in  one 
part  of  a  building  under  the  direction  of  two  of  the  partners  in 
a  firm,  and  the  business  of  ship  chandlers  in  another  part  of 
the  same  building  under  the  direction  of  the  third  partner. 
Separate  books  of  account  were  kept  by  difl^erent  clerks  in  the 
two  branches  of  business,  and  the  partners  confined  themselves 
respectively  to  the  management  of  one  of  the  branches  without 
personally  taking  part  in  the  other.  Work  was  done  and  ma- 
terials furnished  from  the  carpentry  branch  in  the  repairing 
and  equipping  of  a  brig,  upon  the  order  of  her  captain,  to  the 
amount  of  $139,  and  immediately  thereafter  goods  and  articles 
of  ship  chandlery  to  the  value  of  $521  were  furnished  to  the  same 
brig,  on  the  order  of  the  same  captain,  at  different  times  through 
a  period  of  a  month.  The  two  accounts  did  not  constitute  an 
entire  claim.^^  In  an  action  for  money  had  and  received  it  ap- 
peared that  the  defendant,  as  steward  of  the  plaintiff,  had,  be- 
tween April  and  November,  1882,  received  large  sums  of  money 
for  timber  sold  and  in  December,  1821,  4CL  for  rents.  In  a 
former  action  a  judgment  had  been  taken  by  default  for  all  that 
the  plaintiff's  agent  thought  the  defendant  could  pay,  but  after- 
wards it  was  ascertained  that  the  steward  had  received  the  said 
amount  for  rents.     All  the  sums  which  the  plaintiff  knew  the 

4.58;     Borngesaer    v.    Harrison,    12  tutes  a  single  demand.     Williams-A. 

Wis.  544;    Avery  v.  Fitcli,  4  Conn.  E.   Co.   v.   Model   E.   Co.,   i:U   Iowa 

.3(12;  Lane  v.  Cook,  3  Day,  2,5,'");  Keys  GHf),  1.3  L.R.A.{N.S.)   .')29. 

V.  Hoppe,  S.'-,  Misc.  (N.  Y.)  3(;4.    See  49  Atlanta  E.  Co.  v.  Fulton  E.  & 

note  to  §  110.  C.  Mills,  106  Ca.  427;   Bolen  C.  Co. 

The    sale    of    goods    at    dilVerent  v.  Whittaker  13.  Co.,  52  Kan.  747. 

times    and    npon    different    orders,  50  Beck  v.  Devereaux,  9  Neb.  109. 

payment   for   all   being  due,   eonsti-  si  Secor  v.  Stiirgis,  16  N.  Y.  5.54. 


§    112]  ENTIKETY    OF    DAMAGES.  387 

defendant  had  received  at  tlic  time  when  he  coniiiiciicod  the  for- 
mer action  were  considered  as  inchided  in  and  constitntinjij  one 
entire  cause  of  action,  and  the  recovery  was  confined  in  the  hist 
action  to  the  4G/.,  though  the  defendant's  actual  receipts  iov  tim- 
ber were  very  much  greater  than  the  default  judgment.^^ 

Where  the  captain  of  a  steamboat  hired  a  barge  and  executed 
to  the  owner  a  contract  to  pay  $10  per  day  until  returned  in 
good  order  as  received,  but  fixed  no  time  when  it  should  be  re- 
turned or  the  money  paid,  it  was  held  that  the  barge  was  to  be 
returned  in  a  reasonable  time  considering  the  circumstances  of 
the  service  for  which  it  was  hired,  the  stipulated  rent  or  hire 
would  then  be  payable,  the  contract  was  entire  and  not  divisible, 
and  an  action  brought  thereon  after  the  expiration  of  such  rea- 
sonable time  for  the  amount  then  due  for  the  hire  of  the  barge 
at  the  rate  specified  in  the  contract  was  a  bar  to  a  subsequent 
action  on  the  same  contract  for  hire  accruing  after  the  period 
embraced  in  the  judgment  recovered  in  the  former  action.^' 
"If  the  barge  were  not  returned  upon  demand  in  a  reasonable 
time  it  would  be  a  breach  of  the  contract  for  the  return.  The 
right  of  the  party  in  such  a  case  is  not  to  exact  the  $10  a  day 
perpetually,  but  to  charge  at  that  rate  for  a  reasonable  time 
and  then  to  collect  the  value  of  the  barge,  and  by  suing  .  .  . 
(in  the  former  action)  ...  he  in  effect  averred  that  the 
reasonable  time  had  expired  and  the  whole  became  due."  ^* 

§  112.  Continuing  obligations.  Where  the  defendant  had 
covenanted,  in  1822,  that  the  plaintiff  should  have  a  continnal 
supply  of  water  for  a  mill  from  his  dam  and  totally  failed  t(i 
perform  after  1826,  and  in  1835  the  plaintiff  bronght  an  action 
for  the  breach  and  recovered  damages  sustained  by  him  up  to 
that  time,  it  was  held  a  bar  to  a  second  action  arising  from  a 
subsequent  failure  to  perform."  "It  is  true  the  covenant  stip- 
ulated for  a  continued  supply  of  water  to  the  plaintiff's  mill, 
and  in  this  respect  it  may  be  appropriately  styled  a  continuing 

62Bagot  V.   Williams,   3   B.   &   C.  55  Fish  v.  Follev,  (I  Hill,  M.     See 

235;   Risley  V.  Squire,  53  Barb.  2S0.  v..,   v     v    -j-r 

•'  ,       ,  ^     .  .    -r,  AiiK'iinaii   V.   Dcaiif,    i.Vl   N.   \.  3.>J, 

53  Stein  V.  Steamboat  Prairie  Rose, 

17  Ohio  St.  472,  93  Am.  Dec.  631.       28  Am.  St.  584:   S..utlicni  Bell   IVl. 

54  See  Bradley  v.  Washington,  etc. 

Co.,  9  Pet.  107,  9  L.  ed.  08.  &  T.  Co.  v.  Earle,  118  Ga.  506. 


388 


SUTllEKLAND    ON    DAMAGES. 


[§  112 


contract.  Yet,  like  any  other  entire  contract,  a  total  breach  put 
an  end  to  it  and  gave  the  plaintiff  the  right  to  sue  for  an  equiva- 
lent in  damages.  He  obtained  that  equivalent,  or  should  have 
obtained  it,  in  the  former  suit."  The  principle  has  been  ap- 
plied to  an  action  to  recover  rent  under  a  lease  for  a  term  of 
years  where  a  suit  was  brought  to  recover  the  rent  for  one  month 
which  was  due  when  another  suit  was  instituted,^^  and  to  an 
action  to  recover  the  expense  of  supporting  a  non-resident  pau- 
per, such  expense  accruing  after  the  recovery  in  a  former  suit  of 
the  amount  due  when  the  trial  was  had.^'  An  agreement  by  one 
party  to  support  another  during  life  is  a  similar  continuing, 
entire  contract,^®  if  it  is  unconditional.^^  A  separate  action  may 
be  maintained  whenever  there  is  a  new  cause  of  action  whether 
it  arises  at  the  same  time  as  another  cause  or  at  a  different 
time;  but  it  must  exist  and  be  complete  before  the  action  is 
brought.^"  The  recovery  on  an  express  contract  may  not  extend 
beyond  what  is  due  upon  it  when  the  action  was  begun,^^ 
Where  the  contract  is  indefinite  as  to  time  and  negative  in  char- 
acter successive  actions  may  be  brought,  as  where  one  who  has 
sold  his  interest  in  a  business  violates  his  contract  not  to  re- 
engage in  business  in  that  place, ^^ 

§  113.  Damages  accruing  subsequent  to  the  action.    It  is  not 
essential,  however,  that  all  the  injurious  effects  of  the  act  which 


56Burritt  v.  Bclfy,  47  Conn.  322; 
Eeynolds  v.  Jones,  63  Ark.  259.  See 
§  no,  particularly  the  New  York 
cases  cited. 

57  Marlborouj^li  v.  Sisson,  31  Conn. 
332.  See  Pinney  v.  Barnes,  17  id. 
420. 

58  Barthelotte  v.  Melanson,  35 
New  Bruns.  652;  Parker  v.  Russell, 
133  Mass.  74;  Amos  v.  Oakley,  131 
id.  413;  Schell  v.  Plumb,  55  N.  Y. 
592;  Sibley  v.  Rider,  54  Me.  466; 
Fales  V.  Heraenway,  64  Me.  373; 
Miller  v.  Wilson,  24  Pa.  114;  Car- 
penter V.  Carpenter,  66  Hun,  177; 
Shover  v.  Myrick,  4  Ind.  App.  7. 
See  Ferguson  v.  Ferguson,  2  N.  Y. 
360. 

59  Fay  V.  Guynon,  131  Mass.  31; 


Howell  V.  Young,  5  B.  &  C.  267; 
Warner  v.  Bacon,  8  Gray,  397,  69 
Am.  Dec.  253 ;  Prince  v.  Moulton,  1 
Ld.  Raym.  248 ;  Harbin  v.  Green, 
Hob.  189;  Coggesliall  v.  Coggeshall, 
2  Strobh.  51.  See  State  Bank  v. 
Fox,   3   Biatchf.  431. 

60  Rayburn  v.  Casualty  Co.,  141 
N.  C.  425. 

Successive  actions  may  be  main- 
tained for  successive  breaches  by  an 
irrigation  company  of  its  contract 
to  furnish  water  for  crops.  Old 
River  Rice  Irr.  Co.  v.  Stubbs,  — 
Tex.  Civ.  App.  — ,  168  S.  W.  28. 

61  McGinnis  v.  Hardgrove,  163 
Mo.  App.  20. 

62  Just  V.  Greve,  13  111.  App.  302; 
Pierce  v.  Woodward,  6  Pick.  206. 


§  113] 


ENTIKETY    OK    DAMAGES. 


389 


constitutes  the  cause  of  action  should  have  boon  developed  and 
suffered  before  suit;  it  is  immaterial  to  the  right  to  rccov(>r  for 
them  when  the  elfects  manifest  themselves  with  reference  to  the 
time  of  bringing  the  suit.  But  it  is  practically  nuiterial  to  the 
plaintiff  that  the  effects  be  so  manifest,  before  and  at  the  time 
of  the  trial,  as  to  be  susceptible  of  proof.  The  actual  effects 
down  to  the  time  of  the  trial  are  provable ;  and  whether  those 
which  may  ensue  later  may  be  taken  into  account  will  depend  on 
whether  they  are  imminent  and  sufKciently  certain.®'  Interest 
which  is  the  accessory  of  the  principal  does  not  stop  at  Ihc  coin- 
mencement  of  the  action,  but  may  always  be  computed  down  to 
the  verdict.®*  But  whether  continuing  damages  may  be  com- 
puted after  the  commencement  of  the  suit  will  depend  on  wheth- 
er they  proceed  from  the  act  complained  of  in  that  suit  as  the 
cause  of  action,  or  from  some  later  act  constituting  a  fresh  cause 
of  action.®^  A  judgment  creditor  in  lieu  of  her  judgment  agreed 
to  accept  the  bond  of  another  conditioned  for  her  maintenance 


esGroli  V.  South,  121  Md.  ()3!) ; 
Kearney  v.  Davin,  162  111.  App. 
37;  Philadelphia,  etc.  R.  Co.  v. 
Karr,  38  App.  D.  C.  ]n;3;  Wilson 
V.  Oregon-W.  R.  &  N.  Co.,  71  Wash. 
102;  Hancock  v.  White  Hall  T.  W. 
Co.,  102  Va  239,  citing  the  text; 
Holser  v.  Skae,  169  Midi.  484;  Bry- 
son  V.  McCone,  121  Cal.  153;  Sam- 
uel V.  Fidelity  &  C.  Co.,  76  Hun,  308; 
Salzgeber  v.  Mickel,  37  Ore.  216; 
Conlon  V.  McGraw,  66  Mich.  194; 
Coles  V.  Thompson,  7  Tex.  Civ.  App. 
666;  Cook  v.  Redman,  45  Mo.  App. 
397,  citing  the  text;  Galveston,  etc. 
R.  Co.  V.  Borsky,  2  Tex.  Civ.  App. 
545 ;  Filer  v.  New  York  Cent.  R.  Co., 
49  N.  Y.  42,  5  Am.  Neg.  Cas.  147; 
Hayden  v.  Albee,  20  Minn.  159; 
Hagan  v.  Riley,  13  Gray,  515; 
Spear  v.  Stacy,  26  Vt.  61;  Fort  v. 
Union  Pac.  R.  Co.,  2  Dill.  2.59;  Mo- 
bile &  M.  R.  Co.  V.  Gilmer,  85  Ala. 
422;  Erie  &  P.  R.  Co.  v.  Douthet,  88 
Pa.  243,  32  Am.  Rep.  451  (violation 
of    contract    to    pass    plaintifT    and 


family    (luriiii;    their    lives   u\er    de- 
fendant's roatl ) . 

64  Robinson  v.  l'>land,  2  Burr, 
1077;  Hovey  v.  Newton,  II  Pick. 
421;  iJuiiciui  V.  .Markeh'v,  Harp. 
276. 

65  American  Cliina  1).  Co.  v.  Boytl, 
148  Fed.  258;  Cooper  v.  Sillers,  30 
App.  D.  C.  .■)(i7 ;  Staiitiiii  v.  Lapp, 
113  Aid.  .•524:  Dunham  v.  Hastings 
P.  Co.,  95  .\pi..  Div.  (X.  V.)  :{60; 
Henderson  v.  Coleman,  19  Wyi>.  183; 
Mackay  v.  Hlackhtoii,  6  Xi'w  South 
Wales  St.  Kep.  248;  Isastern  Ten- 
nessee, etc.  I\.  Co.  V.  Staub,  7  Lea 
397;  Pierce  v.  Tennessee  ('.,  1.  e*c 
R.  Co.,  173  U.  S.  1.  43  !,.  ed. 
591,  5  Am.  Neg.  Re]).  747;  Has- 
kell County  Bank  v.  Bank,  51  Kan. 
39;  Troy  v.  Cheshire  R.  Co.,  23 
N.  H.  102;  Hicks  v.  Herring,  16  Cal. 
566;  Phillips  v.  Terry.  3  Keyca,  313; 
Cosgritr  V.  Miller,  10  Wyo.  190, 
quoting  the  text;  Phelps  v.  Cajte 
(Jirardeau  W.  W.  &  K.  L.  Co.,  165 
Mo.  App.  454. 


390  SUTHERLAND    ON    DAMAGES.  [§    113 

during  life  or  to  pay  lier  if  she  preferred  it  $150  per  annum; 
the  bond  to  be  secured  by  a  mortgage  on  the  land  of  the  obligor. 
The  defendant  was  employed  to  prepare  the  instrument  and  to 
have  the  mortgage  entered  of  record;  he  withheld  it  from  rec- 
ord until  the  property  became  otherwise  incumbered  by  claims 
to  an  amount  beyond  its  value  and  the  debtor  insolvent.  In  an 
action  on  the  case  the  injured  party  recovered  all  that  she  had 
lost  or  was  likely  to  lose ;  all  that  the  mortgage  if  duly  recorded 
would  have  been  worth  to  her.®^  Where  the  defendant  under- 
took with  the  plaintiff  to  be  surety  for  another  if  the  plaintiff 
would  let  to  him  a  specified  house  at  a  rent  stated  and  would 
execute  an  agreement  to  that  effect,  but  did  not,  the  defendant's 
undertaking  was  entire,  not  to  pay  the  rent  as  it  became  due 
from  time  to  time,  but  to  execute  an  obligation  to  do  so,  and 
only  one  action  could  be  brought  on  his  contract.^'  A  trustee 
ex  maleficio  cannot  be  held  liable  for  profits  beyond  the  date  of 
the  hearing.^* 

Where  a  personal  injury  is  committed  by  a  single  tortious 
act  that  act  is  a  cause  of  action  and  all  the  consequences  for 
which  compensation  may  be  recovered  are  an  entirety ;  recovery 
therefor  may  be  had  once  for  all  in  one  action  and  only  in  one, 
which  may  be  brought  any  time  after  the  act  is  committed.^^ 
So  of  any  act  done  or  default  made  which  is  a  breach  of  any 
stipulation  in  a  contract;  it  is  a  single  and  entire  cause  of 
action,  embracing  all  ensuing  consequences  for  which  compensa- 
tion is  allowed;  and  however  multifarious  may  be  the  stipula- 

66  Miller   v.   Wilson,   24   Pa.    114;  26  N.  Y.  49,  5  Am.  Neg.  Cas.  78;  Fet- 

Howell  V.  Young,  5  B.  &  C.  259.    See  ter  v.  Beale,  1  Salk.  11;  Hochster  v. 

Walton  V.   Ruggles,   180   Mass.   24;  De  la  Tour,  2  El.  &  B.  678;  Miller  v. 

Paro  V.  St.  Martin,  id.  29.  Wilson,  24  Pa.  114;  Veghte  v.  Hoag- 

67Waterbury  v.  Graham.  4  Sandf.  j^^j^j    .,9  N.  J.  L.  125;  Thompson  v. 

^^^'  Ellsworth,  39  Mich.  719;   Dailey  v. 

68  Augusta   N.   S.    Co.   v.   For  law,       ^.        ,  „  r^    nt       o  t     j    ooo 

*=  '       Dismal  Swamp  C.  Co.,  2  Ired.  222; 

''ea  Je^nkls  V.  Atlantic  C.  L.  R.  Co.,  ^'^""^^S-  &  E.  R.  Co   v.  Kern,  9  Ind. 

179  Fed.  535;  Smith  v.  St.  Louis  T.  ^P?"  ^^^-    ^"^^  '^'-  ^^■ 

Co.,    133   Mo.   App.   202,   citing   the  ^'^'^of   ^^^   ^^  "^'^"^^   ^^   *'^«   P^''" 

text ;  Bower  v.  The  Water  Witch,  19  formance  of  a  second  surgical  oper- 

How.  Pr.  241 ;   Curtis  v.  Rochester,  ation  on  the  plaintiff  though  it  was 

etc.  R.  Co.,  18  N.  Y.  534,  9  Am.  Neg.  performed  after  suit  brought.     Gib- 

Cas.  606;  Drew  v.  Sixth  Ave.  R.  Co.,  son  v.  Murray,  120  111.  App.  296. 


114] 


ENTIRETY    OF    DAMAGES. 


391 


tioiis  in  it  any  act  which  amounts  to  a  total  breach  constitutes 
but  a  single  cause  of  action ;  "'  unless  perhaps  where  the  stipu- 
lations are  so  distinct  and  relate  to  subjects  so  disconnected  as 
to  have  no  relation  or  unity  but  such  as  results  from  being  made 
at  the  same  time  or  contained  in  one  instrument.'^  Nor  can  an 
entire  claim  be  severed  by  partial  assignments  so  as  to  become 
the  foundation  of  several  suits  instead  of  one  unless  the  debtor 
consents  thereto.'^ 

§  114.  Damage  to  real  property.  Actions  for  single  and  con- 
tinuing nuisances  and  acts  which  are  wrongful  only  when  they 
result  in  damage  may  be  successively  brought ;  the  damages  re- 
coverable are  ordinarily  confined  to  those  which  accrued  prior 
to  the  time  each  action  was  begun.'^  In  an  action  for  damages 
occasioned  by  flooding  land  a  recovery  was  allow^ed  for  killing 
growing  trees  though  they  did  not  die  until  after  the  action 
was  commenced.'*  In  an  equity  suit  to  obtain  damages  for 
acts  done  and  to  restrain  their  continuance  if  a  temporary  in- 


70  Russell  V.  Excelsior  S.  &  Mfg. 
Co.,  120  111.  App.  23;  Wilkinson  v. 
Dunbar,  149  N.  C.  20;  Pacific  B.  Co. 
V.  United  States  F.  &  G.  Co.,  33 
Wash.  47;  Jacobs  v.  Davis,  34  Md. 
204;  Waterbury  v.  Graham,  4  Sandf. 
215;  Bancroft  v.  Wihspear,  44  Barb. 
209;  Spear  v.  Stacy,  26  Vt.  61.  See 
§  623  as  to  several  suits  for  breach 
of  a  covenant  against  incumbrances. 

71  Mcintosh  V.  Lown,  47  Barb. 
550. 

72  Hancock  v.  White  Hall  T.  W. 
Co.,  102  Va.  239,  quoting  the  three 
preceding  propositions ;  Chicago,  etc. 
R.  Co.  v.  Nichols,  57  111.  464; 
Fourth  Nat.  Bank  v.  Noonan,  88  Mo. 
372;  Loomis  v.  Robinson,  76  id.  488; 
Chicago  &  A.  R.  Co.  v.  Maher,  91 
111.   312. 

73  City  of  Ottumwa  v.  Nicholson, 
161  Iowa,  473;  Hayes  v.  St.  Louis 
&  S.  F.  R.  Co.,  177  Mo.  App.  201 : 
P.  Ballantine  &  Sons  v.  Public  Serv- 
ice Corp.,  86  N.  J.  L.  331,  L.R.A. 
1915A,  369;  Gulf  &  C.  R.  Co.  v.  Hart- 


ley, 88  Miss.  674;  Lewis  v.  Penn- 
sylvania R.  Co.,  76  N.  J.  L.  220; 
Salmon  v.  Blasier  Mfg.  Co.,  123  App. 
Div.  (N.  Y.)  171;  McHenry  v.  Par- 
kersburg,  66  W.  Va.  533,  29  L.R.A. 
(N.S.)  860,  citing  the  text;  Blunt 
V.  McCormick,  3  Denio  283;  Cum- 
berland &  0.  C.  Co.  V.  Hitchings,  65 
Me.  140;  Thayer  v.  Brooks,  17  Ohio, 
489;  LowethV.  Smith,  12  M.  &  W. 
582;  Beach  v.  Crain,  2  N.  Y.  86; 
St.  Louis,  etc.  R.  Co.  v.  Biggs.  52 
Ark.  240,  6  L.R.A.  804;  Cobb  v. 
Smith,  38  Wis.  21  ;  llazoltine  v. 
Case,  46  id.  301,  32  Am.  Rep.  715: 
Burnett  v.  Nicholson,  86  N.  C.  99; 
McConnel  v.  Kibbc,  29  111.  482,  33  id. 
175,  85  Am.  Dec.  265;  Holmes  v. 
Wilson,  10  A.  &  E.  503;  Kinnaird  v. 
Standard  O.  Co.,  89  Ky.  468.  25  Am. 
St.  545,  7  L.R.A.  451  ;  Tllinoia  Cent. 
R.  Co.  V.  Wilbourn,  74  Mi.ss.  2S4 ; 
Lamm  v.  Chicago,  etc.  R.  Co.,  45 
Minn.  71.  10  L.R.A.  208. 

74  Kollogg   v.   Kirksville.    132   Mo. 
App.    519:     Haydon    v.     All)oo,     20 


392  SUTHERLAND    ON    DAMAGES.  [§    114 

junction  is  disregarded  a  supplemental  bill  will  lie  to  recover 
damages  accruing  after  the  bringing  of  the  original  bill ;  ""^  and 
such  damages  may  be  recovered  without  a  supplemental  plead- 
ing.'^ In  Minnesota  the  abatement  of  a  nuisance  and  recovery 
of  damages  predicated  thereon  and  incident  thereto  constitute 
but  one  cause  of  action;  and  where  suit  was  brought  to  abate 
the  judgment  therein  barred  a  subsequent  proceeding  for  dam- 
ages based  upon  the  same  facts,  notwithstanding  the  pleading  in 
that  case  would  not  sustain  an  award  of  damages  and  none  were 
recovered.''  Injury  to  trees  on  noncontiguous  tracts  of  land  by 
the  same  act  gives  but  one  cause  of  action,  though  the  trees  are 
valuable  for  different  uses.'^ 

Until  recently  it  has  been  regarded  as  established  by  the  Eng- 
lish decisions  that,  where  injuries  to  the  land  of  one  person 
result  from  digging,  mining  or  building  upon  the  property  of  an- 
other, all  the  damages,  past  and  prospective,  were  recoverable 
in  one  suit  brought  upon  the  original  cause  of  action.'^  Late 
adjudications  have  established  another  rule.  In  1861  the  house 
of  lords  passed  upon  a  question  based  upon  the  following  facts : 
A.  B.  was  the  owner  of  a  house ;  C.  D.  was  the  owner  of  a  mine 
under  the  house  and  under  the  surrounding  land ;  C.  D.  worked 
the  mine  and  in  so  doing  left  insufficient  support  to  the  house, 
which  was  not  damaged  nor  the  enjoyment  of  it  prejudiced  until 
sometime  after  the  workings  had  ceased.  The  question  sub- 
mitted was :  ''Can  A.  B.  bring  an  action  at  any  time  within  six 
years  after  the  mischief  happened,  or  must  he  bring  it  within 
six  years  after  the  working  rendered  the  support  insufficient  ?" 
The  opinion  was  that  the  action  was  not  barred  if  brought 
within  six  years  from  the  time  the  mischief  was  done.^°    In  an 

Minn.  159;  Clark  v.  Nevada  L.  &  M.  78  Doak   v.    Mammoth    C.   M.   Co., 

Co.,  G  Nev.  202;  Baltimore  v.  Merry-  192  Fed.  748. 

man,   86  Md.  584.     See  Crabtree  v.  79  Mayne's   Dam.    138. 

Hagenbaugh,    25    III.    214,    70    Am.  so  Backhouse  v.   Bonomi,   0  H.   of 

Dec.  793.  L.  Cas.  503;   Bonomi  v.  Backhouse, 

75  Waterman  v.  Buck,  63  Vt.  544.  El.  B.  &  E.  622,  G54. 

76  Karns  v.  Allen,  135  Wis.  48.  Tlie  surface  owner's  cause  of  ac- 

77  Gilbert  v.  Boak  F.  Co.,  86  Minn.  lion  does  not  accrue  until  the  sub- 
365,  58  L.R.A.  735.  See  Murray  v.  sidence  lias  happened.  If  a  partial 
Butte,  35  Mont.  161.  subsidence  has  occurred,  depreciation 


§    114]  ENTIRETY    OF    DAMAGES.  393 

earlier  case  ^^  an  excavation  had  been  made  and  a  subsidence 
had  resulted,  the  injury  from  which  had  been  satisfied.  Sub- 
sequently another  subsidence  from  the  same  excavation  caused 
additional  injnry.  In  an  action  to  recover  for  the  latter  tlic 
defense  was  that  the  cause  of  action  in  respect  to  the  subsidence 
had  been  satisfied.  The  plaintiff  pleaded  that  he  was  not  suing 
for  that  canse  of  action,  but  for  a  new  and  different  cause,  the 
subsequent  subsidence.  The  defendent  contended  that  the 
pleading  was  bad  because  it  was  only  a  new  assignment  of  dam- 
age which  was  the  result  of  the  former  cause  of  action ;  with  this 
contention  the  court  agreed.  In  another  case  ^^  the  trustees  of 
a  turnpike  road  made  a  covered  drain  by  the  side  of  the  high- 
way ;  it  was  so  made  that  it  collected  water  in  it  and  the  water 
was  caused  to  flow  into  the  plaintiff's  mines,  and  could  not  go 
elsewhere.  It  was  answered  that  the  action  was  barred ;  but  it 
appeared  that  the  plaintiff  had  been  injured  within  the  time 
constituting  the  limitation.  The  court  said  the  causa  causans 
of  the  injury  to  the  property  was  a  continuing  cause ;  but  that 
cause  alone  gave  to  the  mine-owner  no  right  of  action ;  it  was  a 
cause  which  if  thereby  any  damage  was  occasioned  to  the  mine- 
owner's  property  would  immediately  give  him  a  cause  of  action ; 
it  had  given  him  a  cause  of  action  sometime  ago,  but  since  that 
the  trustees  continued  it ;  they  might  have  stopped  it ;  the  con- 
tinuing causa  causaiis  remained  and  remained  in  the  power  of 
the  trustees,  and  that  caused  a  new  injury  to  the  mine-owner's 
property,  that  was  a  new  right  of  action  because  it  was  an  injury 
to  his  property  in  each  case.  In  a  case  ®^  later  than  any  re- 
ferred to  it  was  held  by  a  majority  of  the  court,  Oockbui-ii,  C.  J., 
dissenting,  that,  where  land  and  buildings  are  injured  by  the  re- 
moval of  lateral  support  through  mining  operations  carried  on 
by  the  defendant  on  his  own  land  future  damages  arc  recover- 
able. Up  to  this  point  it  seems  clear  that  these  cases  are  in  con- 
flict ;  Wliitehouse  v.  Fellowes  not  being  harmonizable  with  Nick- 
in  value,  because  of  the  risk  of  fu-  82  \\  hitehouso  v.  Fellowes,  ]0  C. 
ture  subsidence,  cannot  be  regarded.  j,  ^^  ^^  ,  -^. 
West   Leigh    C.    Co.    v.    Tunnicliffe, 

[1908]   App.  Cas.  27.  ^^  '^»'"''   ^-    ^Valk.r.   W   ().    I!.    Djv. 

81  Nicklin  v.  Williams,  10  E.x.  259.       3S!J. 


394:  SUTIIEKLAND    ON    DAMAGES.  [§    114 

lin  V.  Williams,  and  the  latter  being  in  antagonism  with  Back- 
house V.  Bonomi.  This  is  the  view  of  the  court  of  appeal  in  a 
case  decided  in  1884  **  and  in  which  the  conclusion  of  the  dis- 
senting member  of  the  court  in  Lamb  v.  Walker  was  adopted 
as  a  correct  exposition  of  the  law  and  as  being  in  harmony  with 
the  decision  of  the  house  of  lords  in  Backhouse  v.  Bonomi.  As 
stated  by  the  master  of  the  rolls  in  Mitchell  v.  Darley  Main 
Colliery  Co.  the  views  of  the  chief  justice  in  Lamb  v.  Walker 
were  that  where  an  excavation  had  been  made  and  a  subsidence 
had  taken  place,  it  may  be  true  that  for  all  the  effects,  both  exist- 
ing and  prospective,  of  that  subsidence,  the  person  injured  ought 
to  sue  at  once.  But  what  is  to  be  done  as  to  a  new  subsidence  ? 
The  mine-owner  has  excavated  in  his  own  property;  he  knows 
that  he  has  caused  a  subsidence  to  his  neighbor's  property,  and 
he  knows  that  that  neighbor  is  entitled  to  damages  for  it;  will 
he  run  the  risk  of  allowing  that  excavation  to  continue,  the  ef- 
fects of  which  he  may  obviate  by  immediately  putting  in  a  wall 
or  propping  up  his  own  property?  There  is  nothing  to  pre- 
vent him ;  will  he  allow  that  to  continue  or  will  he  not  ?  If  he 
does  nothing,  he  is  not  counteracting  the  effects  on  his  neighbor's 
property  of  something  which  he  has  done  on  his  own ;  he  is  not 
counteracting  that  mischief  to  his  neighbor  by  doing  something 
on  his  own  property ;  and  if  there  is  a  new  subsidence  that  will 
give  his  neighbor  a  new  cause  of  action.  It  is  difficult  to  con- 
ceive that  the  jury  which  is  to  give  damages  for  the  first  subsi- 
dence that  is  existing  ought  to  give  damages  for  a  prospective 
new  subsidence  which  the  defendant  has  the  option  and  right 
to  prevent ;  so  that,  although  before  the  verdict  of  the  first  jury 
is  given,  or  although  at  the  time  that  that  verdict  is  given,  the 
mine-owner  is  doing  that  which  will  prevent  any  future  damage, 
nevertheless  the  jury  in  the  first  action  ought  to  take  into  con- 
sideration the  prospective  injury  which  might  be  thought  likely 
to  occur  at  the  time  when  the  action  was  brought.  Expressing 
his  own  views,  the  master  of  the  rolls  continued :  "That  seems 
to  me  a  proposition  which,  when  it  is  well  sifted  out  and  ex- 
amined, cannot  stand,  and  therefore  the  chief  justice's  reason- 

84  Mitchell  V.  Darley  Main  C.  Co.,       West   Leigh    C.    Co.,    [1906]    2    Ch. 
14   Q.    B.   Div.    125;    Tunnicliffe   v.       22. 


§    115]  ENTIRETY    OF    DAMAGES.  395 

ing,  of  itself,  and  without  reference  to  Backhouse  v.  Bonorai,  ia 
conchisive  to  show  that  each  subsidence  is  a  fresh  cause  of  ac- 
tion. Besides  that,  it  seems  to  me  to  be  in  accordance  with 
whart  was  decided  in  Backhouse  v.  Bonomi,  and  to  be  the  logical 
result  of  Backhouse  v,  Bonomi.  .  .  .  Therefore,  I  agree 
with  the  lord  chief  justice's  view  that  each  subsidence  is  a  new 
cause  of  action,  although  the  causa  causans  of  each  subsidence 
may  be  the  same.  It  may  be  argued  that  the  causa  causaiis  is 
not  the  same.  The  causa  causans  of  the  first  is  the  excavation, 
the  causa  causans  of  the  second  is,  as  a  matter  of  fact,  the  exca- 
vation unremedied,  or  the  combining  of  the  excavation  and  of  its 
remaining  unremedied."  A  similar  rule  has  been  applied  where 
the  acts  complained  of  were  not  continuous,  as  where  temporary 
flash-boards  were  erected  on  a  dam  from  time  to  time  or  the 
gates  thereof  were  opened  at  intervals ;  *^  and  where  the  water 
in  a  stream  had  been  diverted  by  placing  obstructions  therein.'^ 
The  cases  in  the  state  courts  are  generally  in  accord  with  the  ex- 
isting English  doctrine.*'  In  Pennsylvania  the  rule  is  other- 
wise.** In  Massachusetts  a  trespass  which  results  in  maintaining 
a  wall  cannot  be  recovered  for  after  the  recovery  and  payment 
of  substantial  damages  for  its  erection.*^ 

§  115.  Same  subject.  Where  injuries  result  from  a  tempo- 
rary trespass  upon  land  all  the  damage  done  must  be  recovered 
in  a  single  action.  If  there  has  been  a  recovery  for  the  injury 
inflicted  upon  a  special  part  of  a  tract  a  subsequent  action  can- 
not be  maintained  to  recover  for  that  done  to  another  portion  of 

SSNoyes  v.  Stillman,  24  Conn.  15.       erson  E.  R.  Co.,  6G  N.  J.  L.  218,  55 

86  Beckwith  v.  Griswold,  29  Barb.  L.R.A.  SI :  Bank  v.  Waterman,  2C 
294;    Wigle    v.    Gosfield    South,    25       Conn.  324. 

Ont.   L.   R.    646.      See    Williams   v.  88  Beach  v.   Scranton,  25   Pa.  Su- 

Missouri  F.  Co.,  13  Mo.  App.  70.  p^j..  430;  Noonan  v.  Pardee,  200  Pa. 

87  Cooper  V.  Sillers,  30  App.  D.  C.  ^-^^  g^  ^  p ^^  ^^q^  gg  ^^  gt_  722, 
567;  Catlin  C.  Co.  v.  Lloyd,  109  111.  ,^^  .^  Guarantee  T.  &  S.  D. 
App.    122;    Schmoe   V.    Cotton     167  ^^    ^.    ^^^^^^^,  ^  ^j  .^  ^^^^    ^^^^^^ 

Ind.  364;  Kansas  City  N.  R.  Co.  v.  ^^^    ^^       „.     ,«„       o       t,     .    n 

_,  ,       ,        -„    T^         1^1     CO    T  T>  A  ■-f'2    Pa.    94,    100.      Sep    Pantali    v. 

Schwake,    70    Kan.    141,    68    L.R.A.  '  ^    ^    ,    -r    ^       ,„  ,, 

„-„     o-                XT            ^K  rr^^    p,-„  Rochester  &  P.  C.  &  I.  Co.,   18  Pa. 

673;    Simon  v.  Nance,  45  Tex.  Liv. 

App.     480;     Smith    v.     Seattle,     18  Super.  341,  204  Pa.  158,  to  the  same 

Wash.  484;  St.  Louis,  etc.  R.  Co.  v.  ^^^ct. 

Bigga,   52   Ark.  240,  6  L.R.A.   804;  89  Mansfield  v.  Tenney,  202  Mnsa. 

Church  of  Holy  Communion  v.  Pat-  •'^12,   25   L.R..\.(N.S.)    73L 


396 


SUTHEELAND    ON    DAMAGES. 


[§  115 


it  at  the  same  time  and  by  the  same  act.^°    Where  the  trespass 
is  continuing  or  is  repeated  each  repetition  or  the  continuation 


I 


90  Mast  V.  Sapp,  140  N.  C.  533,  5 
L.K.A.(X.S.)  379,  ill  Am.  St.  864; 
Pierro  v.  St.  Paul,  etc.  R.  Co.,  39 
Minn.  451,  12  Am.  St.  673;  Child  v. 
Boston  &  F.  I.  Works,  19  Fed.  258; 
Williams  v.  Pomeroy  C.  Co.,  37  Ohio 
St.  583;  Jackson  v.  Emmons,  19  D. 
C.  App.  Cas.  250;  Dick  v.  Webster, 
6  Wis.  481;  Marshall  v.  Ulleswater 
S.  N.  Co.,  L.  R.  7  Q.  B.  166;  Lord 
Oakley  v.  Kensington  C.  Co.,  5  B. 
&  Aid.  138;  Clegg  v.  Dearden,  12  Q. 
B.  575;  Vedder  v.  Vedder,  1  Denio, 
257;  Beronio  v.  Southern  Pac.  R. 
Co.,  86  Cal.  415,  21  Am.  St.  57; 
Hoffman  v.  Mill  Creek  C.  Co.,  16-  Pa. 
Super.  631.  See  Pantall  v.  Roches- 
ter &  P.  C.  &  I.  Co.,  18  id.  341,  204 
Pa.  158. 

Where  damage  was  done  to  crops 
l)y  animals  which  got  access  to  them 
through  a  defective  fence  from  June 
to  December  a  recovery  for  the 
whole  damage  alleged  in  one  count 
was  proper.  Darby  v.  Missouri,  etc. 
R.  Co.,  156  Mo.  391;  Cook  v.  Red- 
man, 45  Mo.  App.  397. 

A  recovery  by  a  cotenant  for  dam- 
age to  land  inclosed  and  used  by  him 
does  not  bar  a  subsequent  action  by 
another  cotenant  for  damage  done 
by  the  same  act.  Gillum  v.  St. 
Louis,  etc.  R.  Co.,  4  Tex.  Civ.  App. 
622. 

In  Kansas  Pac.  R.  Co.  v.  Mihlman, 
n  Kan.  224,  Brewer,  J.,  discussed 
tliis  question  in  an  interesting  way. 
It  was  there  ruled  that  where  A. 
enters  upon  the  land  of  B.  and  digs 
a  ditch  thereon  there  .is  a  direct 
invasion  of  the  rights  of  B.,  a  com- 
pleted trespass,  and  the  cause  of  ac- 
tion for  all  injuries  resulting  there- 
from commences  to  run  at  the  time 
of  the  trespass;  the  fact  tliat  A. 
does  not  re-enter  B.'s  land  and  fill 


up  the  ditch  does  not  make  him  a 
continuous  wrong-doer  and  liable  to 
repeated  actions  as  long  as  the  ditch 
remains  unfilled;  no  one  can  be 
charged  as  a  continuing  wrong-doer 
who  lias  not  the  right  and  who  is 
not  inider  tlie  duty  of  terminating 
that  which  causes  the  injury;  a 
party  who  has  dug  a  ditch  upon  the 
hind  of  another  has  no  right  to  re- 
enter and  fill  it  up;  though  unfore- 
seen injury  results  from  a  completed 
act  there  does  not  arise  a  new  cause 
of  action  for  which  a  recovery  may 
be  had  after  the  original  wrong  has 
been  satisfied. 

Clegg  V.  Dearden,  12  Q.  B.  576,  is 
interesting  upon  tJie  same  distinc- 
tion. There  the  owner  of  a  coal 
mine  excavated  as  far  as  the 
boundary  (which  he  was  by  custom 
entitled  to  do),  and  continued  the 
excavation  wrongfully  into  the  neigh- 
boring mine,  leaving  an  aperture  in 
the  coal  of  tliat  mine,  through  which 
water  passed  into  it  and  did  damage. 
It  was  held  that  the  party  so  exca- 
vating was  liable  in  trespass  for 
breaking  into  the  neighboring  mine, 
but  not  in  an  action  on  the  case  for 
omitting  to  close  up  the  aperture 
on  his  neighbor's  soil,  though  a  con- 
tinuing damage  resulted  from  its 
being  unclosed.  It  was  also  held 
that  a  new  action  could  not  be  main- 
tained for  damages  occasioned  by 
the  flow  of  water  in  consequence  of 
the  aperture  remaining  unclosed 
after  an  action  on  the  case  had  al- 
ready been  brought  for  making  the 
aperture  and  letting  in  the  water, 
which  action  was  referred  to  arbi- 
tration, and  the  plaintiff  being  made 
a  party  to  the  reference  in  respect 
of  any  injury  to  him  by  any  of  the 
matters   alleged   in   the   declaration 


§   115] 


ENTIRETY    OF    DAMAGES. 


397 


after  suit  l)ronglit  is  a  fresh  wrong  and  affords  gronud  for  a 
new  action."  So  where  the  plaintiff  was  seized  of  an  ancient 
house  with  lights  therein  and  the  defendant  erected  a  building 
whereby  the  fonncr's  lights  were  obstructed,  a  recovery  for  the 
erection  did  not  bar  an  action  for  its  continuance.^^  In  another 
case  there  had  been  an  action  of  trespass  for  placing  stumps  and 
stakes  on  the  plaintitt"'s  land,  which  action  had  been  satisfied; 
a  subsequent  action  for  leaving  them  there  was  sustained  on 
the  ground  that  a  new  trespass  was  thereby  committed.®'     In 


in  such  action,  had  had  dainagc« 
awarded  and  paid  for  such  injury, 
although  the  damage  last  com- 
plained of  was  subsequent  to  the 
award  and  payment.  Lord  Denman, 
C.  J.,  said:  "The  gist  of  the  action 
as  stated  in  the  declaration  is  the 
keeping  open  and  unlilled  of  an  aper- 
ture and  excavation  made  by  the 
defendant  into  the  plaintiff's  mine. 
By  the  custom  the  defendant  was 
entitled  to  excavate  up  to  the  bound- 
ary of  his  mine  without  leaving  any 
barrier;  and  the  cause  of  action, 
therefore,  is  the  not  filling  up  of 
the  excavation  made  by  him  on  tiie 
plaintiff's  side  of  the  boiuidary  and 
within  his  mine.  It  is  not,  as  in  the 
case  of  Holmes  v.  Wilson,  10  A.  & 
E.  503,  a  continuing  of  something 
wrongfully  placed  by  the  defendant 
upon  the  premises  of  the  plaintiff; 
nor  is  it  a  continuing  of  something 
placed  upon  the  land  of  a  third  per- 
son to  the  nuisance  of  the  plaintiff, 
as  in  the  case  of  Thompson  v.  Gib- 
son, 7  M.  &  W.  456.  There  is  a  legal 
obligation  to  discontinue  a  trespass 
or  remove  a  nuisance;  but  no  such 
obligation  upon  a  trespasser  to  re- 
place what  he  has  pulled  down  or 
destroyed  upon  the  land  of  another, 
though  he  is  liable  to  an  action  of 
trespass  to  compensate  in  damages 
for  the  loss  sustained.  The  defend- 
ant having  made  an  excavation  and 


aperture  in  tlie  ijlaiutill's  land  was 
lialile  to  an  action  of  trespass;  but 
no  cause  of  action  arises  from  his 
omitting  to  re-enter  the  plaintill's 
land  and  fill  up  the  excavation; 
such  an  omission  is  neither  a  con- 
tinuation of  a  trespass  nor  of  a  nui- 
sance; nor  is  it  the  breach  of  any 
legal  duty."  Cumberland  &  0.  C. 
Co.  V.  iJitchings,  (55  Me.  140. 

Successive  actions  lie  for  the  un- 
lawful diversion  of  water.  Irving  v. 
.Media,  10  Pa.  Super.  132,  allirmed, 
without  opinion,   1!)4  Pa.  (J4S. 

Damages  sustained  since  the  suit 
was  begun  may  be  ri-conped  if  they 
are  set  up  by  ameiulnieiit  to  the 
plea.  Becker  v.  Doiialson,  i;j,'{  (la. 
8(J4. 

91  Morrison  v.  American  Tel.  &  T. 
Co.,  115  App.  Div.  (N.  Y.)  744.  See 
Southern  P.  Co.  v.  Cleveland.  Kif) 
Ala.  22. 

One  action  may  .suffice  where  a 
trespass  to  either  real  or  personal 
property  has  been  continued  without 
intermission  for  longer  than  one 
day  or  has  been  repeated  on  a  sub- 
sequent day.  Habig  v.  Parker,  70 
Neb.  102:  Folger  v.  Fields,  12  Gush. 

92Rosewell  v.   Prior,  2  Salk.  45!). 

93r?owyer   v.  Cook,  4  M.  G.  &   S. 

2.3(i.     Comjiare  Kansas  Pac.  R.  Co.  v. 

.Mililmaii,    17    Kan.  224. 


398  SUTHERLAND    OJST    DAMAGES.  [§    115 

Holmes  v.  Wilson^*  trespass  was  brought  against  a  turnpike 
company  for  continuing  buttresses  on  the  plaintiff's  land  to 
support  its  road.  He  had  recovered  compensation  in  a  former 
action.  After  refusing  to  remove  the  buttresses  on  request  an- 
other action  of  trespass  was  brought.  It  was  argued  for  the  de- 
fendant that  the  damages  given  in  the  first  action  were  to  be 
regarded  as  full  compensation  for  all  injuries  and  were 
to  be  taken  as  the  full  estimated  value  of  the  land  occupied  by 
the  buttresses ;  that  the  judgment  operated  as  a  purchase  of  the 
land.  In  reply  Patterson,  J.^lfeaid :  "How  can  you  convert  a  re- 
covery and  payment  of  damages  for  the  trespass  into  a  pur- 
chase ?  A  recovery  of  damages  for  a  nuisance  to  land  will  not 
prevent  another  action  for  continuing  it.  As  to  the  supposed 
effect  of  the  judgment  in  changing  the  property  of  the  land,  the 
consequence  of  that  doctrine  would  be  that  a  person  who  wants 
his  neighbor's  land  might  always  buy  it  against  his  will,  paying 
only  such  purchase-money  as  a  jury  might  assess  for  damages 
up  to  the  time  of  the  action.  If  the  property  was  changed 
when  did  it  pass  ?  Suppose  the  plaintiff  had  brought  ejectment 
for  the  part  occupied  by  the  defendant's  buttresses,  would  the 
recovery  of  damages  in  trespass  be  a  defense  ?  There  is  no  case 
to  show  that  when  land  is  vested  in  a  party  and  fresh  injuries 
are  done  upon  it  fresh  actions  will  not  lie."  Where  the  de- 
fendant dug  holes  in  and  deepened  the  bed  of  a  stream  in  order 
to  increase  its  water  supply,  with  the  result  that  the  water 
flowed  more  rapidly  j)ast  the  land  of  the  plaintiff  and  was  of  less 
depth,  so  that  such  land  was  liable  to  be  trespassed  on  by  cattle, 
the  plaintiff  was  entitled  to  bring  successive  actions  for  separate 
acts  of  trespass.^^  These  cases  may  be  distinguishable  from 
the  Kansas  decision  ®^  on  the  gTOund  that  the  request  to  remove 
the  things  complained  of  may  be  considered  as  a  license  to  enter 
for  that  purpose ;  but  otherwise  it  is  difficult  to  harmonize  them 
with  it.  It  may  be  that  the  true  ground  of  distinction  is  stated 
in  a  Maine  case :  ^"^     "When  something  has  been  unlawfully 

94  10  A.  &  E.  503.  96  Kansas  Pac.  K.  Co.  v.  Mihlman, 


supra 
97  t 
ern  R.  Co.,  [1805]  2  Irish,  294.  Hitchings,  G5  Me.  140. 


95  Clarke  v.  Midland  Great  West-  ._ , ,      i     ^      j     o     m     nt     r^ 

97  Cumberland    &    O.    C.    Co.    v. 


§    11(3]  EJMTlllKi'Y    OF    DAMAGES.  oUl) 

placed  upon  the  land  of  another,  which  can  and  oii^^ht  to  ho  re- 
moved, then,  inasmuch  as  successive  actions  may  1)0  maintained 
until  the  wrongdoer  is  compelled  to  remove  it,  the  damages  in 
such  suit  must  he  limited  to  the  past  and  cannot  endn-ace  the 
future." 

§  116.  Same  subject.  The  authorities  are  not  agreed  as  to 
the  right  to  bring  successive  actions  where  the  result  of  a  tort 
to  real  property  is  to  create  a  permanent  appropriation  of  it  to 
the  public  use,  as  for  railroads,  streets,  sewers  and  the  like, 
or  to  change  its  condition  so  as  to  adapt  it  to  the  grade  of  streets. 
Where  property  is  taken  for  public  use  under  the  statutes  whicli 
provide  therefor  prospective  damages  as  well  as  others  are  as- 
sessed; they  are  an  entirety'  and  all  such  as  proceed  from  the 
appropriation  of  it  to  the  use  for  which  it  is  taken  are  presumed 
to  have  been  anticipated.^^  If  land  is  damaged  by  a  permanent 
structure  lawfully  erected,  which,  without  any  further  act  except 
to  keep  it  in  repair,  must  continue  to  cause  the  result  which  is 
complained  of,  the  owner  may  recover  in  one  action  for  damages 
sustained  and  those  which  will  fall  upon  him.  The  judgment 
in  the  action  first  brought  will  bar  another  like  action  for  sub- 
sequent injuries  from  the  same  cause.^^    A  recovery  of  prospec- 

98  White  V.  Chicago,  etc.  R.  Co.,  2!)  Mo.  141 ;  Baker  v.  Johnson,  2 
122  Ind.  317,  7  L.R.A.  257;  Perley  Hill,  342;  Call  v.  Middlesex,  2  Gray, 
V.  B.  C.  &  M.  R.  Co.,  57  N.  H.  212;  232;  Veghte  v.  Hoagland,  29  N.  J.  L. 
Sawyer  v.  Keene,  47  id.  173;  Aldrich  125;  Gait  v.  Chicago,  etc.  R.  Co.,  157 
V.  Cheshire  R.  Co.,  21  id.  359,  53  111.  125,  citing  the  text;  Long  Island 
Am.  Dec.  212;  Fowle  v.  New  Haven  R.  Co.  v.  State,  157  App.  Div.  (\. 
&  N.  Co.,  107  Mass.  352,  112  id.  Y.)  12.  But  see  Lancashire  R.  Co. 
334,  17  Am.  Rep.  106;  Van  Schoick  v.  Evans,  15  Beav.  322. 
V.  Delaware  Canal,  20  N.  J.  L.  249;  It  is  said  in  North  Vernon  v. 
Water  Co.  v.  Chambers,  13  N.  J.  Eq.  Voogler,  103  Ind.  314,  that  the  con- 
199;  Waterman  v.  Connecticut  R.  struction  of  works  of  a  public  char- 
Co.,  30  Vt.  610,  73  Am.  Dec.  326;  acter  by  municipal  officers  is  clearly 
Chesapeake  Canal  v.  Grove,  11  Gill  analogous  to  the  seizure  of  land  un- 
&  J.  398;  Furniss  v.  Hudson  River  der  the  right  of  eminent  domain  and 
R.  Co.,  5  Sandf.  551;  Baltimore  R.  that  all  the  damages  occasioned 
Co.  V.  Magruder,  34  Md.  79,  6  Am.  thereby  must  be  assessed  in  one  ac- 
Rep.  310;  Missouri  R.  Co.  v.  Hainea,  lion.  But  this  position  is  contro- 
10  Kan.  439;  LaFayette  R.  Co.  v.  verted  l>y  a  case  considered  in  tlie 
New  Albany,  13  Ind.  90,  74  Am.  Dec.  text  of  this  section. 
246;  Montmorency  R.  Co.  v.  Stock-  99  Vette  v.  Sanitary  Dist.  of  Chi- 
ton, 43  Ind.  328;  Evans  v.  Haefner,  cago,  260  111.  432;  Shrout  v.  Chesa- 


400 


SUTHERLAND    ON    DAMAGES. 


[§  116 


tive  damages  in  such  a  ease  will  bar  an  action  for  subsequent 
damages  though  caused  by  an  unusual  event.^  In  some  cases 
this  principle  has  been  extended  to  the  unlawful  entry  upon  land 
by  railroads  and  the  building  of  tracks  or  streets  thereon,^  and 
in  others  to  the  rightful  improvement  of  a  street,  though  the 
work  was  negligently  done  and  the  negligence  was  the  cause  of 
the  action.^  These  decisions  are  rested  on  the  principle  that 
the  parties  have  elected  to  consider  the  trespass  as  permanent, 
and  they  apply  the  rule  applicable  in  condemnation  proceed- 
ings which  requires  a  final  adjustment  of  the  liability  of  the 
party  condemning.  As  will  appear  there  are  strong  objections 
and  weighty  authorities  in  opposition.  Some  of  the  courts  which 
entertain  this  view  hold  that  if  the  gist  of  the  complaint  is  not 


peake  &  O.  Ry.  Co.,  157  Ky.  1;  Ches- 
apeake &  0.  Ry.  Co.  V.  Blankenship, 
158  Ky.  270;  Wasioto  &  B.  M.  R.  Co. 
V.  Blanton,  160  Ky.  134;  Louisville 
&  N.  R.  Co.  V.  Wliitsell,  125  Ky. 
433;  Gartner  v.  Chicago,  etc.  R.  Co., 
71  Neb.  444;  Teimey  v.  Cincinnati, 
5  Ohio  C.  C.  (N.  S.)  459;  Settegast 
V.  Houston,  etc.  R.  Co.,  38  Tex.  Civ. 
App.  623;  Anctil  v.  Quebec,  33  Can. 
Sup.  Ct.  347  (reservation  of  the 
right  to  further  recourse  is  ineffect- 
ual )  ;  Fowle  v.  New  Haven  &  N.  Co., 
107  Mass.  352;  Troy  v.  Cheshire  R. 
Co.,  23  N.  H.  83;  Chicago  &  A.  R. 
Co.  V.  Maher,  91  111  312;  Same  v. 
Schaffer,  26  111.  App.  280;  Same  v. 
Loeb,  118  111.  203;  Swantz  v.  Muller, 
27  111.  App.  320;  Elizabethtown,  etc. 
R.  Co.  V.  Combs,  10  Bush,  382,  19 
Am.  Rep.  67;  Jefl'ersonville,  etc.  R. 
Co.  v.  Esterle,  13  Bush,  667;  North 
Vernon  v.  Voegler,  103  Ind.  314; 
Philadelphia,  etc.  R.  Co.  v.  Karr,  38 
App.  D.  C.  193;  Central  Branch 
Union  Pac.  R.  Co.  v.  Andrews,  26 
Kan.  702;  Ohio  &  M.  R.  Co.  v. 
Wachter,  123  111.  440;  Bizer  v.  Ot- 
tumwa  H.  Co.,  70  Iowa  145 ;  Powers 
v.   Council  Bluffs,  45   Iowa  652,  24 


Am.  Rep.  792;  Indiana,  etc.  R.  Co. 
v.  Eberle,  110  Ind.  542,  59  Am.  Rep. 
225;  Lafayette  v.  Nagle,  113  Ind. 
425;  Frankle  v.  Jackson,  33  Fed. 
371. 

But  see,  Smith  v.  Sanitary  Dist. 
of  Chicago,  260  111.  453,  where  sub- 
sequent damage  was  caused  by  turn- 
ing additional  water  into  a  river 
previously  dammed. 

1  Fowle  V.  Now  Haven  &  N.  Co., 
112  Mass.  334.  17  Am.  Rep.  106. 

2  Williams  v.  Southern  Pac.  R. 
Co.,  150  Cal.  624;  Pinney  v.  Win- 
sted,  83  Conn.  411;  Keyser  v.  Mich- 
igan S.  R.  Co.,  142  Mich.  143;  Chesa- 
peake &  O.  R.  Co.  v.  Moats,  20  Ky. 
L.  Rep.  1757,  50  S.  W.  31;  Inter- 
national, etc.  R.  Co.  V.  Gieselman, 
12  Tex.  Civ.  App.  123;  Frankle  v. 
Jackson,  33  Fed.  371;  Central 
Branch  Union  Pac.  R.  Co.  v.  An- 
drews, 26  Kan.  702;  Indiana,  etc. 
R.  Co.  v.  Eberle,  supra;  Baldwin  v. 
Chicago,  etc.  R.  Co.,  35  Minn.  354. 

3  North  Vernon  v.  Voegler,  103 
Ind.  314;  Powers  v.  Council  Bluffs, 
svpra;  Harper  v.  Lenoir,  152  N.  C. 
723. 


§    11^  J  ENTIKETY    OF    DAMAGES.  401 

the  unlawful  entry  and  occupation,  but  the  improper  use,  that 
the  wrong  nuiy  be  redressed  in  successive  actions.* 

For  damages  resulting  from  the  negligent  erection  or  con- 
struction of  a  building  or  culvert  which  is  erected  or  constructed 
pursuant  to  law,  successive  actions  may  be  brought.^  Damage 
to  crops  by  the  annual  overflow  of  water  is  susceptible  of  ap- 
portionment and  compensation  therefor  may  be  recovered  in 
successive  actions.^  In  a  New  York  case,  which  was  fully  con- 
sidered '  it  is  held  that,  if  a  railroad  is  constructed  upon  or  over 
a  highway  in  which  or  in  the  soil  of  which  individuals  have  pri- 
vate rights,  unless  the  public  right  is  obtained  and  private  rights 
are  lawfully  acquired  the  builders  thereof  are  trespassers,  and 
an  adjacent  owner  may  recover  only  the  damages  he  has  sus- 
tained up  to  the  commencement  of  the  action;  for  damages 
thereafter  resulting  successive  actions  may  be  brought,®  There 
is  no  presumption  that  the  trespass  will  be  continued,  and  title 
to  laud  (;annot  be  acquired  otherwise  than  by  purchase  or  con- 
demnation proceedings.*  Criticising  the  rule  held  l)v  some 
courts  to  the  effect  that  where  the  character  of  the  injui'y  is  per- 
manent and  the  complaint  recognizes  the  defendant's  risrht  to 
continue  in  the  use  of  the  propert}^  and  to  acquire  as  the  result 
of  the  suit  the  owner's  right  thereto,  in  pursuance  of  which  the 
damages  are  assessed  on  the  basis  of  the  permanent  depreciation 
of  the  property  and  with  special  reference  to  a  case  which  holds 
that  damages  may  be  so  assessed  for  negligence  in  making  a  law- 
ful improvement  in  a  street,^"  Earl,  J.,  says  that  in  his  opinion 

^  Lindquest  v.  Union  Pac.  K.  Co.,  New  York.     Ni'w  York  Mat.  I!ank  v. 

33  Fed.  372.  Metropolitan   E.   R.  Co.,   108   N.   Y. 

5  Ohio  &  M.  R.  Co.  V.  Wachter,  123  UGO;   Pond  v.  Same,  112  N.  Y.  ISO, 

111.    440;    Chicago,    etc.    R.    Co.    v.  8  Am.  St.  734.     Sec  T^hr  v.  Same, 

Schaffer,  26  111.  App.  280,  aff'd  124  104  N.  Y.  270;    Henderson   v.   New 

111.  112.  York   Cent.   R.   Co.,   78  N.   Y.  423; 

eOldfield  V.  Wabasli,  etc.  R.  Co.,  Schell  v.   Plumb,  r)5  id.  502. 

22   Mo.   App.   607;    Van   Hoozier   v.  9  Carl   v.   Sheboygan,   etc.   R.   Co., 

Hannibal,  etc.  R.  Co.,  70  Mo.  145;  46  Wis.  625;  Blcsch  v.  Chicago,  etc. 

Dickson  v.  Chicago,  etc.  R.  Co.,   71  R.    Co.,    43    Wis.    183;     Russell    v. 

id.  575.  Brown,  63  Me.  203;   Cumberland  & 

7UIine  V.  New  York,  etc.  R.  Co.,  O.  C.   Co.   v.  Hitcbings,   65   id.   140. 

101  N.  Y.  98,  54  Am.  Rep.  661.  10  North    Wrnon    v.    Voeglcr,    103 

8  This  rule  is  well  established   in  Ind.  314. 
Suth.  Dam.  Vol.  I.— 26. 


402  SUTHERLAND    ON    UAMAOKS.  [§    116 

that  decision  is  clearly  unsound  as  to  the  precise  question  ad- 
judged. ''What  right  was  there  to  assume  that  the  street  would 
be  left  peraianently  in  a  negligent  condition,  and  then  hold  that 
the  plaintiff  could  recover  damages  upon  the  theory  that  the 
carelessness  would  forever  continue  ?"  The  municipality  "may 
cease  to  be  careless,  or  remedy  the.  effects  of  its  carelessness,  and 
it  may  apply  the  requisite  skill  to  its  embankment,  and  this  it 
may  do  after  its  carelessness  and  unskilfulness  and  the  conse- 
quent damages  have  been  established  by  a  recovery  in  an  action. 
The  moment  an  action  has  been  commenced,  shall  the  defendant 
in  such  a  case  be  precluded  from  remedying  its  wrong?  Shall 
it  be  so  precluded  after  a  recovery  against  it  ?  Does  it  estab- 
lish the  right  to  continue  to  be  a  wrong-doer  forever  by  the  pay- 
ment of  the  recovery  against  it?  Shall  it  have  no  benefit  by 
discontinuing  the  wrong,  and  shall  it  not  be  left  the  option  to 
discontinue  it  ?  And  shall  the  plaintiff  be  obliged  to  anticipate 
his  damages  with  prophetic  ken  and  foresee  them  long  before,  it 
may  be  many  years  before,  they  actually  occur,  and  recover  them 
all  in  his  first  action  ?  I  think  it  is  quite  absurd  and  illogical 
to  assume  that  a  wrong  of  any  kind  will  forever  be  continued 
and  that  the  wrong-doer  will  not  discontinue  or  remedy  it,  and 
that  the  convenient  and  just  rule,  sanctioned  by  all  the  authori- 
ties in  this  state,  and  by  the  great  weight  of  authority  elsewhere, 
is  to  permit  recoveries  in  such  cases  by  successive  actions  un- 
til the  wrong  or  nuisance  shall  be  terminated  or  abated. ^^  In 
Pennyslvania  if  the  damage  from  the  taking  and  from  the  change 
of  grade  arises  at  the  same  time  the  compensation  awarded  or 
recovered  for  the  taking  embraces  the  damages  resulting  from 

11  The  writer  of  the  ojiinioii  cited  Rep.  42;   Tliompson  v.  Morris  C  & 

Rosewell  v.  Prior,  2  Sall<,  460;  Bow-  B.  Co.,  17  N.  J.  L.  480;   Thayer  v. 

yer   v.    Cooiv,   4   M.,    G.    &    S.    23G;  Brooks,  17  Ohio,  489;  Anderson,  etc. 

Holmes  v.  Wilson,  10  A.  &  E.  503;  R.    Co.    v.    Kernodle,    54   Ind.    314; 

Thompson  v.  Gibson,  8  M.  &  W.  281;  Harrington  v.  St.  Paul,  etc.  R.  Co., 

Mitchell  V.  Darley  Main  C.  Co.,  14  17   Minn.   215;    Adams  v.   Hastings 

Q.  B.  Div.  125;   Whitehouse  v.  Fel-  &   D.   R.   Co.,   IS   id.   260;    Ford   v. 

lowes,  10  C.  B.    (N.  S.)    765;   Esty  Chicago  &  N.  R.  Co.,  14  Wis.  609,  80 

V.    Baker,    48    Me.    495;    Russell    v.  Am.   Dec.   791;    Carl  v.   Sheboygan, 

Brown,   63   id.    203;    Cumberland  &  etc.  R.  Co.,  46  Wis.  625;   Blesch  v. 

O.  C.  Co.  V.  Hitchings,  65  id.  140;  Chicago  &  N.  R.  Co.,  43  Wis.  183; 

Bare  v.  Hoffman,  79  Pa.  71,  21  Am.  Green  v.  New  York,  etc.  R,  Co.,  65 


§    118 J  ENTIRETY    OF    DAMAGES.  403 

the  change  of  grade/^  but  if  the  latter  is  made  subsequent  to 
the  taking,  an  action  to  recover  the  damages  done  thereby  will 
lie." 

§  117.  Contracts  of  indemnity.  Upon  contracts  of  indem- 
nity, if  there  has  been  a  breach  before  suit  brought,  any  actual 
damage  subsequently  resulting  therefrom  or  payments  made  by 
the  indemnified  party  covered  by  the  agreement  after  as  well 
as  before  the  commencement  of  suit  and  down  to  the  time  of 
trial  may  be  included  in  the  recovery."  So  if  the  defendant's 
breach  of  any  contract  or  his  wrongful  act  has  involved  the 
injured  party  in  a  legal  liability  to  pay  money,  or  he  has  in- 
curred indebtedness  to  a  third  person,  or  expenses  to  relieve 
against  the  effects  of  the  act  which  constitutes  the  cause  of 
action  such  liability,  indebtedness  or  expenses,  paid  or  not, 
constitutes  an  element  of  damage  without  regard  to  the  time 
when  it  was  actually  incurred  or  discharged.^^ 

§  118.  Damage  to  property  and  injury  to  person,  and  injury 
to  the  person  and  damage  to  reputation  by  same  act.  The  ques- 
tion has  arisen  whether  damage  inflicted  upon  property  and 
injury  resulting  to  the  person  from  one  act  of  negligence  will 
give  cause  for  independent  actions.  Through  the  negligence 
of  the  defendant's  servant  the  plaintiff's  cab  was  damaged  and 
his  person  injured.  An  action  to  recover  for  the  damage  done 
to  the  cab  was  successful.  Subsequently  an  action  to  recover 
for  the  personal  injuries  was  instituted.  It  was  held  that 
inasmuch  as  the  damages  therefor  might  have  been  claimed  in 
the  other  action,  the  judgment  recovered  in  it  barred  the  second 
suit.^^  It  was  considered  that  there  was  but  one  wrong  though 
there  were  two  consequences.     The  court  of  appeal  reversed 

How.  Pr.  154;  Taylor  v.  Metropoli-  Co.,  Ill  Minn.  376,  citing  the  text; 

tan  E.  R.  Co.,  50  N.  Y.  Super.  311;  Allen    v.    Eneroth,    111    ISlinn.    305; 

Duryea  v.  Mayor,  etc.,  26  Hun  120,  Spear  v.  Stacy,  26  Vt.  61. 

and  other  cases  in  New  York.  15  Spear   v.    Stacy,   supra;    Dixon 

i2Righter    V.    Philadelphia,     161  v.   Bell,    1    Stark.    287;     Hagan    v. 

Pa.   73.  Riley,     13     Gray,     515;     Smith     v. 

13  Clark  V.  Philadelphia,  171   Pa.  Howell,  6  Ex.  730;  Kenyon  v.  Wood- 

30,    50    Am.    St.    790;    Rodgers    v.  ruff,  33  Mich.  310. 

Philadelphia,  181  Pa.  243.  16  Brunsden   v.    irumphny.    11    Q. 

l4Brandrup    v.    Empire    State   S.  I?.   Div.    712. 


404  SUTHERLAND    ON    DAMAGES.  [§    118 

this  judgment,  Coleridge,  C.  J.,  dissenting.  The  majority  of 
the  court  were  of  the  opinion  that  "two  separate  kinds  of  in- 
jury were  in  fact  inflicted,  and  two  wrongs  done.  The  mere 
negligent  driving  in  itself,  if  accompanied  by  no  injury  to  the 
plaintiff,  was  not  actionable  at  all,  for  it  was  not  a  wrongful 
act  at  all  till  a  wrong  arose  out  of  the  damage  which  it  caused. 
One  wrong  was  done  as  soon  as  the  plaintiff's  enjoyment  of 
his  property  was  substantially  interfered  with.  A  further 
wrong  arose  as  soon  as  the  driving  also  caused  injury  to  the 
plaintiff's  person.  Both  causes  of  action  in  one  sense  may  bo 
said  to  be  founded  upon  one  act  of  the  defendant's  servant, 
but  they  are  not  on  that  account  identical  causes  of  action."  ^' 
This  distinction  impresses  the  writer  as  too  metaphysical  for 
practical  purposes,  and  as  out  of  harmony  with  the  analogies 
of  the  law.  Assent  is  compelled  to  the  opposite  view  by  the 
reason  given  by  the  chief  justice  in  his  dissenting  opinion:  "It 
appears  to  me  that  whether  the  negligence  of  the  servant  or  the 
impact  of  the  vehicle  which  the  servant  drove  be  the  technical 
cause  of  action,  equally  the  cause  is  one  and  the  same;  that 
the  injury  done  to  the  plaintiff  is  injury  done  to  him  at  one 
and  the  same  moment  by  one  and  the  same  act  in  respect  of 
different  rights,  i.  e.,  his  person  and  his  goods,  I  do  not  in  the 
least  deny;  but  it  seems  to  me  a  subtlety  not  warranted  by  law 
to  hold  that  a  man  cannot  bring  two  actions  if  he  is  injured  in 
his  arm  and  in  his  leg,  but  can  bring  two  if  besides  his  arm  and 
leg  being  injured  his  trousers  which  contains  his  leg  and  his 
coat  sleeve  which  contains  his  arm  have  been  torn."  The  rule 
which  prevails  in  the  state  courts  generally  is  in  harmony  with 
the  views  of  the  dissenting  opinion  quoted  from.^^     In  New 

17  Id.,  14  Q.  B.  Div.  141.  See  .396  (the  last  case  approves  this 
Rose  V.  Buckett,  [1901]  2  K.  B.  language  from  the  Minnesota  case: 
449.  The    different    injuries    constituted 

18  Birmingham  S.  R.  Co.  v.  Lint-  separate  items  of  damage,  but  only 
ner,  141  Ala.  420;  Shoemaker  v.  gave  rise  to  one  cause  of  action; 
Jackson,  128  Iowa,  488,  1  L.R.A.  that  rule  of  construction  should  be 
(N.S.)  137;  Cole  v.  Illinois  Cent.  adopted  which  will  most  speedily 
R.  Co.,  120  Ky.  686 ;  King  v.  Chi-  and  economically  bring  litigation  to 
cago,  etc.  R.  Co.,  80  Minn.  83,  50  an  end,  if  at  the  same  time  it  con- 
L.R.A.  161,  81  Am.  St.  238;  Kimball  serves  the  ends  of  justice.  There  is 
V.  Louisville  &  N.  R.  Co.,  94  Miss.  nothing   to    be   gained   in    splitting 


§  118] 


ENTIRETY    OF    DAMAGES. 


405 


York,  however,  the  English  doctrine  is  favored.  The  ground 
upon  which  the  court  rested  its  ruling  is  that  there  is  such  an 
essential  dilierence  hetween  an  injury  to  the  person  and  au 
injury  to  property  that  makes  it  impracticable,  or,  at  least,  very 
inconvenient  in  the  administration  of  justice  to  blend  the  two. 
Different  periods  of  limitation  apply,  and  the  law  governing  the 
assig-nment  of  the  two  causes  of  action  varies.^^  One  of  the 
Texas  courts  of  civil  appeals  favors  the  English  rule,^°  and  also 
one  of  the  courts  of  appeals  of  California.^^ 

It  seems  quite  consonant  with  the  prevailing  view  as  to  tlio 
recovery  of  damages  for  injury  to  property  and  to  the  person 
by  the  same  act  that  one  who  commits  an  assault  and  battery 
and  at  the  same  time  makes,  in  the  hearing  of  others,  a  slan- 
derous accusations  against  the  assaulted  person  should  respond 
for  both  wrongs  in  the  same  action,  the  injury  to  reputation 
being  pleaded  as  special  damages.^^  But  in  New  York  the 
language  used  may  be  proved  only  for  the  purpose  of  showing- 
malice.^^ 


up  the  rights  of  an  injured  party, 
and  much  may  be  saved  if  one  ac- 
tion is  made  to  cover  the  subject)  ; 
Hof  V.  St.  Louis  T.  Co.,  213  Mo.  445; 
Fernandez  v.  Vahles,  4  Porto  Kico 
Fed.  48;  Missouri,  etc.  R.  Co.  v. 
Lightfoot,  48  Tex.  Civ.  App.  120; 
Mullerleile  v.  Brandt,  64  Wash.  280; 
Pittsburgh,  etc.  R.  Co.  v.  Carlson, 
24  Ind.  App.  559,  566,  7  Am.  Neg. 
Rep.  310;  Wesley  v.  Chicago,  etc. 
R.  Co.,  84  Iowa,  441 ;  Owensboro  & 
H.  G.  R.  Co.  V.  Coons,  20  Ky.  L. 
Rep.  1678 ;  Braithwaite  v.  Hall,  168 
Mass.  38,  1  Am.  Neg.  Rep.  623; 
Bliss  V.  New  York  Cent.  etc.  R. 
Co.,  160  Mass.  447,  455;  Nokken  v. 
Avery  Mfg.  Co.,  11  N.  D.  399; 
"Von  Fragstein  v.  Windier,  2  Mo. 
App.  598;  Lamb  v.  St.  Louis,  etc. 
R.  Co.,  33  id.  489. 

19  Reilly  v.  Sicilian  A.  P.  Co.,  170 
N.  Y.  40,"  57  L.R.A.  176,  88  Am.  St. 
636. 

20  Watson  v.  Texas  &  P.  R.  Co.,  8 


Tex.  Civ.  App.  144.     See  Stickford 
v.  St.  Louis,  7  Mo.  App.  317. 

21  Schermerliorn  v.  Los  Angeles 
Pac.  R.  Co.,  18  Cal.  App.  454.  Tlie 
code  provides  that  the  plaintill  may 
unite  several  causes  of  action  where 
they  arise  out  of  "(6)  injuries  to 
person,  (7)  injuries  to  property," 
and  "the  causes  of  action  so  united 
must  all  belong  to  one  only  of  tiiese 
classes."  A  cause  of  action  for  dam- 
age to  property,  injury  to  character 
and  impairment  of  liealth  cannot  l)o 
united.  Lamb  v.  Ilarbaugli.  105 
Cal.    680. 

22  Birmingham  R.,  L.  &  P.  Co.  v. 
Norris,  2  Ala.  App.  610,  citing  Car- 
rick  v.  Joachim,  126  La.  5,  28  L.R.A. 
(N.S.)  85;  Kelley  v.  Kelley,  8  Ind. 
App.  606;  Conklin  v.  Consolidated 
R.  Co.,  196  Mass.  302;  Wadsworlli 
V.   Treat,   43   Me.   163. 

23  Calvin  v.  Starin,  1.32  .\pp.  Div. 
(N.  v.)   577. 


406  SUTHERLAND    ON    DAMAGES.  [§    119 

§  119.  What  is  not  a  double  remedy.  In  an  attachment  in 
equity  against  B.  and  A.  the  property  of  A.  was  taken  as  the 
property  of  B.,  and,  being  perishable,  was  sold  under  an  order 
of  the  court,  and  afterwards  the  court  decreed  that  the  sheriff 
pay  the  proceeds  of  sale  to  A.  The  sheriff  failing  to  pay,  A. 
moved  against  him  and  his  sureties  and  judgment  was  entered 
for  the  penalty  of  his  bond,  to  be  discharged  by  the  payment 
of  the  proceeds,  which  they  paid.  Previous  to  the  decision  of 
the  court  in  favor  of  A.  he  brought  an  action  on  the  bond 
of  the  sheriff,  against  him  and  his  sureties,  for  the  trespass  in 
taking  his  goods;  the  former  judgment  and  its  payment  were 
set  up  in  defense,  but  it  was  held  that  the  action  was  not  thereby 
barred;  A.  might  recover  the  difference  between  the  value  of 
the  goods  at  the  time  they  were  taken  under  the  attachment 
and  the  amount  of  the  proceeds  of  sale  paid  him.^*  If  the  mas- 
ter of  a  whaling  vessel  abandons  the  voyage  and  wrongfully 
sells  the  property  of  the  owner  on  board,  the  subsequent  collec- 
tion of  a  part  of  the  proceeds  of  such  sale  is  no  bar  to  an  action 
against  him  for  breaking  up  the  voyage  and  disposing  of  the 
property,  but  it  reduces  the  damage.^®  One  whose  goods  were 
maliciously  attached  upon  a  writ  against  a  third  party  and  who 
recovered  judgment  in  replevin  against  the  attaching  officer  was 
not  thereby  barred  of  his  action  against  the  original  plaintiff 
for  wrongfully  directing  the  levy.  The  original  attachment 
was,  on  the  part  of  the  present  defendant,  a  malicious  abuse  of 
legal  process.  Against  the  officer  no  malice  or  improper  mo- 
tive was  charged.  He  could  therefore  be  held  to  answer  in 
damages  only  to  the  extent  required  to  compensate  the  plaintiff 
in  replevin  for  the  actual  pecuniary  loss  necessarily  involved. 
The  plaintiff  in  the  attachment,  on  the  other  hand,  may  be 
liable  for  consequential,  and,  perhaps,  for  vindictive,  damages. 
The  causes  of  action  were  different  and  distinct.^^  If  part  of 
the  goods  seized  under  process  have  been  disposed  of,  their 
owner  may  maintain  an  action  for  their  conversion  and  replevin 
for  those  in  the  officer's  possession.^'^ 

24  Sangster  v.  Commonwealth,  H  26  Vincent  v.  McNamara,  70  Conn. 
Gratt.  124.                                                   332. 

25  Brown  v.  Smith,  12  Gush.  366  27  Gehlort  v.  Quinn,  35  Mont.  451, 


§    1-^0]  ENTlllKTY    OV    DAMAGES.  1(J7 

§  120.  Prospective  damages,  hi  tlic  application  of  llic  nih; 
that  all  the  dainai-cs  which  pertain  to  a  cause  of  action,  with- 
out reference  to  the  time  when  they  actually  accrue,  are  entire 
and  cannot  be  recovered  piecemeal  by  successive  actions  it  is 
frequently  necessary  to  take  into  consideration  ihimaiios  which 
have  not  been  actually  suffered  cither  at  the  commencement  of 
the  suit  or  its  trial;  for  otherwise  there  would  be  a  very  incon- 
venient postponement  of  that  class  of  actions  or  a  renunciation 
of  a  large  part  of  the  compensation  due  to  the  injured  party. 
When  a  cause  of  action  accrues  there  is  a  right,  as  of  that  date, 
to  all  the  consequent  damages  which  will  ever  ensue.^*  J'hey 
are  recoverable  in  one  action  if  they  can  be  proved,  and  only 
one  can  be  maintained;  it  may  be  brought  at  any  time  after 
the  accrual  of  the  right.  The  question  is  a  practical  and  legal 
one  in  each  case  whether  the  cause  of  action  is  of  such  a  nature 
that  the  injurious  consequences  of  the  wrong  complained  of 
can  reach  into  the  future  or  whether  any  subsequent  damages 
will  be  owing  to  a  continuous  fault  which  may  be  the  founda- 
tion of  a  new  action.^^  So  is  the  question  whether  any  offered 
evidence  tends  to  prove  futux'e  damages  which  are  the  legal 
result  of  the  wrong  which  constitutes  the  cause  of  action,  and 
whether  the  sum  of  the  evidence  in  the  particular  case  is  suffi- 
cient for  the  consideration  of  the  jury. 

If  a  growing  crop  is  destroyed  it  can,  of  course,  never  be 
shown  with  absolute  certainty  that  but  for  its  destruction  it 
would  have  matured ;  nor  that  one  party  who  is  stopped  by  the 

119  Am.  St.  864,  approving  Huff-  Mo.  App.  397,  citing  tlic  text;  Iannis 
man  v.  Knight,  36  Ore.  581.  v.  Buckeye  Pub.  Co.,  44  Minn.  105; 
28  Smith  V.  Minnesota-M.  Co.,  168  iJowe  v.  Minnesota  M.  Co.,  47  Minn. 
Fed.  777;  Alderson  v.  Houston,  154  400 .  yAie  &  P.  R.  Co.  v.  Doutliet,  88 
Cal.  1;  Griffing  v.  Winfield,  53  Fla.  p^^  243,  32  Am.  Rep.  451;  Commerce 
589,  citing  the  text;  White  v.  Rem-  g^.^j^  ^^^^  g^^,.  ^.  pj^.^^  ^33  N. 
ick,  198  Mass.  41;  Mast  v.  Shaw,  ^.  ^3  j^^.^^^^^^  ^.  ^^,;^^^.^.  ^,  ^^ 
140  N.  C.  533,  5  L.R.A.(N.S.)  379, 
111  Am.  St.  864,  citing  the  text; 
Stumm  V.  Western  U.  Tel.  Co.,  140 
Wis.  528;  Empie  v.  Empie,  35  App, 
Div.  (N.  Y.)  51;  Morrison  v.  Mc-  '^^  -^"i-  ^^t.  460,  23  L.R.A.  707. 
Atee,  23  Ore.  530;  Fales  v.  Hemen-  29  Occidental  C.  M.  Co.  v.  Corn- 
way,  64  Me.  373;  Paige  v.  Barrett,  stock  T.  Co.,  125  Fed.  244,  quoting 
151   Mass.  67;   Cook  v.  Redman,  45  the  text. 


167  X.  Y.  510,  82  Am.  St.  731;  Am- 
erman  v.  iVane,  132  N.  Y.  355.  See 
Dnimmond  v.  Crane,  159  Mass.  577, 


408  SUTHERLAND  ON  DAMAGES.  [§  120 

other  in  the  performance  of  a  special  contract  would  other- 
wise have  proceeded  to  a  complete  execution  of  it  so  as  to  entitle 
himself  to  its  full  benefits.  ]Sror  is  it  matter  of  law  that  the 
jury  shall  assume  that  the  crop  would  have  matured,  or  that 
the  contract  would  have  been  fulfilled.  The  jury  may  esti- 
mate, with  the  aid  of  testimony,  the  value  of  the  crop  at  the 
time  of  its  destruction,  in  view  of  all  the  circumstances  exist- 
ing at  any  time  before  the  trial  favoring  or  rendering  doubtful 
the  conclusion  that  it  would  attain  to  a  more  valuable  condi- 
tion, and  all  the  hazards  and  expenses  incident  to  the  process 
of  supposed  growth  or  appreciation,^"  and  so  of  the  increase 
of  a  flock  of  sheep  and  the  growth  of  the  wool  thereof.^^  The 
same  uncertainties  and  a  greater  surface  of  them  are  encoun- 
tered in  actions  upon  warranties  that  seeds  sold  for  planting 
are  of  particular  varieties.^^ 

In  actions  upon  contracts  which  contemplate  a  series  of  acts 
and  a  considerable  period  of  time  for  performance,  a  party 
complaining  of  a  total  breach  by  the  other  sufiiciently  main- 
tains his  right  to  recover  if  he  has  performed  without  default 
up  to  the  time  of  the  breach  and  is  ready  to  proceed,  though 
his  right  to  the  value  of  the  contract  depends  on  his  ability  and 
inclination  to  prosecute  the  performance  on  his  part  to  com- 
pletion. He  is  entitled  to  recover  the  profits  which  he  would 
have  made, — the  contract  price  less  what  he  would  have  to  do 
or  expend  to  earn  or  otherwise  entitle  himself  to  it,^^     This 

30  St.  Louis,  etc.  R.  Co.  v.  Iloshall,  Chicago,  etc.  R.  Co.  v.  Schaflfer,  26 

82  Ark.  387;   Yazoo,  etc.  K.  Co.  v.  111.  App.  280,  aff'd  124  111.   112.   * 
Hubbard,  85  Miss.  480,  quoting  the  31  Schraiidt     v.     Yoiiug,     2     Neb. 

text;   Shoemaker  v.  Acker,  116  Cal.  (Uiiof. )    546,  citing  the  text;   Rule 

239,  citing  the  text;    Shoemaker  v.  v.  McGregor,  117  Iowa  419. 
Crawford,   82   Mo.   App.   487;    Rail-  32  Randall   v.  Raper,  El.   B.  &  E. 

way  Co.  V.  Yarborough,  56  Ark.  612,  84;  Passinger  v.  Thorburn,  34  N.  Y. 

619,  quoting  the  text;   Railway  Co.  G34;    White  v.  Miller,   7  Hun,  427, 

V.  Lyman,   57   Ark.   512;    Taylor  v.  71  N.  Y.  118,  27  Am.  Rep.  13;  Van 

Bradley,  39  N.  Y.   129;    People's  I.  Wyck  v.  Allen,  69  N.  Y.  61,  25  Am. 

Co.  V.  Steamer  Excelsior,  44  Mich.  Rep.  136;   Wolcott  v.  Mount,  36  N. 

229;   Smith  v.  Chicago,  etc.  R.  Co.,  .J.  L.  262,  13  Am.  Rep.  438;   Ferris 

38  Iowa,  518;  Richardson  v.  North-  v.  Comstock,  33  Conn.  513. 
rup,  66  Barb.  85 ;   Folsom  v.  Apple  33  Carolina  P.  C.  Co.  v.  Columbia 

River  L.  D.  Co.,  41  Wis.  602;  Texas  I.  Co.,  3  Ga.  App.  483,  quoting  the 

Pac.  R.  Co.  V.  Bayliss,  62  Tex.  570;  text. 


§    121]  ENTIRETY    OF    DAMAGES.  409 

deduction  may  be  the  price  of  labor  or  the  value  of  property  at 
a  future  day.  The  action  for  damages  recoverable  for  sucli  :i 
breach  may  be  brought  and  tried  before  that  day  arrives.  1 1' 
so,  the  prices  prevailing  at  the  time  of  the  breach  may  be  acted 
upon  as  the  test  of  values  at  the  times  mentioned  in  the  <-'Mi 
tract;  ^*  but  if  the  trial  be  delayed  until  the  date  fixed  for  i>.i- 
formance  the  parties  may  show  the  prices  actually  prevailing 
then  or  any  other  conditions,  favorable  or  otherwise,  afTecting 
the  cost  of  fulfilling  the  contract.^^  The  gcncnil  rule  has  ii.. 
application  where  the  damages  claimed  are  not  recoverabh'  be- 
cause too  speculative,  as  where  there  was  a  breach  of  contract 
to  deliver  lumber  which  might  be  manufactured  while  the 
defendant  was  operating  his  mill  on  orders,  but  which  did  n(.t 
require  that  the  mill  should  be  operatcd.^^ 

§  121.  Certainty  of  proof  of  future  damages.  The  conserva- 
tism pervading  tl^?  law  is  opposed  to  allowing  compensation  for 
probable  loss.  It  manifests  itself  more  particularly  in  r(>spect 
to  those  damages  which  might  be  proved  with  certainty  if  th(^y 
were  real,  and,  if  not  fanciful  and  imaginary,  are  past  dam- 
ages: not  such  as  are  contemplated  to  arise  in  the  future  ivom 

34  Alderson  v.   Houston,   154   Cal.  an  action  for  the  breach  of  tlic  con- 

1;  Masterton  v.  Mayor,  7  Hill,  61.  tract  before  the  time  of  its  comph-- 

'sSHagan  v.  Nashville  T.  Co.,  124  tion  may  be  estimated  and  computed 

Tenn    93,   citino    the   text;    Burrcll  to  the   end   of  the  contract,  period. 

V.  New  York  &  S.  S.  S.  Co.,  14  Mich.  Upon  like  principles  in  this  suit  on- 

34;   People's  I.  Co.  v.  Steamer  Ex-  ly   such   damages   can   be  recovered 

cel'sior,    44    Mich.    229;    Chicago   v.  as  existed  at  the  time  of  the  eom- 

Greer  '  9  Wall.  726,  19  L.  ed.  769 ;  mencement  of  tlie  action  and  result- 

Hochster  v    De  la  Tour,  2  El.  &  B.  ing  from  the  nondelivery  of  tlie  lum- 

678-    Frost  v.  Knight,  L.  R.  5   Ex.  ber  up  to  that  time.    It  wouhi  be  an 

322'  7  id   11 1 ;  Taylor  v.  Bradley,  39  anomaly  to  hold  that  damages  which 

N    Y    129-   Howard  v.  Daly,  61   id.  could  not  be  recovered  at  the  com- 

362    19  Am    Rep   285;  Richmond  v.  mencement   of    the   suit   because   of 

Dubuque,  etc.  R.  Co.,  40  Iowa  264;  being    speculative    might,    neverthe- 

Tacobsv   Davis,  34  Md.  204;  Grover  less,    by    results   transpiru.g    subse- 

V    Buck    34  Mich.  519;    Shoemaker  quent   to    suit   brought,   become    re- 

v    Acker    116  Cal.  239.  coverable  in  the  particular  suit.  Nor 

'36  Byrne  M    Co.  v.  Robertson,  145  do  we  think   in   this  case  that  the 

Ala.  273.   It  was  said:    This  feature  situation    is    relieve.1    by    the    aw-r- 

of  the  contract  clearly  differentiates  ment  in  this  complain    that  defend- 

this   case   from  that   class   of  cases  ant  notified   plaintiff  be  would  not 

where   the   recoverable   damages    in  perform  the  contract. 


410  SUTHEELAND    ON    DAMAGES.  [§    121 

such  causes  as,  according  to  general  experience,  produce  them. 
The  decided  cases  which  relate  to  prospective  damages  warrant 
the  statement  that  the  injured  party  is  entitled  to  recover  com- 
pensation for  such  elements  of  damage  as  are  likely  to  occur; 
the  jury  may  proceed  upon  reasonable  probabilities  and  accept 
as  sufficiently  proved  those  results  which,  under  like  circum- 
stances, generally  come  to  pass.^^  It  is  not,  however,  to  be 
hence  inferred  that  prospective  damages  may  be  recovered  on 
every  plausible  anticipation,  nor  that  no  allowance  is  to  be 
made  for  the  uncertainties  which  affect  all  conclusions  depend- 
ing on  future  events ;  it  is  only  intended  that  such  uncertainties, 
where  the  damages  are  shown  by  evidence  reasonably  certain, 
do  not  exclude  them  wholly  from  consideration.  The  price 
of  an  average  colt  cannot  be  fixed  by  deducting  the  cost  of  its 
keep  from  the  value  of  an  average  horse,  for  there  is  not  a  cer- 
tainty of  exemption  from  accidents  and  disease.  All  the  dam- 
ages from  a  single  tortious  act  are  an  entirety,  and  must  be 
assessed  and  recovered  once  for  all.^*  Successive  actions  can- 
not be  maintained  for  their  recovery  as  they  may  accrue  from 
time  to  time.  The  injured  party  is  entitled  to  recover  in  one 
action  compensation  for  all  the  damages  resulting  from  the  in- 
jury, whether  present  or  prospective.  And  in  respect  to  the 
latter,  the  rule  is  that  he  can  recover  for  such  as  it  is  shown 
with  reasonable  certainty  will  result  from  the  wrongful  act  com- 
plained of.^^ 

37Rugg  V.  Rohrbach,  110  111.  App.  Wyer,  67  Me.  65;  Giflford  v.  Waters, 

532;    James  v.  Kibler,   94  Va.   165,  6r  N.  Y.  80;  Richardson  v.  Mellish, 

citing  the  text;   Treat  v.   Hiles,   81  2  Ring.  229;    Wilson  v.  Northamp- 

Wis.   278;    Lewis  v.   Atlas  Mut.   L.  ton,   etc.   R.   Co.,   L.   R.   9   Ch.   279, 

Ins.  Co.,  61  Mo.  534  (disapproved  in  quoted  from  in  §  590.     See  ch.  36. 

Pellet  V.  Manufacturers'  &  M.'s  Ins.  38  §  120;  Galligan  v.  Sun  P.  &  P. 

Co.,  43  C.  C.  A.  G69,  104  Fed.  502)  ;  Ass'n,  25  N.  Y.  Misc.  355. 

Howell   V.   Young,   5   R.   &   C.   259;  39  Smith    v.    Minetto-M.    Co.,    168 

Macrae  v.  Clarke,  L.  R.  1  C.  P.  403;  Fed.  777;   Alderson  v.  Houston,  154 

Frye  v.  Maine  Cent.  R.  Co.,  07  Me.  Cal.    1,    citing    the    text;    Filer    v. 

414;   Richmond  v.  Dubuque,  etc.  R.  New   York   Cent.   R,   Co.,   49   N.   Y. 

Co.,  40  Iowa,  264;  Schell  v.  Plumb,  42;    Miller  v,   Wilson,  24  Pa.   114; 

55  «vr.  Y.  592;   Missouri,  etc.  R.  Co.  Fetter  v.  Reale,  1  Salk.  11;  Hodsoll 

V.  Fort  Scott,  15  Kan.  435;  Roper  v.  v.  Stallebrass,  11  A.  &  E.  301;  Short 

Johnson,  L.  R.  8  C.  P.  167;  Peltz  V.  v.    McCarthy,    3    B.    &    Aid.    626; 

Eichele,  62  Mo.  171;   Sutherland  v.  Howell   v.   Young,   5   B.   &   C.   259; 


122] 


ENTIKETY    OK    DAMAGES. 


411 


§  122.  Same  subject;  action  for  enticing  away  apprentice, 
servant  or  son,  or  procuring  discharge  of  servant,  lu  an  action 
for  enticing  away  an  apprentice  damages  cannot  include  the 
loss  of  his  services  for  the  residue  of  his  term,  for  he  may 
return.""  Where  an  action  on  the  case  was  brought  to  recover 
for  the  defendant's  enticement  of  the  plaintiff's  minor  son  from 
his  service  and  inducing  him  to  enlist  in  the  army  for  three 
years  the  plaintiff  could  only  recover  damages  for  the  loss  of 
service  up  to  the  time  of  the  commencement  of  the  action,  or 
at  most  up  to  the  time  of  trial."  But  it  is  otherwise  where 
the  discharge  of  a  servant  is  illegally  brought  about  by  a  third 


Ingram    v.    Lawson,    8    Scott,    471; 
Clegg    V.    Dearden,    12    Q.    B.    576; 
Stroyan  v.  Knowles,  6  H.  &  N.  454; 
East  Jersey  W.  Co.  v.  Bigelow,  60 
N.  J.  L.  201;   Smith  v.  Pittsburgh 
&  W.  R.  Co.,  90  Fed.  783;   Groten- 
keraper  v.  Harris,  25  Ohio  St.  514; 
Hamilton  v.  Great  Falls  St.  R,  Co., 
17  Mont.  334,  352,  12  Am.  Neg.  Gas. 
229,  citing  the  text;    Block  v.  Mil- 
waukee St.  R.  Co.,  89  Wis.  371,  27 
L.R.A.  365,  46  Am.  St.  849;   Pitts- 
burgh, etc.  R.  Co.  V.  Moore,  110  111. 
App.  304.     See  ch.  36. 

40  Fay  V.  Guynon,  131  Mass.  31; 
Hambleton  v.  Veere,  2  Saund.  170; 
Moore  v.  Love,  3  Jones,  215 ;  Hodsoll 
V.  Stallebrass,  11  A.  &  E.  301;  Trigg 
V.  Northcut,  Litt.  Sel.  Cas.  414; 
Lewis  V.  Peachey,  1  H.  &  C.  518; 
Drew  V.  Sixth  Ave.  R.  Co.,  26  N.  ^. 
49,  5  Am.  Neg.  Cas.  78.  See  McKay 
V.  Bryson,  5  Ired.  216. 

« Covert   V.    Gray,    34    How.    Pr. 

450. 

In  Moore  v.  Love,  3  Jones,  215, 
there  is  an  interesting  discussion  of 
the  question  as  to  what  causes  of 
action  are  entire  and  what  not.  The 
case  of  McKay  v.  Bryson,  5  Ired. 
216,  is  there  noticed  and  a  distinc- 
tion taken  between  an  action  for 
conveying  an  apprentice  out  of  the 
state  and  an. action  brought  by  the 


master  who  knows  that  the  appren- 
tice is  not  far  removed  and  where 
he  is.  In  the  former  case  damages 
may  be  recovered  for  the  total  loss 
of  his  services  during  the  whole 
period  of  the  apprenticeship,  sub- 
ject to  a  deduction  on  account  of 
the  plaintiff's  chance  of  regain- 
ing the  apprentice;  in  the  latter 
case  the  continued  detention  of  the 
apprentice  was  a  succession  of  torts 
for  wliich  new  action  might  be 
luought  from  time  to  time. 

The  true  distinction  is  undoubted- 
ly pointed  out  in  the  foregoing  opin- 
ion, that  the  damages  in  an  action 
cannot   include   those   arising   after 
suit  is  brought  if  a  new  action  could 
be  brought   for  them;    but  it  may 
admit  of  a  doubt  if   the  case  was 
properly  disposed  of  upon  that  test. 
A    trespasser    who    takes    personal 
property  and  retains-  it  may  be  saul 
to  commit  a  succession  of  torts  while 
he  retains  the  property;  but  in  an 
action  for  such  a  taking  the  injured 
party  would  undoubtedly  be  obliged 
to  make  his  full  claim  of  damages. 
He  would  not  be  entitled  to  a  suc- 
ces.sion  of  actions.     In  cases  where 
apprentices  have  been  enticed  away, 
and  tlu"  enticer  lias  not,  by  the  in- 
jury  or  otherwise,  made   it   reason- 
al)ly  certain  that  the  apprentice  will 


412 


SUTUEKLAND    ON    DAMAGES. 


[§  123 


person,  who  has  made  it  impossible  for  the  servant  to  obtain 
other  employment,'*^ 

§  123.  Future  damages  for  personal  injuries.  In  ascertain- 
ing the  amount  of  damages  resulting  from  a  personal  injury 
the  jury  may  consider  the  bodily  pain  and  mental  suffering 
which  have  occurred  and  are  reasonably  certain  or  likely  to 
occur  in  the  future  in  consequence  thereof,  as  well  as  the  loss 
of  time,  expense  of  medical  and  other  attendance  and  the 
diminution  of  ability  to  earn  money.*^  The  inquiry  cannot 
be  extended  to  cover  the  merely  possible  consequences  of  the 
injury,  as  by  the  possible  outbreak  of  a  new  disease  or  other 
sufferings  having  their  cause  in  the  original  wrong  done  the 
plaintiff";  in  such  a  case  there  is  a  double  speculation — one  that 
the  result  may  possibly  occur,  and  the  other  that  if  it  does  it 
will  be  a  product  of  the  original  injury  instead  of  some  otlie;- 
new  and,  perhaps,  unknown  cause.** 


not  return,  prospective  damages  are 
not  denied  because  a  new  action  may 
be  brought  for  tliem  but  because  they 
are  not  susceptible  of  proof;  they 
are  not  certain.  But  if  the  defend- 
ant has  control,  and  will  have  it  in 
the  future,  he  may  be  charged  with 
depriving  the  master  of  the  services 
of  an  apprentice  for  the  whole  term 
for  the  same  reason  that  he  might 
be  charged  with  the  full  value  of 
a  horse  tortiously  taken.  See  Her- 
ritcr  V.  Porter,  23  Cal.  385. 

42  Hanson  v.  Innis,  211  Mass.  301. 

«  Swift  V.  Raleigh,  54  111.  App. 
44;  Griswold  v.  New  York  Cent.  etc. 
R.  Co.,  115  N.  Y.  61,  12  Am.  St. 
775 ;  Hamilton  v.  Great  Falls  St.  R. 
Co.,  17  Mont.  334,  353,  12  Am.  Neg. 
Cas.  229,  citing  the  text;  Ayres  v. 
Delaware,  etc.  R.  Co.,  158  N.  Y.  254; 
Denver  Con.  T,  Co.  v.  Riley,  14  Colo. 
App.  132;  Bay  Shore  R.  Co.  v.  Har- 
ris, 67  Ala.  6,  2  Am.  Neg.  Cas.  1; 
Curtiss  V.  Rochester,  etc.  R.  Co.,  20 
Barb,  282,  9  Am.  Neg.  Cas.  606; 
Atchison  v.  King,  9  Kan.  550;  Welch 
V.  Ware,  32  Mich.  77;   Birchard  v. 


Bootli,  4  Wis.  67 ;  Morely  v.  Diuibar, 
24  Wis.  183;  Wilson  v.  Young,  31 
Wis.  574;  Goodno  v.  Oshkosh,  28 
Wis.  300;  Spicer  v.  Chicago,  etc.  R. 
Co.,  29  Wis.  580,  7  Am.  Neg.  Cas. 
187 ;  Karasich  v.  Hasbrouck,  28  Wis. 
509;  Pennsylvania  R.  Co.  v.  Dale, 
76  Pa.  47;  Tomlinson  v.  Derby,  43 
Conn.  562;  Fulsome  v.  Concord,  46 
Vt.  135;  Nones  v.  Northouse,  id. 
587;  Metcalf  v.  Baker,  56*N.  Y.  662; 
New  Jersey  Exp.  Co.  v.  Nichols,  33 
N.  J.  L.  434,  12  Am.  Neg.  Cas.  243, 
97  Am.  Dec.  722;  Walker  v.  Erie  R. 
Co.,  03  Barb.  260,  9  Am.  Neg.  Cas. 
666;  Bradshaw  v.  Lancashire  R.  Co., 
L.  R.  10  C.  P.  189;  Collins  v.  Coun- 
cil Bluffs,  32  Iowa,  324;  Russ  v. 
Steamboat  War  Eagle,  14  Iowa,  363, 
9  Am.  Neg.  Cas.  326;  Dixon  v.  Bell, 
1  Stark.  287;  McLain  v.  St.  Louis 
&  S.  R.  Co.,  100  Mo.  App.  374, 
citing  the  text.     See  ch.  36. 

44  Strohm  v.  New  York,  etc.  R. 
Co.,  96  N.  Y.  305;  Toser  v.  New 
York  Cent.  etc.  R.  Co.,  105  N.  Y. 
659;  Turner  v.  Newburgh,  109  N.  Y. 
301;  Ayres  v.  Delaware,  etc.  R.  Co., 


§  125] 


ENTIRETY    OF    DAMAGES. 


413 


§  124.  Only  present  worth  of  future  damages  given.  Aii 
award  on  account  of  prospective  damages  is  like  payment  in 
advance  and  in  fixing  the  same  that  fact  may  be  considered  and 
the  amount  reduced  to  its  present  worth.**  The  method  of  so 
reducing  such  damages  will  be  governed  by  the  rule  of  the 
forum  though  the  cause  of  action  arose  in  another  jurisdic- 
tion.*« 

§  125.  Continuous  breach  of  contract  or  infraction  of  rights 
not  an  entirety.  A  continuous  breach  of  a  contract  or  infrac- 
tion of  a  right  is  not  an  entirety.  It  is  at  any  time  severable 
for  the  purpose  of  redress  in  damages  for  the  injury  already 
suffered.  This  is  the  case  whenever  a  continuous  duty  imposed 
by  law  or  by  contract  is  uninterruptedly  neglected,  whetlun- 
such  departure  from  the  line  of  duty  be  by  positive  acts  or  by 
culpable  inaction.*'  There  is  a  legal  obligation  to  discontinue 
a  trespass  or  to  remove  a  nuisance.*^  So  a  covenant  to  keej) 
certain  premises  in  repair  for  a  specified  period  imposes  a 
continuous  duty  and  when  neglected  gives  a  continuous  cause 
of  action.*^     When  an  action  is  brought  the  injury  to  that  tinu 


158  N.  Y.  254;  Lauth  v.  Chicago 
Union  T.  Co.,  244  111.  244;  O'Keefe 
V.  United  R.  Co.,  124  Mo.  App.  613, 
citing  tlie  text.    See  §  1251. 

45  Wilkinson  v.  Dunbar,  149  N. 
C.  20;  Poe  v.  Railroad,  141  N.  C. 
525;  Kelly  P.  Co.  v.  London,  — 
Tex.  Civ.  App.  — ,  125  S.  W.  074; 
Bockelcamp  v.  Lackawanna,  etc.  R. 
Co.,  232  Pa.  66 ;  Pickett  v.  Wilming- 
ton &  W.  R.  Co.,  117  N.  C.  616,  53 
Am.  St.  611,  30  L.R.A.  257;  Good- 
hart  V.  Pennsylvania  R.  Co.,  177  Pa. 
1,  50  Am.  St.  787;  Morrisey  v. 
Hughes,  65  Vt.  553,  17  Am.  Neg. 
Cas.  706;  Alabama  G.  S.  R.  Co.  v. 
Carroll,  28  C.  C.  A.  207,  84  Fed. 
772;  Morrison  v.  McAtce,  23  Ore. 
530;  Fulsome  v.  Concord,  46  Vt. 
135;  Scientific  American  C.  Depart- 
ment v.  Gillespie,  4  Ala.  App.  500. 
See  §§   1251,  1265. 

The  rule  for  computing  the  pres- 
ent   worth    of    money    payable    in 


future  is  laid  down  in  Rivers  v.  Ray 
City  T.  &  E.  Co.,  164  Mich.  696. 

46  Georgia,  etc.  R.  Co.  v.  Sasscr, 
4  Ga.  App.  276. 

47  Kennedy  v.  New  York,  196  N. 
Y.  19,  25  L.R.A.  (N.S.)  847;  Rug- 
gles  v.  Wilson,  162  Mo.  App.  372; 
Lake  Sliore,  etc.  R.  Co.  v.  Ricliards, 
152  III.  59,  30  L.R.A.  33:  ^'an  Kcu- 
ren  v.  Miller,  78  Hun,  173;  Con- 
nolly V.  Coon,  23  Ont.  -App.  37; 
Powers  v.  Ware,  4  I'lvk.  106;  Pierce 
V.  Woodward,  6  Pick.  206;  MeConnel 
v.  Kibbe,  33  111.  175,  85  Am.  Dec. 
265.  See  Drummond  v.  Crane,  150 
Mass.  577,  38  Am.  St.  460,  23  L.R.A. 
707;  Wilson  v.  Sullivan,  17  I'tah, 
341. 

48  Per  Lord  Dennian  Clegg  v. 
Dearden,  12  Q.  B.  601  ;  Savannah, 
etc.  R.  Co.  V.  Davis,  25  Fla.  917; 
.Ndams  v.  Hastings  &  D.  R.  Co.,  18 
.Minn.  260. 

49  Cooke  V.   England,  27   -Md.   14; 


4>14 


SUTIIEKLAND    ON    DAMAGES. 


[§  125 


is  segregated  and  the  recovery  is  confined  to  such  damages  as 
result  from  the  breach  or  wrong  continued  to  the  commencement 
of  the  action.^" 

§  126.  Continuance  of  wrong  not  presumed.  The  law  will 
not  presume  the  continuance  of  a  wrong,  nor  allow  a  license  to 
continue  it,  or  a  transfer  of  title  to  result  from  the  recovery 
of  damages  for  prospective  misconduct.^^  But  in  equity  the 
owner  of  real  property  upon  which  a  trespass  has  been  com- 
mitted may  restrain  the  continuance  of  the  wrong  and  thus 
prevent  a  multiplicity  of  actions  at  law  to  recover  damages. 
In  such  an  action  the  court  may  determine  the  amount  of 
damages  the  owner  would  sustain  if  the  trespass  were  perma- 
nently continued  and  decree  that,  upon  their  payment,  the 
plaintiff  shall  give  a  deed  or  convey  the  right  to  the  defendant. ^^ 

§  127.  Necessity  and  advantage  of  successive  actions.  The 
necessity  and  advantage  of  successive  actions  to  recover  dam- 
ages which  proceed  from  a  continuous  and  still  operating  cause 
are  very  obvious;  for,  besides  the  considerations  which  have 
already  been  mentioned,  the  injurious  effects  so  blend  together 
that  in  most  instances  it  would  be  wholly  impracticable  to  ac- 
curately apportion  them.     Therefore,  the  right  to  recover  for 


Beach  v.  Grain,  2  N.  Y.  86;  Bleecker 
V.  Smith,  13  Wend.  530;  Phelps  v. 
New  Haven,  etc.  Co.,  43  Conn.  453; 
Keith  V.  Hinkston,  9  Bush,  283. 

50Id. ;     Sackrider     v.     Beers,     10 
Johns.   241;    Shaw   v.   Etheridge,    3 
Jones,  301;   Brasfield  v.  Lee,  1  Ld. 
Kaym.  329;  Wliiteliouse  v.  Fellowes, 
10  C.  B.  (N.  S.)  765;  Mahon  v.  New 
York   Cent.   R.   Co.,   24   N.   Y.   658 
Phillips    V.    Terry,    3    Keyes,    313 
Hayden    v.    Albee,    20    Minn.    159 
Thompson  v.  Gibson,  7  M.  &  W.  456 
Beckwith  v.  Griswold,  29  Barb.  291 
Bradley    v.    Amis,    2    Hayw.    390 
Caruthers    v.    Tillman,    1    id.    501 
Dimcan     v.     Markley,     Harp.     276 
Moore  v.  Love,  3   Jones,   215;    Cole 
V.  Sprowl,  35  Me.  161,  56  Am.  Dec. 
6r6:  T^"«lson  v.  Nicholson,  5  M.  &  W. 


437;    Park    v.    Hubbard,    134    App. 
Div.    (N.  Y.)    468. 

51  Adams  v.  Hastings  &  D.  R.  Co., 
18  Minn.  260;  Ford  v.  Chicago,  etc. 
R.  Co.,  14  Wis.  609,  80  Am.  Dec. 
791;  Uline  v.  New  York,  etc.  R.  Co., 
101  N.  Y.  98,  54  Am.  Rep.  661;  Sa- 
vannah &  0.  G.  Co.  V.  Bourquin,  51 
Ga.  378;  Hanover  W.  Co.  v.  Ashland 
I.  Co.,  84  Pa.  279;  Wliitmore  v. 
Bischoff,  5  Hun  176;  Sherman  v. 
Milwaukee,  etc.  R.  Co.,  40  Wis.  645 ; 
Russell  V.  Brown,  63  Me.  203;  Bow- 
yer  v.  Cook,  4  C.  B.  236;  Holmes  v. 
Wilson,  10  A.  &  E.  503;  Battishill 
V.  Reed,  18  C.  B.  696;  Cumberland 
&  0.  C.  Co.  V.  Hitchings,  65  Me.  140. 

52  Pappenheim  v.  Metropolitan  E. 
R.  Co-.,  128  N.  Y.  436,  13  L.R.A.  401; 
Amerman  v.  Deane,  132  N.  Y.  355, 
28  Am.  St.  584. 


§    127]  ENTIRETY    OF    DAMAGES.  4l5 

all  damages  which  have  been  suffered  to  the  time  of  bringiir 
the  first  action,  in  the  next,  all  damages  which  have  been  suf- 
fered from  that  time  to  that  of  commencing  such  second  action, 
and  so  on  while  the  cause  continues  is  the  most  convenient 
course  for  practical  redress  that  can  be  devised.^'  In  cases  of 
contracts  imposing  a  continuous  duty  or  a  duty  the  continued 
neglect  of  which  is  an  uninterrupted  breach,  from  which  resuhs 
a  steady  accretion  of  damage,  the  injured  party  may  bring  a 
succession  of  actions  or  treat  defaults  having  that  significance 
as  a  total  breach,^*  and  recover  damages  accordingly.  Of  this 
nature  was  the  contract  in  Grain  v.  Beach,^^  where  the  plaintitl' 
had  granted  to  the  defendants  a  perpetual  right  of  way  over 
his  land  and  covenanted  to  erect  a  gate  of  a  specified  descrij)- 
tion  at  the  terminus,  to  which  the  defendants  covenanted  in  tlic 
same  instrument  to  make  all  necessary  repairs.  The  plaint  ill" 
erected  the  gate,  which  was  subsequently  removed  by  some 
unknown  person.  It  was  held  that  the  defendants  were  bound 
to  replace  it;  the  covenant  was  continuing;  an  action  brought 
thereon  after  the  removal  of  the  gate  for  damages  occasioned 
by  cattle  coming  on  the  plaintiff's  land  in  consequence  of  there 
being  no  gate  and  a  recovery  therein  were  no  bar  to  anothev 
action  on  the  same  covenant  for  damages  accruing  after  the 
commencement  of  the  first  suit.  The  defendants'  default  was 
not  a  total  breach,  nor  declared  and  recovered  on  as  such,  and 
hence  they  were  not  thereby  relieved  of  the  continuing  obliga- 
tion of  the  covenant.  If  it  were  an  entire  contract,  however, 
any  breach  would  be  or  might  be  treated  as  a  total  breach.^® 
Covenants  for  support  and  maintenance  during  life  are  entire 
and  any  breach  entitles  the  injured  party  to  recover  entire  dam- 
ages for  a  total  breach,^'^  but  as  they  impose  a  continuous  duty 

53  LTline  v.  New  York  Cent.  R.  Co.,  plained  in  Grain  v.   Beach,  2  Barb. 

101    N.    Y,    88,    54   Am.    Rep.    661;  124:  Keck  v.  Bieber,  148  Pa.  (i45. 

Mitchell  V.  Darley  Main  C.  Co.,  14  55  2  N.  Y.  86,  2  Barb.  120. 

Q.  B.  Div.  125.  56  Kisl,  v.  Folley,  6  Hill,  54. 

54nrand    Kapida,    etc.    R.    Co.    v.  57  Sclull   v.   I'liimb.  55  N.  Y.  502; 

Van  Dusen,  29  Mich.  431;   Koyalton  I'ah's    v.    litiuciiway,    64    Me.    'M.i; 

V.  Royalton  &  W.  T.  Co.  14  Vt.  311;  Tippin  v.  Ward,  5  Ore.  450;   Dn-ss- 

VVithers    v.    Reynolds,    2    B.    &    Ad.  er  v.  Dresser.  ;?5  Barl).  57;{;   Shaller 

882;    Fish  v.  Folley,  (i   Hill,  54,  ex-  v.  T^'c,  8  id.    112;   'riiislecs  of  How- 


416 


SUTHERLAND    ON    DAMAGES. 


[§  128 


the  injured  party  may  have  a  succession  of  actions  treating  any 
acts  of  breach  as  partial  only.^^ 

Section  2. 
parties  to  sue  and  be  sued. 

§  128.  Damages  to  parties  jointly  injured  entire.  Before 
leaving  the  subject  of  the  entirety  of  causes  of  action  and  dam- 
ages it  is  proper  to  notice  some  i)oints  relative  to  parties.  At 
common  law  all  the  ])arties  who  are  jointly  injured  by  a  tort 
or  breach  of  contract  may  sue  jointly  for  damages;  in  actions 
ex  contractu  the  rule  is  imperative.  All  the  parties  with  whom 
the  violated  contract  was  made  must  join  as  plaintiffs  unless 
their  interests  are  severed  in  the  contract,  so  that  upon  a  breach 
a  distinct  cause  of  action  accrues  to  each  or  less  than  all.^^  Ac- 
tions for  personal  injuries  to  a  married  woman  must  be  in  the 
names  of  the  husband  and  wife  ^°  except  where  statutes  have  so 


arcl  College  v.  Turner,  71  Ala.  429, 
46  Am.  Rep.  326;  Carpenter  v.  Car- 
penter, 66  Hun,  177;  Empie  v.  Em- 
pie,  35  App.  Div.  (N.  Y.)  51.  See 
Wright  V.  Wright,  49  Mich.  624. 

58  Id.;  Fiske  V.  Fiske,  20  Pick. 
499;  Berry  v.  Harris,  43  N.  H.  376; 
Ferguson  v.  Ferguson,  2  N.  Y.  360; 
Turner  v.  Hadden,  62  Barb.  480. 
Fay  V.  Guynon,  131  Mass.  31.  See 
Parker  v.  Russell,  133  id.  74. 

59  Thomas  v.  Bola  L.  Co.,  1  Cal. 
App.  335;  International  H.  Co.  v. 
Flynn,  238  111.  636;  New  York  Nat. 
Exch.  Bank  v.  Reed,  232  111.  123; 
National  Hollow  B.  B.  Co.  v.  Bake- 
well,  224  Mo.  203;  Brinton  v.  Thom- 
as, 138  Mo.  App.  64;  McC4ara  v. 
Ake,  226  Pa.  228;  Park  v.  Southern 
R.,  78  S.  C.  302;  Phoenix  Assur.  Co. 
V.  Fristoe,  53  W.  Va.  361;  Bigelow 
V.  Reynolds,  68  Mich.  344;  Hall  v. 
Leigh,  8  Cranch,  50,  3  L.  ed.  484; 
Fugure  v.  Mutual  Soc.  of  St.  Joseph, 
46  Vt.  362 ;  Cleaves  v.  Lord,  3  Gray, 
66;   Jewett  v.  Cunard,  3  Woodb.  & 


:M.  277;  Little  v.  Hobbs,  8  Jones, 
179,  78  Am.  Dec.  275;  Gridley  v. 
Starr,  1  Root,  281 ;  Farmer  v.  Stew- 
art, 2  N.  H.  97;  Eastman  v.  Ram- 
sey, 3  Ind.  419 ;  Millard  v.  Baldwin, 
3  Gray,  484 ;  Dow  v.  Clark,  7  Gray, 
198 ;  Weathers  v.  Ray,  4  Dana,  474 ; 
Frankem  v.  Trimble,  5  Pa.  520; 
Ross  V.  Milne,  12  Leigh,  204,  37  Am. 
Dec.  646;  Thompson  v.  Page,  1 
Mete.  (Mass.)  566;  The  Ship  Po- 
tomac, 2  Black  581,  17  L.  ed.  263; 
Archer  v.  Bogue,  4  111.  526;  Robert- 
son V.  Reed,  47  Pa.  115;  Sawyer  v. 
Steele,  4  Wash.  227;  Newcomb  v. 
Clark,  1  Denio  226;  Law  v.  Cross, 
1  Black  533,  17  L.  ed.  185;  Beetle 
V.  Anderson,  98  Wis.  6;  Dunn  v. 
Smith  (Tex.  Civ.  App.),  74  S.  W. 
576;  Bacon  v.  Peoria  &  E.  R.  Co., 
162  111.  App.  162. 

60  Lamb  v.  Harbaugh,  105  Cal. 
680;  White  v.  Vicksburg,  etc.  R. 
Co.,  42  La.  Ann.  990;  Gallagher  v. 
Bowie,  06  Tex.  265,  10  Am.  Neg. 
Cas.  254;   Ezell  v.  Dodson,  60  Tex. 


§  129] 


ENTIRETY    OF    DAMAGES. 


■117 


enlarged  the  property  rights  of  iiiai-riod  woincii  :is  to  onable  tli(Mii 
to  maintain  such  actions  in  their  own  names. *^^  In  an  action  for 
malicious  prosecution  of  husband  and  wife  each  has  a  separate 
right  of  action,  and  they  cannot  join  their  causes  of  action;  hut 
the  husband  is  a  necessary  co-plaintilV  with  the  wife  in  her 
action. ^^  If  the  duty  of  sui)porting  a  chihl  devolves  u[)on  the 
father  and  he  is  alive  when  the  mother  sues  for  an  injnrv  to 
the  child  she  cannot  maintain  the  action,  n<itwithsl:inding  sho 
has  been  divorced  and  the  care  and  cnstody  ol'  the  cliiM  wcvc 
awarded  her.®^ 

§  129.  Actions  under  statutes.  In  actions  broniiht  uiuU-v 
statutes  which  create  a  liability  where  none  existed  at  comnum 
law,  the  parties  who  sue  thereunder  must  bring  themselves  (dear- 
ly within  the  language  used  by  the  legislature.  Such  statutes 
will  not  be  extended  or  enlarged  by  construction.^*  The  relief 
or  remedy  is  not  available  to  any  person  who  is  not  included 
therein.^^  If  the  right  to  sue  for  an  injury  which  has  resulted 
in  death  is  given  to  a  "child,"  an  illegitimate  child  cannot  re- 


331;  Tell  v.  Gibson,  06  Cal.  247; 
King  V.  Thompson,  87  Pa.  365,  30 
Am.  Eep.  364;  Northern  Cent.  R. 
Co.  V.  Mills,  61  Md.  355;  Blair  v. 
Chicago  &  A.  R.  Co.,  89  Mo.  384. 
Compare  Bennett  v.  Bennett,  116 
N.  Y.  584,  6  L.R.A.  553. 

61  Chicago,  etc.  R.  Co.  v.  Dunn, 
52  111.  260;  Musselnian  v.  Galligher, 
32  Iowa,  383;  Chadron  v.  Glover,  43 
Neb.  732. 

A  wife  may  maintain  an  action  in 
her  own  name  against  a  woman  who 
has  alienated  from  her  the  affection 
and  deprived  her  of  the  society  of 
her  husband,  although  they  live  to- 
gether as  husband  and  wife.  Foot 
V.  Card,  58  Conn.  1,  18  Am.  St. 
258,  6  L.R.A.  829;  Bennett  v.  Ben- 
nett, supra;  Humphrey  v.  Pope,  122 
Cal.  253.     See  ch.  38. 

A  wife  may  sue  for  injury  to  her 

person  and  her  husband  for  the  loss 

of  her  services  and  the  expense  to 

which  he  has  been  put.     Mageau  v. 

Suth.  Dam.  Vol.  I.— 27. 


Great   Northern   R.   Co.,   103   Minn. 
290,    15   L.R.A.  (N.S.)    511. 

62  Williams  v.   Cascbcer,    lit!  Cal. 


.\I. 


63  Keller    v.    St.    Louis, 
596,  47  L.R.A.  391. 

64  Sutherland,  Const,  of  Stats.. 
§    371. 

65  Thompson  v.  Wabash  R.  Co.. 
184  Fed.  554;  De  Paolo  v.  Laquin 
L.  Co.,  178  Fed.  877;  Brown  v.  Sun- 
day Creek  Co.,  165  Fed.  504;  Vaugh 
V.  Bunker  Hill  &  S.  M.  &  S.  Co.. 
126  Fed.  895:  Walker  v.  Vickshurg. 
etc.  R.  Co.,  IJO  La.  718;  Hammond 
V.  Lewiston,  etc.  St.  R.  Co.,  lOG 
:\re.  209,  30  L.R.A.  (N.S.)  78: 
Johnson  v.  Seattle  F.  Co..  .39  \Vasl>. 
211;  West  v.  Leiphart,  169  Mich. 
354;  McNamara  v.  Slavens,  76  Mn. 
330;  Gil)bs  V.  Hannibal.  82  id.  143; 
Warren  v.  Fnglehart,  13  Neb.  283; 
Woodward  v.  Chicago  &  N.  R.  Co.. 
23  Wis.  400;  Diekina  v.  New  York 
Cent.   R.  Co.,  23   N.   Y.    158,  5    Am. 


418 


SUTHERLAND    ON    DAMAGES. 


[§  129 


cover  for  its  mother's  death  in  England/^  nor  in  Canada ;  ^"^  but 
it  is  otherwise  under  a  statute  which  uses  the  words  "next  of 
kin."  ^^  Where  an  action  is  given  for  the  benefit  of  the  widow 
and  next  of  kin  it  may  be  brought,  though  there  be  no  widow, 
if  there  are  next  of  kin,  and  vice  versa.^^  Nor  are  the  "next  of 
kin"  required  to  be  so  nearly  related  to  the  person  whose  death 
is  sued  for  as  to  require  any  duty  of  sustenance,  support  or 
education.'''" 

§  130.  Must  be  recovered  by  person  in  whom  legal  interest  is 
vested.  The  suit  must  be  brought  in  the  name  of  the  party  in 
whom  is  vested  the  legal  interest  though  the  equitable  interest 
be  in  another  person.'^  The  funds  of  a  voluntary  association 
were  put  under  the  control  and  management  of  trustees  who  took 
a  note  payable  to  themselves  on  lending  the  funds  to  other  mem- 


Npg.  Cas.  61 ;  Tennessee  C,  I.  &  R. 
Co.  V.  Herndon,  100  Ala.  451,  13 
Am.  Neg.  Cas.  ISO;  Woodward  I. 
Co.  V.  Cook,  124  Ala.  349;  Maulo 
C.  Co.  V.  Partonheimer,  155  Ind. 
100,  109. 

For  failure  of  a  public  officer  to 
collect  and  apportion  taxes  between 
a  state  and  county  the  state  and 
county  may  maintain  separate  ac- 
tions. Ex  parte  Hudgins,  —  Ala. 
— ,  65  So.  959. 

If  the  right  of  action  is  given  to 
two  or  more  jointly,  one  person  may 
not  bring  an  action.  Clark  v.  Kan- 
sas City,  etc.  E.  Co.,  153  Mo.  App. 
689. 

A  husband  may  not  join  in  an 
action  Avitli  his  child  to  recover  the 
funeral  expenses  of  his  wife,  the 
child  suing  to  recover  for  his 
mother's  death.  Johnson  v.  Seattle 
E.  R.  Co.,  39  Wash.  211. 

66  Dickinson  v.  Northeastern  R. 
Co.,  2  H.  &  C.  735. 

67  Gibson  v.  Midland  R.  Co.,  2 
Ont.  65S. 

68  Muhl  v.  Michigan  Southern  R. 
Co.,  10  Ohio,  272.     See  ch.  37.' 

In     Louisiana     separate     actions 


may  be  brought  by  the  widow  and 
minor  children  to  recover  for  the  de- 
cedent's death.  Eichorn  v.  New  Or- 
leans, etc.  R.,  L.  &  P.  Co.,  112  La. 
236,  104  Am.  St.  437. 

69  Sutherland,  Const,  of  Stats., 
§  371,  citing  McMahon  v.  Mayor, 
33  N.  Y.  642,  647. 

70Tilley  v.  Hudson  River  R.  Co., 
24  N.  Y.  474 ;  Galveston,  etc.  R.  Co. 
V.  Kutac,  72  Tex.  643,  12  Am.  Neg. 
Cas.  599;  Petrie  v.  Columbia,  etc. 
R.  Co.,  29  S.  C.  303;  Railroad  Co. 
v.  Barron,  5  Wall.  90,  18  L.  ed.  591; 
Baltimore,  etc.  R.  Co.  v.  Hauer,  60 
Md.  449. 

71  Kansas  City,  etc.  R.  Co.  v. 
Blaker,  68  Kan.  244,  64  L.R.A. 
81 ;  Conner  v.  Missouri  Pac.  R.  Co., 
181  Mo.  397;  Treat  v.  Stanton,  14 
Conn.  445;  Denton  v.  Denton,  17 
Md.  403;  Sunapee  v.  Eastman,  32 
N.  H.  470;  Pike  v.  Pike,  24  N.  H. 
384;  Phillips  v.  Pennywit,  1  'Ark. 
59;  Lapham  v.  Green,  9  Vt.  407; 
Governor  v.  Ball,  Hempst.  541 ;  Lord 
v.  Carnes,  98  Mass.  308;  Hart  v. 
Stone,  30  Conn.  94;  Pierce  v.  Robie, 
39  Me.  205,  63  Am.  Dec.  614;  Yea- 
ger  V.  Wallace,  44  Pa.  94;   Morton 


§    loO]  ENTIRETY    OF    DAMAGES.  419 

bers.  It  was  held  tliut  the  trustees  in  their  individuiil  ii;iines 
were  eutitled  to  maintain  an  action  on  the  note,  as  it  was  pay- 
able to  them,  though  the  defendants  as  well  as  themselves  were 
members  of  the  association  beneficially  interested  in  the  col- 
lection.'''^ One  who  pays  the  consideration  for  a  privilege  or 
benefit  Avliich  he  may  confer  upon  another  may  sue  for  the 
denial  of  it.'^  A  trustee  who  has  sold  trust  property  without 
assigning  a  claim  for  damages  resulting  from  a  wrong  done 
thereto  prior  to  the  sale  may  bring  suit  to  recover  therefor.'* 
In  an  action  by  a  firm  the  name  of  a  dormant  partner  need  not 
and  ought  not  to  be  used,'*  unless  he  is  one  of  the  parties  dis- 
closed in  the  contract.'^  The  parties  to  a  contract  are  the  persons 
in  whom  the  legal  interest  in  the  subject  of  it  is  deemed  to  be 
vested,  and  who  therefore  must  be  the  parties  to  the  action 
which  is  instituted  for  the  purpose  of  enforcing  it  or  recovering 
danuiges  for  its  violation."  An  agent  who  has  sold  property  on 
credit,  pursuant  to  authority  from  and  for  his  principal,  may 
sue  the  purchaser  in  his  own  name  if  he  is  bound  to  account  to 
the  owner  or  if  he  has  accounted  to  him  for  it.'®  An  undis- 
closed principal  may  sue  on  a  contract  made  for  his  benefit  by 
an  agent,'^  unless  exclusive  credit  was  given  the  agent.*" 

An  agreement  to  relinquish  a  business  and  not  to  carry  it  on 
thereafter  in  a  designated  place,  no  limit  being  specified  as  to 
time,  and  a  bond  conditioned  for  the  observance  thereof,  are  not 

V.   Webb,   7   Vt.   123;    Boardrnan   v.  76  Clark    v.    Cartrr.    2    Cow.    SI; 

Keeler,  2  Vt.  65;   Clarkson  v.  Car-  Lord   v.   Baldwin,    (i    Pic-k.    .!;-)•_>. 

ter,  3  Cow.  84;  Mitchell  v.  Dall,  2  77  Treat  v.  Stanton,  14  Conn.  445; 

H.   &   G.    159;    Lord   v.   Baldwin,   G  Daugherty  v.  American  U.  Tel.  Co., 

Pick.  352;   Wilson  v.  Wallace,  8  S.  75  aj^.  ]68,  51   Am.  Uep.  435;   Os- 

&   R.   55;    Warner    v.    Griswold,    8  g^^^  ^    Skinner,  211  111.  220. 

Wend.   666;    Clark   v.   Miller,   4   id.  78  Fuller  v.  Curtis,   100  Ind.  237. 

^2^-  50  Am.  Rep.  786;  Jackson  v.  Mott, 

72  Pierce  v.  Robie,  39  Mo.  205,  63       _„  ^  _' 

'  76  Iowa,  263. 

Am.  Dec.  614.  79  Wells   v.   Western   U.   Tol.   Co.. 

73  Trustees  of  Howard  College  v.  01  x  p  a  /mq^ 
r,.  .,-.  Ai  ^or.  Ac^  \  T>  ^  144  Iowa,  605,  24  L.R.A.(N.S.) 
Tu^rner,   71   Ala.   429,   46   Am.   Rep.  ^^^^^  ^^^  ^^^^    ^^    ^^^  ^  ^^^^  ^    ^^ 

74  Lancaster  v.  Connecticut  Mut.  v.  Atlas  P.  C  Co..  103  Md.  209; 
L.  Ins.  Co.,  92  Mo.  460,  1  Am.  St.  I^''"  v.  Lee,  78  Ala.  511.  56  Am. 
739.  I'^'-P-  52. 

75  Clark  V.  Miller,  4  Wend.  628.  80  Cowan  v.  (  iirran,  216  111.  598. 


420  SUTHERLAND    ON    DAMAGES.  [§    130 

SO  personal  to  the  obligee  that  he  cannot  sue  thereon  for  a  breach 
of  the  agreement  after  he  has  transferred  the  property  and 
bnsiness  for  the  benefit  of  his  vendee.  There  seems  no  doubt, 
upon  the  authorities,  that  the  agTeement  could  be  transferred 
with  and  as  an  incident  of  the  property,  the  purchase  being  made 
with  knowledge  of  the  condition  of  the  bond.^^  The  contrary 
doctrine  is  held  in  Oregon. ^^  The  English  cases  referred  to  in 
the  note  are  not  considered  in  that  case,  and  the  California 
case  cited  is  distinguished  because  the  word  ''heirs'.'  was  used 
in  tlie  contract  there  passed  upon  while  it  was  not  employed 
in  the  one  before  the  court.  The  breach  of  a  covenant  which 
runs  with  land  gives  the  widow  who  occupies  it  as  a  home- 
stead a  right  of  action  though  she  was  not  to  pay  for  it.®^ 

§  131.  Not  joint  when  contract  apportions  the  legal  interests. 
AYhere  the  contract  separates  and  apportions  the  legal  interests 
the  injury  in  case  of  a  breach  is  correspondingly  separate  and 
distinct.^*  Thus  a  promise  to  pay  the  respective  owners  of  land 
taken  for  a  road  such  sums  as  a  referee  named  shall  award  gives 
each  a  separate  action  for  the  amount  awarded  him.*^  A  con- 
tract between  a  fruit  company  and  a  number  of  fruit  growers 
to  receive,  dry,  and  market  their  crops,  at  specified  rates  per 
pound,  that  delivered  by  each  person  being  weighed  and  dried 
separately  and  then  weighed  out  to  the  owner  and  mingled  with 
other  fruit,  a  receipt  being  given  each  owner,  is  several.*^  Where 
the  consideration  furnished  by  the  obligees  is  several  their 
interests  are  prima  facie  several;  and  so  where  they  may  suffer 
separate  and  distinct  unascertained  injuries  from  the  breach 
of  a  contract.*''^ 

81  Webster  v.  Buss,  61  N.  H.  40,  G  83  St.  L.,  I.  M.  &  S.  R.  v.  O'Baugh, 
Am.  Rep.  317;  Guerand  v.  Dandelet,       45)  Ark.  418. 

.32  Md.  562,  3  Am.  Rep.  164;    C'ali-  84  Hackett    v.    Northern    Pac.    R. 

fornia  S.  N.  Co.  v.  Wright,  6  Cal.  Co..  140  Fed.  717. 

258,     8     id.     585;      Pemberton     v.  85  National    Bank   v.    Buckwalter, 

Vaughan,  10  Q.  B.  87:   Hastings  v.  214  Pa.  289;   Farmer  v.  Stewart,  2 

Whitley,  2  Ex.  6]].     It  was  held  in  K.    H.    97;    Jewett     v.     Cunard,     3 

the  last  case  that  a  suit  might  be  Woodb.    &   M.    277;    State   Ins.    Co. 

brought  by  the  executors  of  the  ob-  v.  Belford,  2  Kan.  App.  280. 

ligee  for  a  breach  arising  after  his  86  Arnold    v.    Producers'    F.    Co., 

death.  128   Cal.  637. 

82  nillman  v.  Shannahan,  4  Ore.  87  Atlanta,  etc.  R.  Co  v.  Thomas, 
163,  18  Am.  Rep.  281.  GO  Fla.  412. 


§    loo]  ENTIKETY    OF    DAiMACJKS.  1 1>  1 

§  132.  Implied  assumpsit  follows  the  consideration.  Where 
the  assumpsit  is  implied  it  will  follow  the  t'ousidenitioii.**  A 
committee  appointed  bv  a  school  district  to  repair  a  schoolhoiise 
took  the  job  among  themselves,  each  perforniing  work  and  fur- 
nishing a  separate  portion  of  materials.  Kach  had  a  distinct 
cause  of  action.^^  By  the  failure  of  I.  to  fulfill  a  promise  made 
to  G.  and  S.  to  enter  satisfaction  of  a  judgment  against  them 
the  judg-ment  was  collected  entirely  out  of  the  i)ruperty  of  (J, ; 
he  recovered  in  an  action  by  himself  alone  for  money  piii<l.^° 
If  money  is  deposited  with  a  stakeholder  on  the  event  of  a  wager 
by  one  who  acts  as  an  agent  for  several  others  each  of  the  latter 
may  bring  a  separate  action  to  recover  the  money  deposited  for 
him,  though  the  stakeholder  was  ignorant  of  the  principals  on 
whose  account  the  deposit  was  made.^^  Several  plaintiffs  claim- 
ing distinct  rights  cannot  join  in  the  siime  action. ^^ 

§  133.  Effect  of  release  by  or  death  of  one  of  several  entitled 
to  entire  damages.  Where  a  cause  of  action  e.r  conlrdrlu  nccrucs 
to  several  jointly  it  is  an  entirety;  they  must  all  join  in  an 
action  upon  it;  no  others  can,  except  where  assigmnents  are 
sanctioned  by  statute  as  a  transfer  of  the  legal  i-ight  of  action 
or  unless  that  right  devolves  upon  others  by  operation  of  law, 
as  in  case  of  death  or  marriage.  It  cannot  be  severed. by  partial 
assignment,^^  nor  by  the  giving  of  a  release  by  one  of  several 
jointly  entitled  to  sue.  Such  a  release  would  ojierate  to  extin- 
guish the  right  of  action  at  law;  for  if,  for  such  a  reason,  all 
to  whom  the  right  of  action  accrued  cannot  join  in  a  snit  upon 
it  no  action  can  be  maintained.^*  Hut  one  of  se\eral  joint 
creditors  between  whom  no  partnershij)  exists  cannot  release  the 
conmion  debtor  so  as  wholly  to  conclude  his  co-creditors  win.  do 
not  assent.     lie  may  defeat  an  action  at  law,  but  they  will  be 

88  Lee  V.  Gibbons,  14  S.  &  R.  110.  93  rhica<,'o,  etc.   H.  Co.  v.   Xi.-bols. 

89Geer  v.   School  Dist.,  6  Vt.   7(5.       •"•'   Til.  404. 

94  Hall  V.  (iray.  n4  Me.  2:U):   Kim- 
ball V.  Wilson,  ?.  N.   ri.  nO;   .\[yrick 

V.  Dame,  n  Ciisli.  248,  09  Am.  Dec. 

92  Barry   v.    Roorcr.s,   2   Bibb   314;        oo^       t     i  x-      i    ii      i- 

•^  o       '  284;     Tuckcrnian     v.     Newliall,     1< 

Hinchman  v.  Paterson  R.  Co.,  17  ^^^^^  r^f^^^  .  ]r^ic^n  v.  Lincoln,  13 
N.  J.  Eq.  75,  86  Am.  Dec.  252:  ;\rass.  424.  Sec  Eisenhart  v.  Slay- 
Chambers  V.  Hunt,  18  N.  J.  L.  33fl.       niaker,  14  S.  &  R.  154. 


90  Taylor  v.  Gould,  57  Pa.  152 

91  Yates   V.    Foot,    12    Johns.    1 


422  SUTliEKLAND    ON    DAMAGES.  [§    133 

entitled  to  assert  their  rights  in  equity.  It  is  a  general  rule  that 
joint  creditors  cannot,  by  a  division  of  their  claim  between  them- 
selves, acquire  a  separate  right  of  action  against  their  debtor, 
either  at  law  or  in  equity ;  but  when  a  debtor  procures  a  release 
from  a  part  of  them  he  cannot  object  to  the  others  proceeding 
against  him  in  equity.^^  On  the  death  of  one  of  two  persons 
who  have  a  joint  right  of  action  upon  contract  it  survives,  and 
the  survivor  alone  is  entitled  to  sue.  The  personal  representa- 
tives of  the  deceased  cannot  be  joined  with  him.^^  By  consent 
a  joint  demand  may  be  severed  so  that  several  suits  may  be 
brought.^'  So  an  assignee  of  the  whole  or  a  part  may  sue  in 
his  own  name  if  the  debtor  promise  to  pay  him,^^  but  not 
otherwise.®^ 

§  134.  Misjoinder  of  plaintiffs,  when  a  fatal  objection.  In 
such  action  it  is  a  fatal  objection,  available  on  the  trial,  that 
there  is  a  misjoinder  of  plaintiffs.^  It  is  equally  so  in  actions 
ex  delicto.^  And  in  actions  ex  contractu  the  non-joinder  of  all 
the  parties  in  whom  the  right  of  action  is  vested  is  fatal,  and 
the  objection  may  be  taken  on  the  trial.^  But  in  actions  of 
tort  the  non-joinder  of  a  party  who  ought  to  join  as  co-plaintiff 
can  only  be  taken  advantage  of  by  plea  in  abatement  or  upon 
the  trial  by  an  apportionment  of  damages.* 

95  Upjohn    V.    Ewing,    2    Ohio    St.  Ohio,  333,  15  Am.  Dec.  547;  Robiii- 
13;  Hosack  v.  Rogers,  8  Paige,  229;  son  v.  Scull,  3  N.  J.  L.  817. 
Carrington  v.  Crocker,  37  N.  Y.  336.  2  Glover    v.    Hunnewell,    6    Pick. 

96  Jackson  v.  People,  6  Mich.  154;  222;  Ainsworth  v.  Allen,  Kirby  145. 
Smith  V.  Franklin,  1  Mass.  480;  ^  Dob  v.  Ralsey,  16  Johns.  34; 
Walker  v.  Maxwell,  id.  113;  Morri-  ^hle  v.  Purdy,  6  Wend.  629;  Hansel 
son  V.  Winn,  Hardin,  480;  Beebe  v.  '■  Morris,  1  Blackf.  307;  Mcintosh 
Miller,  Minor,  364;  Brown  v.  King,  ''■  ^ong-  2  N.  J.  L.  274;  Hilliker  v. 
.  T,M  u  .Po  Vm  ,  T>  ■  1  -A  Loop,  5  Vt.  116,  26  Am.  Dec.  286; 
1   Bibb,  462;   Clark    v.    Parish,    id.  ^„/'        ^^  ^  -,    t^   ., 

Elhs    V.    McLenioor,    1    Bailey,    13; 

Coffee     V,     Eastland,     Cooke,     159; 

Sweigart   v.   Berlc,   8   S.   &  R.   308; 

97  Parker  v.  Bryant,  40  Vt.  291;        ^^^J^  ^    ^,^^^^^  ^  ^^^^^^  ^^g.   ^^^. 

Carrington  v.  Crocker,  37  N.  Y.  336.       ^^^jj^  ^    ^^^^j^^  j^^,^^^^^  gg^.    j^^^^^ 

98  Page  V.  Danforth,  53  Me.  174.  ^    Hotchkiss,  2  Conn.  697;  Baker  v. 

99  Hay  V.  Green,  12  Cush.  282.  Jewell,    6    Mass.    460,    4    Am.    Dec. 
1  Brent  v.  Tivebaugh,  12  B.  Mon.       ]62;    Halliday   v.   Doggett,    6   Pick. 

87;     Blakcy     v.     Blakey,     2     Dana,       359;    Gordon  v.  Goodwin,    2    N.    & 

460;   Doreraus  v.   Selden,   19  Johns.       McC.  70,  10  Am.  Dec.  573. 

213;    Waldsmith    v.    Waldsmith,    2  4  Waggoner  v.  Snody,  36  Tex.  Civ. 


547;    Chandler  v.   Hill,    2    Hen.    & 
Mun.  124. 


§    135]  ENTIRETY    OF    DAMAGES.  423 

§  135.  Joinder  of  defendants;  effect  of  non-joinder  and  mis- 
joinder. By  the  common  law  all  joint  promisors  should  be 
joined  as  defendants;  and  all  should  be  sued,  or  only  one,  on 
a  joint  and  several  contract.^  On  a  joint  and  several  promissory 
note  made  by  a  firm  in  the  firm  name  and  by  another  person  in 
his  individual  character  a  suit  nuiy  be  maintained  agaiust  the 
members  of  the  firm  without  joining  the  other  nuiker,  they,  for 
this  purpose,  being  considered  but  one  person,  the  non-joinder 
of  the  other  being  no  ground  of  objection.^  WJiere,  some  weeks 
after  the  execution  of  a  lease  of  real  estate,  a  tliird  person,  by 
writing  obligatory,  became  surety  for  the  lessee  they  were  not 
jointly  liable  and  could  not  be  joined  as  defendants.'  Two  or 
more  persons  cannot  be  sued  jointly  unless  a  joint  liability  is 
proved.^  On  the  death  of  one  joint  promisor  the  liability  sur- 
vives'at  law^  against  the  remaining  or  surviving  promisor,  and 
the  personal  representative  of  the  deceased  cannot  be  joined  as 
co-defendant.^  Many  persons  may  join  in  one  instrument  with- 
out making  themselves  jointly  bound.  Whether  they  have  done 
so  or  not  is  a  question  of  intention  to  be  determined  by  the  con- 
struction of  the  entire  contract.  The  undertaking  of  each  may 
be  several,  as  is  usual  in  subscriptions  for  some  common  purpose, 
and  sometimes  in  other  promises  to  pay.^°     Joining  too  many 

App.  514,  quoting  the  text;  Wright  Co.    v.    Ely    D.    G.    Co.,    lol    Ala. 

V.   Bennett,   2   Barb.   45]  ;    White  v.  272. 

Webb,  15  Conn.  302.  6  Van  Tine  v.  Crane,  1  Wend.  524. 

5  Damron  V.  Sweetser,  16  111.  App.  7  Tourtelott  v.   Junkin,  4   P.IiuUf. 

339;     Deloach    v.    Dixon,    Hempst.  4S3. 

428;  Merrick  v.  Trustees  of  Bank,  8  8  Rowan  v.  Rowan,  29  Pa.  181. 

Gill,  59;  Minor  V.  Mechanics'  Bank,  9  Sigler  v.  Interest,    3    N.    J.    L. 

1   Pet.   73;    Bangor   Bank  v.   Treat,  724;   Gillin  v.  Pence,  4  T.  B.  Mon. 

6  Me.  207,  19  Am.  Dec.  210 ;  Fielden  304;   Murphy    v.    Branch    Bank,    5 

V.  Lahens,  9  Bosw.  436;   Claremont  Ala.   421;    Poole  v.   McLcod,   1   Si-. 

Bank  v.  Wood,  12  Vt.  252;  Keller  v.  &  M.  391;   Union  Bank  v.  Mott,  2t 

Blasdel,  1  Nev.  491;  Merica  v.  Bur-  N.  Y.  633;  Voorhis  v.  Childs,  17  id. 

get,  36  Ind.  App.  453;   Sundberg  v.  354. 

Goar,  92  Minn.  143.  10  J.arkin  v.   IJiitterficld,  29   Midi. 

The    voluntary    discontinuance    of  254;    State    v.    llciidersDn,    120    ()a. 

an  action  against  a  defendant  joint-  780;    Morgan    v.    J'.racii,    104    Minn, 

ly   and   severally   liable,   for   a   rca-  247;    Heinrich   v.   Missouri   &    I.  C. 

son   not  personal  to  him,   i.s  a   dis-  Co.,   102   Mo.    App.   229:    Bolton    v. 

continuance    as    to    all.     Ashby   B.  Gifford,    45    Tex.     (  iv.     Apj).     1-10; 


424 


SUTHERLAND    ON    DAMAGES. 


[§  135 


persons  as  defendants  in  an  action  upon  contract  is  a  fatal  ob- 
jection and  may  be  taken  advantage  of  on  the  trial;  ^^  but  if 
less  than  all  those  jointly  liable  are  sued  the  objection  of  the 
non-joinder  of  others  can  only  be  taken  advantage  of  by  plea  in 
abatement  unless  it  appears  on  the  face  of  the  declaration.^^ 

§  136.  How  joint  liability  extinguished  or  severed.  If  one 
jointly,  or  jointly  and  severally  liable  is  released  by  a  satisfaction 
all  are  discharged."  So  a  specialty  taken  from  one  merges  any 
simple  contract  liability,  not  only  of  the  person  giving  the  spe- 
cialty, but  of  others  jointly  liable  with  him.^^^  Thus  where  a 
mercantile  business  was  carried  on  in  a  single  name  and  the 


Davis   V.    Schmidt,     126    Wis.     461, 
110  Am.  St.  938. 

UTuttle  V.  Cooper,  10  Pick.  281; 
Walcott  V.  Canfield,  3  Conn.  194; 
Livingston  v.  Tremper,  11  Johns. 
101;  Erwin  v.  Devine,  2  T.  B.  Mon. 
124;  Jenkins  v.  Hart,  2  Rand.  446. 

12  Bragg  V.  Wetzell,  5  Blackf.  95 ; 
Burgess  v.  Abbott,  6  Hill,  135 ;  Nash 
V.  Skinner,  12  Vt.  219,  36  Am.  Dec. 
338;  Hicks  v.  Cram,  17  Vt.  449; 
Means  v.  Milliken,  33  Pa.  517; 
Douglas  V.  Chapin,  26  Conn.  76. 

13  McCoy  V.  L.  &  N.  R.  Co.,  146 
Ala.  333;  Vandiver  v.  Pollak,  107 
Ala.  547,  54  Am.  St.  118;  Jones  v. 
Chism,  73  Ark.  14;  Jones  v.  Allen, 
38  Colo.  512;  Allen  v.  Ruland,  79 
Conn.  405,  118  Am.  St.  146;  War- 
then  V.  Melton,  132  Ga.  113;  Wall- 
ner  Chicago  Con.  T.  Co.,  245  111. 
148;  Mooney  v.  Chicago,  239  111. 
414;  Cleveland,  etc.  R.  Co.  v.  Hilli- 
goss,  171  Ind.  417,  131  Am.  St.  258; 
Horgan  v.  Boston  E.  R.  Co.,  208 
Mass.  287;  Corey  v.  Havener,  182 
Mass.  250;  Laughlin  v.  Excelsior  P. 
Mfg.  Co.,  153  Mo.  App.  508;  Cleland 
v.  Anderson,  66  Neb.  252,  5  L.R.A. 
(N.S.)  136;  Peterson  v.  Wiggins, 
2.30  Pa.  631 ; ;  Chetwood  v.  Cali- 
fornia Nat.  Bank,  113  Cal.  414; 
Donaldson  v.  Carmichael,  102  Ga. 
40,   3   Am.    Neg.    Rep.     770;     Lord 


V.  Tiffany,  98  N.  Y.  412,  50  Am. 
Rep.  689;  Ellis  v.  Esson,  50  Wis. 
138,  36  Am.  Rep.  830;  Gross  v. 
Pennsylvania,  etc.  R.  Co.,  65  Hun, 
191;  Blackman  v.  Simpson,  120 
Mich.  377,  58  L.R.A.  410;  State  v. 
Watson,  44  Mo.  305;  Heckman 
V.  Manning,  4  Colo.  543;  Gunther  v. 
Lee,  45  Md.  60,  24  Am.  Rep.  .504; 
Line  v.  Nelson,  38  N.  J.  L.  358; 
Bonney  v.  Bonney,  29  Iowa,  448; 
Prince  v.  Lynch,  38  Cal.  528. 

The  rule  extends  to  all  who 
might  have  been  held  for  the  wrong. 
Breeden  v.  Frankford  M.,  etc.  Ins. 
Co.,  220  Mo.  327. 

Where  judgment  was  rendered 
against  two  defendants  upon  a  ver- 
dict which  apportioned  their  liabil- 
ity, a  motion  to  vacate  it  and  dis- 
miss the  action  as  to  one  was  denied 
on  the  ground  that  it  might  operate 
as  a  discharge  of  both.  McCool  v. 
Mahoney,  54  Cal.  491.  See  Minor  v. 
Mechanics'  Bank,  1  Pet.  46,  87. 

A  similar  verdict  was  considered 
as  being  against  one  defendant  and 
a  finding  in  favor  of  the  otlier 
against  whom  the  smaller  sum  was 
charged.  Clissold  v.  Machell,  25 
Up.  Can.  Q.  B.  SO,  26  id.  422. 

14  Ward  V.  Motter,  2  Rob.  (Va.) 
536. 


§  136] 


ENTIRETY    OF    DAMAGES. 


42: 


merchant  in  whose  name  it  was  conducted  bought  ^oods  and 
executed  a  specialty  for  the  price  the  vendor,  though  ignonint 
at  the  time  that  such  purchaser  had  a  doruiant  partner,  hut  who 
discovered  that  fact  after  the  death  of  the  i)urchaser  who  execut- 
ed the  specialty,  was  held  not  entitled  to  maintain  aasinnjmt 
on  the  simple  contract  against  the  dormant  partner  because  that 
contract  was  extinguished.^^  According  to  some  authorities  the 
satisfaction  and  discharge  of  one  who  was  not  in  fact  liable  to 
the  person  injured  does  not  alfect  the  rights  of  the  latter  against 
those  who  are  liable;  ^^  several  courts  take  the  opposing  vicw,^'' 
Joint  tort-feasors  may  be  sued  jointly  in  the  same  action  or  in 
separate  actions,  and  several  judgments  may  be  rendered 
in  either  action;  these  do  not  alfect  the  liability  of  any  of 
the  parties  unless  satisfaction  in  some  form  is  uuide,^*  though  the 
action  is  dismissed  as  to  some  before  judgment. ^^    pjut  the  issue 


15  Id. 

16  Ryan  V.  Becker,  136  Iowa,  273; 
Kentucky  I.  &  B.  Co.  v.  Hall,  125 
Ind.  220;  Missouri,  etc.  R.  Co.  v. 
McWherter,  59  Kan.  345 ;  citing 
Turner  v.  Hitchcock,  20  Iowa,  310; 
Bloss  V.  Plymale,  3  W.  Va.  393, 
100  Am.  Dec.  752;  Wilson  v.  Reed, 
3  Johns.  175;  Wardell  v.  McCon- 
nell,  25  Neb.  558;  Snow  v.  Chandler, 
10  N.  H.  92,  34  Am.  Dec.  140;  Bell 
V.  Perry,  43  Iowa,  368;  Owen  v. 
Brockschmidt,  54  Mo.  285;  Pogel  v. 
Meilke,  60  Wis.  248. 

17  Laughlin  v.  I\Ifg.  Co.,  supra; 
Hubbard  v.  St.  Louis,  etc.  R.  Co., 
173  Mo.  249;  Fitzgerald  v.  Union 
S.  Co.,  89  Neb.  393,  33  L.R.A. 
(N.S.)  983;  Leddy  v.  Barney,  139 
Mass.  394;  Leither  v.  Philadelphia 
T.  Co.,  125  Pa.  397,  4  L.R.A.  -54; 
Tompkins  v.  Clay  St.  R.  Co.,  66 
Cal.  163,  11  Am.  Neg.  Cas.  181; 
Miller  v.  Beck,  108  Iowa,  575;  But- 
ler V.  Ashworth,  110  Cal.  614. 

18  Lovelace  v.  Miller,  150  Ala. 
422,  11  L.R.A. (N.S.)  670;  Doyle  v. 
Nesting,  37  Colo.  522;  Cleveland, 
etc.  R.   Co.  v.    Hilligoss,    171    Ind. 


417,  131  Am.  St.  258;  Griindel  v. 
Union  I.  Works,  127  Cal.  438,  78 
Am.  St.  75,  47  L.R.A.  467 ;  Vincent 
V.  McNamara,  70  Conn.  332;  Love- 
joy  V.  Murray,  3  Wall.  1,  IS  L.  ed. 
129;  Norfolk  L.  Co.  v.  Simmons,  2 
Marvel,  317.     See  §  216. 

If  judgment  is  taken  against  two 
jointly  or  separately  liable  for  sums 
agreed  upon  the  payment  by  either 
of  the  sum  named  in  the  judgment 
discharges  it.  Huntington  v.  New- 
port News  &  M.  V.  Co.,  78  Conn. 
35. 

The  rule  tliat  a  judgment  without 
satisfaction  against  one  of  two 
joint  wrongdoers  sued  separati'Iy 
does  not  I)ar  an  action  against  tlie 
other  does  not  apply  if  tliey  arc 
sued  jointly.  "Tlie  cau.se  of  action, 
being  single,  has  been  merged  in 
the  judgment  and  the  form  of  tlie 
action  changed.  It  cannot  after- 
wards be  divided  into  actions,  one 
sounding  in  contract  and  the  other 
in  tort."  Cameron  v.  Kan  rich,  201 
Mass.  451. 

19  Nordliaus  v.  Vandaiia  H.  Co., 
242  HI.   160. 


426  SUTHERLAND    ON    DAMAGES.  [§    136 

of  an  execution  or  the  granting  of  an  order  for  issuance  seems 
to  be  considered  a  satisfaction  in  Indiana,^"  and  so  of  the  entry 
of  judgment.^^  The  satisfaction  of  a  judgment  against  a  builder 
for  the  substitution  of  inferior  material  and  for  doing  work  in 
an  unworkmanlike  manner  bars  an  action  by  the  same  plaintiff 
against  the  architect  who  made  the  plans  for  the  building  and 
contracted  to  supervise  its  erection  in  accordance  therewith.  It 
is  said  the  former  suit  against  the  builder  was  based  on  his 
violation  of  the  building  contract,  while  this  suit  appears  to 
have  been  brought  for  the  purpose  not  only  of  recovering  dam- 
ages from  the  defendant  for  his  alleged  neglect  as  an  architect, 
but  also  to  recover  damages  arising  in  consequence  of  the  omis- 
sions, negligence,  unfaithfulness  and  wrongdoing  of  the  builder. 
It  is  true  that  the  acts  of  the  builder  which  formed  the  basis 
for  the  damages  awarded  in  the  suit  against  him  are  now  alleged 
to  have  been  allowed  to  occur  by  reason  of  the  architect's  negli- 
gence in  the  performance  of  his  duty.  But  whether  the  wrong- 
doing complained  of  in  the  former  case  be  the  joint  act  of  the 
builder  and  the  defendant  or  the  several  tort  of  each  can  make 
no  diiference  in  determining  the  validity  of  the  plea  or  the 
admissibility  of  the  record  in  evidence  in  this  case.  If  the  de- 
fendant and  the  builder  had  both  been  sued  in  the  first  case  for 
the  injury  there  alleged  there  could  have  been  but  one  recovery. 
And  it  would  seem  to  be  very  clear  reason,  and  authority  as 
well,  that  the  same  result  must  follow  when  the  same  injury  is 
caused  by  the  independent  acts  of  several  wrong-doers.  The 
reason  of  this  rule  is  apparent.  It  is  neither  just  nor  lawful 
that  there  should  be  more  than  one  satisfaction  for  the  same 
injury  whether  that  injury  be  done  by  one  or  more.^^ 

In  Ontario  the  recovery  of  a  judg-  ers.     Strickland  v.  Wedgeworth,  154 

ment    against    one    defendant    bars  Ala.     654,     overruling     Torrcy     v. 

an  action  against  any  other;  but  an  Forbes,  94  Ala.  ]35. 

action  may  be  brought  against  sev-  20  Ashcraft  v.  Knoblock,  146  Ind. 

eral  and  if    judgment    is    rendered  169. 

against  one  a  motion  mary  be  made  21  Indianapolis     T.     &     T.    Co.   v. 

to    include    the    others.      Sheppard  Holtzclaw,   40   Ind.   App.   311. 

Pub.  Co.  V.  Pres.  Pub.  Co.,  lO  Ont.  22  Berkley  v.  Wilson,  87  Md.  219, 

L.  R.  243.  citing  Cleveland  v.  Bangor,  87  Me. 

A   discontinuance   as    to    one   do-  264;   Brown  v.  Cambridge,  3  Allen, 

fendant  is  immaterial  as  to  the  oth-  474;    Lovejoy    v.    Murray,    3    Wall. 


§    137]  ENTIRETY    OF    DAMAGES.  427 

§  137.  Principles  on  which  joint  right  or  liability  for  tort 
determined.  Whether  actions  in  tort  are  joint  as  to  the  parties 
injured  or  as  to  those  liable  depends  on  very  plain  principles. 
The  injury  is  joint  where  it  at  once  affects  property  or  interests 
jointly  owned;  in  other  words,  there  must  be  a  community  of 
interest  between  the  parties  injured  in  that  which  the  injury 
affects.  Husband  and  wife  may  not  join  in  an  action  to  recover 
damages  on  account  of  a  nervous  shock  to  her,  and  expense  and 
loss  of  time  by  him,  both  having  been  caused  by  the  unlawful 
entry  of  the  landlord  on  premises  jointly  occupied  by  them."' 
And  to  render  wrong-doers  jointly  liable  there  must  be  concert 
or  a  common  purpose  between  them."*  Persons  who  are  jointly 
interested  in  the  damages  recoverable  for  an  injurj^  to  property 
may  unite  in  a  suit  for  their  recovery  although  they  are  not 
joint  owners  of  the  property  itself.  Thus  two  persons  in  posses- 
sion of  land  carrying  on  business  in  a  mill  which  belongs  to  one 
of  them  only  may  unite  in  an  action  for  damages  for  a  negligent 
burning  of  it,"^  and  parties  who  may,  as  individual  owners  of 
land  held  in  severalty,  join  in  an  action  for  injury  thereto,  may 
also  claim  damages  sustained  by  them  individually  from  the 

1,  18  L.  ed.  129;  Gunther  v.  Lee,  45  whereof    both    buildings    fell    upon 

Md.  67,  24   Am.  Rep.  504.  and  destroyed   the  plaintiflF's  build- 

23  Stewart  v.  Alvis,  30  Ind.  App.  ing,  at  the  same  time  and  on  the 
237.  whole  of  said  building  and  both  of 

24  Persons  who  have  committed  which  became  an  undistinguialiablo 
distinct  torts  in  relation  to  the  same  mass,  as  was  the  building  on  wliicli 
property  may  not  be  joined.  Hack-  they  fell,  so  that  it  could  not  bo 
ney  v.  Perry,  152  Ala.  626.  said    which    produced    the    greater 

If  one  or  more  persons  conspire  damage,  and  it  could  not  be  deter- 
with  another  to  commit,  or  two  or  mined  as  to  the  extent  of  the  dam- 
more  persons  combine  together  to  age  either  did,  both  defendants 
effect,  the  violation  of  a  contract  were  liable  for  the  whole  damage 
and  their  object  be  effected  to  the  and  neither  could  complain  that 
damage  of  a  third  person,  the  latter  both  were  sued  jointly.  If  the  evi- 
may  recover  against  him  who  broke  dcnce  showed  that  either  was  not 
the  contract  and  against  those  so  negligent  he  would  not  be  liable,  in 
connected  with  the  wrong.  Martens  which  case  tlie  others  would  luvve 
V.  Reilly,  109  Wis.  464.  See  Quinn  no  reason  to  complain  of  the  mis- 
V.   Leathern,    [1901]    App.   Cas.  495.  joinder-.      Johnson    v.    Cliapnian.   4.? 

Where  the  complaint  alleged  that  W.  Va.  639. 

each   of   two   defendants   was   negli-  25  Cleveland    v.    Grand    Tr\ink    K. 

gent  in  not  having  a  sufficient  wall  Co.,  42  Vt.  449;    Rhoads  v.   Hootb, 

to   sustain   his   building,   by   reason  14  Iowa,  575. 


42S  SUTHERLAND    ON    DAMAGES.  [§    137 

same  acts.^^  If  injury  is  done  both  to  the  possession  and  the 
freehold  and  the  interests  of  both  owners  are  affected,  though 
in  different  degrees,  the  life  tenant  and  the  remainder-man  may 
join  in  case  for  the  recovery  of  the  damages.^'^  All  joint  owners 
of  personal  property  are  rightly  joined  in  actions  for  tortious 
injuries  thereto.^*  At  common  law  the  rule  was  that  "when 
two  or  more  persons  are  jointly  entitled,  or  have  a  joint  legal 
interest  in  the  property  affected,  they  must,  in  general,  join  in 
the  action  or  the  defendant  may  plead  in  abatement."  ^^  As  to 
tenants  in  common  who  bring  actions  against  third  parties  a  dis- 
tinction existed  between  real  and  personal  actions.  "When  the 
action  is  in  the  realty  they  must  sue  separately ;  ^°  when  in  the 
personalty  they  must  join.^^  This  rule  must  give  way  if  the  ef- 
fect of  enforcing  it  will  be  to  deny  a  remedy.  The  reason  for  it 
— to  protect  defendants  from  a  multiplicity  of  suits — is  good; 
but  if  adherence  to  it  will  cause  a  failure  of  justice  the  reason 
for  departing  from  the  rule  is  stronger  than  that  for  applying 
it  because  there  is  a  possibility  that  no  other  suit  will  be  brought 
on  the  cause  of  action ;  while  there  is  a  certainty  that  adherence 
to  it  will  work  the  loss  of  a  remedy.  These  considerations  in- 
duced the  Minnesota  court  to  permit  one  tenant  in  common  of 
personalty  to  maintain  an  action  against  a  stranger  for  a  wrong 
done  to  it,  the  co-tenants  refusing  to  join  as  plaintiffs,  and,  being 
non-residents,  they  could  not  be  made  defendants.^^    The  owner 

26  Teel  V.  Rio  Bravo  O.  Co.,  47  tract  for  each  machine  and  that  each 
Tex.  Civ.  App.  153.  contract  was  signed  by  one  of  them 

27  Western  &  R.  Co.  v.  Tate,  129  only  in  his  individual  name  does 
Ga.  526:  Mclntire  v.  Westmoreland  not  preclude  parol  proof  that  the 
C.  Co.,  118  Pa.  108.  purchase  of  each  machine  was  made 

28  Glover  v.  Austin,  6  Pick.  209 ;  by  one  of  them  as  agent  for  the 
Pickering  v.  Pickering,  11  N.  H.  other  and  on  their  joint  account; 
14].  such    evidence   will   sustain   a   joint 

But  in  California  one  joint  owner  action   for   breach    of    warranty   of 

can    recover   but   one-half   the   dam-  the  machines.     Fox  v.  Stockton  H. 

ages    for    injury    done   to   the    joint  etc.  Works,  83  Cal.   333. 

property.     Loveland  v.  Gardner,  79  29  i  Chitty  Plead.  64. 

Cal.  317,  4  L.R.A.  395.  30  Carley  v.  Parton,  75  Tex.  98. 

If    two   machines   are    bought   on  31  Hill  v.  Gibbs,  5  Hill,  56 ;  Row- 
joint   account  and   paid   for   out   of  land  v.  Murphy,  66  Tex.  534. 
joint   funds   the  fact  that  the  pur-  32  Peck  v.  McLean,  36  Minn.  228, 
chasers  entered  into  a  separate  con-  1  Am.  St.  665. 


§    138]  ENTIRETY    OF    DAMAGES.  429 

and  lessee  of  land  being  cultivated  on  shares  may  join  in  an 
action  for  an  injury  to  the  crop  resnlting  from  the  use  of  nnfit 
seed.^^ 

§  138.  Tortious  act  not  an  entirety  as  to  parties  injured. 
A  tortious  act  is  not  an  entirety  as  to  the  persons  aU'eeted  bv 
it;  it  may  affect  many  persons  and  do  a  several  injury  to  each.'* 
A  single  trespass  upon  real  estate,  injurious  to  the  possession 
and  to  the  inheritance,  will  1)0  an  entire  cause  of  action  if  one 
person  has  the  whole  title  and  is  in  possession.  Ihu.  if  one 
person  has  the  possession  and  another  a  reversionary  title  a 
distinct  wrong  is  done  to  each,  for  which  oi\v]\  may  Kriug  a 
separate  and  independent  action.'^  One  having  a  special  inter- 
est in  real  estate  injured  by  the  tortious  act  of  another  may 
recover  damages  therefor  whether  the  wrong-doer  is  a  strangei- 
or  has  another  interest  in  the  same  premises.'^  The  purchaser 
of  a  crop  of  growing  grass  is  entitled  to  the  exclusive  enjoy- 
ment of  the  crop  standing  on  the  land  during  the  proper  period 
of  its  full  growth  and  removal,  and  may  maintain  trespass 
quare  clansum  f regit  against  a  stranger  who  during  that  time 
wrongfully  enters  and  cuts  and  carries  away  the  grass.'^  lie 
conld  maintain  a  like  action  against  the  general  owner  of  the 
land  for  such  a  trespass. ^^  The  general  rule  that  actions  for 
injuries  to  the  person  or  to  character  must  be  maintained  sever- 

33  Fuhrman  v.  Interior  W.  Co.,  43  W.  Va.  259,  2  Am.  Nog.  Rep. 
—  Wash.  — ,  116  Pac.  666.  G6S. 

34  Tobin  V.  Best,  120  App.  Div.  In  Pennsylvania  a  joint  action 
(N.  Y.)  387;  Steelier  v.  People,  217  may  he  maintained.  ^Iclntire  v. 
111.  348  (action  under  dramshop  Westmoreland  C.  Co.,  118  Pa.  108; 
act)  ;  Mitchell  v.  Heisen,  169  111.  Kuula  v.  Moose  Mountain  Limit«'d, 
App.  531.  26  Ont.  L.  R.  332. 

35  Nashville,  etc.  R.  Co.  v.  Hei-  36  Hashroucic  v.  Winkler,  48  N.  .1. 
kens,  112  Tenn.  378,  65  L.R.A.  298;  L.  431;  Lusc  v.  Jones,  39  N.  J.  L. 
Wood  V.  Williamsburgh,  46  Barb.  707;  Turnpike  Co.  v.  Fry.  88  Tenn. 
601;    Gilbert  v.  Kennedy,  22  Mich.  296. 

5;    Files   v.    Magoon,    41    Me.    104;  37  DolloiT   v.    Danf.irtii,   43   .\.    11. 

Stevens  v.   Adams,   1   Thomp.   &   C.  219;  Howard  v.  Lincoln,  13  Me.  122; 

587;    Stoner   v.    Hunsicker,    47    Pa.  Austin  v.  Hiulsnn   Pvjv.r  R.  Co.,  25 

514;    Adams    v.   Emerson,     6     Pick.  N.  Y.  334. 

57;  Bobbins  v.  Borman,  1  Pick.  122;  38  Clap  v.  Draper.  4  Mass.  266,  3 

Jordan  v.  Benwood,  42  W.  Va.  312,  Am.   Dec.   215;    Caldwell   v.   Julian, 

36  L.R.A.  519;  Yeager  v.  Fairmont,  2  Mills,  294. 


430  SUTHERLAND    ON    DAMAGES.  [§    138 

ally  by  the  persons  affected,^^  does  not  prevent  partners  charged 
with  dishonesty  in  the  management  of  the  business  of  the  firm 
from  maintaining  a  joint  action,  though  they  may  sue  sever- 
ally.^" In  Louisiana  persons  vv^ho  are  jointly  slandered  may 
unite  in  an  action.*^  Where  two  or  more  persons  suffer  a  joint 
damage  and  each  also  a  separate  damage  from  the  same  tort,  in 
a  joint  action  only  the  joint  damage  may  be  recovered.'*^ 

§  139.  General  and  special  owners.  In  such  case  the  damages 
will  be  according  to  the  tenure  by  which  the  jDlaiutiff  holds  and 
such  as  result  from  the  injury  he  has  suffered.  lie  must  show 
that  his  title  gives  him  an  interest  in  the  damages  he  claims,  and 
can  recover  none  except  such  as  affect  his  right. '*^  In  actions 
against  a  stranger  for  taking  or  converting  personal  property  a 
bailee,  mortgagee  or  other  special  property  man  is  entitled  to 
recover  its  full  value,  but  must  account  to  the  general  owner  for 
the  surplus  recovered  beyond  the  value  of  his  own  interest ;  but 
against  the  general  owner  or  one  in  privity  with  him  only  the 
value  of  the  special  property.^*  Where  goods  assigned  to  a 
creditor  in  trust  to  pay  himself  and  other  creditors  were  attached 
at  the  suit  of  some  of  the  creditors  as  property  of  the  assignor 

39  Anderson  v.  Evansville  B.  Barb.  518;  Rhoads  v.  Woods,  41 
Ass'n,   49   Ind.   App.   403.  Barb.   471;    Sherman   v.   Fall   River 

40  Weitershausen  v.  Crotian  P.  I.  Co.,  5  Allen,  213;  Bartlett  v.  Kid- 
&  P.  Co.,  157  Fed.  947.  der,   14  Gray,  449;   Russell  v.  Bnt- 

41Madere  v.   Alexandre,    126   La.  tcrfield,    21    Wend.    300;    Fallon    v. 

342.  Manning,     35     Mo.     271;      Chaffee 

42  Collier  v.  Postum  C.  Co.,  150  v.  Sherman,  26  Vt.  237;  Soule  v. 
App.  Div.  (N.  Y.)  169;  Rhoads  v.  White,  14  Me.  43G;  Mead  v.  Thomp- 
Booth,  14  Iowa  576;  Jefferson  F.  gon,  78  111.  62;  Guttner  v.  Pacific 
Co.  V.  Rich,  182  Ala.  633.  g.   w.   Co.,  96   Fed.  617,  citing  the 

43  Gilbert  v.  Kennedy,  22  Mich.  5.       ^.g^t..    Armory   v.    Delamire,    1    Str. 
One   who   has   borrowed   property       g^g.    rpj^^   j^^^^^   ^ity,   2   C.   C.   A. 

cannot  maintain  an  action  for  its  ^^^^^  -^  ^^^  g.^^.  knight  v.  Car- 
loss.  Lockhart  v.  Western  &  A.  R.  ^^  ^  ^  ^  287,  71  Fed. 
Co..  73  Ga.  472,  44  Am.  Rep    883.                ^^^  ^^^^^^^^^    ^^^    p^^^_    ^^^_ 


See  §§  1136,  1137. 

A  bailee  who  is  under  no  liability 


44  Southern  R.  Co.  v.  Adams 
Mach.  Co.,  165  Ala.  436;  Walsh  v. 
United  States  T.  &  A.  Co.,  153  111. 
App.  229;  Denver,  etc.  R.  Co.  v.  to  his  bailor  cannot  recover  for  an 
Frame,  6  Colo.  382;  White  V.Webb,  injury  to  property  held  by  him. 
15  Conn.  302;  Seaman  v.  Luce,  23  Claridge  v.  South  Staffordshire  T. 
Barb.   240;    Chadwick   v.   Lamb,   29       Co.,   [1892]   1   Q.  B.  422. 


§    lod]  ENTlllETY    OF    DAMAGES.  431 

before  the  assignment  was  assented  to  hy  any  creditor  bnt  the 
assignee,  and  the  value  of  the  goods  exceeded  the  amount  of  the 
latter's  demand,  in  an  action  of  trespass  brought  by  the  assignee 
against  the  attaching  officer,  the  measure  of  damages  was  the 
amount  of  the  plaintiff's  demand  against  the  assignor  and  not 
the  value  of  the  goods.**  An  officer,  with  an  execution  against 
one  of  two  partners,  who  makes  himself  a  tresj)asser  ah  inilio 
by  levying  on  the  entire  property  of  the  concern,  still  represents 
the  interest  of  the  execution  debtor,  and  the  owner  of  the  other 
interest  can  recover  against  him  only  the  value  thereof.*^ 

Several  persons  having  separate  and  distinct  interests  in  a 
chattel  cannot  unite  in  rei)levin  for  it;*''  two  persons  cannot 
join  in  suing  for  an  injury  done  to  one  of  them.*^  Where  two 
consta^tles  levy  on  the  same  goods  by  virtue  of  separate  execu- 
tions they  cannot  join  in  an  action  against  one  who  takes  away 
the  goods.*^  One  of  several  joint  debtors  whose  separate  goods 
are  taken  on  execution  and  wasted  must  sue  alone  for  redress ; 
and  so  if  the  officer  extorsively  demand  and  receive  of  the  debtors 
illegal  fees.*°  Actions  for  torts  connected  with  the  matter  of  a 
contract,  where  the  tort  consists  in  the  mere  omission  of  a  con- 
tract duty,  nmst  be  brought  by  the  party  injured.*^  In  one  suit 
the  courj;  will  not  take  cognizance  of  distinct  and  separate  claims 
of  different  persons.  Where  the  damage  as  well  as  the  interest 
is  several  each  party  nmst  sue  separately.*^  Whether  the  plain- 
ts Boydcn  V.  Moore,  11  Pick.  362;  a  firm  of  all  liis  riglit,  title  and  in- 
INIantonya  v.  Emerich  0.  Co.,  172  torost  in  and  to  the  partnersliip 
111.  92,  citing  tlie  text.  assets    gives    tlic    assignee    sneli    an 

46  Berry  v.  Kelly,  4  Robert.   100.       interest    in    a    claim    sccurwl    by    a 

47  Chambers  v.  Hunt,  18  N.  J.  L.       mortgage  on  crops  as  makes  him  a 
"^•'9.  proper    coiJiaintiH'    with     tlie    oth'T 

48Winans  v.  Denman,  3  N.  J.  L.       p,„.t„p,-   j,,  an  action   for  their  con- 
version  or   a    sjxH'ial   action   on    the 
49Warne  v.  Rose,  5  N.  J.  L.  809.       ^^^^   .^^   ^,,^   ,^^^^^„.^^    ^^    ^^^^.^.,.    ^,,^ 

50Ulmer  v.   Cunningham,    2    Me.       ^^^  ^|^^^^.^^^_     j^^^.^,^  ^._  ^^ 


VZ'it. 


117;  Slaughter  v.  American  Bap- 
tist P.  Soc,  (Tex.  Civ.  App.),  150 
S.  W.  224 


Ala.  590. 

52  Andrews    v.     Weckerman,     144 


SiFairmount    R.    Co.    v.    Stutler,  ^Ji^'^-    1^^;    ^^^hte   v.    Hanaen,    106 

54  Pa.  375,  6  Am.  Neg.  Cas.  260,  93  Minn.  365;  Tlufnagel  v.  Mt.  Vernon, 

Am   Dec   714.  49  Hun,  286;  Governor  v.  Hicks,  12 

The  assignment  by  one  member  of  Ga.  189;  Rhoads  v.  Booth,  14  Iowa, 


432 


SUTHERLAND    ON    DAMAGES. 


[§  140 


titi's  ill  a  joint  action  are  co-partners  or  not  is  immaterial  so  long 
as  tlioir  cause  of  action  is  shown  to  be  joint.^^ 

§  140.  Joint  and  several  liability  for  torts.  If  injuries  or 
damage  are  sustained  through  the  affirmative  acts  or  negligence 
of  several  persons,  an  action  may  be  brought  against  all  or  any 
of  them  without  prejudicing  the  plaintiff's  rights.^* 


575;    Schaeffer     v.     Marieiithal,    17 
Ohio  St.  183. 

53  Wood  V.  Fithian,  24  N.  J.  L.  33. 

54  Reynolds  v.  Metropolitan  St. 
Ry.  Co.  180  Mo.  App.  138;  Arnold 
V.  C.  Hoffman  &  Son  Milling  Co., 
93  Kan.  54;  Thoreson  v.  St.  Paul 
T.  &  L.  Co.,  73  Wash.  99;  Kirkpat- 
rick  V.  San  Angelo  Nat.  Bank 
(Te.x.  Civ.  App.),  148  S.  W.  362; 
Maddox  v.  Neuton,  4  Ala.  App.  454;  . 
American  S.  Co.  v.  Souers,  50  Ind. 
App.  475;  Young  v.  Aylesworth, 
35  R.  I.  259,  citing  the  text;  Marsh 
V.  Usk  H.  Co.,  73  Wash.  543;  Traf- 
fler  V.  Detroit  *&  C.  N.  Co.,  181  Fed. 
256;  Mason  v.  WoUovich,  10  L.R.A. 
(N.S.)  765,  150  Fed.  699,  80  C.  C. 
A.  435;  The  Hamilton,  146  Fed. 
724,  77  C.  C.  A.  150;  Southern  R. 
Co.  V.  Jones  C.  Co.,  167  Ala.  575; 
Abney  v.  Mize,  155  Ala.  391;  Roach 
V.  Rector,  93  Ark.  521;  Southwest- 
ern Tel.  &  T.  Co.  V.  Bruce,  89  Ark. 
581 ;  St.  Louis,  etc.  R.  Co.  v.  Cool- 
idge,  73  Ark.  112,  108  Am.  St.  21, 
67  L.R.A.  555;  Allen  v.  Ruland,  79 
Conn.  405;  Burns  v.  Horkan,  120 
Ga.  161;  Western  &  A.  R.  Co.  v. 
Henderson,  6  Ga.  App.  385;  Finley 
V.  Southern  R.  Co.,  5  Ga.  App.  722 ; 
Parmalee  Co.  v.  Wheelock,  224  111. 
194;  Baltimore,  etc.  R.  Co.  v.  Klee- 
spies,  39  Ind.  App.  151;  St.  Louis, 
etc.  R.  Co.  V.  Noland,  75  Kan.  691 ; 
Guernsey  v.  Davis,  67  Kan.  378; 
Bowman  v.  Hazen,  69  Kan.  682 ; 
Hawkins  F.  Co.  v.  Morris,  143  Ky. 
738 ;  Probst  v.  Hinesley,  1 33  Ky.  64 ; 
Illinois  Cent.  R.  Co.  v.  Coley,  121 
Ky.  385,  1  L.R.A. (N.S.)   370;  Cum- 


berland Tel.  &  T.  Co.  V.  Ware,  115 
Ky.  581 ;  D'Almeida  v.  Boston  &  M. 
R.,  209  Mass.  81;  Corey  v.  Havener, 
182  Mass.  250;  Fryklund  v.  Great 
Northern  R.  Co.,  101  Minn.  37; 
Berry  v.  St.  Louis,  etc.  R.  Co.,  214 
Mo.  593;  Faust  v.  Pope,  132  Mo. 
App.  287 :  Rand  v.  Butte  E.  R.  Co., 
40  Mont.  398;  Fitzgerald  v.  Uiiion 
S.  Co.,  89  Neb.  393,  33  L.R.A. (N.S.) 
983;  Starr  v.  Bankers'  Union,  81 
Neb.  377,  129  Am.  St.  680;  Squire 
v.  Ordemann,  194  N.  Y.  394;  Hughes 
V.  Harbor  &  S.  B.  &  S.  Ass'n,  131 
App.  Div.  (N.  Y.)  185;  Barber  v. 
Dewes,  101  App.  Div.  (N.  Y.)  432; 
Upson  C.  &  M.  Co.  V.  Williams, 
28  Ohio  C.  C.  388;  Warner  v.  De- 
Armond,  49  Ore.  199;  McElroy  v. 
Harnack,  213  Pa.  444;  .Moore  v. 
Chattanooga  E.  R.  Co.,  119  Tenn. 
710,  10  L.R.A.  (N.S.)  978;  Cole- 
man V.  Bennett,  111  Tenn.  705; 
San  Marcos  E.  L.  &  P.  Co.  v.  Comp- 
ton,  48  Tex.  Civ.  App.  586;  Sexton 
R.  &  I.  Co.  V.  Sexton,  48  Tex.  Civ. 
App.  190;  Groot  v.  Oregon  S.  L.  R. 
Co.,  34  Utah,  152;  Walton  v.  Miller, 
109  Va.  210,  132  Am.  St.  908;  Hel- 
berg  V.  Hosmer,  143  Wis.  620;  01- 
well  V."  Skobis,  126  Wis.  308; 
O'Kcefe  v.  Walsh  (1903)  2  Irish, 
681;  Moore  v.  Fryman,  154  Iowa, 
534;  Williams  v.  Sheldon,  10  Wend. 
654;  Merryweather  v.  Nixan,  8  T. 
R.  186;  Wheeler  v.  Worcester,  10 
Allen,  591;  Murphy  v.  Wilson,  44 
Mo.  313,  100  Am.  Dec.  390;  Moore 
V.  Appleton,  26  Ala.  633. 

Some    authorities    .state    the   rule 
thus:      If    injuries    or    damage   are 


140] 


ENTIKETY    Ul<'    DAMAGES. 


■iod 


If  separate  judgnieuts  are  obtained  the  plaiiiiitV  may,  at  Iiis 
option,  where  the  judgnieuts  are  I'tir  vai'viui;'  amoiints,  elect  tu 


sustained  through  tlic  affirmative 
acts  or  negligence  of  several  persons 
acting  jointly,  or,  if  contributed  to 
by  each,  in  pursuance  of  a  joint  pur- 
pose, an  action  may  be  brought 
against  all  or  any  of  tliem.  Others, 
and  the  weight  of  autliority  favors 
the  rule  as  stated  in  the  text,  ig- 
nore the  necessity  for  joint  action 
or  tlie  existence  of  a  common  pur- 
pose; as  where  by  the  separate,  but 
concurrent,  negligence  of  two  car- 
riers a  passenger  is  injured  by  a 
collision,  or  a  person  is  simultane- 
ously arrested  on  two  warrants  is- 
sued at  the  instance  of  two  persons. 
Colgrove  v.  New  York,  etc.  R.  Co., 
20  N.  Y.  492,  75  Am.  Dec.  419; 
Slater  v.  Mersereau,  64  N.  Y.  147; 
Boyd  v.  Watt,  27  Ohio  St.  268; 
City  El.  St.  R.  Co.  v.  Conery,  61 
Ark.  .38],  54  Am.  St.  262,  31  L.R.A. 
570;  Pine  Bluff  ^V.  &  L.  Co.  v.  Mc- 
Cain, 62  Ark.  118;  Klauber  v.  Mc- 
Grath,  35  Pa.  13  8,  78  Am.  Dee.  329; 
Peckham  v.  Burlington,  Brayton, 
134;  Allison  v.  Hobbs,  96  Me.  26; 
Boston  &  A.  R.  Co.  v.  Shanly,  107 
Mass.  568 ;  Newman  v.  Fowler,  37 
N.  J.  L.  89,  16  Am.  Neg.  Cas.  722; 
Lake  Erie  &  W.  R.  Co.  v.  Middlecofi', 
150  111.  27;  Kansas  City  v.  Slang- 
strom,  53  Kan.  431;  Pugh  v.  Chesa- 
peake &  0.  R.  Co.,  101  Ky.  77,  2 
Am.  Neg.  Rep.  159,  72  Am.  St.  392; 
Stone  V.  Dickson,  5  Allen,  29,  81 
Am.  Dec.  727;  Cuddy  v.  Horn,  46 
ilich.  603;  Flaherty  v.  Minneapolis, 
etc.  R.  Co.,  39  Minn.  328,  12  Am. 
St.  654;  Grand  Trunk  R.  Co.  v. 
Cummings,  106  U.  S.  700,  27  L.  ed. 
266;  Brown  v.  Coxe,  75  Fed.  689; 
McFadden  v.  Metropolitan  St.  R. 
Co.,  16T  Mo.  App.  652.  See  §  141 
and  note.  But  this  doctrine  has 
been  doubted.  Lull  v.  Fox  &  W. 
Suth.  Dam.  Vol.  I.— 28. 


T.  Co.,  in  Wis.  100;  Trowbridge  v. 
Forepaugh,  14  Minn.  133;  Lark  ins 
v.  Eckwur/.cl,  42  Ala.  322,  94  Am. 
Dec.  651;  Powell  v.  1  liomp.son,  80 
Ala.  51. 

It  has  been  said,  arpucJidn,  of  a 
complaint  which  set  up  tlic  8«!parato 
and  distinct  wrongs  of  the  rcspcc- 
tive  defendants  and  sought  to  en- 
force a  joint  liability  for  acts  whicli 
were  not  joint  in  themselves  nor 
bound  together  by  tlie  tie  of  a  com- 
mon purpose,  that  this  cannot  In- 
done;  the  wrong  done  must  be  joint- 
ly done  in  fact  by  the  defendants, 
or  if  contributed  to  by  each,  a  joint 
purpose  must  be  imputable  to  them 
before  they  can  be  said  to  be  joint 
tort-feasors,  and  responsible  jointly 
and  severally  for  the  resulting  in- 
jury. It  will  not  sudlce,  as  a  gen- 
eral proposition  at  least,  that  the 
separate  wrongful  acts  or  omissions 
of  two  persons,  having  no  connec- 
tion with  each  other,  the  motive  of 
each  being  foreign  to  that  of  the 
other,  have  in  their  imintended  co- 
alescence and  coaction  produced  an 
injury.  Richmond  &  D.  R.  Co.  v. 
Greenwood,  99  Ala.  501,  11  Am. 
Neg.  Cas.  9;  Ensley  L.  Co.  v.  Lewis, 
121  Ala.  100. 

This  appears  to  be  in  conformity 
with  the  rule  in  England,  in  a  re- 
cent case  the  plaintifT  brought  an 
action  for  negligently  excavating 
near  liis  house,  \\h(>reby  it  was  dam- 
aged; the  defendant  attributed  the 
damage,  wholly  or  in  part,  to  the 
negligence  of  a  water  company 
in  leaving  a  main  insufficient  ly 
stopped.  The  court  declined  to  join 
such  com  pan  J'  as  a  defendant  be- 
cause the  torts  wore  separate, 
though  the  resulting  damage  was 
the   same  in   each   case.     Thompson 


434 


SUTIIEIiLAND    ON    DAMAGES. 


[§  140 


enforce  the  one  which  is  for  the  largest  amount.^^  The  rule 
concerning  the  bringing  of  actions  applies  in  eqnity  as  well  as 
at  law.®®  Such  persons  may  participate  so  as  to  be  thus  liable 
by  preconcert  to  do  the  wrong  complained  of,  or  to  procure  it 
to  be  done,  as  well  as  by  jointly  taking  part  in  it,  or  by  subse- 
quently adopting  the  act  done  or  neglect  suffered  as  principals.®' 
The  extent  of  individual  participation  in,  or  of  expected  benefit 
from,  a  joint  tort  is  immaterial ;  each  and  all  of  the  tort-feasors 


V.  London  County  Council,  [1897]  1 
Q.  B.  84. 

In  an  earlier  case  against  two  de- 
fendants it  was  alleged  tliat  eacli  of 
them,  by  their  several  acts,  and 
that  they  by  their  combined  acts, 
obstructed  the  plaintiff's  access  to 
his  premises,  and  an  injunction  and 
damages  were  prayed  against  each 
of  them;  it  was  determined  that  the 
action  could  not  be  maintained;  that 
one  of  the  defendants  must  be 
struck  out.  Sadler  v.  Great  West- 
ern R.  Co.,  [1896]  App.  Cas.  450, 
affirming  [1895]  2  Q.  B.  688. 

Where  a  municipality  is  bound  to 
see  that  its  streets  and  sidewalks 
are  kept  in  proper  condition  it  can- 
not be  joined  as  a  defendant  with 
a  resident  property  owner  whose 
duty  it  is  to  see  that  the  walk  ad- 
joining his  premises  is  in  good  re- 
pair for  an  injury  resulting  from  his 
neglect.  Their  co-operation  is  not 
of  a  nature  which  makes  them  joint 
wrongdoers.  Button  v.  Lansdownc, 
198  Pa.  56.3.  See  Wiest  v.  Electric 
T.  Co.,  200  Pa.  148,  58  L.R.A.  666; 
Schneider  v.  Augusta,  118  Ga.  610. 

The  joint  liability  of  a  wife  for 
her  husband's  tort  depends  upon  her 
volition  in  doing  the  wrong.  Ma- 
honey  V.  Roberts,  86  Ark.  130. 

55  Roodhouse  v.  Christian,  55  111. 
App.  107;  Kansas  City  v.  Slang- 
strom,  53  Kan.  431;  Pugh  v.  Chesa- 
peake &  0.  R.  Co.,  Young  v.  Ayles- 
worth,   35   R.   I.   259;    Blackman   v. 


Simpson,  120  Mich.  377,  58  L.R.A. 
410;  Berkson  v.  Kansas  City  C.  R. 
Co.,  144  Mo.  211;  Burk  v.  Howley, 
179  Pa.  539,  57  Am.  St.  607;  Koch 
V.  Peters,  97  Wis.  492. 

56  New  Jersey  P.  Co.  v.  Schaeffer, 
159  Fed.  171;  Old  Dominion  C.  M. 
&  S,  Co.  V.  Bigelow,  203  Mass.  159, 

40  L.R.A.  (N.S.)  314;  Hopkins  v. 
Oxley  S.  Co.,  28  C.  C.  A.  99,  103, 
S3  Fed.  912,  citing  Cunningham  v. 
Pell,  5  Paige,  007;   Wall  v.  Thomas. 

41  Fed.  620. 

57  Pioneer  M.  Co.  v.  Mitchell,  190 
Fed.  937,  111  C.  C.  A.  771;  Zobel 
v.  Rawlings  M.  Co.,  49  Colo.  134; 
Grimes  v.  Greenblatt,  47  Colo.  495; 
Chattachoochee  B.  Co.  v.  Goings,  135 
Ga.  529;  Golibart  v.  Sullivan,  30 
Ind.  App.  428;  Stuart  v.  Chapman, 
104  Me.  17;  Chase  v.  Cochran,  102 
Me.  431;  Medairy  v.  McAllister,  97 
Md.  488;  Cascarclla  v.  National  G. 
Co.,  151  Mich.  15;  Carp  v.  Queen 
Ins.  Co.,  203  Mo.  295;  Summers  v. 
Keller,  152  Mo.  App.  026;  Cooper 
v.  Scyoc,  104  Mo.  App.  414;  First 
Nat.  Bank  v.  Avery  P.  Co.,  69  Neb. 
329,  111  Am.  St.  541;  Carey  v. 
Wolff,  72  N.  J.  L.  510;  Murdouch  v. 
Tuten,  76  S.  C.  502;  Hunt  v.  Di 
Bacco,  69  W.  Va.  449;  Smith  v. 
Healey,  —  N.  Y.  Misc.  — ,  121  Supp. 
230;  Mathews  v.  Livingston,  86 
Conn.  263;  Virtue  v.  Creamery  P. 
Mfg.  Co.,  123  Minn.  17;  Schafer  v. 
Ostmann,  172  Mo.  App.  602;  Fan- 
ning V.   Brandl,   178  111.   App.   224; 


§  140] 


BNTIliETY    OF    DAAIAUKS. 


435 


are  liable  for  the  entire  damage. ^^  The  law  is  thus  accurately 
and  comprehensively  laid  down  in  a  Xew  York  case:  ''To 
entitle  the  plaintiff  to  a  verdict  against  all  the  defendants  as 
joint  trespassers  it  must  appear  that  they  acted  in  concert  in 
committing  the  tres})ass  complained  of;  if  some  aided  and  as- 
sisted the  others  to  commit  the  tresi)ass  or  assented  tu  the  tres- 
pass committed  by  others,  having  an  interest  therein,  they  are 
all  jointly  guilty ;  .  .  .  it  would  not  be  material  if  they  had 
une(|ual  interests  in  the  avails  of  the  trespass;  for  those  who 


Bolnnit  V.  Pcnse,  31  S.  D.  filO,  (in 
the  absence  of  proof  of  a  conspir- 
acy) ;  Northern  T.  Co.  v.  Palmer, 
171  111.  383;  Donovan  v.  Consoli- 
dated C.  Co.,  187  111.  28,  aff'g  88  111. 
App.  589;  Lewis  v.  Read,  13  M.  & 
W.  834;  Davis  v.  Newkirk,  5  Denio 
92;  Cook  V.  Hopper,  23  Mich.  511; 
Bonnel  v.  Dunn,  28  N.  J.  L.  153; 
Ford  V.  Williams,  13  N.  Y.  584;  Ball 
V.  Loomis,  29  N.  Y.  412;  Hyde  v. 
Cooper,  2G  Vt.  552;  Lewis  v.  Johns, 
34  Cal.  629;  Adams  v.  Freeman,  9 
Johns.  118;  Guille  v.  Swan,  19 
Johns.  381,  10  Am.  Dec.  234;  Hume 
v.  Oldacre,  1  Stark.  351 ;  Stewart  v. 
Wells,  6  Barb.  81;  Wheeler  v.  Wor- 
cester, 10  Allen,  591. 

The  ratification  by  a  national 
union  of  the  act  of  a  local  union  in 
e.xpelling  a  member  makes  the  for- 
mer a  proper  party  to  the  action 
for  redress.  Schouten  v.  Alpine,  77 
N.  Y.  Mi.sc.  19. 

58  McCool  V.  Mahoney,  54  Cal. 
491;  Learned  v.  Castle,  73  id.  454; 
McCalla  v.  Shaw,  72  Ga.  458 ;  Ever- 
road  V.  Gabbert,  83  Ind.  489 ;  West- 
brook  v.  Mize,  35  Kan.  299;  Sharpe 
V.  Williams,  41  Kan.  56;  Boaz  v. 
Tate,  43  Ind.  60;  Breedlove  v.  Bun- 
dy,  96  id.  319;  Page  v.  Freeman,  19 
Mo.  421;  Wright  v.  Lathrop,  2  Ohio, 
275;  Knickerbacker  v.  Colver,  8 
Cow.  Ill;  Turner  v.  Hitchcock,  20 
Iowa,  310;   Nelson  v.  Cook,   17   111. 


443;  McMannus  v.  Lee,  43  Mo.  206, 
97  Am.  Dec.  386;  Brown  v.  Perkins, 

I  Allen,  89;  Barden  v.  Felcli,  109 
Mass.  154;  Williams  v.  Sheldon,  10 
Wend.  654;  Currier  v.  Swan,  63  Me. 
323;  Mason  v.  Sieglitz,  22  Colo. 
320;  Hunter  v.  Wakefield,  97  Ga. 
543 ;  Sternfels  v.  Metropolitan  St.  R. 
Co.,  73  App.  Div.  (N.  Y.)  494;  Hill 
V.  Ninth  Ave.  R.  Co.,  109  N.  Y.  239, 
9  Am.  Neg.  Cas.  665;  Atlanta  v. 
Chattanooga  F.  &  Pipeworks,  64 
L.R.A.  721,  61  C.  C.  A.  387,  127  Fed. 
23;   Hayes  v.  Miller,  150  Ala.  621, 

II  L.R.A.  (N.S.)  748,  124  Am.  St. 
93;  Marriott  v.  Williams,  152  Cal. 
705,  125  Am.  St.  87;  Forsythe  v. 
Los  Angeles  R.  Co.,  149  Cal.  569; 
Cordiner  v.  Los  Angeles  T.  Co.,  5 
Cal.  App.  400;  Peru  II.  Co.  v.  Len- 
hart,  48  Ind.  App.  319;  Wisecarvcr 
v.  Chicago,  etc.  R.  Co.,  141  Iowa 
121;  Holderman  v.  Hood,  70  Kan. 
267;  Woodbury  v.  Sparrell  Print, 
198  Mass.  1;  Cook  v.  Hastings,  150 
Mich.  289,  14  L.R.A. (N.S.)  1123; 
Bragg  v.  Metropolitan  St.  R.  Co., 
192  Mo.  331;  Broustor  v.  Fox,  117 
Mo.  App.  711.  An  exception  is  noted 
in   §   1059, 

In  an  action  against  conspirators 
the  jury  may  assess  damages  against 
tlie  separate  defendants  according 
to  the  respective  dates  when  they 
liecame  conspirators.  O'Keefe  v. 
Walsli,    \]W.\]    2   Irish   6S1. 


436  SUTirEKLAND    ON    DAINIAGES.  [§    140 

confederate  to  do  au  unlawful  act  are  deemed  guilty  of  tlie  whole 
although  their  share  in  the  profits  may  be  small.  But  if  any  of 
the  defendants  are  not  guilty  at  all,  or  if  any  of  them,  though 
guilty,  were  acting  separately  and  for  themselves  alone,  without 
any  concert  with  the  others,  they  ought  to  be  acquitted  and  those 
only  found  gTiilty  who  were  acting  jointly."  ^^  The  fact  that 
one  who  orders  an  act  done,  which  results  in  injury  to  a  third 
person,  gave  such  order  as  the  officer  of  a  municipal  or  private 
corporation  does  not  absolve  him  from  liability  for  the  conse- 
quences.^" The  rule  is  that  two  or  more  persons  cannot  be  held 
jointly  liable  for  verbal  slander.^^  While  admitting  this  it  is 
said  in  a  recent  case  in  which  slander  of  title  was  the  ground 
of  the  action,  that  under  circumstances  where  all  the  defendants 
are  jointly  concerned  and  interested  and  participate  in  the  gen- 
eral purpose,  their  concert  and  co-operation  may  be  shown  al- 
though the  false  and  malicious  statements  may  have  been  made 
by  one  alone, ^^  Where  a  master  is  liable  for  the  tort  of  his 
servant,  a  principal  for  that  of  his  agent  or  deputy,  they  are 
jointly  liable. ^^    Joint  liability  attaches  to  a  firm  for  a  slander 

59  Williams  v.  Sheldon,  10  Wend.  Daiibenbiss,  84  Cal.  1 ;  New  Ellers- 
654;  Howard  v.  Dayton  C.  &  I.  Co.,  lie  F.  Club  v.  Stewart,  12,3  Ky.  8,  9 
94   Ga.   416;    Pittsburgh    R.   Co.   v.       L.R.A.(N.S.)    475. 

Chapman,  145  Fed.  886,  76  C.  C.  A.  61  Blake  v.   Smith,   19   R.   I.  476; 

418;  Le  Laurin  v.  Murray,  75  Ark.  Cox  v.  Strickland,  120  Ga.  104;  Du- 

232;     Millard    v.    Miller,    39    Colo.  quesne    D.    Co.    v.    Greenbaum,    135 

103;    Howe   v.    Bradstreet   Co.,    135  Ky.  182,  24  L.R.A.(N.S.)   955.     See 

Ga.  564;   Shannon  v.  Swanson,  20S  Hendricks  v.  Middlebrooks  Co.,  118 

111.    52;    Lawrence   v.    Leathers,    31  Ga.  331;  Kellar  v.  James,  63  W.  Va. 

Ind.  App.  414;  Bernheimer  V.  Beck-  139,    14    L.R.A.(N.S.)     1003;    State 

er,  102  Md.  250,  3  L.R.A.iN.S.)  221,  v.  Marlier,  46  Mo.  App.  233;  Butts 

111  Am.  St.   356;    Stone  v.  Heggie,  v.  Long,  94  id.  687,  692. 

82  Miss.  410;   Paddock-H.  I.  Co.  v.  62  Chesebro    v.    Powers,    78    Mich. 

Rice,    179    Mo.    480;    Otrich    v.    St.  472.      See    Thomas    v.    Rumsey,    6 

Louis,    etc.    R.    Co.,    154    Mo.    App.  Johns.  26. 

420;    Barton    v.    Barton,    119    Mo.  63  Balme  v.  Hutton,  9  Bing.  471; 

App.   507;    Allen   v.   Bear   Creek   C.  Waterbury   v.   Westervelt,   9   N.   Y. 

Co., '43  Mont.  269;  West  V.  Grocery  598;    Morgan    v.    Chester,    4    Conn. 

Co.,  138  N.  C.  166;  Sanders  V.  Cline,  387;    Barker    v.    Braham,    3    Wils. 

22  Okla.  154;   Citizens'  R.  &  L.  Co.  368;  Bates  v.  Pilling,  6  B.  &  C.  38; 

V.    Atwood,   —   Tex.    Civ.    App.    — ,  Newberry  v.  Lee,  3  Hill,  523;  Crook 

138   S.   W.   1101.  V.  Wright,  R.  &  M.  278;  Armstrong 

60  Jenne  v.  Sutton,  43  N.  J.  L.  v.  Dubois,  4  Keyes,  291;  Baker  v. 
257,    39    Am.    Rep.    578;    Myers    v.  Davis,  127  Ga.  649;  Malone  v.  Ham- 


§  141]  ENTIRETY  OF  DAMAGES.  437 

by  an  agent  or  servant  if  it  was  directed,  authorized  or  ratified." 
If  an  officer  takes  property  of  a  wrong  person  ou  process  he,  as 
well  as  the  party  or  attorney  who  directs  it  and  even  the  sureties 
who  execute  a  bond  of  indemnity  to  the  officer  covering  that 
tort,  may  be  jointly  liable.^^  An  action  for  deceit  in  the  nature 
of  a  conspiracy  cannot  be  sustained  against  a  principal  for  the 
unauthorized  fraudulent  acts  and-  representations  of  the  agent 
aloue.^*'  According  to  the  Eowa  court  if  one  joint  wrung-d(Xir 
was  actuated  by  malice  his  condition  of  mind  will  be  altrilnited 
to  the  others,  and  each  will  1)0  liable  for  all  the  damages,  adiial 
and  exemplary,  resulting  from  the  wrong. ^'  But  this  we  regard 
as  a  very  doubtful  proposition.  In  Kentucky  a  cause  of  action 
under  the  common  law  against  one  party  for  compensatory  dam- 
ages cannot  be  joined  with  an  action  against  another  party  for 
punitive  damages,  the  right  thereto  resting  on  a  statute,  although 
both  causes  of  action  arose  out  of  the  same  transaction.^*  The 
better  rule  is  that  co-operation  is  necessary  to  make  a  joint  tort 
a  wilful  one.^^ 

§  141.  Same  subject.  In  an  action  for  diverting  water  from 
a  natural  water-course  so  as  to  flood  the  pkiintiif's  laud  it  ap- 
peared that  the  defendant  did  it  by  walling  the  banks  on  his 
own  land  to  preserve  them,     A  third  person,  by  certain  acts 

mond,  6  Ga.  App.  114;  Louisville  &  65  Woodworth      v.      Gorsliiie,      ."^O 

N.  R.  Co.  V.  GoUihur,  40  Ind.  App.  Colo.   186,   58   L.R.A.   417;    Murray 

480;    Corliss   v.   Keown,   207    Mass.  v.    Lovejoy,    2    Cliff.    191;    LovcJ.iy 

149;   Cascarella  v.  National  G.  Co.,  v.  Murray,  3  Wall.  1,  18  L.  ed.  129; 

151  Mich.  15;   Krolilc  v.  Curry,  148  Lewis  v.  Johns,  34  Cal.  029;  Kiiiglit 

Mich.    214;    Mayberry    v.    Northern  v.   Nelson,   117   Mass.   458;    P.all   v. 

Pac.  R.  Co.,  100  Minn.  79,  12  L.R.A.  Loomis,    29    N.    Y.    412;     Herring 

(N.S.)    675;  Meloon  v.  Read,  73  N.  y    Hoppock,  15  N.  Y.  409;   Root  v. 

H.  153;   Coalgate  v.  Bross,  25  Okla.  chandler,    10    Wend.    110,    35    .\m. 

244,    138   Am.   St.   915;    Sanders   v.  j^^^     ^^^..    yincent    v.    McNamara, 

Cline,   supra;   Williams   v.   Tolbert,  ^^  ^^^^    ^^,^ 

76   S.  C.  211;    Ruddell  v.   Seaboard  ^^  p     '^  vfparker,  40  X.  11.  47. 

A.  L.   R.,   75   S.   C.   290;    Gibson   v.  f 

'   ,        ,„    .  T  V,  .   /^T  o  ^  67  Reizen.stein  v.  Clark,  104  Iowa, 

Holmes,  78  Vt.  110,  4  L.R.A. (N.S.)  ' 

',                  „       TI7    A  T     r-  287,   292,    citing   this   .section.      See 

451;    Johnson   v.   Far  West  L.   Co.,  ''          '            '^         , 

47  Wash.  492;  Morrison  v.  Northern  ^^-  ^^ 

Pac    R    Co.,   34   Wash.   70;    Ott   v.  68  Clayton  v.  Henderson.   103   Ky. 

Murphy,  160  Iowa,  730.  228,  44  L.R.A.  474. 

64Duquesne  D.  Co.  V.  Greenbaum,  69  Sehafor    v.    Ostmann.    MS    Mo. 

supra.  '^PP-  ^'-'•*- 


438 


SUTHEELAND    ON    DAMAGES. 


[§  141 


wholly  independent  of  defendant's  and  without  concert  with 
him,  increased  the  volume  of  water  that  flowed  upon  such  land. 
The  defendant  was  only  liable  for  the  flooding  caused  by  him, 
and  not  for  that  part  of  the  plaintiff's  damages  resulting  from 
the  increased  volume  of  water  caused  by  such  third  person."''*' 
But  where  nine  different  creditors,  acting  without  concert  and 
without  knowing  that  they  were  employing  a  common  agent, 
wrongfully  caused  their  debtor  to  be  arrested  by  the  same  officer 
on  their  several  writs,  service  being  made  simultaneously,  and 
by  virtue  thereof  committed  the  debtor  to  jail  where  he  was 
confined  upon  all  of  the  writs  at  the  same  time,  they  were  deemed 
joint  trespassers,  and  full  satisfaction  recovered  by  the  debtor 
from  one  of  them  was  held  a  bar  to  an  action  a2:ainst  the  others.'^ 


70  Wallace  v.  Drew,  59  Barb.  413; 
Equitable  P.  Mfg.  Co.  v.  Cleveland, 
etc.  E.  Co.,  155  111.  App.  265;  Car- 
hart  V.  State,  115  App.  Div.  (N. 
Y.)   1. 

71  Stone  V.  Dickinson,  5  Allen,  29, 
81  Am.  Dee.  727;  Allison  v.  Hobbs, 
96  Me.  26;  Vandiver  v.  Pollak,  107 
Ala.  547,  54  Am.  St.  118.  Bigelow, 
J.,  said  in  the  Massachusetts  case: 
"As  a  matter  of  first  impression,  it 
might  seem  that  ihe  legal  inference 
from  .  .  .  (The  fact  that  the  de- 
fendants acted  separately  and  inde- 
pendently of  each  other  without  any 
apparent  concert  among  theihselves) 

is  that  the  plaintiff  might 
hold  each  of  them  liable  for  his  tor- 
tious act,  but  that  they  could  not 
be  regarded  as  co-trespassers,  in  the 
absence  of  proof  of  any  intention  to 
act  together,  or  of  knowledge  that 
they  were  engaged  in  a  common 
enterprise  or  undertaking.  But  a 
careful  consideration  of  the  nature 
of  the  action,  and  of  the  injury 
done  to  the  plaintiff,  for  which  he 
seeks  redress  in  damages,  will  dis- 
close the  fallacy  of  this  view  of  the 
case.  The  plaintiff  alleges  in  his 
declaration  that  he  was  unlawfully 
arrested   and   imprisoned.      This    is 


the  wrong  which  constitutes  the 
gist  of  the  action,  and  for  which  he 
is  entitled  to  indemnity.  But  it  is 
only  one  wrong,  for  which  in  law 
he  can  receive  but  one  compensation. 
He  has  not  in  fact  suffered  nine 
separate  arrests,  or  undergone  nim.' 
separate  terms  of  imprisonment.  The 
writs  against  him  were  all  served 
simultaneously,  by  the  same  officer, 
acting  for  all  the  creditors,  and  the 
confinement  was  enforced  by  the 
jailor  on  all  the  processes,  contem- 
poraneously, during  the  entire  .  pe- 
riod of  his  imprisonment.  The  al- 
leged trespasses  on  the  person  of 
the  plaintiff  were,  therefore,  simul- 
taneous and  contemporaneous  acts, 
committed  on  him  by  the  same  per- 
son, acting  at  the  same  time  for 
each  and  all  of  the  plaintiffs  in  the 
nine  writs  upon  which  he  was  ar- 
rested and  imprisoned.  It  is,  tlien, 
the  common  case  of  a  wrongful  or 
unlawful  act,  committed  by  a  com- 
mon agent,  acting  for  several  and 
distinct  principals. 

''It  does  not  in  any  way  change 
or  affect  the  injury  done  to  the 
plaintiff,  or  enhance  in  any  degree 
the  damages  which  he  has  suffered, 
that  the  immediate  trespassers,  by 


§  HI] 


ENTIRETY    OF    DAMAGES. 


439 


It  is  not  possible  to  harmonize  the  cases  on  the  extent  of  the 
co-operation  which  makes  parties  jointly  liable.  It  seems  per- 
fectly proper  that  an  unlawful  act  done  by  one  ])erson,  though 
it  be  in  furtherance  of  a  lawful  pui'pose  in  the  accomplishment 
of  which  others  are  engaged,  should  nut  make  the  latter  liable 
if  it  is  done  without  their  concurrence,  and  no  benefit  is  received 
by  them  from  it.'''^  Where  the  effects  of  the  independent  acts 
of  two  persons  on  opposite  sides  of  a  street  united  in  causing 


whom  the  tortious  act  was  done, 
were  the  agents  of  several  different 
plaintiffs,  who  without  preconcert 
had  sued  out  separate  writs  against 
him.  The  measure  of  his  indemnity 
cannot  be  made  to  depend  on  the 
number  of  principals  who  employed 
the  officers  to  arrest  and  imprison 
him.  We  know  of  no  rule  of  law 
by  which  a  single  act  of  trespass 
committed  by  an  agent  can  be  multi- 
plied by  the  number  of  principals 
who  procured  it  to  be  done,  so  as  to 
entitle  the  party  injured  to  a  com- 
pensation graduated,  not  according 
to  the  damages  actually  sustained, 
but  by  the  number  of  persons 
through  whose  instrumentality  the 
injury  was  inflicted.  The  error  of 
the  plaintiff  consists  in  supposing 
that  the  several  parties  who  sued 
out  writs  against  him,  and  caused 
him  to  be  arrested  and  imprisoned, 
cannot  be  regarded  as  co-trospassers, 
because  it  does  not  appear  that  they 
acted  in  concert,  or  knowingly  em- 
ployed a  common  agent.  Such  pre- 
concert or  knowledge  is  not  essen- 
tial to  the  commission  of  a  joint 
trespass.  It  is  the  fact  that  they 
all  united  in  the  wrongful  act,  or 
set  on  foot  or  put  in  motion  the 
agency  by  which  it  was  committed, 
that  renders  them  jointly  liable  to 
the  party  injured.  Whether  the 
act  was  done  by  the  procurement  of 
one  person  or  of  manj',  and,  if  by 
many,    whether   they   acted   from   a 


common  purpose  and  design  in 
vvliich  they  all  shared,  or  from  sep- 
arate and  distinct  motives,  and 
without  any  knowledge  of  tiic  inten- 
tions of  each  other,  tlie  nature  of 
the  injury  is  not  in  any  degree 
changed,  or  the  damages  increased 
wliich  the  party  injured  has  a  right 
to  recover.  He  may,  it  is  true,  have 
a  good  cause  of  action  against  sev- 
eral persons  for  the  same  wrongful 
act,  and  a  right  to  recover  damages 
against  each  and  all  therefor,  with 
the  privilege  of  electing  to  take  his 
satisfaction  de  melioribus  d-nxinis. 
But  there  is  no  rule  of  law  by  wliicli 
he  can  claim  to  convert  a  joint  into 
a  several  trespass,  or  to  recover 
more  than  one  satisfaction  for  his 
damages,  when  it  appears  that  he 
has  suffered  tlie  consequences  of  a 
single  tortious  act  only."  I'agley 
V.  Wonderland  Co.,  205  Mass.  238. 
Sec  Wchle  v.  Butler,  ]2  Abb.  Pr. 
(N.  S.)   139. 

72  Wert  v.  Potts,  70  Iowa,  012,  J4 
Am.  St.  252;  Livesay  v.  First  Nat. 
Bank,  36  Colo.  526,  6  L.K.A.(N.S.) 
598,  118  Am.  St.  120. 

One  does  not  become  a  partici- 
I»ator  in  an  assault  and  battery  by 
witnessing  and  mentally  approving 
it,  no  word  or  sign  being  used.  Lis- 
ter V.  McKee,  79  111.  App.  210. 

After  mortgaged  goods  were 
wrongfully  attached  by  creditors  of 
the  mortgagor  other  creditors  placed 
their  writs  in  the  officer's  hands  and 


440 


SUTIIEKLAND    ON    DAMAGES. 


[§  141 


iiijiirv,  there  being  no  concert  of  action,  they  were  held  not 
jointly  lialjleJ^  So  where  a  dam  was  filled  with  deposits  of 
coal  dirt  from  different  mines  on  the  stream  above  the  dam, 
worked  by  persons  having  no  connection  with  each  other,  it  was 
held  that  they  were  not  jointly  liable  for  the  combined  results 
of  throwing  coal  dirt  into  the  river  by  all  the  workers  of  the 
mines ;  that  the  ground  of  action  was  not  the  deposit  of  dirt  in 
the  dam  by  the  stream  but  the  negligent  act  above.  Throwing  the 
dirt  into  the  stream  was  the  tort;  the  deposit  in  the  dam  only 
the  consequence.  The  tort  of  each  was  several  when  committed 
and  did  not  become  joint  because  its  consequences  united  with 
other  consequences.'*  Agnew,  J.,  referring  to  the  instructions 
of  the  trial  court  asserting  a  joint  liability  or  the  liability  of 
each  for  the  combined  results,  said:  "The  doctrine  of  the 
learned  judge  is  somewhat  novel,  though  the  case  itself  is  new ; 
but  if  correct  is  well  calculated  to  alarm  all  riparian  owners 
who  may  find  themselves  by  slight  negligence  overwhelmed  by 
others  in  gigantic  ruin.     It  is  immaterial  what  may  be  the 


he  indorsed  returns  of  a  levy  upon 
tlie  same  goods,  subject  to  the  first 
levy.  It  appears  to  have  been  the 
opinion  of  the  court  that  if  such 
subsequent  attaching  creditors  did 
nothing  further  they  might  not  have 
been  liable  jointly  with  the  officer 
and  the  original  attaching  creditor, 
in  the  absence  of  proof  showing  con- 
cert of  action  (Sparkman  v.  Swift, 
81  Ala.  2.31;  Lee  v.  Maxwell,  OS 
Mich.  49G)  ;  but  they  afterward 
joined  together  in  directing  and  as- 
sisting the  officer  in  selling  the 
goods,  and  in  bringing  a  suit  in 
equity  to  set  aside  the  mortgage  as 
fraudulent,  and  to  enjoin  a  sale  of 
the  property  by  the  mortgagee,  in 
consequence  of  which  acts  the}'  and 
the  indemnitors  of  the  officer  became 
jointly  liable  with  the  officer  and 
the  first  attaching  creditors.  Koch 
V.  Peters,  97  Wis.  492,  citing  Love- 
joy  v.  Murray,  3  Wall.  1,  18  L.  ed. 
120. 


Where  creditors  employed  the 
same  attorney  and  separate  attach- 
ments were  levied  on  the  property 
of  their  debtor,  neither  creditor 
being  in  any  way  interested  in  the 
claim  of  any  other  creditor  or  its 
prosecution,  the  creditors  were  not 
joint  tort-feasors.  INIiller  v.  Beck, 
108  Iowa,  ,575. 

73  De  Donato  v.  Morrison,  160  Mo. 
581;  Baird  v.  Yohn,  26  Pa.  482; 
Leidig  v.  Bucher,  74  Pa.  67 ;  Wiest 
v.  Electric  T.  Co.,  200  Pa.  148,  58 
L.R.A.  666;  Sun  Co.  v.  Wyatt,  48 
Tex.  Civ.  App.  340. 

74  Little  Schuylkill,  etc.  Co.  v. 
Pvichards,  57  Pa.  142,  98  Am.  Dec. 
209;  Tackaberry  v.  Sioux  City  S. 
Co.,  154  Iowa,  358,  40  L.R.A.  (N.S.) 
102;  Watson  v.  Colusa-P.  M.  &  S. 
Co.,  31  Mont.  513,  and  cases  cited; 
Swain  v.  Tennessee  C.  Co.,  Ill 
Tenn.  430.  Contra,  Day  v.  Louis- 
ville C.  &  C.  Co.,  60  W.  Va.  27,  10 
L.R.A.  (N.S.)   167. 


141] 


ENTIRETY    OF    DAMAGES. 


Ill 


nature  of  the  several  acts  or  bow  small  their  share  in  the  ultimate 
injury.  If  instead  of  coal  dirt  others  were  felling  trees  and 
suffering  their  tops  and  branches  to  float  down  the  stream  finally 
finding  a  lodgment  in  the  dam  with  the  coal  dirt,  he  who  threw 
in  the  coal  dirt  and  he  who  felled  the  trees  would  each  be  respon- 
sible for  the  acts  of  the  other.  In  the  same  manner  separate 
trespassers  who  should  haul  their  rubbish  upon  n  city  hit  and 
throw  it  upon  the  same  pile  would  each  be  liable  lor  the  whole 
if  the  final  result  be  the  only  criterion  of  liability."  The  court 
rejected  this  view  and  held  as  above.  The  judge  t'urthei'  said: 
''True,  it  nuiy  be  difficult  to  determine  how  much  dirt  came 
from  each  colliery,  but  the  relative  pro])orti(ms  thrown  in  by 
each  may  form  some  guide,  and  a  jury  in  a  case  of  such  diili- 
culty  caused  by  the  party  himself  would  uunisure  the  injury 
of  each  with  a  liberal  hand.  But  the  difficulty  of  separating  the 
injury  of  each  from  the  others  would  be  no  reason  that  one  man 
should  be  hekl  to  be  liable  for  the  torts  of  others  without  concert. 
It  would  be  simply  to  say  because  the  plaintiff  fails  to  prove  the 
injury  one  man  does  him  he  may  therefore  recover  from  that 
one  all  the  injury  that  others  do.  This  is  bad  logic  and  hard  law. 
Without  concert  of  action  no  joint  suit  could  be  brought  against 
the  owners  of  all  the  collieries,  and  clearly  this  nuist  be  the  test.'* 


75Sellick  V.  Hall,  47  Conn.  260; 
Watson  V.  Colusa-P.  M.  &  S.  Co., 
31  Mont.  513.  Compare  Upson  C. 
&  M.  Co.  V.  Williams,  28  Ohio  C.  C. 
388. 

In  Hillman  v.  Newington,  56  Cal. 
57,  the  plaintiff  was  entitled  to  four 
hundred  inches  of  the  water  in  a 
creek ;  the  defendants  severallj'  and 
without  concert  of  action  diverted 
water  to  such  an  extent  that  he  did 
not  receive  that  quantity.  In  pass- 
ing upon  the  question  of  misjoinder 
of  parties  defendant  the  court  said: 
"It  is  not  at  all  improbable  that  no 
one  of  the  defendants  deprives  the 
plaintiff  of  tlie  amount  to  which  he 
is  entitled.  If  not,  upon  what 
ground  could  he  maintain  an  action 
against    any    one    of   them?      If    he 


were  entitled  to  all  tlie  water  of  the 
creek,  then  every  person  who  divert- 
ed any  of  it  would  l)e  liable  to  iiim 
in  an  action.  But  he  is  only  en- 
titled to  a  certain  specific  amount 
of  it,  and  if  it  is  only  by  the  joint 
action  of  the  defendants  that  he  is 
deprived  of  that  amount,  it  seems 
to  us  tliat  the  wrong  is  committed 
by  them  jointly  because  no  one  of 
them  alone  is  guilty  of  any  wrong. 
Eacb  of  them  diverts  some  of  the 
water :  and  the  aggregate  reduces 
the  volume  below  tlie  anunint  (o 
which  the  plaintiff  i.s  entitled,  al- 
though the  amount  diverted  by  any 
one  would  not.  It  is  quite  evident, 
tiierefore,  that  without  unity  or  con- 
cert of  action  no  wrong  could  l>e 
committed,    and    we    tliink    tliat    in 


442  SUTHERLAND  ON  DAMAGES. 

In  some  states,  as  has  been  seen/  independent  concert  of 
action  is  a  basis  for  holding  the  parties  jointly  liable.''^  Thus, 
where  several  persons  were  entitled  to  water  from  a  reservoir 
and  the  wrongful  and  excessive  use  of  the  water  by  some 
deprived  the  plaintiif  of  his  share,  it  was  said  the  case  was  anal- 
ogous to  that  of  an  injury  produced  by  the  collision  of  two  rail- 
road trains  under  different  ownership  and  management,  caused 
I)y  the  concurring  negligence  of  both  companies.  Each  is  joint- 
ly and  severally  liable.  It  would  be  impossible  to  apportion  the 
damages  bet\\een  the  two  acts  of  negligence  or  determine  the 
amount  produced  by  each.  The  law  does  not  permit  one  per- 
son to  shield  himself  from  liability  for  an  act  resulting  in  in- 
jury because  someone  else  has  at  the  same  time  contributed  to 
produce  the  same  injury.''"^  Independent  action  is  not  a  defense 
to  an  action  for  creating  a  public  nuisance.'''^  The  difficulty 
of  apportioning  the  damages  in  cases  of  the  kind  here  con- 
sidered will  not  bar  the  plaintiff  from  obtaining  redress;  the 
jury  will  be  allowed  a  large  license  in  that  respect.'^ 

Separate  owners  are  not  jointly  liable  for  injuries  jointly 
committed  by  their  respective  animals  though  the  latter  hap- 
pen to  unite  in  a  single  transaction.  Each  owner  is  liable  only 
for  the  injury  committed  by  his  own  animal ;  and  his  liability 

such  a  case  all  who  act  must  be  necessary  to  make  persons  joint 
held  to  act  jointly.  If  there  be  a  wrong-doers  in  a  conspiracy  to  ruin 
surplus  [of  water]  the  defendants  the  business  of  another,  see  Dore- 
can  settle  the  priority  of  right  to  mus  v.  Hennessy,  176  111.  608,  68 
it  among  themselves.  That  can  in  Am.  St.  203,  43  L.R.A.  797;  Mar- 
no  way  affect  the  plaintiff's  right  to  tens  v.  Reilly,  109  Wis.  404 ;  State 
the  amount  to  which  he  is  entitled.  v.  Huegin,  110  Wis.  189,  62  L.R.A. 
It    does    not    seem    to    us    that    the  yqq 

defendants'  answer  that  each  one  of  7e  Consolidated    I.    Mach.    Co.    v. 

them     is    acting    independently     of.  ^.^.^^^^  ^3^  jjj    ^g^^  ^^  ^.R.A.  090, 

every    other    one    shows    that    the  ^3    Am.    St.    692;    Peru    H.    Co.    v. 

wrong  complained  of  is  not  the  re-  ^^^^^^^^^^  ^^  ^^^^  3^^ 


77  Elkhart  P.  Co.  v.  Fulkerson,  30 


suit  of  their  joint  action;  and  if  it 

does  not  the  answer  in  that  respect 

.      .        (p  ■      .     .               ^.■^.   ^.            -,  Ind.    App.    219;    South    Bend    Mfg. 

IS    insufficient    to    constitute    a    de-  '  '                                                " 

fense.     The   case  so   far   as   we   are  ^o-   "'■   Lip^^art,   12   Ind.  App.   185; 

advised  is  siii  generis.     No  parallel  HUlman  v.  Newington,  supra. 

case   is  cited   by   either   side."      See  ''^  See  §  1059. 

§  142.  79  Carhart  v.  State,  115  App.  Div. 

As  to  the  measure  of  co-operation  (N.  Y. )    1. 


§  1^1] 


ENTIUETY    OK    DAMAGES. 


443 


is  based  on  liis  duty  to  rostraiii  it  and  his  iH\i;lc('t  in  allowinc; 
it  to  go  at  large  where,  in  pursuing  its  known  natural  inclina- 
tion, it  may  do  damage.®"  If,  however,  separate  owners  keep 
animals  in  common  and  by  a  concurring  negligence  or  design 
suffer  them  to  run  at  large  as  one  herd,  they  are  jointly  liable 
for  all  damages  by  the  united  trespass  of  all  or  any  of  them.'' 
Where  three  persons  opened  a  gate  leading  to  a  vacant  lot  in 
which  was  a  horse  owned  by  a  fourth  person,  and  turned  their 
horses  into  such  lot,  and  one  of  these  three  horses  injured  such 
other  horse,  each  of  those  persons  was  liable  as  a  joint  tort-feasor 
for  such  injury,  regardless  of  whether  they  owned  the  horses 
they  turned  in  or  knew  they  were  vicious.®^  Two  railroad  com- 
panies used  the  same  track  by  joint  arrangement,  governed 
by  common  rules ;  their  trains  collided  owing  to  mutual  and 
concurring  negligence  and  caused  a  single  injury.  They  were 
jointly  liable.  It  is  immaterial  that  the  companies  were  en- 
gaged in  the  performance  of  unconnected  duties;  the  test  of 
liability  is  the  inscparableness  of  the  consequences  of  the  neg- 


80  Foster  v.  Bussey,  3  32  Iowa, 
G40;  Anderson  v.  Halverson,  120 
Iowa,  125;  Nohre  v.  Wright,  98 
Minn.  477;  Pacific  Livestock  Co.  v. 
Murray,  45  Ore.  103;  Dyer  v.  Hutch- 
ins,  87  Tenn.  198;  Auchmuty  v. 
Ham,  1  Denio,  495,  1  Am.  Neg.  Cas. 
229;  Wilbur  v.  Hubbard,  35  Barb. 
303,  1  Am.  Neg.  Cas.  231;  Parten- 
heimcr  v.  Van  Order,  20  Barb.  479, 
1  Am.  Neg.  Cas.  433;  Russell  v. 
Tomlinson,  2  Conn.  206,  1  Am.  Neg. 
Cas.  74;  Adams  v.  Hall,  2  Vt.  9, 
1  Am.  Neg.  Cas.  252  (the  rule  lias 
been  changed  by  statute,  Remele  v. 
Donohue,  54  Vt.  555 ;  Fairchild  v. 
Rich,  68  Vt.  202)  ;  Van  Steinburgh 
V.  Tobias,  17  Wend.  562,  1  Am.  Neg. 
Cas.  235;  Buddington  v.  Shearer, 
20  Pick.  477 ;  Nierenborg  v.  Wood, 
59  N.  J.  L.  112. 

Under  a  statute  expressing  that 
every  owner  or  keeper  of  a  dog  en- 
gaged in  doing  damage  to  slieep, 
Iambs,    or    other    domestic    animals 


shall  be  liable  in  an  action  of  tort 
to  the  county  for  all  damages  so 
done,  the  liability  is  for  all  tiie 
damages  in  the  doing  of  which  tlie 
dog  engages.  Worcester  County  v. 
Ashworth,  160  Mass.  186;  Nelson  v. 
Nugent,  106  Wis.  477.  The  same 
conclusion  has  been  reaclied  under 
a  statute  less  genoral  in  its  lan- 
guage. Kerr  v.  O'Connor,  (i.l  l*a. 
341,   1  Am.  Neg.  Cas.  242. 

If  cattle  owned  by  dilTerent  per- 
sons do  e(|ual  damage  to  land  on 
which  they  trespass  the  damages 
will  be  apportioiK'd  anumg  them  ac- 
cording to  tiie  number  owned  l)y 
each.  Wood  v.  Snider,  187  X.  ^'. 
28,  12  L.R..\.(N.S.)    912. 

81  .lack  V.  Iludnall,  25  Ohio  St. 
255,  1  Am.  Neg.  Cas.  434,  IS  Am. 
Rep.  298;  Wilson  v.  White,  77  Nob. 
351,  124  Am.  St.  S.V2. 

82  Martin  v.  Farrcll,  M  Apj).  Div. 
(N.  Y.)    177.     Sec  §   140,  n..t.'. 


444  SUTHERLAND    ON    DAMAGES.  [§    141, 

ligence.®^  The  same  rule  applies  to  adjourning  landowners  by 
whose  concurring  negligence  an  insecure  party  wall  is  main- 
tained,^* to  connecting  carriers  who  fail  to  properly  feed 
animals  in  transit,  the  neglect  of  the  initial  carrier  being  con- 
tinued by  the  connecting  carrier,^^  and  also  in  case  of  concur- 
rent negligence  of  a  street  car  company  in  the  operation  of  its 
car  and  of  the  city  in  suffering  a  street  to  remain  in  bad  condi- 
tion resulting  in  injury  to  a  passenger  alighting  from  a  car.®^ 
§  142.  Same  subject;  civil  damage  statutes;  acts  of  members 
of  partnership.  A  statute  giving  a  joint  action  to  any  person 
Avho  shall  be  injured  in  his  means  of  support  by  any  intoxicat- 
ed person,  or  in  consequence  of  the  intoxication,  habitual  or 
otherwise,  against  any  person  or  persons  who  shall,  by  selling 
or  giving  intoxicating  liquors,  have  caused  the  intoxication  in 
whole  or  in  part  of  sTu:'h  person  or  persons,  gives  a  right  of 
action  against  all  such  persons  who  participate  in  causing  a 
particular  or  several  particular  intoxications  of  a  person;  if 
damages  result  therefrom  the  person  injured  may  sue  such  per- 
sons jointly  or  severally;  and  also  all  persons  who,  only  by  the 
sale  of  li(|uor  t(j  a  person,  materially  contribute  to  make  him-- 
au  liabitual  drunkard  may  be  sued  jointly  by  the  person  injured 
in  consequence.  But  the  two  classes  cannot  be  sued  joint- 
ly, and  those  who  alone  contributed  to  cause  habitual  intoxica- 
tion made  responsible  jointly  with  those  who  only  contributed 
to  the  particular  intoxication  and  the  reverse.^'  Under  the 
Iowa  statute  whoever  contributes  to  a  single  act  of  intoxication, 
though  by  sales  of  liquor  made  in  separate  places,  whereby  dis- 
ss Colegrove  V.  New  York,  etc.  R.  St.  802;  Galveston,  etc.  R.  Co.  v. 
Co.,  20  N.  Y.  492,  9  Am.  Neg.  Cas.  Vollratli,  40  Tex.  Civ.  App.  46; 
618,  75  Am.  Dec.  418;  Lindenbaiim  Keeley  v.  Great  Northern  R.  Co., 
V.  New  York,  etc.  R.  Co.,  197  Mass.  139  ^Vis.  448.  See  §  140  note. 
314;   Feneff  v.  Boston  &  M.  R.,  196  84  K lander    v.    McGrath,    3.5    Pa. 

Mass.  575;   Chesapeake  &  0.  R.  Co.  mo    -o    a        t^       oon 
'  J  28,   /8  Am.  Dec.  329. 
V.  Davis,  119  Ky.  641;  Illinois  Cent.  -c  ti  ix-              j.      t>    /-.           ixr      1 
„    ^           „       .•     „,    '  .        ,_     ,^  85  Baltimore,  etc.  R.  Co.  v.  Wood, 
R.  Co.  v.  Harris,  85  Miss,  lo;  Mar- 
tin  V.   Seaboard   A.   L.   R.   Co.,   148  '^^^  ^^>'-  '^^^• 

N.  C.  259;   Harrill  v.  Railroad  Co.,  86  Reynolds    v.    Metropolitan    St. 

135  N.   C.   601;    Maumee  Valley  R.  ^.Y-  Co.,  180  Mo.  App.  138. 

&  L.   Co.   v.   Montgomery,   81    Ohio,  Sf  Tetzner    v.    Naugliton,    12    111. 

426,  26  L.R.A.(N.S.)    987,  135  Am.  App.  148. 


§   1J2] 


ENTIRETY    OF    DAMAGES. 


445 


tinct  damages  are  caused,  is  a  joint  wrong-door.^^  K'nowledge 
or  consent  l)y  a  member  of  a  firm  is  not  essential  to  liis  lia- 
bility.^^ But  there  is  no  joint  liability  unless  the  defendants 
contributed  to  a  specific  act  or  acts  of  intoxication.*"  In  an 
earlier  case  the  court  sav:  "A    joint  lialdlitv  arises  where  an 


88  Kearney  v.  Fitzgerald,  43  Iowa. 
580;  Woolheather  v.  Risley,  38 
Iowa,  486. 

89]\Iatliro  V.  Story  City  D.  Co.. 
130  Iowa,  111. 

90  Richmond  v.  Schickler,  57  Jowa, 
486. 

Boyd  V.  Watt,  27  Ohio  St.  259,  is 
a  novel  and  interesting  case.  The 
Avidow  of  Dr.  Watt  brought  an  ac- 
tion ;  the  complaint  alleged  that  lie 
was  a  physician  witli  an  extensive 
practice,  from  the  profits  of  which 
he  was  able  to  fnrnish  her  comfort- 
able means  of  support;  that  about 
April,  1865,  he  became  and  was  in 
the  habit  of  getting  intoxicated,  and 
so  continued  until  his  death  in  1869, 
of  which  the  defendant  had  notice; 
that  during  that  period  and  at  sun- 
dry and  divers  times  the  defendant 
sold  him  in  quantities  of  from  one 
pint  to  a  quart  intoxicating  liquors, 
causing  said  Watt  to  become  intoxi- 
cated and  an  habitual  drunkard ; 
and  by  reason  thereof  during  said 
period,  and  resulting  tlierefrom,  he 
became  incapable  of  attending  to  his 
usual  business,  and  squandered  his 
estate,  and  so  deprived  her  of  her 
means  of  support.  Johnson,  J., 
speaking  for  a  majority  of  the 
court,  said:  "The  statute  gives  the 
action  against  'any  person  who 
shall  .  .  .  liave  caused  the  in- 
toxication.' Tliis  intoxication  may 
be  'habitual  or  otherwise.'  A  right 
of  action  is  given  for  damages  re- 
sulting from  single  cases  of  intoxi- 
cation or  from  habitual  intoxica- 
tion. Under  the  code  several  dis- 
tinct causes  of  action  may  bo  joined 


in  one  action  for  damages  growing 
out  of  distinct  cases  of  intoxication, 
wlicre  each  cause  of  action  is  sepa- 
rate and  distinct,  and  is  l)etween  tlie 
same  parties;  but  if  on  trial  it  ap- 
pears that  some  of  the  acts  of  intox- 
ication were  caused  bj*  others,  no 
recovery  as  to  them  could  be  liad. 
In  sucii  case  the  causes  of  action 
are  separate,  and  the  damages  re- 
sulting from  cacli  are  distinct  and 
disconnected;  and  tlie  causes  of  ac- 
tion should  be  separately  stated  and 
numbered. 

"In  such  a  case  tlie  (|ucsti<)n  would 
bo  as  to  each  case  of  intoxication, 
who  caused  it,  and  what  damages 
resulted  fro)n  it.  What  would  con- 
stitute a  causing  or  a  single  act  un- 
der the  statute  to  render  one  lial)lc 
would  then  arise.  That  question  is 
not  made  in  this  case.  The  charge 
is  of  causing  habitual  intoxication 
for  a  series  of  years.  The  damages 
alleged  are  not  the  proximate  re- 
sults from  distinct  cases,  but  tlu! 
ultimate  result  of  habitual  intoxi- 
cation. This  continued  haliit  of 
drinking  is  alleged  to  have  rendered 
the  husband  incapable  of  attending 
to  his  business,  and  caused  him  to 
squander  his  estate.  This  final  re- 
sult deprived  the  plaintilT  of  her 
means  of  support.  It  is  a  charge 
of  repeated  illegal  acts,  producing 
by  their  imited  effects  an  ultimate 
state  or  condition  of  Dr.  Watt,  out 
of  which  the  damages  arise.  The 
plaintiff  asks  to  recover  the  dam- 
ages resulting  from  this  state  or 
condition  of  her  husband,  caused  by 
repeated  illegal  sales  for  a  scries  of 


446 


SUTIIEELAND    ON    DAMAGES. 


[§  142 


immediate  act  is  done  by  the  co-operation  or  joint  act  of  two 
or  more  persons.     Mere  successive  wrongs,  being  the  independ- 


years,  and  not  the  damages  from  a 
single  case  of  intoxication,  nor  of  a 
series  of  distinct  cases  at  different 
times,  caused  by  separate  and  dis- 
tinct illegal  sales.  The  means  used 
were  sales  in  quantity  by  the  pint 
and  quart.  To  a  person  of  Dr. 
Watt's  habits,  frequent  sales  in  sucli 
quantity  were  calculated  to  produce 
the  result  complained  of.  Every 
person  is  presumed  to  have  intended 
the  natural  and  probable  conse- 
quences of  his  acts.  The  defendant 
was,  in  violation  of  law,  using 
means  calculated  to  produce  the  al- 
leged injury.  If  the  jury  found 
that  this  was  so,  and  that  the 
means  so  employed  were  so  con- 
tinued as  to  produce  the  condition 
of  the  husband  alleged,  then  they 
had  the  right  to  presume  he  intend- 
ed the  result  which  followed,  though 
others,  with  or  without  preconcert, 
contributed  to  cause  it.  The  in- 
tent with  which  the  act  or  acts  are 
done  is  always  an  important  element 
in  the  case.  In  this  case  it  is  pecul- 
iarly so.  The  means  used,  the  force 
or  agency  employed,  are  to  be  con- 
sidered in  ascertaining  that  intent. 
If  as  seems  to  be  claimed,  a  defend- 
ant can  only  be  liable,  except  in 
cases  of  conspiracy  or  agreement, 
when  he  is  the  sole  cause  of  the  lia- 
bitual  intoxication,  and  no  recovery 
can  be  had  unless  the  damages  can 
be  separated  (an  impossibility  in 
most  cases  of  this  class),  then  this 
part  of  the  statute  is  virtually  a 
dead  letter. 

"Why  should  the  defendant  be 
exonerated  from  the  injury  he  has 
caused  by  his  habitual  wrongs  for  a 
series  of  years  by  showing  that 
others,  without  his  knowledge,  have 
also   contributed   by   like   means   to 


this  result?  He  was  using  adequate 
means  to  produce  the  result,  and 
may,  therefore,  fairly  be  presumed 
to  have  intended  it.  True,  he  may 
not  have  enjoyed  a  monopoly  in  the 
profits  accruing,  by  reason  of  the 
competition  of  others  in  a  common 
business;  but  that  certainly  is  no 
reason  why  he  should  not  be  liable 
for  the  injuries  he  was  intentionally 
engaged  in  causing.  If  such  is  the 
law,  then  he  could  take  advantage 
of  his  own  wrong  by  showing  that 
during  this  four  years  another  or 
others  had  also  contributed.  Such 
is  not  the  law  in  criminal  cases  at 
common  law,  as  will  be  shown  here- 
after; and  we  know  no  reason  for 
greater  strictness  under  this  statute 
than  in  cases  of  the  highest  crimes 
known  to  tlie  law.  This  section  of 
the  statute,  we  take  it,  is  to  be  con- 
strued by  ordinary  canons  of  con- 
struction." 

The  foregoing  views  of  the  court 
presuppose  that  the  defendant  in- 
sisted on  complete  exemption  from 
responsibility  because  other  persons 
made  sales  to  Dr.  Watt.  But  the 
case  as  reported  does  not  disclose 
that  any  such  position  was  taken. 
The  defendant  asked  the  court  to 
charge  the  jury  "that  the  defendant 
was  only  liable  for  damages  to  tlie 
plaintiff  occasioned  by  intoxication 
produced  by  the  intoxicating  liquor 
which  the  defendant  himself  had 
sold  to  said  Dr.  Watt,  and  that  the 
defendant  was  not  liable  for  any 
damages  produced  by  the  intoxica- 
tion of  said  Dr.  Watt,  occasioned  by 
intoxicating  liquors  sold  to  him  dur- 
ing said  period  by  other  persons;" 
which  charge  the  court  refused  to 
give  except  with  the  following  qual- 
ifications: '"Should  you  find  that  the 


§   1^2] 


ENTIRETY    OF    DAMAGES, 


447 


ent  acts  of  the  i^ersous  doing  tbem,  will  not  create  a  joint  lia- 
bility although  the  wrongs  may  be  committed  against  the  same 


defoiidant  sold  intoxicating  liquor 
•  to  Joseph  Watt  in  violation  of  law 
witliin  tlie  time  charged  in  the  peti- 
tion, and  that  the  plaintiff  sustained 
damages  by  reason  of  the  intoxica- 
tion of  said  Watt,  caused  thereby 
to  her  person,  property  or  means  of 
support,  the  fact  that  other  persons 
also  st)ld  liquor  to  said  Watt,  in 
violation  of  law,  witliin  tliat  period, 
and  which  liquor  may  have  contril)- 
uted  to  increase  the  intoxication, 
and  consequently  to  enhance  the  in- 
jury resulting  to  the  plaintiff  there- 
from; such  facts,  if  they  be  shown 
to  have  existed,  will  not  exonerate 
the  defendant  from  the  consequence 
of  his  wrongful  acts;  but,  on  the 
contrary,  he  will  still  be  responsible 
for  all  the  injury  resulting  to  tlio 
plaintiff  from  the  intoxication  of 
Joseph  Watt,  caused  by  his  illegal 
sale  of  liquor  to  him.  If  you  can 
separate  the  damages  resultinfi 
jrom  the  intoxication  caused  hy  il- 
legal sales  to  Watt  by  dejendant 
from  the  damages  resulting  from, 
sales  hy  others,  you  must  do  so;  but 
if  such  separation  cannot  be  made 
you  will  render  your  verdict  against 
the  defendant  for  all  the  actual 
pecuniary  damages  resulting  to  the 
plaintiff  in  person,  property  or 
means  of  support  hy  reason  of  the 
intoxication  of  the  said  Joseph 
Watt,  to  ichich  intoxication  the  il- 
legal sales  of  intoxicating  liquor 
by  the  defendant  contnbuted." 

The  judgment  for  tlu'  pjaintill' 
was  affirmed.  And  upon  tlie  state 
of  facts  supposed  by  the  defendant's 
request,  the  appellate  court  treat  th< 
defendant  and  all  other  persons  who 
sold  liquor  to  Dr.  Watt  as  jointly 
and  severally  liable — as  joint  tort- 
feasors.    On  tliat  point  the  learned 


judge  wlio  delivered  tlie  majority 
opinion  states  the  defendant's  posi- 
tion and  the  answer  as  follows: 
''Counsel  properly  admit  tiuit  where 
two  or  more  act  liy  concert  in  an 
unlawful  design  each  is  lialile  for 
all  damages,  but  claim  if  each  acts 
independently,  or  without  the 
knowledge  of  the  other,  then  he  is 
onl}'  liable  for  his  own  acts.  In  the 
former  case  the  acts  of  otliers  co- 
operating are  his  acts,  because  they 
are  only  in  furtherance  of  a  com- 
nion  unlawful  design.  If  there  is 
no  common  intent  there  can  be  no 
joint  lial)ility,  but  each  is  rcsponsi- 
Ide  for  his  own  act.  If  there  is  a 
common  intent,  or  one  without  such 
intent  aids  one  with  it  in  doing  an 
unlawful  act,  the  latter  is  nevcrtiie- 
less  guilty,  though  not  the  sole 
cause.  They  claim  tliis  principle  is 
limited  to  cases  of  conspiracy  or 
concerted  action.  In  tliis  we  think 
they  mistake  the  autliorities.  We 
hold  that  this  common  intent,  wliich 
is  sudicient  to  create  mutual  lia- 
bility, may  exist  without  previous 
agreement  or  a  common  understand- 
ing to  do  the  unlawful  act,  and  that 
it  may  be  presumed  to  exist  when 
the  means  employed  create  that  pre- 
sumption as  well  as  by  proving  an 
express  ^igreement." 

This  "common  intent  wliicii  is  suf- 
ficient to  create  mutual  lial)ility"  is 
further  on  in  the  opinion,  thus 
elucidated:  "If  the  defendant  was 
using  the  means  calculated  to  pro- 
duce the  injury,  the  law  presumes 
that  he  intended  to  produce  it.  If 
others,  with  or  without  concert,  were 
concurrently  co-operating  with  him, 
using  like  means,  they  were  acting 
witli  the  same  common  design,  and 
if  the  injury  resulted  each  is  liable, 


448 


su'j'ii  i:i:r,AXD  ox  damages. 


[§   11^ 


person.  There  must  be  concurrent  action,  co-operation  or  a 
consent  or  approval  in  the  accomplishment  by  the  wrong-doers 
of  the  particular  wrong  in  order  to  make  them  jointly  liable."^^ 
Ihit  where  it  is  provided  that  the  person  who  furnishes  the 
liquor  which  causes  the  intoxication  "in  whole  or  in  part,"  ha- 
bitual or  otherwise,  shall  be  liable  the  damages  cannot  be  ap- 
portioned ;  full  recovery  may  be  had  against  any  one  who  con- 
tributed to  the  result  complained  of,^^  regardless  (»f  the  time 
the  several  defendants  began  the  sale  of  liquor  to  the  prohibited 
person.^^  Under  the  statutes  of  Nebraska  the  joint  and  sev- 
eral liability  of  dealers  extends  to  the  sureties  on  their  bonds.^* 
Each  partner  is  an  agent  (jf  the  tirni  of  which  he  is  a  member 
for  the  purpose  of  carrying  on  its  business  in  the  way  it  is  usu- 


thougli  each  was  acting  without  the 
knowledge  of  what  the  other  Avas 
doing.  So  if  the  defendant  alone 
was  using  such  means  as  created 
this  presumption  of  intent  to  do  the 
act  and  another,  without  concert, 
free  from  such  intent,  was  contribut- 
ing to  the  injury,  the  former  is 
liable  for  all  damages,  notwith- 
standing the  other  also  contribut- 
ed." 

The  majority  of  the  court  came  to 
the  conclusion  that  vendors  of  intox- 
icating liquors  who  separately  sell 
to  a  man,  who,  by  thus  imbibing,  in 
a  period  of  several  years,  becomes  an 
habitual  drunkard,  are  in  law  joint- 
ly and  severally  liable  for  that  re- 
sult, though  they  have  no  concert 
in  the  sense  of  communicating  with 
each  other  on  the  subject;  thougli 
they  do  not  act  together,  that  is,  no 
two  of  them  join  in  any  one  sale, 
and  each  may  be  unacquainted  with 
the  others,  and  perhaps  may  not 
even  know  that  there  are  others; 
though  the  only  circumstance  that- 
is  supposed  to  join  and  unify  them 
is  they  are  engaged  in  the  same 
kind  of  business  and  each  is  doing 
such   a  business   as  lias  a  tendency 


to  make  drunkards,  and  in  a  par- 
ticular case  they  have  thus  made 
one. 

91  La  France  v.  Krayer,  42  Iowa, 
143;  Hitcbner  v.  Ehlers,  44  id.  40; 
Faivre  v.  Manderscheid,  117  Iowa, 
724;  Morenus  v.  Crawford,  15  Hun, 
45.  See  Stalmka  v.  Krietle,  66  Neb. 
829. 

92Neuerberg  v.  Gaulter,  4  111. 
App.  348;  Bryant  v.  Tidgewill,  133 
Mass.  86;  Werner  v.  Edmiston,  24 
Kan.  147;  Rantz  v.  Barnes,  40 
Ohio  St.  43 ;  Aldrich  v.  Parnell,  147 
:Mass.  409;  Jones  v.  Bates,  26  Xeb. 
693;  Jockers  v.  Borgman,  29  Kan. 
109,  44  Am.  Rep.  625. 

This  is  the  rule  applied  in  Michi- 
gan, although  the  statute  does  not 
contain  the  words  "in  wliole  or  in 
part."  Steele  v.  Thompson,  42 
Mich.  594;  Bowden  v.  Voorheis,  135 
Mich.  684;  Merrinane  v.  Miller, 
157  Mich.  279,  25  L.R.A.(N.S.)  585; 
Scab  ill  V.  .^tna  Ind.  Co.,  157  Mich. 
310.  See  Sutherland's  Stat.  Const., 
§  377. 

93Earp  v.  Lilly,  120  111.  App.  123. 

94Horst  V.  Lewis,  71  Neb.  365, 
370. 


§  142] 


ENTIRETY    OF    DAlVfAOKS. 


449 


ally  prosecuted;  hence  tin  ordinary  }):irlii(Mslii|)  is  lialih^  for 
the  results  of  the  negligence  or  other  wrong  of  aiiv  one  of  its 
members  in  condneting  its  affairs  in  the  usual  way.^^  Such 
liability  extends  to  the  fraudulent  or  malicious  conduct  of  one 
partner  though  the  others  had  no  knowledge  of  it,  if  the  act 
was  done  for  the  benefit  of  the  firm  and  was  within  the  scope 
of  the  partnership.^^  But  it  does  not  embrace  acts  done  beyond 
such  scope^'  unless  they  are  authorized  or  adopted  by  the  firni.^' 
A  partnership  is  also  responsible  for  the  negligence  of  its  s«'rv- 
ants  subject  to  the  same  limitations.^^  The  stockhohk-rs  of 
a  corporation  which  unauthorizedly  carries  on  business  in  a 
state  other  than  that  under  whose  laws  it  was  created  are  liable 
as  partners  for  torts  committed  by  it  therein.^ 


95  Haase  v.  Morton,  138  Iowa, 
205;  Linton  v.  Hurley,  14  Gray, 
191;  Buckie  v.  Cone,  25  Fla.  1; 
Mode  V.  Penland,  93  N.  C.  292;  Ger- 
hardt  v.  Swaty,  57  Wis.  24;  Robin- 
son V.  Goings,  63  Miss.  500;  Wiley 
V.  Stewart,  122  111.  545;  Hall  v. 
Yoimts,  87  N.  C.  285;  Hyrne  v.  Er- 
win,  23  S.  C.  226;  Stroher  v.  Elt- 
ing,  97  N.  Y.  102,  49  Am.  Rep.  515, 
12  Am.  Neg.  Cas.  400;  Rice  v.  Van 
Why,  49  Colo.  7 ;  Burgess  v.  Patter- 
son, 139  Ky.  547. 

96  Interurban  C.  Co.  v.  Hayes,  191 
Mo.  248;  Lothrop  v.  Adams,  133 
Mass.  471,  43  Am.  Rep.  528;  Loclce 
V.  Stearns,  1  Mete.  (Mass.)  560,  35 
Am.  Dec.  382;  Durant  v.  Rogers,  87 
111.  508;  Chester  v.  Dickeraon,  54 
N.  Y.  1,  13  Am.  Rep.  550;  Guillou 
V.  Peterson,  89  Pa.  163;  Robinson 
V.   Goings,   03   Miss.   500.      But   see 

Suth.  Dam.  Vol.  I.— 29. 


Gilbert  v.  Emmons,  42  111.  143,  89 
Am.  Dec.  412;  Grund  v.  Van  VK-ek, 
69  111.  478;  Rosenkrans  v.  Barker, 
115  id.  331,  56  Am.  Re]).   169. 

97Gwynn  v.  Duftield,  66  Iowa, 
708,  55  Am.  Rep.  280;  Schwabacker 
V.  Riddle,  84  111.  517. 

98  Graham  v.  Meyer,  4  Blatcl\. 
129;  Heirn  v.  MeCaughan,  32  Miss. 
17;  Taylor  v.  Jones,  42  N.  H.  25; 
Ernstman  v.  Black,  14  111.  App.  381 ; 
Woodling  V.  Knickerbocker,  31 
Minn.  268. 

99  Roberts  v.  Johnson,  aS  X.  V. 
613;  Stables  v.  Kley.  1  C.  ct  P. 
614,  6  Am.  Neg.  Cas.  200;  Brent 
V.  Davis,  9  Md.  217;  Linton  v.  Hur- 
ley,  14  Gray,   191. 

1  Mandeville  v.  Courtriglit,  6 
L.R.A.(N.S.)  1003,  142  Fed.  97,  73 
C.   C.   A.  321. 


450  SDTHEELAND    ON    DAMAGES. 


CHAPTER  V. 

LEGAL  LIQUIDATIONS  AND  REDUCTIONS. 
Section  1. 

circuity  of  action. 

143.  Defense  of. 

144.  Agreement  not  to  sue. 

145.  Principle  operates  in  favor  of  plaintiff. 

146.  Damages  must  be  equal. 

147.  Reciprocal  obligations. 

Section  2. 

mutual  credit. 

148.  Compensation  by   mutual  demands. 

Section  3. 

mitigation  of  damages. 

149.  Equitable  doctrine  of. 

150.  Absence  of  malice. 

151.  Words  as   provocation   for   assault;   agreements  to   fight;    payment 

of  fine. 

152.  153.  Provocation  in  libel  and  slander. 

154.  Mitigating  circumstances  in  trespass  and  other  actions. 

155.  Plaintiff's  acts  and  negligence. 

15G,  157.  Measures    of    prevention;    return    of    property;    discharge    of 
plaintiff's  debt. 

158.  No  mitigation  when  benefit  not  derived  from  defendant. 

159.  Fuller  proof  of  the  res  gestae  in  trespass,  negligence,  etc. 

160.  Official  neglect. 

161.  Same  subject;   modification  of  the  old  rule. 

162.  Plaintiff's  consent. 

163.  Injuries  to  character  and  feelings. 

164.  Reduction  of  loss  or  benefit. 

165.  166.  Pleading  in  mitigation. 

167.  Payments.  * 

Section  4. 

recoupment  and  counter-claim. 

168,  1G9.  Definition  and  history  of  recoupment. 


I 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  451 

170,  171.  Nature  of  defense. 

172.  Constituent  features  of  recoupment. 

173.  Remedy    by   counter-claim. 

174.  Validity  of  claim  essential. 

175.  17G.  Parties. 

177.  Maturity  of  claim  or  demand;   statute  of  liinitations. 

178.  Cross-claim  must  rest  on  contract  or  subject-matter  of  action. 

179.  180.  Recoupment    for    fraud,   breach    of    warranty,    negligence,    etc. 

181.  What  acts  may  be  the  l)asis  of  recoupnu-nt. 

182.  Cross-claims  between  landlord  and  tenant. 

183.  Cause  of  action,  connection   between  and   cross-claim. 

184.  Recoupment   between   vendor   and   purchaser. 

185.  Liquidated  and  unli(iuidated  damages  may   be   rci'oujK'd. 

186.  Affirmative  relief  not  obtainable. 

187.  Election  of  defendant  to  file  cross-claim  or  sue  upon  lii.s  (Icmaml 

188.  Burden  of  proof;   measure  of  damages. 

189.  A  cross-claim   used   in   defense  cannot   l)c   sued   upon. 

190.  Notice  of  cross-claim. 

Section  5. 

marshaling  and  distbihution. 

191.  Definition. 

192.  Sales  of  incumbered  properly  in  jiarcels  to  diirerent  pureliasers. 

193.  Sale  subject  to  incumbrance. 

194.  Effect  of  creditor  releasing  part. 

195.  Rights   where  one   creditor   may   resort  to   two   funds   and   anotlier 

to  only  one. 

196.  Same  where  the   funds  belong  to  two  debtors. 

197.  Principles  on  which  priority  determined. 

Section  6. 

set-off  of  judgments. 

198.  Power   to   direct  set-off   inherent. 

199.  When  it  will  or  will  not  be  granted. 

200.  Interest  of  the  real  parties  considered. 

201.  Set-off  not  granted  before  jiidgment; 

202.  Assignee  must  make  an  absolute  purcluise. 

203.  Nature   of   action    immaterial;    foreign    judgments. 

204.  Liens  of  attorneys. 

Section  1. 
circuity  of  action. 

§  143.  Defense  of.    Tho  defense  of  circuity  of  action  is  avail- 
able where  the  i^urties  stand  in  such  legal  relation  to  ^.9.c;h  other 


452  SUTIIEKLAND    ON    DAMAGES.  [^    143 

that  if  the  phiiutiff  recovers  against  the  defendant  the  latter, 
thereupon  and  by  reason  thereof,  has  a  cause  of  action  against 
the  former  for  the  very  sum  so  recovered.  The  plaintiff's  de- 
mand is  then  neutralized  by  his  liability,  consequent  upon  re- 
covery, to  pay  back  such  sum;  by  legal  equation  the  plaintiff 
has  no  cause  of  action.  This  defense  accomplishes  the  same 
result  as  would  the  circuity  of  action.  Thus  in  an  action  against 
the  surviving  partner  upon  the  promissory  note  of  a  partnership 
an  indenture  by  which  the  plaintiff  and  others  had  covenanted 
to  indemnify  the  defendant  against  all  debts  due  from  the  part- 
nership and  against  all  actions  brought  against  him  by  reason 
of  such  debts  was  a  bar  to  the  action.^  Under  a  statute  which 
imposes  a  personal  liability  upon  stockholders  for  the  debts 
of  a  corporation  a  creditor,  who  is  himself  a  stockholder,  cannot 
maintain  an  action  to  enforce  such  liability  against  a  co-stock- 
holder.^ One  who  is  a  surety  upon  an  official  bond  cannot 
recover  from  his  fellow-sureties  the  full  amount  of  damages  he 
has  sustained  hy  its  breach.^ 

§  144.  Agreement  not  to  sue.  On  this  principle  if  a  cred- 
itor makes  a  valid  agreement  never  to  sue  his  debtor  upon  a 
specified  demand  it  operates  to  extinguish  the  debt  like  a  re- 
lease.'* But  when  the  covenant  is  that  a  demand  shall  not  be 
put  in  suit  within  a  limited  time  a  breach  thereof  cannot  be 

1  Whitaker  v.  Salisbury,  15  Pick.  plaintiff,  was  substantially  to  be 
534;  Austin  v.  Cummings,  10  Vt.  26.  paid  to  the  defendant,  and  the  dec- 

2  Gray  v.  Coffin,  9  Cush.  192,  206;  laration  so  alleges,  the  defense  of 
Bailey  v.  Bancker,  3  Hill,  188,  38  circuity  of  action  is  not  good.  Id.; 
Am.  Dec.  625.  Wilders  v.  Stevens,  15  M.  &  W.  208. 

3  Alderson  v.  Mendes,  16  Nev.  298.  4  Robinson    v.    Godfrey,    2    Mich. 
Tlie  plaintiff  declared  on   a  note       408;  Cuyler  v.  Cuyler,  2  Johns.  186; 

made  by  C.  and  payable  to  the  plain-  Phelps  v.   Johnson,   8  id.   54;   Lane 

tiff  or  his  order,  and  afterwards  in-  ^    Owings,   3   Bibb,   247 ;    Millett  v. 

dorsed  by  him  to  the  defendant,  who  jjayford,  1  Wis.  401 ;  Reed  v.  Shaw, 

reindorsed  it  to  the  plaintiff.  After  ^  ^^^^^^^  ^45;  McNeal  v.  Blackburn, 
verdict  for  the  latter  the  judgment 


7  Dana,  170;  Jackson  v.  Stackhouse, 
1  Cow.  122,  13  Am.  Dec.  514;  ScAvall 


was  arrested.     Bishop  v.  Hayward, 

4  T.  R.  470.     But  if  it  appears  that 

the  plaintiff's  name  was  originally  '•■  ^P^rrow,  16  Mass.  24;   Gibson  v. 

used  for  form  only,  and  that  it  was  Gibson,  15  id.  106,  8  Am.  Dec.  94; 

understood  by  all  the  parties  to  the  Jones  v.  Quinnipiack  Bank,  29  Conn. 

instrimient    that    the    note,    though  25;    Clark    v.    Bush,    3    Cow.    151; 

nominally     made     payable     to     the  Dearborn  v.  Cross,  7  id.  48. 


§    146]  LEGAL    LIQUIDATIONS    AND    llEDUCTIONS.  45-3 

pleaded  in  har  of  that  demand.  'I'hc  reason  is  that  (ho  (hniiaii;os 
for  the  breach  of  the  latter  covenant  IxMn^i:  nncertaiii  ainl  not 
determinable  by  the  amonnt  of  the  demand,  the  ])riiici])lc  of 
eircnity  of  action  is  not  api)licable. 

§  145.  Principle  operates  in  favor  of  plaintiff.  Ihc  prin- 
ciple of  avoiding  circuity  of  action  will  sometimes  operate  in 
favor  of  the  plaintiff.  A  town  was  compelled  to  pay  damages 
for  an  iujnry  resulting  from  a  defect  in  a  highway  occasioned 
by  the  want  of  repair  of  a  cellar  way  constructed  in  a  sidewalk 
and  leading  to  an  adjoining  building  occupied  by  a  tenant; 
it  was  held  that  the  occupant,  and  not  the  owner,  was  liable  to 
the  town  for  such  damages,  and  was  prima  facie  liable  to  third 
persons  suffering  injury  from  any  such  defect;  but  if  there  be 
an  express  agreement  between  the  landlord  and  tenant  that  the 
former  shall  keep  the  premises  in  rejiair,  so  that  in  case  of  a 
recovery  against  the  tenant  he  would  have  his  remedy  over,  then 
the  party  injured,  to  avoid  circuity,  may  bring  his  suit  in  tlic 
first  instance  against  the  landlord.^ 

§  146.  Damages  must  be  equal.  If  a  deed  contains  recipro- 
cal covenants  which  are  governed  by  the  same  rule  of  damages 
one  covenant  may  be  pleaded  in  bar  to  another  to  avoid  circuity 
of  action.  But  where  the  covenants  are  distinct  and  independ- 
ent they  cannot  be  so  pleaded,  for  the  damages  may  not  Ix?  com- 
mensurate and  each  party  must  recover  against  the  otlici- 
separate  damages  according  to  the  justice  of  the  casc.^  This  de- 
fense has  been  termed  a  setting  oft"  of  one  right  of  action  auainst 
another.'''  It  is  available  though  the  damages  he  unlicpiidated, 
but  the  damages  on  the  two  causes  of  action  must  be  the  same  in 
amount  as  matter  of  law,  and  must  so  appear  by  the  pleadings.* 
In  other  words,  a  good  plea  in  avoidance  of  circuity  of  action 
must  show  that  the  sum  which  the  defendant  is  entitled  to  re- 

5  Lowell  V.  Spaulding,  4  Gush.  7  Mayne  on  Dam.  (Stli  oii.l,  p. 
277;  Payne  v.  Rogers,  2  H.  Bl.  349.  160. 

6  Gibson  v.  Gibson,  15  Mass.  100,  8  Id.;  Turner  v.  Thomas.  L.  R.  0 
112,  8  Am.  Dec.  94;  Guard  v.  White-  C.  P.  610;  De  Mattos  v.  Saunders, 
side,  13  111.  7;  Millett  v.  Hayfmd,  1  7  id.  570;  Walmesley  v.  Cooper,  11 
Wis.  401;  Thurston  v.  James,  6  R.  A.  &  E.  216;  Carr  v.  Steplicn.s,  9 
I.  103;  Rowland  v.  Marvin,  5  Cal  B.  &  C.  750;  Connop  v.  Levy,  11  Q. 
501.  B.  769. 


454  SUTHERLAND    ON    DAMAGES.  ~         [§    146 

cover  from  the  plaintiff  is  necessarily  the  same  as  that  in 
respect  of  which  the  plaintiff  is  suing.  The  rigid  severity  and 
precision  of  this  test  are  illustrated  in  the  following  case.  By 
a  charter-party  it  was  agreed  between  the  master  and  the  char- 
terers that  one-third  of  the  stipulated  freight  should  be  paid 
before  the  sailing  of  the  vessel,  the  same  to  be  returned  if  the 
cargo  was  not  delivered  at  the  port  of  destination,  the  charterers 
to  insure  the  amount  at  the  owner's  expense  and  deduct  the  cost 
of  doing  so  from  the  first  payment  of  freight.  The  charterers 
paid  the  one-third  freight,  deducting  the  premium  for  insur- 
ance. The  vessel  and  cargo  did  not  reach  their  destination.  In 
an  action  by  the  charterers  to  recover  the  freight  so  paid,  the 
owner  pleaded  that  the  loss  of  the  part  of  the  freight  to  be 
returned  was  such  a  loss  as  was  by  the  charter-party  to  be  in- 
sured against  by  the  charterers  at  the  owner's  expense,  and  such 
insurance,  if  effected,  would  have  indemnified  the  defendant 
against  the  loss  of  the  freight  stipulated  to  be  returned;  that 
although  the  plaintiffs  might,  with  the  use  of  reasonable  care 
and  diligence,  have  effected  an  insurance,  whereby  the  defend- 
ant and  the  owner  of  the  ship  would  have  been  fully  indemnified 
against  the  loss  of  the  one-third  freight  so  to  be  returned,  yet 
the  plaintiffs  effected  the  insurance  so  negligently  and  in  such 
disregard  of  the  usual  course  of  business  that  the  same  became 
of  no  use  or  value,  and  the  defendant,  by  reason  of  such  im- 
proper conduct,  had  sustained  damages  to  the  amount  of  the 
said  third  freight  so  insured,  and  the  plaintiffs  thereby  became 
liable  to  the  defendant  for  the  same,  and  liable  to  make  good  to 
him  such  amount  as  he  should  have  to  return  to  the  plaintiffs 
under  the  charter-party,  and  any  sum  paid  or  returned  by  the 
defendant  to  the  plaintiffs  in  respect  of  the  freight  would  be 
the  damage  sustained  by  the  defendant  by  reason  of  such  im- 
proper conduct  and  deviation,  and  he  would  be  damnified  to 
that  extent.  The  court  held  that  the  plea  was  bad  inasmuch 
as  the  conclusion  it  drew  was  not  warranted  by  the  facts  stated, 
for  the  liability  of  the  plaintiffs  in  respect  of  their  negligence  in 
effecting  the  insurance  was  a  liability  for  damages  which  were 
not  necessarily  identical  in  amount  with  the  claim  set  up  by 


§    146]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  455 

them  in  their  action.  Jervis,  C.  J. :  "It  is  not  denied  that  the 
rule  in  question  is  phiin  and  well  ascertained,  viz. :  tha't  to 
justify  a  defendant  in  setting  up  a  demand  in  avoidance  of 
circuity  of  action  he  must  show  that  the  sum  which  he  claims  to 
be  entitled  to  recover  back  is  of  necessity  the  identical  sum 
which  the  plaintiff  is  suing  for.  The  only  difficulty  arises 
from  the  application  of  the  rule.  I  was  somewhat  struck  by 
a  difficulty  arising  from  the  allegation  in  the  plea  that,  by  and 
through  the  negligent  and  improper  conduct  of  the  plaintiiVs 
in  effecting  the  insurance,  the  insurance  became  of  no  use  or 
value  and  the  defendant  thereby  sustained  damage  to  the  amount 
of  one-third  of  the  freight  so  insured ;  and  that  the  jilaintiffs 
thereby  became  liable  to  the  defendant  for  the  same, 
and  liable  to  make  good  to  the  defendant  such  amount  as  he 
should  have  to  return  to  the  plaintiffs  under  the  charter-party ; 
and  that  the  sum  paid  by  the  defendant  to  the  plaintiffs,  or 
received  by  them,  .  .  .  would  be  the  damages  sustained  by 
the  defendant  by  reason  of  such  improper  conduct.  But  I  think 
my  brother  Channell  has  relieved  me  from  that  difficulty  by 
suggesting  that  it  is  a  mere  conclusion  drawn  from  the  previous 
allegations, — not  a  conclusion  of  law  necessarily  resulting  from 
such  previous  allegations,  one  which  a  jury  might  or  might  not 
arrive  at.  I  think  that  unless  the  judge  would  be  bound  to  tell 
the  jury  that  the  amount  which  the  defendant  claims  by  his  plea 
is, necessarily  the  same  amount  as  the  plaintiffs  claim  by  their 
declaration  the  plea  does  not  bring  the  case  within  the  rule  as 
to  circuity  of  action.  The  case  differs  materially  from  those 
which  were  cited,  ...  in  which  the  defendant  was  bound 
to  a  liquidated  and  ascertained  sum  on  the  failure  of  the  plain- 
tiff to  perform  a  duty.  This  is  a  matter  which  sounds  in  dam- 
ages. The  plaintiffs  had  undertaken  to  effect  an  insurance 
for  the  defendant  with  third  persons ;  and  it  maij  be  that  in  the 
result  the  defendant  will  be  entitled  to  recover  from  the  plain- 
tiffs precisely  the  same  amount  of  damages  that  the  plaintiffs 
will  recover  in  this  action ;  but  there  are  various  circumstances 
which  might  by  possibility  arise  to  reduce  the  damages  in  that 
action  to  a  lesser  or  even  to  a  nominal  amount;  and  unless  the 


456 


SUTHEELAND    ON    DAMAGES. 


[§  147 


defendant  could  negative  all  these  possible  circumstances,  he 
could  not  make  this  a  good  plea.^ 

§  147.  Reciprocal  obligations.  The  reciprocal  obligations  of 
the  parties  may  be  such  that  the  action  of  one  may  be  barred 
by  a  counter  covenant  which  is  not  only  a  good  defense  on  the 
ground  of  avoiding  circuity  of  action,  but  also  as  a  release.  Of 
this  nature  is  a  covenant  never  to  sue.^°  To  sustain  a  bar  in  that 
form,  however,  the  contract  must  be  technically  such  as  to 
amount  to  a  release.  But  the  defense  of  circuity  of  action  does 
not  depend  on  the  principle  of  a  release,  but  on  the  policy  of 
the  law  against  unnecessary  litigation  and  the  convenience  of 
admitting  a  party  to  his  ultimate  right  by  the  shortest  and  most 
direct  process. 


9  Charles  v.  Altin,  15  C.  B.  46. 
Crowder,  J.,  doubted.  He  said:  "I 
have  entertained  considerable  doubts 
during  the  argument,  and  I  must 
confess  that  tliese  doubts  are  not 
altogether  removed;  and  although 
my  lord  and  my  two  learned  brothers 
think  otherwise,  it  is  with  consid- 
erable reluctance  that  I  should  come 
to  the  conclusion  that  the  plea  is 
no  answer  to  the  declaration.  The 
rule  as  to  the  avoidance  of  circuity 
of  action  is  in  my  opinion  a  just  and 
valuable  one,  and  it  is  important 
that  a  case  should  be  brought  witli- 
in  it  if  possible.  In  point  of  fact 
and  common  sense  nobody  can  doubt 
that,  if  these  plaintiffs  recover  back 
the  one-third  freight  to-day  and  the 
defendant  were  to  bring  a  cross-ac- 
tion against  them,  and  to  allege  and 
prove  what  is  stated  in  this  plea,  the 
jury  would  be  directed  to  give  dam- 
ages to  precisely  the  same  amount." 
After  quoting  the  language  of  Mr. 
Justice  Washington  in  Morris  v. 
Summerl,  2  Wash.  C.  C.  203,  lie  con- 
tinued: "It  is  not  said  that,  us  a 
positive  matter  of  law,  he  is  respon- 
sible to  that  extent.  It  probably 
amounts  to  this,  that  the  loss  would 


be  the  reasonable  measure  of  dam- 
ages. The  learned  judge  is  referring 
to  a  course  of  dealing.  The  case  be- 
fore us  arises  upon  a  contract  to 
insure  tlie  amount, — the  precise 
amount, — which  the  plaintiffs  are 
claiming  under  tlie  charter-party  to 
have  returned  to  them;  and  the 
question  is  whether  the  breach  of 
the  engagement  to  insure  does  not 
so  clearly  entitle  the  defendant  to 
recover  from  the  plaintiffs  the  pre- 
cise sum  which  they  by  their  action 
are  seeking  to  recover  from  him,  as 
to  warrant  the  plea.  If  this  had 
been  a  contract  of  indemnity,  there 
could  have  been  no  doubt."  Alston 
V.  Herring,  11  P]x.  822. 

10  Smith  V.  Mapleback,  1  T.  R. 
441;  Johnson  v.  Carre,  1  Lev.  152; 
Harvey  v.  Harvey,  3  Ind.  473;  Reed 
V.  Shaw,  1  Blackf.  245;  Jackson  v. 
Stackhouse,  1  Cow.  122,  13  Am.  Dec. 
514;  Phelps  V.  Johnson,  8  Johns. 
54;  Jones  v.  Quinnipiack  Bank,  29 
Conn.  25;  Walker  v.  McCulloch,  4 
Me.  421;  Lane  v.  Owings,  3  Bibb 
247 ;  Hastings  v.  Dickinson,  7  Mass. 
153,  5  Am.  Dec.  341;  Shed  v.  Pierce, 
17  Mass.  G23.     See  §  6. 


§  148]        legal  liquidations  and  reductions.  457 

Section  2. 
mutual  credit. 

§  148.  Compensation  by  mutual  demand.  Mutual  debts  or 
credits  do  not  compensate  each  other  except  when  pleaded  un- 
der statutes  of  set-off  unless  they  are  so  connected  that  the 
parties  have  reciprocally  the  right  to  retain  out  of  the  moneys 
they  owe  the  amount  they  are  creditors  for.  Then  the  accounts 
are  reciprocal  payments,  and  no  demand  exists  upon  either  side 
except  for  the  net  balance.  This  is  the  case  where  the  demands 
of  both  parties  are,  with  their  mutual  consent,  brought  into  one 
account  as  debit  and  credit;  ^^  and  also  wherever  a  l)arty  lias  a 
lien  on  moneys  in  his  hands  or  which  he  holds  for  the  satis- 
faction of  a  cross-demand  in  favor  of  himself,  as  in  the  case  of 
factors,  brokers  and  others.  In  an  early  case  a  ship  broker  re- 
covered for  his  principal  a  sum  of  money  for  damages  done  to 
his  ship  by  collision ;  the  broker  paid  over  all  but  his  charges 
for  services,  and  it  was  held  in  a  suit  by  the  princij)al  for  the 
reasonable  sum  so  retained  that  the  defendant  had  a  right  to 
it.  The  action  was  for  money  had  and  received,  and  it  was 
said  the  plaintiff  should  not  receive  more  than  he  was  in  equity 
entitled  to,  and  this  could  not  be  more  than  what  remained  after 
deducting  all  just  allowances  which  the  defendant  was  entitled 
to  out  of  the  very  sum  demanded ;  it  was  not  in  the  nature  of  a 
cross-demand  or  mutual  debt,  but  a  charge  which  makes  the 
sum  received  for  the  plaintiff's  use  so  much  less.^^ 

In  conformity  to  a  natural  equity  that  one  debt  shall  com- 
pensate another,  and  for  the  convenience  of  commerce,  the 
courts  favor  liens  and  recognize  them,  first,  A\'here  there  is  an 
express  contract;  second,  where  one  may  be  iuiplied  from  the 

11  Pond  V.  Clark,  47  Vt.  565;  Mc-  267;  Muller  v.  Pondir,  55  N.  Y.  325; 
Neil  V.  Garland,  27  Ark.  343;  San-  Dresser  Mfg.  Co.  v.  Waterson,  3 
ford  V.  Clark,  29  Conn.  457;  Myers  jigtc.  (Mass.)  9;  Turpin  v.  Reyn- 
V.  Davis,  26  Barb.  367.  ^^^      J4  La.  473:   Holbrook  v.   Re- 

12  Dale  V.  SoUet,  4  Burr.  2133:   1  .            ^   _   ,        _.       ^       ^  ,, 
r^x,-4.^  .    r,i    rco     T^                  c          1  ceivera,  6  Paige,   220.     See  Taft  v. 
Chitty  s  PI.  563;  Rawson  v.  Samuel, 

Cr.  &  Ph.  161;  Green  v.  Farmer,  4  ^y^^^'^".  14  Pick.  336;  Schermerhorn 
Burr.  2214;  Patrick  v.  Hazen,  10  Vt.  v.  Anderson,  2  Barb.  584;  Citizens' 
183;    Saltus   v.    Everett,   20    Wend.      Bank  v.  Carson,  32  Mo.  191. 


45S  SUTHERLAND  ON  DAMAGES.  [§  148 

usage  of  trade;  third,  where  it  may  be  implied  from  the  man- 
ner of  dealing  between  the  parties  in  the  particular  case ;  fourth, 
where  the  defendant  has  acted  in  the  capacity  of  a  factor.^' 
Where  it  was  part  of  the  contract  between  a  servant  and  his  mas- 
ter that  the  former  should  pay  out  of  his  wages  the  value  of  his 
master's  goods  lost  by  his  negligence  it  was  an  agreement  that 
the  wages  were  to  be  paid  only  after  deducting  the  value  of  the 
things  lost,  and  their  loss  was  provable  under  the  general  issue. ^* 
So  where  by  the  custom  of  the  hat  trade  the  amount  of  injury 
done  to  hats  in  dyeing  was  to  be  deducted  from  the  dyer's  wages, 
evidence  of  injury  from  this  cause  was  admitted  in  reduction 
of  damages.^^  Equity  will  grant  relief  aside  from  the  statute 
where  there  is  a  mutual  credit  between  the  parties  based  on  the 
existence  of  a  debt  due  from  the  crediting  party  to  the  other.'^® 

Section  3. 

mitigation  of  damages. 

§  149.  Equitable  doctrine  of.  Mitigation  of  damages  is  what 
the  expression  imports,  a  reduction  of  their  amount;  not  by 
proof  of  facts  which  are  a  bar  to  a  part  of  the  plaintiif's  cause 
of  action,  or  a  justification,  nor  of  facts  which  constitute  a 

13  Id.  bankruptcy.      Pollock,   C.   B.,   said: 

14  Le  Loir  v.  Bristow,  4  Camp.  "If  this  had  been  an  action  of  trover 
134;  Cleworth  v.  Pickford,  7  M.  &  for  the  bill,  no  doubt  it  would  have 
W.  314.  been   altogether   a   question   for  the 

15  Bamford  v.  Harris,  1  Stark.  jury  as  to  the  amount  of  damages. 
343.  See  Alder  v.  Keighley,  15  M.  So,  also,  if  it  had  been  an  accommo- 
&  W.  119.  In  this  case  the  bank-  dation  bill,  or  the  bankrupt's  own 
rupt  had  given  the  defendant  a  bill  bill.  But  this  is  not  an  action  of 
drawn  by  himself  for  600L,  which  trover,  but  of  breach  of  contract, 
the  defendant  agreed  to  discount,  The  defendant  promised  to  deliver 
retaining  1001.  and  the  discount.  to  the  bankrupt  the  amount  of  the 
He  never  paid  the  bankrupt  any-  bill,  minus  1001.  and  discount.  The 
thing.  The  action  was  brought  by  bankrupt  \\'ould  have  to  receive  that 
the  assignees  for  breach  of  the  agree-  sum,  and  his  assignees  are  entitled 
ment.  The  jury  gave  a  verdict  for  to  recover  the  game  amount  which 
495?.,  being  the  amount  of  the  bill,  he  would  be  entitled  to  receive,  had 
minus  the  lOOZ.  and  discount.  This  he  continued  solvent,  by  reason  of 
was  held  correct  though  the  bill  had  the  breach   of  contract." 

become  worthless  on  accoimt  of  the  16  Tuttle  v.  Bisbee,  144  Iowa,  53. 


§    150]  LEGAL    LIQUIDATIONS    AND    KEDlJC^nONS.  450 

cause  of  action  in  favor  of  the  defendant;  but  rather  of  facts 
which  show  that  the  pLaintiff's  conceded  cause  of  action  does 
not  entitle  him  to  so  hirge  an  amount  as  the  showing-  on  his 
side  would  otherwise  justify  the  jury  in  allowing  him.  Facts 
for  mitigation  are  addressed  to  the  e(iuity  of  the  law,  and  are 
admitted  to  assist  in  the  application  of  the  paramount  rule 
that  damages  should  not  exceed  just  compensation  unless  the 
case  calls  for  severity  in  the  form  of  exemplary  damages." 
But  if  a  wrong  is  wilfully  done  courts  are  not  inclined  to  allow 
the  resulting  damages  to  be  mitigated  by  taking  into  acx'ount 
lawful  acts  of  the  wrong-doer  which  have  benefited  the  other 
party. ^*  There  are,  however,  few  exceptions  to  the  rule  that 
any  circumstance  competent  as  evidence  to  reduce  the  dam- 
ages may  be  proven  on  the  trial  for  that  purpose  although  it 
may  not  have  been  effective  until  after  the  suit  was  begun. ^^ 

§  150.  Absence  of  malice.  Matters  may  be  proved  in  miti- 
gation which  tend  to  excuse  or  justify  -the  act  complained  of, 
though  they  are  not  a  full  excuse  or  justificatiou.^"  Thus,  where 
the  plaintiff  was  taken  into  custody  for  an  offense  not  justifying 
an  arrest,  evidence  of  the  offense  was  allowed  to  be  given,  for 
it  was  in  the  nature  of  an  apology  for  the  defendant's  conduct.*^ 

17  Huntington    E.   P.    Co.   v.   Par-  stockguards.     Texas  &  St.  Louis  R. 

sons,  G2  W.  Va.  26,  9  L.R.A.(N.S.)  Co.  v.  Young,  60  Tex.  201;  Houston, 

1130,  125  Am.  St.  9o4.  etc.   R.   Co.   v.   Adams,   63   id.   200; 

iswiiorton   V.    Webster,   56    Wis.  St.  Louis  S.  R.  Co.  v.  Lee  (Tex.  Civ. 

356.     See  §   155.  App.),  151  S.  W.  331. 

19  Marsh  v.  McPherson,  105  U.  S.  20  Shaffer  v.  Austin,  68  Kan.  234, 

709,  716,  26  L.  ed.  1139,  1141;   Ga-  31    L.R.A.(N.S.)     957:     Spencer    v. 

bay  V.  Doane,  77  App.  Div.   (N.  Y.)  Minnick,  41   Okla.    613;     Massee  v. 

413.     An  exception  has  been  proper-  Williams,    124    C.    C.    A.,   207    Vod. 

ly  made  in  case  of  the  breach  of  the  222. 

contract  where   the  conduct   of   the  Where   express   malice   is   alleged 

party  in  default  has  misled  the  other  in   a   libel   suit  it  is  competent  for 

by  causing  him  to  believe  that  per-  the  libelant  to  show  good  faitli  and 

formance  would  be  made  as  soon  as  absence  of  malice.     Snyder   v.   Tri- 

practicable.      Cronan    v.    Stutsman,  bune    Co.,    161    Iowa,    671,    but    not 

168  Mo.  App.  46,  and  anotlier  wlicre  so  in  a  suit  for  slander  in   the  ab- 

the  injured  person  is  not  skilled  in  sence  of  such  an  allegation.     Hrandt 

doing  the  work  needed  to  be  done  to  v.  Story,  161  Iowa.  451. 

protect  his  property  and  may  not  be  21  Ljnford  v.  Lake,  3  H.  4  N.  276; 

qualified   to   select   a   person   of  the  Warwick    v.    Foulkes,    12    M.   &   \V. 

proper  capacity,  as  the  repairing  of  507;  Wells  v  Jackson,  3  Munf.  458; 


460 


SUTHERLAND    ON    DAMAGES. 


[§  151 


In  trespass  for  false  imprisonment  the  void  warrant  of  arrest 
and  proceedings  had  under  it  are  admissible  in  evidence  to 
disprove  malice  and  prevent  the  recovery  of  exemplary  dam- 
ages,^^  but  not  to  mitigate  those  which  are  compensatory.^^  Ad- 
vice of  counsel  does  not  mitigate  compensatory  damages.^*  The 
absence  of  malice  is  relevant  in  an  action  for  openly  shadowing 
a  person  by  detectives.  ^^ 

§  151.  Words  as  provocation  for  assault;  agreements  to  fight; 
payment  of  fine.  Although  the  general  rule  is  that  no  words  of 
provucation  whatever  will  justify  the  offended  party  in  inflict- 
ing a  blow  upon  the  offender,^^  they  generally  constitute  an  ex- 
cuse which  will  mitigate  the  damages,  and  may  be  proved  for 
that  purpose.^^  But  such  provocation  or  any  other  must  be  so 
recent  as  to  induce  the  presumption  that  the  violence  was  com- 
mitted under  the  immediate  influence  of  the  passion  thus  ex- 


Paine  v.  Fair,  118  Mass.  74;  Brad- 
ner  v.  Faulkner,  93  N.  Y.  515. 

22Woodall  V.  McMillan,  38  Ala. 
022 ;  Wells  v.  Jackson,  3  Munf .  458. 

23  Lewis  V.  Lewis,  9  Ind.  105.  See 
§§  1257,  1258. 

24  Kicliards  v.  Sanderson,  39  Colo. 
270,  121  Am.  St.  167. 

25  Schultz  V.  Frankfort  Marine  A. 
&  P.  G.  Ins.  Co.,  151  Wis.  537,  43 
L.R.A.(N.S.)    520. 

26  Willey  V.  Carpenter,  64  Vt.  212, 
15  L.R.A.  853;  Lampkin  v.  Louis- 
ville &  N.  R.  Co.,  106  Ala.  287; 
Abney  v.  Mize,  155  Ala.  391;  Bir- 
mingham R.,  L.  &  P.  Co.  V.  Mullen, 
138  Ala.  614;  Le  Laurin  v.  Murray, 
75  Ark.  232;  Mitchell  v.  United  R. 
Co.,  125  Mo.  App.  1  (noting  some 
exceptions)  ;  Mahoning  Valley  R. 
Co.  V.  De  Pascale,  70  Ohio,  179,  65 
L.R.A.  860.  Contra.  Tliompson  v. 
Shelverton,  131  Ga.  714;  Mason  v. 
Nashville,  etc.  R.  Co.,  135  Ga.  741, 
33  L.R.A.  (N.S.)  280;  Bomeval  v. 
American  C.  Co.,  127  La.  57,  and 
local  cases  cited.  The  question  is 
for   the   jury.      Garrett  v.   Herring- 


dine,  7  Ga.  App.  744;   Thompson  v. 
Shelverton,  supra. 

27  Birmingham  R.,  L.  &  P.  Co.  v. 
Coleman,  181  Ala.  478;  Rarden  v. 
Maddox,  141  Ala.  506  (an  earlier 
case  says  that  the  mitigation  goes 
only  to  punitive  damages).  Mitchell 
V.  Gambill,  140  Ala.  316;  Doerhoefer 
V.  .  Shewmaker,  123  Ky.  646;  Har- 
vey V.  Harvey,  124  La.  595;  Stock- 
ham  V.  Malcolm,  111  Md.  615;  Baum- 
gartner  v.  Hodgdon,  105  Minn.  22; 
Prindle  v.  Haight,  83  Wis.  50;  Burke 
v.  Melvin,  45  Conn.  243;  Kiff  v. 
Youmans,  86  N.  Y.  324,  50  Am.  Rep. 
543;  Boniiio  v.  Caledonio,  144  Mass. 
299;  Frazer  v.  Berkeley,  7  C.  &  P. 
7S9;  Perkins  v.  Vaughan,  5  Scott 
N.  R.  881;  Thrall  v.  Knapp,  17 
Iowa,  468;  Lund  v.  Tyler,  115  Iowa, 
236;  Cushman  v.  Ryan,  1  Story, 
91;  Avery  v.  Ray,  1  Mass.  12;  Lee 
V.  Woolsey,  19  Johns.  319,  10  Am. 
Dec.  230;  Maynard  v.  Beardsley,  7 
Wend.  560,  22  Am.  Dec.  595 ;  Genung 
V.  Baldwin,  77  App.  Div.  (N.  Y.) 
584;  Rochester  v.  Anderson,  1  Bibb 
428 ;      McAlexander     v.     Harris,     6 


151] 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


4G1 


cited. ^'  The  language  of  the  parties  is  often  so  immediately 
associated  and  identified  with  the  transaction  that  it  is  imprac- 
ticable to  supress  it  in  giving  evidence  of  their  conduct;  and, 
indeed,  the  suppression  of  it,  if  practicable,  would  only  tend  to 
exhibit  the  transaction  in  false  and  deceitful  colors.*^  The  law 
mercifully  makes  this  concession  to  the  weakness  and  intirmitios 
of  human  nature,  which  subject  it  to  uncontrollable  influences 
when  under  great  and  maddening  excitement,  superinduced  by 
insult  and  threats.  But  it  wholly  discountenances  the  cruel  dis- 
position which  for  a  long  time  broods  over  hastily  and  unguard- 
edly spoken  words,  and  seeks,  when  opportunity  offers,  to  make 
them  an  excuse  for  brutal  behavior.  With  such  a  tem])er  it  has 
no  sympathy.^"    The  mitigating  effect  of  a  provocation  in  words 


Munf.  465 ;  McBride  v.  McLaughlin, 

5  Watts  375;  Waters  v.  Brown,  3  A. 
K.  Marsh.  557 ;  Corning  v.  Corning, 

6  N.  Y.  97 ;  Currier  v.  Swan,  63  Me. 
323;  Matthews  v.  Terry,  10  Conn. 
455;  Delevan  v.  Bates,  1  Mich.  97; 
Saltus  V.  Kipp,  12  How.  Pr.  342. 
See  §§  162,  1255. 

28  Long  V.  Seigel,  177  Ala.  338; 
Mills  V.  Warner,  167  Mich.  619; 
Birmingham  R.,  L.  &  P.  Co.  v.  Nor- 
ris,  2  Ala.  App.  610;  Le  Laurin  v. 
Murray,  75  Ark.  232;  Warner  v. 
Talbot,  112  La.  817,  66  L.R.A.  336, 
104  Am.  St.  460;  Jackson  v.  Old 
Colony  St.  P..  206  Mass.  477,  30 
L.R.A.  (N.S.)  1046;  Glassey  v.  Dye, 
S3  Neb.  615;  Davis  v.  Collins,  69  S. 
C.  460;  Houston  &  T.  Cent.  R.  Co. 
V.  Batchler,  infra;  Corning  v.  Corn- 
ing, Rocliester  v.  Anderson,  supra; 
Ellsworth  V.  Tliompson,  13  Wend. 
658. 

A  provocation  in  the  morning  does 
not  mitigate  an  assault  made  in  the 
afternoon  of  the  same  day.  Reiser 
V.  Smith,  71  Ala.  48,  46  Am.  Rep. 
342.  And  so  with  an  assault  made 
one  day  after  the  alleged  cause. 
Gronan  v.  Kuckkuck,  59  Iowa,  18; 
Carson  v.  Singleton,  23  Ky.  L.  Rep. 
1626. 


In  Brooks  v.  Carter,  34  Fed.  M'>, 
the  defendant  gave  the  plaintilV 
tliirty  minutes  in  wliieli  to  retract 
statements  made  by  him,  and  on  liis 
declining  to  do  so  made  an  assault. 
There  was  too  much  deliberatioii  to 
allow  the  facts  to  mitigate  the  dam- 
ages. 

In  Irwin  v.  Porter,  1  Hawaii, 
159,  a  provocation  given  on  Satur- 
day was  allowed  to  be  proven  in 
mitigation  of  damages  for  an  as- 
sault committed  ^le  following  Mon- 
day. 

29  Birmingham  R.,  B.  &  P.  Co.  v. 
Mullen,  138  Ala.  614,  and  cases  cited 
in  the  second  and  third  notes  to  this 
section. 

80  Shoemaker  v.  Jackson,  128 
Iowa  488,  1  L.R.A.  (N.S.)  1.37;  Car- 
son V.  Singleton,  23  Ky.  L.  Pep. 
1620,  quoting  the  text.  In  I'feiscr 
V.  Smith,  71  Ala.  481,  4(1  Am.  R.p. 
342,  the  text  is  quoted,  and  tin- 
rules  stated  are  said  to  be  sustained 
by  the  uniform  current  of  decisions 
in  this  country  for  the  pa,st  three- 
quarters  of  a  century.  Caitlier  v. 
Blowers,  11  Md.  536. 

If  deliberation  is  shown  in  com- 
mitting an  assault  and  batti'ry  tlie 
defendant  may  not  prove  the  words 


462  SUTHEKLAND    ON    DAMAGES.  [§    151 

is  spent  when  there  has  been  time  for  reflection,  and  for  the 
passion  excited  by  it  to  cool.  Other  antecedent  facts,  how- 
ever, may  be  proved  in  mitigation,  where  they  are  connected 
with  the  acts  complained  of,  and  afford  an  explanation  of  the 
motives  and  conduct  of  the  defendant,  and  show  him  less  cul- 
pable than  he  would  otherwise  appear.  Thus  where  the  injury 
is  inflicted  in  an  attempt  to  prevent  the  execution  of  previous 
threats,  the  defendant  may  prove  such  threats  in  mitigation  of 
damages,  as  conducing  to  show  that  an  excusable  motive  gov- 
erned him,  as  well  as  the  motives  with  which  the  other  acted  in 
the  rencounter.^^  And  so  for  the  purpose  of  determining 
whether  insulting  words  shall  mitigate  the  damages  the  court 
will  view  the  whole  situation,  and  if  they  were  induced  by 
previous  offensive  words  used  by  the  defendant  the  recovery  will 
not  be  mitigated  because  of  their  use.^^  In  a  case  in  Maine'^ 
there  was  an  affray  between  the  plaintiff  and  one  of  the  defend- 
ants in  the  afternooH.  In  the  evening  of  the  same  day  the  de- 
fendant assaulted  the  plaintiff'  at  his  own  house.  It  was  held 
that  the  defendants  might  show  the  fact  of  the  affray  in  the 
afternoon,  but  not  its  details,  in  mitigation  of  damages  for 
the  last  assault.  ''It  was  to  show  the  object  and  purpose  of  the 
second  assault,  or  the  state  of  mind  with  which  it  was  done. 
Otherwise  there  would  have  been  nothing  to  indicate  to  the 
jury  but  that  the  house  was  entered  for  the  purpose  of  robbery 
and  plunder,  or  something  of  the  kind.  The  fact  of  the  previ- 
ous affray  might  have  some  weight  on  the  question  of  the 
amount  of  damages  recoverable,  and  might  legitimately  be  re- 
garded as  part  of  the  transaction  to  be  investigated  in  this 
suit."     And  in  a  case  in  Wisconsin  ^*  it  was  held  in  an  action 

communicated  to  him  as  those  used  ]\IcCord    66;    McKenzie   v.    Allen,   3 

in  insulting  his  daughter,  he  having  Strobh.  546. 

knowledge  of  the  insult  the  day  be-  32  Houston  &   T.   Cent.   R.   Co.   v. 

fore  the  assault  and  being  informed  Batchler,  37  Tex.  Civ.  App.  116. 

as  to  the  words  used  about  thirty  33  Currier  v.  Swan,  63  Me.  323. 

minutes  prior  thereto.     Lovelace  v.  34  Fairbanks    v.    Witter,    18    Wis. 

Miller,     1.50    Ala.    422,    11    L.R.A.  287,  86  Am.  Dec.  765. 

(N.S.)   670.  Where  there  has  been  a  persistent 

31  Waters    v.     Brown,     3     A.     K.  continuation    and    repetition    of    in- 

Marsh.    557;     Rhodes    v.    Bunch,    3  suits  for  the  sole  purpose  of  exciting 


§    151]  I^EGALi    HQUlDATlUiSIS    AND    KEDUCTIONS.  4(3.'J 

for  an  injury  to  the  person,  committed  in  an  alTray,  that  Qvi- 
dence  offered  should  have  been  received  that  the  i)laintill'  for 
several  years  had  frequently  tried  to  provoke  a  <iuarrcl  with 
the  defendant,  and  on  various  occasions  threatened  his  life, 
some  of  these  being  made;  to  the  defendant,  and  all  of  them 
brought  to  his  knowledge  before  the  occasion  in  question.  If 
the  insulting  language  used  by  the  plaintiff  was  used  because  of 
his  intoxicated  condition  resulting  from  the  use  of  liipiors  sold 
him  by  the  defendant  no  mitigation  will  be  allowed.^* 

The  defendant  nuiy  show  that  the  parties  fought  by  agree- 
ment ;  ^®  but,  the  fighting  being  unlawful,  the  consent  of  tlio 
])laintift'  does  not  defeat  a  recovery.^'  Where  a  battery  proceeds 
from  a  dispute  in  which  the  parties  impugn  each  other's  veracity 
courts  have  differed  as  to  whether  the  defendant  may  prove  in 
mitigation  that  his  statement  in  the  altercation  was  true.  Such 
proof  has  been  excluded  in  Indiana,^'  but  in  Maryland  where 
the  parties  disputed  and  blows  ensued  from  questioning  each 
other's  veracity  the  defendant  was  allowed  to  show  that  he 
told  the  truth. ^^  Proof  by  the  plaintiff  in  aggravation  of 
damages  that  the  defendant  threatened  to  beat  him  because  he 
had  circulated  slanderous  words  concerning  the  defendant  does 
not  entitle  the  latter  to  give  evidence  that  the  plaintiff  had  in 
fact  circulated  the  slander.*"  Some  question  has  been  raised  as 
to  the  extent  to  which  damages  may  be  mitigated  by  proof  of 

and    irritating    another,    and    these  ley,   3   Jones,    131;    Stout   v.   Wren, 

have  been  repeated  from  day  to  day,  1  Hawks,  420,  9  Am.  Dec.  053 ;  Lund 

the  case  is  not  to  be  controlled  or  v.  Tyler,  115  Iowa,  23(5;   McCue  v. 

limited  by  a  few  hours  or  a  single  Klein,  60  Tex.  168,  48  Am.  Kep.  260; 

day.     Dolan  v.  Fagan,  63  Barb.  73.  state   v.   Burnham,   56   Vt.   445,   48 

35Robichaud  v.  Maheux,  104  Me.  ^^^    j^^p    gQi      Compare  Galbraith 

524.  V.    Fleming,    60    Mich.    408;    Smitli 

36Willey  V.  Carpenter,  64  Vt.  212,  ^,  ^.,^^^^^  gg  ^^j^,,  ^^^ .  ^^^^^.^  ^. 
15L.R.A.  853;  Adams  V.Waggoner,       ^^  .^    ^^^^     g3_j .    j.^^^^^^^    ^, 

33  Ind.  531,  5  Am.  Rep.  230;  Logan 
V.  Austin,  1  Stew.  476;  Barliolt  v. 
Wright,  45  Ohio  St.  177,  4  Am.  St. 
535. 


Lang,  !)0  Miss.  46!), 

38  Butt  v.  Gould,  34  Ind.  552. 

39  Marker  v.  Miller,  0  X.  D.  338; 


37T^Iorris  v.  Miller,   83   Neb.  218,  c"*^^^"'  i*  ^eems  Houston  &  T.  Cent. 

20   L.R.A.(N.S.)    007,    131    Am.   St.  K.  Co.  v.  Batchler,  s«p7-a. 

636;    Shay    v.    Thompson,    59    Wis.  « Rochester  v.   Anderson,   1    Bibb 

540,  48  Am.  Rep.  538:  Bell  v.  Hans-  428. 


-464  .   SUTllEKLAND    ON    DAMAUES.  [§    151 

provocation  in  words.  Judge  Story  said  they  might  be  reduced 
to  nominal  when  the  words  were  'Very  gross  and  reprehensible 
and  calculated  from  the  circumstances  to  draw  forth  strong  re- 
sentment." *^  This  has  been  doubted/^  but  it  seems  to  be  sup- 
ported by  authority.  When  the  wrong  is  done  under  circum- 
stances arising  without  the  plaintiff's  fault,  and  these  furnish 
a  reasonable  excuse  for  the  violation  of  public  order,  consider- 
ing the  infirmities  of  human  temper,  there  is  no  foundation  for 
exemplary  damages,  but  the  plaintiff"  is  entitled  to  compensa- 
tion. But  where  there  i^  a  reasonable  excuse  for  the  violation 
of  public  order  arising  from  the  provocation  or  fault  of  the 
plaintiff",  but  not  sufficient  to  entirely  justify  the  wrong  done, 
there  can  be  no  exemplary  damages  and  the  circumstances  of 
mitigation  must  be  applied  to  the  actual  damages.^^  Dixon, 
C.  J.,**  said:  '^'This  seems  to  follow  as  the  necessary  and  logical 
result  of  the  rule  which  permits  exemplary  damages  to  be  re- 
covered. Where  motive  constitutes  a -basis  for  increasing  the 
damages  of  the  plaintiff  al>ove  those  actually  sustained,  there  it 
should,  under  proper  circumstances,  constitute  the  basis  for 
reducing  them  below  the  same  standard.  If  the  malice  of  the 
defendant  is  to  be  punished  by  the  imposition  of  additional 
damages  or  smart  money,  then  ijiaiice  on  the  part  of  the  plain- 
tiff", by  which  he  provoked  the  injury  complained  of,  should  be 
subject  to  like  punishment,  which,  in  his  case,  can  only  be  in- 
flicted by  withholding  the  damages  to  which  he  would  otherwise 
be  entitled.  The  law  is  not  so  one-sided  as  to  scrutinize  the 
motives  and  punish  one  party  to  the  transaction  for  his  mali- 
cious conduct  and  not  punish  the  other  for  the  same  thing;  nor 
so  unwise  as  not  to  make  an  allowance  for  the  infirmities  of 
men  when  smarting  under  the  sting  of  gross  and  immediate 
provocation.  If  it  were,  then,  as  has  been  well  said,  it  would 
frequently  happen  that  the  plaintiff  would  get  full  compensa- 

41  Cushman  V.  Ryan,  1  Story,  100.       Hawaii,    159;    Mason    v.    Nashville, 
42Birchard  v.   Booth,   4  Wis.   67.       etc.  R.  Co.,  135  Ga.  741,  33  L.R.A. 

43Robison  v.  Rupert,  23  Pa.  523;  /xtc  \    oon      coi.ii              ht  t 
T.     J        T,-        o  TT7    or,    -r.^     T,,,  (N.S.)    280.     See  Stockham  v.  Mai- 
Reed  V.  Bias,  8  W.  &  S.  189;  Ells- 
worth V.  Thompson,  13  Wend.  663;  ^°^™'  ^^^  ^^-  ^'^^'  Baltimore  &  0. 
Genung   v.    Baldwin,    77    App.    Div.  R-   Co.   v.   Strube,   111   Md.   119. 
(N.    Y-)     584;    Irwin    v.    Porter,    1  44  Moreley  v.  Dunbar,  24  Wis.  183. 


§    151]  LEGAi    LIQUIDATION 8    AM)    DEDUCTIONS. 


40i 


tion  for  damages  occasioned  by  himself, — a  result  wliicli  would 
be  contrary  to  every  principle  of  reason  and  justice.  And  so  1 
find  the  uninterrupted  course  of  decision  both  in  England  and 
this  country."*^  In  opposition  to  this  view  there  are  several 
dissents  including  the  supreme  court  of  Wisconsin  and  other 


45  Citing  Robisori  v.  Kiipert,  23  Pa. 
523;  Fraser  v.  ]5erl<oloy,  7  C.  &  P. 
621;  Millard  v.  Brown,  35  N.  Y. 
297;  Finnerty  v.  Tipper,  2  Camp. 
72;  Avery  v.  Kae,  1  Mass.  1] ;  Cush- 
man  v.  Ryan,  1  Story,  100;  Gaither 
V.  Blowers,  11  Md.  551,  552;  Child 
V.  Homer,  13  Pick.  503;  Keyes  v. 
Devlin,  3  E.  D.  Smith,  518;  Roches- 
ter V.  Anderson,  1  Bibb,  428;  Lee  v. 
Woolsey,  19  Johns.  319,  10  Am.  Dec. 
230;  Ireland  v.  Elliott,  5  Iowa  478, 
68  Am.  Dec.  715;  Maynard  v. 
Beardsley,  7  Wend.  560,  22  Am.  Dec. 
595;  Waters  v.  Brown,  3  A.  K. 
Marsh.  577;  Prentiss  v.  Shaw,  5G 
Me.  427,  96  Am.  Dec.  475;  Rhodes 
V.  Bunch,  3  McCord  65 ;  McKenzie  v. 
Allen,  3  Strobh.  546;  Matthews 
V.  Terry,  10  Conn.  459;  Coxe  v. 
Whitney,  9  Mo.  531 ;  Collins  v.  Todd, 
17  Mo.  539;  Corning  v.  Corning,  6 
N.  Y.  103;  Willis  v.  Forrest,  2  Duer, 
310;  Tyson  v.  Booth,  100  Mass.  258; 
Marker  v.  Miller,  9  Md.  338;  Bing- 
ham V.  Garnault,  Buller's  N.  P.  17. 

In  Wilson  v.  Young,  31  Wis.  574, 
the  subject  was  again  under  discus- 
sion, and  a  majority  of  the  court 
held  to  a  middle  groimd  between  the 
doctrine  of  Birchard  v.  Booth  and 
Merely  v.  Dunbar — that  in  an  action 
for  assault  and  battery  compensa- 
tory, as  distinguished  from  puni- 
tive, damages  are  of  two  kinds:  1. 
Those  which  may  be  recovered  for 
the  actual  personal  or  pecuniary  in- 
jury and  loss,  the  elements  of  which 
are  loss  of  time,  bodily  suflFering, 
impaired  physical  or  mental  powers, 
mutilation  and  disfigurement,  ex- 
penses of  surgical  and  other  attend- 
Suth.  Dam.  Vol.  I.— 30. 


ance  and  the  like.  2.  Those  wliicli 
may  be  recovered  for  injuries  to  tiie 
feelings  arising  from  the  insult  or 
indignity,  the  public  exposure  and 
contumely,  and  the  like.  Tiiut  com- 
pensatory damages  ('f  llie  first  kind 
are  to  be  determined  without  refer- 
ence to  the  question  wliethcr  tlie  de- 
fendant was  influenced  Ijy  malicious 
motives  in  the  act  complained  of: 
and,  on  the  other  hand,  evidence  of 
tlireatening  or  aggravating  language 
or  malicious  conduct  on  the  plain- 
tifl's  part,  not  constituting  a  legal 
justification  of  the  defendant's  acts, 
cannot  be  considered  in  mitigation 
of  such  damages.  That  compen.^a- 
tory  damages  of  the  second  kind  de- 
pend entirely  upon  the  malice  of 
the  defendant;  and  as  evidence  of 
such  malice  may  be  given  to  in- 
crease that  kind  of  damages,  so  evi- 
dence of  threatening  and  malicifius 
words  or  acts  on  the  plaintiff's  part, 
just  previous  to  the  assault,  though 
not  constituting  a  legal  justifica- 
tion, should  be  admitted  to  mitigate 
or  even  defeat  such  damages.  The 
distinction  above  made  between  thr- 
kinds  of  compensatory  damages  is 
disapproved  of  in  Craker  v.  Chicago, 
etc.  R.  Co.,  36  Wis.  657,  17  Am. 
Rep.  504,  8  Am.  Neg.  Cas.  665. 

There  are  other  Wisconsin  cases 
which  declare  that  "personal  abuse 
which  may  have  had  something  to 
do  witli  inducing  and  bringing  upon 
another  an  assault  may  be  consid- 
ered by  a  jury  in  mitigation  of  dam- 
ages. But  a  man  commencing  an 
assault  and  battery  under  such  cir- 
cumstances is  liable  for  the  actual 


4G6  SUTllEKLAND    ON    DAMAGES.  '  [§    151 

courts  of  high  repute.     The  argument  of  Judge  Dixou  seems  to 
the  editor  to  be  fully  answered  by  the  court  of  Vermont,  which, 
like  the  other  courts  that  deny  that  words  of  provocation  may 
mitigate  compensatory  damages,  grant  that  they  mitigate  ex- 
emplary  damages.      "If  provocative  words   may  mitigate,   it 
follows  that  they  may  reduce  the  damages  to  a  mere  nominal 
sum  and  thus  practically  justify  an  assault  and  battery.     But 
why,  under  this  rule,  may  they  not  fully  justify?     If  in  one 
case  the  provocation  is  so  great  that  the  jury  may  award  only 
nominal  damages,  why,  in  another  in  which  the  provocation  is 
far  greater,  should  they  not  be  permitted  to  acquit  the  defendant 
and  thus  overturn  the  well-settled  rule  of  law  that  words  cannot 
justify  an  assault.     On  the  other  hand,  if  words  cannot  justify 
they  should  not  mitigate.     A  defendant  should  not  be  heard  to 
say  that  the  plaintiff  was  first  in  the  wrong  by  abusing  him  with 
insulting  words,  and  therefore,  though  he  struck  and  injured  the 
plaintiff,  he  was  only  partly  in  the  wrong  and  should  pay  only 
part  of  the  actual  damages.     If  the  right  of  the  plaintiff*  to  re- 
cover actual  damages  were  in  any  degTee  dependent  on  the  de- 
fendant's intent,  then  the  plaintiff's  provocation  to  the  defendant 
to  commit  the  assault  upon  him  would  be  legitimate  evidence 
bearing  upon  that  question,  but  it  is  not.     Even  lunatics  and 
idiots  are  liable  for  actual  damages  done  by  them  to  the  property 
or  person  of  another,*®  and  certainly  a  person  in  the  full  posses- 
sion of  his  faculties  should  be  held  liable  for  his  actual  injuries 
to  another  unless  done  in  self-defense  or  under  reasonable  appre- 
hension that  the  plaintiff  was  about  to  do  him  bodily  harm.    The 
law  is  that  a  person  is  liable  in  an  action  of  trespass  for  an  as- 
sault and  battery,  although  the  plaintiff*  made  the  first  assault,  if 
the  defendant  used  more  force  than  was  necessary  for  his  pro- 
tection, and  the  symmetry  of  the  law  is  better  preserved  by 
holding  that  the  defendant's  liability  for  actual  damages  begins 
wdth  the  beginning  of  his  own  wrongful  act."  *' 

damages  which  result."     Fenelon  v.  47  Goldsmith  v.   Joy,   61  Vt.   488, 

Butts,    53    Wis.    344.      Corcoran    v.  499,  4  L.R.A.  500,  15  Am.  St.  923; 

Harran,    55    Wis.    120.      See   Yates  Grace    v.    Dempsey,    75    Wis.    313; 

V.  New  York,  etc.  R.  Co.,  67  N.  Y.  Prindle       v.       Haight,       83       Wis. 

100,  8  Am.  Neg.  Cas.  555.  50;  Jacobs  v.  Hoover,  9  Minn.  204; 

46  See  §  16.  Oushman  v.  Waddell,  1  Baldwin,  57 ; 


§    151   ]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  U!7 

The  fact  that  the  offeuding  person  in  an  action  for  assault 
and  battery  has  been  subjected  to  tine  in  a  criminal  prosecution 
does  not  bar  or  mitigate  his  liability  to  exeuiplary  "  or  com- 
pensatory *^  danuigcs  in  a  civil  action.  This  question  will  be 
more  fully  considered  in  the  chapter  on  exemplary  damages.'" 
The  character  of  the  party  assaulted  cannot  affect  the  damages 
which  he  is  entitled  to  recover,^^  nor  can  proof  be  iiia<l('  of  the 
generally  peaceable  character  of  the  defendant  to  rebut  uuilico 
or  mitigate  the  damages.^^  The  malice  entertained  by  the 
plaintiff  toward  the  defendant  when  the  assault  was  comniittctl 
does  not  mitigate  the  latter's  liability.^^ 

Immediately  after  the  civil  war  the  plaintiff,  having  publicly 
and  indecently  exulted  over  the  assassination  of  President  Lin- 
coln, was  arrested,  pursuant  to  a  general  order  of  the  defendant 
as  commander  of  a  military  department.  The  order  was  illegal 
but  Avas  issued  without  malice  and  was  intended  as  a  means  of 
preserving  the  public  peace.  The  plaintiff  was  held  not  entitled 
to  exemplary  damages  for  his  arrest  and  imprisonment,  but, 
having  been  manacled  and  compelled  to  labor  with  other  prison- 
ers during  the  time  he  was  held  in  custody,  these  circumstances 
were  held  to  be  good  ground  for  enhancement  of  the  damages.''* 

McBride    v.    McLaughlin,    5    Watts  ley  v.  Watson,  45  Vt.  289,  12  Am. 

375;  Donnelly  v.  Harris,  41  111.  126;  Rep.  197;  Cook  v.  Ellis,  6  Hill,  400, 

Gizler  v.  Witzel,  82  111.  322;  John-  41    Am.    Dec.    757;    McWilliams    v. 

son  V.  McKee,  27  Mich.  471;   Pren-  Bragg,  3  Wis.  424;  Brown  v.  Swinc- 

tiss  V.  Shaw,  56  Me.  712;   Mangold  ford,  44  id.  282,  28  Am.  Rep.  582; 

V.   Oft,   63  Neb.   397;   Armstrong  v.  Wilson    v.    Middleton,    2    Cal.    54; 

Rhoades,  4  Penn.    (Del.)    151;   Mit-  Corwin  v.  Walton,  18  Mo.  71,  5»  Am. 

chell  V.  Gambill,   140  Ala.   316;   Le  Dec.    285.      Contra,    Smithwick    v. 

Laurin    v.    Murray,    75    Ark.    232;  Ward,  7  Jones,  64,  75  Am.  Dec.  453. 

Marriott  v.  Williams,  152  Cal.  705,  See  §  402  and  ch.  26. 

125  Am.  St.  87;   Warner  v.  Talbot,  49  Id.;    Powell  v,   Wiley,   125   Oa. 

112  La.  817,  06  L.R.A.  3.36,  104  Am.  823:  Reddin  v.  C.ates,  52  Iowa,  210. 

St.  460;  Burley  v.  Menefee,  129  Mo.  60  ch.  9. 

App.  518;  Mitchell  v.  United  R.  Co.,  61  Corning  v.  Corning,  6  N.  Y.  97, 

125  Mo.  App.  1 ;  Covcll  V.  Carpenter,  104;    Smitliwick  v.  Ward,   7   Jonc3, 

24  R.  I.  1;  Parham  v.  Langford,  43  04:  Ward  v.  State,  28  Ala.  53.     Sec 

Tex.  Civ.  App.  31 ;  Hardin  v.  Hoges,  §  94. 

33   Tex.   Civ.   App.   155 ;    McNeil   v.  62  Reddin  v.  Gates,  supra. 

Mullin,  70  Kan.  634.  68  Mills  v.  Warner,  167  Mich.  019. 

«Irby   V.    Wilde,    155    Ala.    388;  64  McCall     v.     McDowell.     Deady, 

Abnev  v.  Mize,  155  Ala.  391;  Hood-  233;   Rotli  v.  Smith.  .")4   Til.  431. 


468  SUTHERLAND    ON    DAMAGES.  [§    152 

§  152.  Provocation  in  libel  and  slander.  In  actions  for  libel 
or  slander  it  may  be  proved  in  mitigation  tbat  there  was  an 
immediate  provocation  in  the  acts  and  declarations  of  the  plain- 
tiff.^^  The  defendant  cannot,  however,  prove  such  acts  and 
declarations  done  or  made  at  a  different  time  or  any  antecedent 
facts  which  are  not  fairly  to  be  considered  part  of  the  same 
transaction,  however  irritating  and  provoking  they  may  be.^® 
It  has  been  held  that  a  criminatory  retort  made  after  three  days 
is  not  i)art  of  the  same  transaction,  nor  when  it  has  no  relation 
to  the  previous  publication  and  there  is  no  preceptible  connec- 
tion between  them.^'''  It  has  also  been  held  that  where  a  party  is 
sued  for  republishing  a  libelous  article  in  a  newspaper,  and  the 
republication  is  accompanied  by  remarks  tending  to  a  justifica- 
tion of  the  article,  but  not  amounting  to  it,  the  defendant  is  not 
permitted  to  prove  the  truth  of  the  remarks  in  mitigation  of 
damages  because  the  evidence  would  tend  to  prove  the  charge 
well  founded;  that  evidence  in  mitigation  must  be  such  as  ad- 
mits the  charge  to  be  false.^^  The  defendant  may  show  that 
he  was  drunk  or  insane  when  he  spoke  the  words. ^® 

Upon  common  principles  the  general  issue  in  an  action  on 
the  case  for  slander  would  put  in  issue,  not  only  the  speaking 
of  the  slanderous  words,  but  their  alleged  falsity  and  the  malice. 
The  early  adjudications  were  in  harmony  with  this  view,  but 
upon  consultation  of  the  judges  in  England  about  one  hundred 
and  eighty  years  ago  it  was  resolved  that  in  the  future,  if  the 

55  Alderson  v.  Kahle,  73  W.  Va.  57  Beardsley  v.  Maynard,  4  Wend. 
090,51  L.R.A.(N.S.)  1198;  Miles  v.  3.36.  See  Graves  v.  State,  9  Ala. 
Harrington,  8  Kan.  425 ;  Jauch  v.  443 ;  Maynard  v.  Beardsley,  7  Wend. 
Jauch,  50  Ind.  135;  Beardsley  soO;  Lister  v.  Wriglit,  2  Hill,  320; 
V.  Maynard,  4  Wend.  330 ;  Moore  v.  Underhill  v.  Taylor,  2  Barb.  348 ; 
Clay,  24  Ala.  235,  CO  Am.  Dec.  461;  Richardson  v.  Northrup,  56  Barb. 
Powers  V.  Presgroves,  38  Miss.  227;  ^q^ 

McClintock  v.   Crick,   4   Iowa,   453;  ^g  ^                t,     i        nA  \TiT      ^    mc 

'                 '          '  58  Cooper  V.  Barber,  24  Wend.  105. 

Duncan  v.  Brown,  15  B.  Mon.  180;  ,„  ^^        ,,        ^^        n    irv  t     1    o^ 

„                    ^      ,  .  ,      -,„    „r-       -o  59  Howell  V.  Howell,  10  Ired.  84; 

Ranger    v.    Goodrich,    17    Wis.    /8;  ,,       ,.,,     „^    ,    ,,„     , 

„                      rr-     1          r«    Til      Ann  Gatcs  V.  Meredith,  7  Ind.  440 ;  Jones 
Freeman   v.   Tinsley,    50    111.    497; 

Moiisler  v.  Harding,  33  Ind.  176,  5  ^-   Townsend,   21   Fla..  431,   57   Am. 

Am    Rep.  195  ^^P-  ^^^'  Alderson  v.  Kahle,  73  W. 

56  Hamilton  V.  Eno,  81  N.  Y.  116;  Va.  690,  51  L.R.A.(N.S.)  1198,  cit- 
Lee  V.  Woolsey,  19  Johns.  319,  10  ing  the  text.  Contra,  Mix  v.  Mc- 
Am.  Dec.  230.  Cov,  22  Mo.  App.  488. 


§    152]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


469 


defendant  intend  to  justify,  he  shall  plead  his  justifioation 
that  the  plaintitF  may  know  what  he  has  to  nieet.^°  The  rule 
then  promulgated  has  ever  since  prevailed  in  England  and  has 
been  followed  in  this  country.''^  It  has  also  ensued  that,  under 
the  general  issue  in  such  actions,  the  defendant  cannot  })rovo 
the  truth  of  the  words  spoken  either  to  rebut  malice  or  mitigate 
damages.^^  It  has  been  deemed  as  important  that  the  plaintitf 
should  have  notice  that  the  truth  of  the  words  is  intended  to  be 
proved  when  the  purpose  is  mitigation  of  damages,  as  when  the 
jjroof  is  intended  for  any  other  object.^^  In  some  jurisdictions, 
therefore,  the  defendant  has  been  precluded  from  all  jiroof  un- 
der the  general  issue  which  implies  the  truth  of  the  charge  or 
tends  to  prove  it.^^  To  get  the  opportunity  to  adduce  any  such 
proof  he  was  required  to  plead  the  truth  of  the  words  as  a  justi- 
fication; then  if  he  succeeded  he  was  exonerated  from  all  lia- 
bility; but  if  he  failed,  the  plea,  being  a  repetition  of  the 
defamatory  words,  aggi'avated  the  damages,  for  malice  was  con- 
clusively presumed.^^    In  ISTew  York  by  such  an  unsustained  plea 


60  Underwood  v.  Parker,  2 
Strange,  1200. 

eiBodwell  V.  Swan,  3  Pick.  37G; 
Knight  V.  Foster,  39  N.  II.  576; 
Taylor  v.  Robinson,  29  Me.  323 ;  Kay 
V.  Fredrigal,  3  Pa.  221;  Jarnigan  v. 
Fleming,  43  Miss.  710;  Douge  v. 
Pearce,  13  Ala.  127;  Henson  v. 
Veatch,  1  Blackf.  369;  Gilman  v. 
Lowell,  8  Wend.  573;  Wagstaflf  v. 
Ashton,  1  Harr.  503;  Snyder  v.  An- 
drews. 6  Barb.  43;  Shirley  v.  Kea- 
thy,  4  Cold.  29;  Barns  v.  Webb,  1 
Tyler,  17;  Updegrove  v.  Zimmer- 
man, 13  Pa.  619;  Root  v.  King,  7 
Cow.  613;  Swift  v.  Diekerman,  31 
Conn.  285. 

62  Knight  v.  Foster,  39  N.  H.  576 ; 
Bailey  v.  Hyde,  3  Conn.  463;  Swift 
V.  Diekerman,  31  Conn.  291;  Shep- 
ard  V.  Merrill,  13  Johns.  475. 

63  Wolcott  V.  Hall,  6  Mass.  514,  4 
Am.  Dec.  173;  Jarnigan  v.  Fleming, 
43  Miss.  710;  Treat  v.  Browning,  4 
Conn.  408,  10  Am.  Dec.  156. 


64  Gilman  v.  Lowell,  8  Wend.  573; 
Knight  V.  Foster,  39  N.  H.  576; 
Moyer  v.  Pine,  4  Mich.  409;  Regnier 
V.  Cabot,  7  111.  34;  McAlexandcr  v. 
Harris,  6  Munf.  465 ;  Porter  v.  Bot- 
kins,  59  Pa.  484;  Chamberlin  v. 
Vance,  51  Cal.  75;  Pease  v.  Shippen, 
80  Pa.  513,  21  Am.  Rep.  116;  Wor- 
mouth  V.  Cramer,  3  Wend.  395,  20 
Am.  Dec.  706;  McCec  v.  Sodusky,  5 
J.  J.  Marsh.  ,185,  20  Am.  Doc.  251. 
See  Commercial  News  Co.  v.  Beard, 
116  111.  App.  501. 

If  the  plaintiff  j)uts  in  evidence  a. 
fact  not  pleaded  tending  to  create 
an  inference  of  expres.s  malice  the 
defendant  may  rebut  tliat  inference 
by  explanatory  evidence.  Keiley  v. 
Timme,  53  Wis.  63. 

66  Id.;  Gorman  v.  Sutton,  32  Pa. 
247;  Larned  v.  Biiflinton,  3  Mass. 
546,  3  Am.  Dec.  185;  Robinson  v. 
Dru7nmond,  24  Ala.  174;  Pool 
V.  Devers,  30  Ala.  672;  Downing  v. 


470  SUTHERLAND    ON    DAMAGES.  [§    152 

the  defendant  was  held  to  admit  the  malice  on  his  part,  and  he 
could  not  resort  to  any  defense  based  on  its  absence.^^  While  he 
had  technically  a  right  to  introduce  evidence  in  mitigation,  still 
without  a  plea  of  justification  he  could  establish  no  fact  which 
would  show  that  he  had  good  reason  to  believe  the  charge  to  be 
true  when  the  words  were  spoken,  and  if  he  put  in  the  only  plea 
which  would  give  him  a  right  to  introduce  such  proof  he  lost 
the  benefit  of  it  by  the  stubborn  presumption  of  malice  unless 
his  proof  was  sufficient  to  establish  the  truth  of  the  charge. 
There  was  therefore  very  little  scope  for  mitigation  in  that  class 
of  actious.^'^  The  injustice  of  such  a  rule  induced  the  courts 
in  some  of  the  states,  as  well  as  in  England,  to  admit  proof  of 
facts  and  circumstances  tending  to  show  the  truth  of  the  words 
spoken,  but  falling  short  of  proving  it;  in  other  words,  the 
defendant  might  show  that  he  had  reason  to  believe  when  he 
uttered  the  words  that  they  were  true.^^  Under  this  i-nle  it  has 
been  allowed  to  be  proved  that  there  were  reports  in  the  neigh- 
borhood that  the  plaintiff  had  been  guilty  of  practices  similar  to 
those  imputed  to  him,^^  or  that  general  reports  that  he  was 
guilty  of  the  very  offense  were,  previously  to  the  speaking  of 
the  words,  in  circulation.''^"  But  the  defendant  to  mitigate  dam- 
ages and  repel  the  presumption  of  malice  cannot  give  in  evidence 

Brown,   3   Colo.  571;    Cavanaugh  v.  v.  Barker,  4  Harr.  520;  Galloway  v. 

Austin,  42  Vt.  576.  Courtney,    10    Rich.   414;    Williams 

66  Gilman  V.  Lowell,  8  Wend.  573;  v.  Cawley,  IS  Ala.  206;  Brown  v. 
Purple  V.  Horton,  13  id.  9,  27  Am.  Brooks,  3  Ind.  518;  Wilson  v.  Apple, 
Dec.  167;  Fero  v.  Ruseoe,  4  N.  Y.  3  Ohio,  270;  Minesinger  v.  Kerr,  9 
162.  Pa.  312;  Van  Derveer  v.  Sutphin,  5 

67  See  Bush  v.  Prosser,  11  N.  Y.  Ohio  St.  293;  Farr  v.  Rasco,  9  Mich. 
347;  Bisbey  V.  Shaw,  12  id.  67.  353,    80    Am.    Dec.    88;    Massee    v. 

68  Knobell  v.  Fuller,  Norris'  Peake  Williams,  124  C.  C.  A.  492,  207  Fed. 
Add.  Cas.  32;  v.  Moor,  1  M.  222. 

&    S.    285;    Leicester    v.    Walter,    2  69 y.  Moor,  1  M.  &  S.  285. 

Camp.  251;   East  v.  Chapman,  2  C.  See  ch.  34. 

&  P.  570;  Bailey  v.  Hyde,  3  Conn.  70  Calloway  v.  Middleton,  2  A.  K. 
463,  8  Am.  Dec.  202;  Bridgman  v.  Marsh.  372,  12  Am.  Dec.  409;  Ken- 
Hopkins,  34  Vt.  532;  Williams  v.  nedy  v.  Gregory,  1  Binn.  (Pa.)  85; 
Miner,  18  Conn.  464;  Haywood  v.  Treat  v.  Browning,  4  Conn.  408,  10 
Foster,  16  Ohio,  88;  Wagner  v.  Hoi-  Am.  Dec.  156;  Case  v.  Marks,  20 
brunner,  7  Gill,  296;  Huson  v.  Dale,  Conn.  248;  Bridgman  v.  Hopkins,  34 
19  Mich.  17,  2  Am.  Rep.  66;  Rigden  Vt.  532;  Blickenstaff  v.  Perrin,  27 
V.  Wolcott,  6  Gill  &  J.  413;  Morris  Ind.  527;  Morris  v.  Barker,  4  Harr. 


§    15;}  ]  LEGAJ.    iJC^UlDATIONS    AND    KEDUCTIONS. 


•171 


facts  of  which  he  was  igiioriiiit  at  llic  limt'  i»i'  iiHcrini:  tin'  woi'.ls 
coiiii^laiiied  ofJ^  The  fact  that  rojxtrts  wore  in  ciiviihilioii 
prior  to  the  uttering  of  the  words,  to  Ihc  otfcct  that  plaint  ill'  was 
guilty  of  the  offense  imputed  to  liim  cannot  generally  i.e  jirovcn 
in  mitigation  in  courts  which  a(hnit  pmof  which  is  nut  full 
justitication  but  which  tends  to  show  the  trutli  of  the  W(.nls 
spoken.'^  The  general  character  of  the  plaint  ill"  at  the  time  the 
defamatory  words  were  s[)oken  is  unirdnnly  deemed  in  issue,  for 
it  is  the  foundation  of  his  claim  for  damages,  and  he  is  at  all 
times,  without  special  notice  in  the  pleadings,  snp))(>sed  \n  j)e 
prepared  to  sustain  it  against  any  attack.'^ 

§  153.  Same  subject.  It  is  held  in  Michigan  that  where  <.nly 
the  general  issue  is  pleaded  and  evidence  is  offered  in  mitiga- 
tion tending  4;o  show  the  truth  of  the  words  spoken,  the  oiler 
conclusively  admits  that  the  charge  was  false  though  at  the 
time  the  defendant  made  it  he  believed  it  to  be  true.  Such  an 
offer,  under  such  pleadings,  should  be  treated  as  involving  a 
disclaimer  of  the  truth  of  the  words  and  a  conclusive  admission 
that  they  were  not  true;  but  not  as  inconsistent  with  tlu;  idea 


520;  Henson  Veatch,  1  Blackf.  SOO : 
Church  V.  Bridgman,  6  Mo.  190; 
Easterwood  v.  Quin,  2  Brev.  04,  3 
Am.  Dec.  700;  Shilling  v.  Carson, 
27  Md.  175,  92  Am.  Dec.  632;  Cook 
V.  Barkley,  2  N.  J.  L.  169,  2  Am. 
Dec.  343;  Wethcrbee  v.  Marsh,  20 
N.  H.  561,  51  Am.  Dec.  244;  Bowen 
V.  Hall,  20  Vt.  232;  Fletcher  v.  Bur- 
roughs, 10  Iowa,  557;  »Shealian  v. 
Collins,  20  111.  325,  71  Am.  Dec. 
271;  Kimball  v.  Fcrnandex,  41  Wis. 
329.     See  ch.  34. 

71  Bailey  v.  Hyde,  3  Conn.  463,  8 
Am.  Dec.  202;  Hatfield  v.  Lashor,  81 
N.  Y.  246;  Willower  v.  Hill,  72  id. 
36;  Barkly  v.  Copeland,  74  Cal.  1, 
15  Pac.  Bep.  307,  5  Am.  St.  413; 
Whitney  v.  Janesville  Gazette,  5 
Biss.  330;  Edwards  v.  Kansas  City 
Times  Co.,  32  Fed.  Eep.  813. 

72  Anthony  v.  Stephens,  1  Mo. 
254;  Fisher  v.  Patterson.  14  Ohio, 
418;   Wilson  v.  Fitch,  41    Cal.  363; 


Bush  V.  Prosser,  11  N.  Y.  347,  361. 
Sec  Bowen  v.  Hall,  20  Vt.  232. 

73  Buford  V.  McLuny,  1  N.  &  MeC. 
268;  Sawyer  v.  Eifert,  2  id.  511,  10 
Am.  Dec.  633;  Douglass  v.  Tousey, 
2  Wend.  352;  Hamer  v.  McFarlin,  4 
Denio,  509;  Pallet  v.  Sargent,  36  N. 
H.  406;  Sanders  v.  .Folinson,  6 
Blackf.  53;  Rhodes  v.  1  jams,  7  .\la. 
574;  Wolcott  v.  Hall,  (i  .Mass.  51}. 
4  Am.  Dec.  173;  ]\Ioyer  v.  Mover,  l!i 
Pa.  210;  Alderman  v.  Frendi,  1 
Pick.  1 :  Bodwcll  v.  Swan,  3  id.  376 ; 
McNutt  V.  Young,  8  L.'igli.  542; 
Dewit  V.  Creeiifield,  5  Ohio 
225;  Fitzgerald  v.  Stewart,  53  Pa. 
343;  Powers  v.  Preagrovea,  38  Miss. 
227:  Warner  v.  Lockerby,  31  Minn. 
421  ;  Maxwell  v.  Kennedy,  50  Wis. 
645:  Pattangall  v.  Mooers.  113 
Me.  412;  Simonaon  v.  Tvovewell,  — 
Ark.  — ,  175  S.  W.  407:  Burkhiser 
V.  Lyons,  —  Tex.  Civ.  -App.  — ,  167 
S.  W.  244. 


472  SUTHERLAND    ON    DAMAGES.  [§    153 

that  the  defendant  at  the  time  he  uttered  them  may  have  be- 
lieved them  to  be  true.  He  therefore  has  a  right  to  introduce 
any  facts  and  circumstances  tending  to  show  grounds  for  such 
belief  at  the  time  of  the  speaking  of  the  vs^ords.'''*  The  same 
doctrine  is  held  in  Ohio.  The  whole  reason  of  the  rule  for 
admitting  such  evidence  is  to  relieve  the  defendant  from  the 
consequences  which  attach  to  malice  in  the  speaking  of  the 
^vords.  He  may  show  particular  acts  of  the  plaintiff  which, 
unexplained,  gave  him  a  just  reason  to  believe  the  truth  of  the 
declarations  which  he  uttered;  but  which,  when  explained  and 
understood,  may  be  found  to  be  compatible  with  the  plaintiff's 
innocence.  This  is  permitted  upon  the  ground  that  the  proof 
when  introduced  may  serve  to  show  that  the  defendant  was 
mistaken  in  making  the  charge,  that  he  misconstrued  the  act 
or  conduct  of  the  party  by  supposing  it  to  be  criminal,  while 
in  fact  it  was  not.  When  the  testimony  can  have  no  other  effect 
than  to  make  apparent  the  plaintiff's  guilt  and  prove  the  truth  of 
the  words  spoken,  its  introduction  to  the  jury  must  tend  to 
justify  the  speaking;  not  to  mitigate  damages  by  showing  the 
absence  of  malice.  To  be  competent  for  the  former  purpose  the 
facts  relied  on  must  be  pleaded  specially  and  cannot  be  given  in 
evidence  under  the  general  issue.'^ 

The  rule  has  been  far  from  universal  that  an  unsustained 
plea  of  justification  shall  in  all  cases  be  deemed  proof  of  malice 
or  have  the  effect  to  exclude  evidence  of  the  absence  thereof. 
Where  a  plea  of  justification  is  interposed  without  any  expecta- 
tion of  sustaining  it,  there  is  no  reason  why  such  deliberate  rep- 
etition of  the  slander  should  not  be  taken  into  consideration  in 
the  assessment  of  damages.  But  it  has  not  been  deemed  just 
to  hamper  a  bona  fide  defense  with  the  hazard  of  such  a  con- 
sequence as  matter  of  law.  Perley,  G.  J.,  said:  "If  he  believed 
when  he  spoke  the  words  that  they  were  true,  and  makes  a 
hona  fide  defense  to  the  action  under  the  plea'  of  justification, 
w^e  do  not  see  why  he  should  make  it  under  the  penalty  of 

74Huson  V.  Dale,   19  Mich.   17,  2       Apple,  3  Ohio,  270;  Dewit  v.  Green- 

Am^Rep.  66  field,  5  Ohio,  225;  Haywood  v.  Fos- 

75  Reynolds  v.  Tucker,  6  Ohio  St.  >         >        j 

516,    67    Am.    Dec.    353;    Wilson   v.       ter,  10  Ohio,  88. 


§    154]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  4:73 

being  punished  by  increased  damages  if  he  should  fail  to  satisfy 
the  jury  of  the  fact  any  more  than  in  other  cases  where  a  de- 
fendant does  not  succeed  in  a  hoim  fide  defense.  We  think  it 
should  be  left  to  the  jury  to  decide  the  weight  and  character 
of  the  evidence  introduced  in  support  of  the  plea  and  the  man- 
ner and  spirit  in  which  the  defense  is  conducted ;  whether  tlie 
real  object  of  the  plea  and  evidence  was  to  defend  the  actitui 
with  reasonable  expectation  of  success  or  to  repeat  the  oriiijiiial 
slander."  '' 

These  principles  have  now  been  established  by  statute   in 
many  states  where  the  harsher  rule  formerly  prevailed.      In 
New  York,  as  well  as  in  many  other  jurisdictions  having  codes, 
it  is  provided  that  the  defendant  may  allege  both  the  truth  of 
the  matter  charged  as  defamatory  and  any  mitigating  circum- 
stances to  reduce  the  amount  of  damages,  and  whether  he  prove 
the  justification  or  not  he  may  give  evidence  of  such  circum- 
stances.    This  statute  does  not  mean  that  he  must  connect  them 
together,  that  he  cannot  allege  one  without  the  other ;  but  that  he 
should   not   be    prohibited    from    alleging   either;    accordingly 
the  defendant,  without  pleading  the  truth  of  the  words  spoken, 
may  allege  facts  tending  to  establish  their  truth  and  prove  such 
facts  in  mitigation.^'    If  a  plea  of  justification  or  in  mitigation 
is  interposed  in  bad  faith,  and  for  the  purpose  of  injuring  the 
plaintift''s  reputation,  the  fact  may  bo  considered  by  the  jury.'* 
§  154.  Mitigating  circumstances  in  trespass  and  other  actions. 
In  trespass  for  levying  on  the  plaintift'^s  property  under  an  exe- 
cution against  a  third  party  the  defendant  may  show  in  miti- 
gation of  damages  on  a  writ  of  inquiry,  after  judgment  ])y 
default,  that  at  and  prior  to  the  levy  the  property  was  in  his 
possession,  or  that  the  plaintiff  was  not  the  owner;  but  he  is 
estopped  by  the  judgment  from  showing  that  the  plaintill"  had 

76  Pallet  V.  Sargent,  36  N.  H.  496;  Am.  Kep.  98;  Raynor  v.  Kinney.  14 

Byrkett  v.  Monohon,  7  Blackf.  8.3,  41  Oliio  St.  283. 

Am.  Dec.  212;  Chalmers  v.  Shackoll,  77  Busli  v.  Prosser,  11  N^  \.  34<  ; 

6  C    &  P    475;   Sanders  v.  Johnson,  Bisbcy  v.  Shaw.  12  N.  ^.  C,,. 
6    Blackf     .50     36    Am.    Dec.    .'364;  78  Cruikshank  v.  Gordon,   118   N. 

Thomas   v.    Dunaway,    .30   111.    373;  V.    178;    Distin   v    Rose.   09   N     \ 

Cummerford  v.  McAvoy,  12  111.  311 ;  122 ;  Bennett  v.  Matthews     .4  Barb. 

Corbley   v.   Wilson,    71   111.   209,   22  410.     See  Doe  v.  Roe.  32  TTiu.,  0.8. 


474  SUTHEELAND    ON    DAMAGES.  [§    154 

not  such  interest  as  would  entitle  him  to  maintain  the  suit.'' 
Where  a  building  was  blown  up  without  authority  to  stay  the 
progress  of  a  conflagration,  the  fact  was  allowed  to  be  shown; 
and  the  jury  in  estimating  the  damages,  it  was  held,  should  con- 
sider the  circumstances  under  which  the  building  and  its  con- 
tents were  and  their  chance  of  being  saved,  even  though  not  at 
the  time  on  fire,  and  should  determine  the  damages  with  refer- 
ence to  the  peril  to  which  they  were  exposed.^"  So  if  a  landlord 
enters  to  make  repairs  which  are  necessary  and  which  the  tenant 
ought  to  have  made,  but  neglected  to  make,  or  if  he  enters  to 
make  repairs  which  he  is  bound  to  make,  but  which  the  tenant 
forbids  him  to  make,  the  damages  will  be  estimated  with  refer- 
ence to  these  circumstances  and  will  be  less  than  if  the  entry 
w^ere  made  without  color  of  excuse.^^  A  person  sued  for  enter- 
ing and  cutting  down  trees  may  show  in  mitigation  a  verbal 
license  from  the  plaintifP,^^  or,  when  sued  for  breach  of  a  con- 
tract, that  performance  would  have  been  useless.*^  In  actions 
for  false  imprisonment  or  malicious  prosecution  the  fact  that 
the  defendant  acted  under  instructions  of  his  employer  will  not 
mitigate  damages.^^  Evidence  that  the  plaintiff  in  a  suit  for 
false  imprisonment  committed  a  theft  in  consequence  of  which 
he  was  held  in  private  custody  may  be  shown  in  mitigation  of 
damages.®^  The  advice  of  counsel,  if  given  botm  fide,  is  a  cir- 
cumstance which  may  be  considered  to  disprove  malice  and 
mitigate  exemplary  damages,*^  if  it  was  given  on  a  full  disclos- 
ure of  the  facts.^'  The  damages  recoverable  for  the  breach  of  a 
marriage  promise  are  not  lessened  because  the  defendant  with- 

79  Sterrett  v.  Raster,  37  Ala.  366;  83  Louisville  &  P.  C.  Co.  v.  Rowan, 
Squire  v.  HoUenbeck,  9  Pick.  551,  20       4  Dana,  606. 

Am.  Dec.  506;  Lowell  v.  Parker,  10  84  Josselyn  v.  McAllister,  22  Mich. 

Mete.  (Mass.)  309,  43  Am.  Dec.  436.       g^Q 

80  Parsons  v.  Pettingell,  11  Allen, 
507;   Reed  v.  Bias,  8  W.  &  S.  189; 

Scott  V.  Rawls,   159   Ala.  399.     See 

,v     1  n       4.  Ki     +1  i:.    n  86  Fox  V.  Davis,  55  Ga.  298 ;  Bohm 

vVorkman  v.  Great  Northern  R.  Co.,  ' 

32  L.  J.   (Q.  B.)   279.  ^'-  ^^""PV'  1  Mont.  333. 

81  Reeder  v.  Purdy,  41  111.  279.  ^'^  Louisville  &  N.  R.  Co.  v.  Smith, 

82  Chicago  T.  &  T.  Co.  v.  Core,  141  Ala.  335,  citing  the  text;  Shores 
223  111.  58;  Wallace  v.  Goodall,  18  v.  Brooks,  81  Ga.  468,  13  Am.  St. 
N.  H.  439.  332.     See  eh.  25. 


85  Nelson  v.  Snoyenbos,   155  Wis. 
590. 


§    155]  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  475 

drew  his  affections  from  the  plaint  ill'  without  causc.^^  Any  act 
done,  no  matter  by  whom,  by  wliich  th(^  injury  rcsiili  in^-  from 
a  trespass  is  put  an  end  to  or  mitigated  may  be  pruvc(L®^  The 
good  faith  of  a  trespasser  who  has  cut  timber  on  or  removed  ore 
from  the  land  of  another  nmy  lessen  his  liability  for  the  added 
value  given  by  his  labor  to  the  timber  or  ore.®"  The  defendant's 
belief  in  the  harmlessness  of  a  wild  animal  which  injured  the 
plaintiif  has  been  considered  in  mitigation.®^ 

§  155.  Plaintiff's  acts  and  negligence.  The  acts  and  negli- 
gences of  the  plaintiff  which  have  enhanced  the  injury  resnlting 
from  the  defendant's  act  or  neglect  may  be  shown  in  mitigation 
of  damages.  The  defendant  is  liable  for  the  natural  and  proxi- 
mate consequences  of  his  violations  of  contract  and  of  his  un- 
lawful acts;  but  if  the  plaintiff  has  rendered  these  conse(picnces 
more  severe  to  himself  by  some  voluntary  act  from  which  it  was 
his  duty  to  refrain,  or  if  by  his  neglect  to  exert  himself  reason- 
ably to  limit  the  injury  and  prevent  damage,  in  the  cases  in 
which  the  law  imposes  that  duty,  and  thereby  he  suffers  addi- 
tional injury  from  the  defendant's  act,  evidence  is  admissible 
in  mitigation  to  ascertain  to  what  extent  the  damages  claimed 
are  to  be  attributed  to  such  acts  or  omissions  of  the  plaintiff.®^ 
If  he  omit  to  use  his  opportunities  and  does  not  reasonably  exert 
himself  to  lessen  the  damages  which  may  result  from  such  act 
he  is  not  entitled  to  compensation  for  the  injury  which  he  might 
and  ought  to  have  prevented,  except  to  the  extent  of  proper  com- 
pensation for  such  measures  or  acts  of  prevention  as  the  case 
required  and  were  within  his  knowledge  and   power.®^     The 

88  Richmond  v.  Roberts,  t)8  111.  92  Chicago  &  E.  I.  R.  Co.  v.  .Mitcli- 
472.  ell,   5(5   Tnd.   App.   354;    Kopezynski 

89  Alabama  Midland  R.  Co.  v.  Cos-  v.  Bolcom,  V.  L.  Co.,  71  Wasii.  0;{ ; 
kry,  92  Ala.  254.  Alabama  City  G.  &  A.  Co.  v.  Brady, 

In  proceedings  for  the  condemna-  IGO  Ala.  615;  Liebler  v.  Carrel,  155 

tion  of  land  the  owner  is  not  bound  Mich.  196;  Foehr  v.  New  York  S.  L. 

so  to  act  as  to  lessen  the  lial)ility  R.   Co.,  40   Pa.   Super.   7;    Rratt  v. 

of  the  condemnor.     Rirmingham  R.,  Dunlap,   85   Conn.    180;    Cincinnati, 

L.  &  O.  Co.  V.  Long,  5  Ala.  App.  510.  N.   0.  &   T.   P.   R.   Co.   v.   Crabtree, 

90  §§  1126  et  seq.  30    Ky.    L.    Rep.    1000;    Boggess   v. 

91  Besozzi  V.  Harris,  1  Fost.  &  F.  IMetropolitan  St.  R.  Co..  lis  M,,. 
92;   Hayes  v.  Miller,   1.50  Ala.  621,  328,  quoting  the  te.\t. 

11   L.R.A.(N.S.)    748,    124   Am.    St.  93  Td.;    Sloss-S.    S.    &     I.    Co.    v. 

93,  it  seems.  IMiteliell,  161  Ala.  278;  Dickerson  v 


476 


SUT1IEKL,AND    ON    DAMALiEH. 


L§  m:. 


measure  of  his  duty  in  this  regard  is  ordinary  care  and  dili- 
'To  require  one  who  has  been  injured  to  take  proper 


sence. 


Finley,  15S  Ala.  149;  St.  Louis  S. 
R.  Co.  V.  Reagan,  79  Ark.  484,  7 
L.R.A.{N.S.)  097;  Parks  v.  Sullivau, 
46  Colo.  340,  25  L.R.A.(N.S.)  025; 
Moses  V.  Autuono,  56  Fla.  499,  20 
L.R.A.(N.S.)  350;  Woodward  v. 
Tierce,  147  III.  App.  339;  Kimball 
V.  Citizens'  G.  &  E.  Co.,  141  Iowa, 
632;  Mystic  M.  Co.  v.  Chicago,  etc. 
R.  Co.,  131  Iowa,  10;  Bennett  v.  Mt. 
Vernon,  124  Iowa,  537 ;  Lorenzo  v. 
Puerto  Rico  S.  Co.,  5  Porto  Rico 
Fed.  535 ;  Balbas  v.  Rogers,  4  id  82. 
Stonega  C.  &  C.  Co.  v.  Addington, 
112  Va.  807,  37  L.R.A.(N.S.)  969; 
Smith  V.  Hiighey,  66  Ore.  408;  Sea- 
board Air  Line  Ry.  Co.  v.  Patrick, 
10  Ala.  App.  341;  Moody  v.  Sind- 
linger,  —  Colo.  — ,  149  Pac.  263; 
Nelson  v.  Buick  Motor  Co.,  183  111. 
App.  323;  Walley  v.  Wiley,  56  Ind. 
App.  171;  Atkinson  v.  Kirkpatrick, 
90  Kan.  515;  Crosby  v.  Plummer, 
111  Me.  355;  Dubinsky  v.  Wells 
Bros.  Co.  of  New  York,  218  Mass. 
232;  Weller  v.  Missouri  Lumber  & 
Mining  Co.,  176  Mo.  App.  243; 
Carthage  Stone  Co.  v.  Travelers'  Ins. 
Co..  186  Mo.  App.  318:  Waterman 
Lumber  &  Supply  Co.  v.  Holmes,  — 
Tex.  Civ.  App.  — ,  161  S.  W.  70; 
Spokane  Casket  Co.  v.  Mitchell,  76 
Wash.  425;  Hay  v.  Long,  78  Wash. 
616;  Dietrich  v.  Hannibal  &  St.  J. 
R.  Co.,  89  Mo.  App.  36;  Kumberger 
V.  Congress  S.  Co.,  158  N.  Y.  339, 
345;  Warren  v.  Stoddart,  105  U.  S. 
224,  26  L.  ed.  1117;  Goshen  v.  Eng- 
land,  119  Ind.  368,  5  L.R.A.  253; 
Louisville,  etc.  R.  Co.  v.  Jones,  108 
Ind.  551,  9  Am.  Neg.  Cas.  298;  Sher- 
man Center  T.  Co.  v.  Leonard,  46 
Kan.  354,  26  Am.  St.  101;  Miller 
V.  Mariners'  Church,  7  Me.  51,  20 
Am.  Dec.  341;  Mather^  vriButler 
County,  28  Iowa,  253;   Maynard  v. 


Maynard,  49  Vt.  297 ;  Arden  v.  Good- 
acre,  11  C.  B.  371  :  Howard  v.  Daly, 
61  N.  Y.  362,  19  Am.  Rep.  285; 
Sutherland  v.  Wyer,  67  Me.  64; 
Williams  v.  Chicago  C.  Co.,  60  111. 
149;  Benziger  v.  Miller,  50  Ala.  206; 
Dunn  v.  Johnson,  33  Ind.  54,  5  Am. 
Rep.  177;  Keyes  v.  Western  Ver- 
mont S.  Co.,  34  Vt.  81;  Cook  v. 
Soule,  56  N.  Y.  420;  Campbell  v. 
Miltenberger,  26  La.  Ann.  72;  Par- 
sons v.  Sutton,  06  N.  Y.  92;  Bisher 
v.  Richards,  9  Ohio  St.  495;  Dob- 
bins V.  Duquid,  65  111.  464 ;  Hayden 
V.  Cabot,  17  Mass.  169;  Emery  v. 
Lowell,  109  Mass.  197 ;  True  v.  In- 
ternational Tel.  Co.,  60  Me.  9 ;  Grin- 
die  V.  Eastern  Exp.  Co.,  67  Me.  317, 
24  Am.  Rep.  31;  Luse  v.  Jones,  39 
N.  J.  L.  707;  United  States  v.  Smith, 
94  U.  S.  214,  24  L.  ed.  115;  Beymer 
V.  McBride,  37  Iowa,  114;  Le 
Blanche  v.  London,  etc.  R.  Co.,  1  C. 
P.  Div.  286 ;  Hamlin  v.  Great  North- 
ern R.  Co.,  1  H.  &  N.  408 ;  Smeed  v. 
Foord,  1  E.  &  E.  602;  Fullerton  v. 
Fordyce,  144  Mo.  519;  Uhlig  v.  Bar- 
num,  43  Neb.  584;  Loomer  v. 
Thomas,  38  Neb.  277;  Packet  Co.  v. 
Hobbs,  105  Tenn.  29,  45;  Nashua  I. 
&  S.  Co.  v.  Brush,  33  C.  C.  A.  456, 
91  Fed.  213,  citing  the  text;  Fried- 
enstein  v.  United  States,  35  Ct.  of 
Cls.  1 ;  Bickham  v.  Hutchinson,  50 
La.  Ann.  765;  Gooden  v.  Moses,  99 
Ala.  230 ;  Raymond  v.  Haverhill,  168 
Mass.  382.  Compare  Wieting  v. 
]\Iillston,  77  Wis.  523,  which  is  dis- 
approved in  the  Massachusetts  case. 
94  Ross  V.  City  of  Stamford,  88 
Conn.  260;  Doran  v.  Waterloo,  C. 
F.  &  N.  Ry.  Co.,  —  Iowa,  — ,  147  N. 
W.  1100;  A.  S.  Cameron  Steam 
Pump  Works  v.  Lubbock  Light  &  Ice 
Co.,  —  Tex.  Civ.  App.  — ,  167  S.  W. 
256;    Fairfield  v.   Salem,  213  Mass. 


§    155]        LEGAL    LIQUIDATIONS    AND    BEDUCTIONS.  177 

and  immediate  steps  to  prevent  future  conseiiucnees  is  (lciii;iii<l- 
ing  of  him  a  degree  of  care  and  an  infallibility  of  jiulgmuiit 
which  the  most  skilful  physician  docs  not  possess.''  ^*  ''An  in- 
jured person  who,  from  the  circumstances,  might  reasoiiaMy 
believe  that  her  injury  was  of  a  character  that  rest  alone  winiid 
afford  a  speedy  recovery  therefroni,  shouhl  not  be  rci[uir('(l  to  in- 
cur the  heavy  expenses  of  nursing  and  medical  attendance  as  a 
condition  to  lier  right  of  recovery  of  adequate  danuig(!s."  '®  If 
an  injured  person  selects  and  uses  all  reasonably  accessible 
means  to  cure  his  hurt  and,  for  a  time  upon  his  own  judgment 
and  without  medical  advice,  adopts  and  pursues  such  treatment 
as  a  physician  of  ordinary  care,  prudence  and  skill  uses  in  treat- 
ing a  similar  injury,  his  duty  is  fully  discharged,  though  it 
appears  that  a  more  skilful  treatment  might  have  produced  a 
more  favorable  result.^'  The  rule  which  requires  reasonable 
conduct  on  the  part  of  one  whose  legal  rights  have  been  violated 
should  not  be  invoked  by  a  defendant  as  a  basis  for  a  critical 
examination  of  the  conduct  of  the  injured  party,  or  merely  for 
the  purpose  of  showing  that  the  injured  person  might  have  taken 
steps  which  were  wiser  or  more  advantageous  to  the  defendant. 
Reasonably  prudent  action  is  required;  not  that  action  Avhich 
the  defendant,  upon  afterthought,  may  be  able  to  show  would 
have  been  more  advantageous  to  him.^^  A  wrongdoer  may  not 
insist  upon  the  right  to  shut  the  plaintiff  out  from  the  use  of 
other  machines  and  force  him  to  buy  from  him  in  order  that 

296;   Hurxthal  v.  Boom  Co.,  53  W.  ing  the  text.     See  Alabama  S.  &   I. 

Va.  87,  97  Am.  St.  954,  quotinfj  the  Co.  v.  Kratzor  I.  C.  Co.,  2  Ala.  App 

preceding     part     of     this     section.  604. 

American  Realty  Co.  v.  Thompkins,  It  may  be  tiio  duty  of  the  injured 

37   App.   D.   C.   87 ;    Louisville,   etc.  party  to  pay  an  illegal  exaction  to 

R.  Co.  V.  Falvey,  104  Ind.  409.  avoid   a   large   loss   if   that   can   be 

95  Fullerton  v.  Fordyce,  144  Mo.  done  vpithout  waiving  his  rights  and 
519,  533.  the    sum    paid    can     bo    recovered. 

96  Kennedy  v.  Busse,  60  111.  App.  Holly  v.  Neodesha,  88  Kan.  102.  But 
440.  See  Williams  v.  Brooklyn.  33  compare  Northern  Colorado  I.  Co.  v. 
App.  Div.    (N.  Y. )    539.  Pouppirt,  ivfra.     But  such  party  is 

97  Packet  Co.  v.  Hobbs,  105  Tenn.  not  required  to  do  acts  which  would 
29.  44.  work    an    estoppel    as   between    him 

98  The  Thomas  P.  Sheldon,  113  nnd  the  other  party.  Northern 
Fed.  779,  781;  Wabash  R.  Co.  v.  Colorado  I.  Co.  v.  Pouppirt,  22  Colo. 
Campbell,   117   111.   App.   630,   quot-  App.  563. 


478 


SUTilEKLAND    ON    DAMAGES. 


[§  155 


he  may  mitigate  his  loss.^^  It  is  believed  to  be  a  general  rule 
that  where  the  party  in  default  controls  the  market  the  other 
may  stand  on  his  legal  rights  and  is  not  bound  to  accept  from 
such  party  a  substitute  for  that  he  was  entitled  to,  especially  if 
that  substitute  would  increase  the  benefit  to  the  party  who  had 
committed  the  default.  This  would  be  putting  a  premium  on 
the  breach  of  contracts.  The  acts  and  conduct  of  the  plaintiff 
in  a  civil  damage  action  toward  the  property  of  the  defendant 
and  the  person  of  the  plaintiff's  husband,  if  disconnected  with 
the  illegal  sales  of  liquors,  cannot  be  shown  in  mitigation.^ 

In  some  states  and  under  the  federal  employers'  liability  act 
contributory  negligence  to  a  certain  extent  is  not  a  defense  if 
the  defendant  was  also  at  fault.  There  such  negligence 
diminishes  the  damages  which  the  plaintiff  may  recover,^  except 
where  the  defendant  has  been  responsible  for  a  positive,  con- 
tinuous tort.^  The  plaintiff's  negligence  may  be  considered  in 
mitigation  ^vhether  the  defendant's  conduct  has  been  merely 
negligent   or   reckless   and   wanton.*     The   rule   requiring  the 


Where  there  was  a  breach  of  duty 
to  supply  water  for  irrigation,  in 
consequence  of  which  plants  ready 
for  transplanting  were  lost,  the 
measure  of  duty  upon  the  landoAvn- 
er  only  required  that  reasonable 
diligence  be  exercised  in  an  effort 
to  secure  other  plants  in  the  vicin- 
ity ;  it  was  not  necessary  to  use  the 
land  to  which  the  plants  were  to  be 
transplanted  for  other  purposes. 
American  Rio  Grande  L.  &  I.  Co. 
V.  Mercedes  P.  Co.,  (Tex.  Civ.  App.) 
155  S.  W.  286. 

99  Tubular  R.  &  S.  Co.  v.  Exeter 
B.  &  S.  Co.,  159  Fed.  824,  86  C.  C. 
A.  648. 

1  Gough  V.  State,  32  Ind.  App.  22. 

2  Tilghman  v.  Seaboard  Air  Line 
R.  Co.,  167  N.  C.  16.3;  Florida  R. 
Co.  V.  Dorsey,  59  Fla.  260;  Bene- 
dict P.  Co.  V.  Atlantic  C.  L.  R.  Co., 
55  Fla.  514,  20  L.R.A.(N.S.)  92; 
Southern  R.  Co.  v.  Gore,  128  Ga. 
627 :  Rakes  v.  Atlantic  G.  &  P.  Co., 


7  P.  I.  359;  Louisville  &  N.  R.  Co. 
V.  Martin,  113  Tenn.  266;  Neil  v. 
Idaho,  etc.  R.  Co.,  22  Idaho 
74;  Atlanta,  etc.  R.  Co.  v.  Wyly 
65  Ga.  120;  Hardin  v.  Ledbetter, 
103  N.  C.  90;  East  Tennessee,  etc. 
R.  Co.  v.  Fain,  12  Lea,  35;  Louis- 
ville &  N.  R.  Co.  V.  Conner,  2  Baxt. 
382,  12  Am.  Neg.  Cas.  593;  East 
Tennessee,  etc.  R.  Co.  v.  Thompson, 
12  Lea,  200,  12  Am.  Neg.  Cas.  593; 
Railway  Co.  v.  Howard,  90  Tenn. 
144,  12  Am.  Neg.  Cas.  591;  Galves- 
ton, etc.  R.  Co.  V.  Hodnett  (Tex. 
Civ.  App.)    155  S.  W.  678. 

The  rule  applies  under  the  Federal 
Employers'  Liability  Act.  Philadel- 
phia, etc.  R.  Co.  V.  Tucker,  35  App. 
D.  C.  123. 

3  Sattorfield  v.  Rowan,  83  Ga.  187. 

4  Cincinnati,  etc.  R.  Co.  v.  Davis, 
62  C.  C.  A.  505,  127  Fed.  933;  Rail- 
way Co.  V.  Wallace,  90  Tenn.  52, 
62,  and  this  is  true  regardless  of 
the   extent   of   the   plaintiff's   negli- 


§    156]  LEGAL    LIQUIDATIONS    AXD    REDUCTIONS.  470 

wronged  party  to  lessen  the  damage  done  has  boon  held  not  to 
apply  to  a  case  of  wilful  injnry.  ''Since  one  who  lias  com- 
mitted an  assault  and  battery  upon  another  cannot  urge  in 
his  defense  that  the  plaintiff  might,  by  the  use  of  due  care,  have 
avoided  the  battery,  we  think  where  the  injury  is  intentional 
he  should  not  be  permitted  to  say  in  reduction  of  damages  that 
the  i)laintilf  might  have  prevented  them  at  least  in  part  by  care- 
ful conduct  on  his  part.  If  negligence  contributing  to  llic  in  jiii-y 
cannot  be  set  up  to  defeat  the  action  when  the  act  of  the  defend- 
ant was  wilful,  by  a  parity  of  reasoning,  the  defendant  in  such 
a  case  should  not  be  permitted  to  say  that,  but  for  the  negli- 
gence of  the  defendant  in  failing  to  avoid  the  consequences  of 
the  wrong,  he  would  have  suffered  no  damage,  or  only  a  ])art 
of  the  damages  for  which  he  claims  a  recovery."  ^  Under  a 
statute  of  this  nature  applying  only  to  the  plaintiff  or  his  prop- 
erty his  contributory  negligence  will  bar  the  recovery  for  lost 
profits.^ 

§  156.  Measures  of  prevention;  return  of  property;  discharge 
of  plaintiff's  debt.  Acts  of  the  plaintiff  or  the  defendant,  and 
in  some  cases  of  third  persons,  by  which  the  prima  facie  loss  or 
injury  from  the  act  complained  of  has  been  reduced  or  partially 
compensated  may  l>e  shown  in  reduction  of  damages.'  ^Measures 
of  prevention  taken  by  the  plaintiff"  to  prevent  loss  or  to  avert 
some  of  the  consequences  of  the  wrong  complained  of,  and  which 
have  had  an  ameliorating  effect,  may  be  proved ;  and  the  dam- 
ages will  be  mitigated,  according  to  the  particular  facts,  to  the 
actual  loss.     Where  goods  have  been  taken  from  the  owner,  and 

gence.      Tennessee    Cent.    R.    Co.    v.  ing  Dean  v.  Rapleo,  145  X.  ^■.  ;U!i. 

Binkley,    127    Tenn.    77,    and    cases  The  general  subject  of  mitigation, 

cited.  or    preventable    damages,    lias    been 

5  Galveston,   etc.   K.   Co.   v.   Zant-  considered  in  §§  88-90. 

zinger,  92  Tex.  365,  44  L.R.A.  553,  6  Florida   E.   C.   R.   Co.  v.   Smith, 

71  Am.  St.  859.  61  Fla.  218. 

Aggravated  damages  because  the  7  if  a  proceeding  for  the  recovery 
plaintiff  was  ravished  may  not  be  of  a  penalty  for  tlie  violation  of  im 
recovered  in  an  action  for  assault  ordinance  is  civil  in  its  nature  the 
and  battery  unless  resistance  to  the  defendant  may  show  what  he  has 
ravishment  is  shown  to  have  been  done  to  ])ri'vent  the  wrong  corn- 
made.  Cholodnicka  v.  Gloniclzek,  plaimd  of.  Chicago  v.  Knobel.  1^^2 
150  App.  Div.    (N.  Y.)   206.  follow-  111.   \V1. 


480 


SUTHERLAND    ON    DAMAGES. 


[§  156 


sold  by  an  officer  who  cannot  justify  for  want  of  a  plea  or  be- 
cause bis  writ  would  not  avail  for  that  purpose,  such  officer  or 
any  person  liable  for  his  tort  may  show  that  the  plaintitt"  bought 
the  goods  at  the  tortious  sale  for  less  than  their  value.® 

Whenever  the  owner  recovers  his  property  after  any  wrong- 
ful taking  or  detention  the  expense  of  procuring  its  return  is 
the  measure  of  damages,  in  the  absence  of  special  damage,  if  the 
property  itself  has  not  been  injured  or  diminished  in  value. 
In  other  words,  the  wrong-doer  is  prima  facie  liable  for  the 
value  of  the  property  at  the  time  he  tortiously  took  or  converted 
it,  with  interest ;  but  if  it  has  been  returned  and  accepted  by  the 
owner  its  value  then,  or,  if  he  has  incurred  expense  to  recover 
it,  then  its  value  less  such  expense,  will  be  deducted  by  way  of 
mitigation  from  the  amount  which  would  otherwise  be  the 
measure  of  damages.^  Where  one  recovers  property  which  had 
been  unlawfully  taken  he  is  considered  as  having  accepted  it 
in  mitigation  of  damages  upon  the  principle  that  he  has  thereby 
received  partial  compensation  for  the  injury  suifered.^"    In  an 


8  Forsyth  v.  Palmer,  14  Pa.  96,  53 
Am.  Dec.  519;  Murray  v.  Burling, 
10  Johns.  175 ;  Baker  v.  Freeman,  9 
Wend.  36,  24  Am.  Dec.  117;  Ford  v. 
Williams,  24  N.  Y.  359;  Baldwin  v. 
Porter,  12  Conn.  473;  Hurlburt  v. 
Green,  41  Vt.  490;  Mclnroy  v.  Dyer, 
47  Pa.  118;  Tamvaco  v.  Simpson,  H. 
&  R.  374;  Kaley  v.  Shed,  10  Mete. 
(Mass.)  317;  Sprague  v.  Brown,  40 
Wis.  612;  Reynolds  v.  Shuler,  5 
Cow.  323. 

9  Central  R.  Co.  v.  Montmollen, 
145  Ala.  468,  117  Am.  St.  58 ;  Leon- 
ard V.  Maginnis,  34  Minn.  506;  Dai- 
ley  V.  Crowley,  5  Lans.  301;  Green- 
field Bank  v.  Leavitt,  17  Pick.  1, 
28  Am.  Dec.  208;  Pierce  v.  Benja- 
min, 14  Pick.  356;  Lucas  v.  Trum- 
bull, 15  Gray,  306;  Perkins  v.  Free- 
man, 26  III.  477;  Hallett  v.  Novion, 
14  Johns.  273;  Delano  v.  Curtis,  7 
Allen,  470;  Cook  v.  Hartle,  8  C.  & 
P.  568;  Bennett  v.  Lockwood,  20 
Wend.  223,  32  Am.  Dec.  532;   Burn 


V.  Morris,  2  Cromp.  &  M.  579;  Doo- 
little  V.  McCullough,  7  Ohio  St. 
299;  Wheelock  v.  Wheelwright,  5 
Mass.  104,  1  Am.  Neg.  Cas.  659; 
Cook  V.  Loomis,  26  Conn.  483;  Hep- 
burn V.  Sewell,  5  Harr.  &  J.  211,  9 
Am.  Dec.  512;  Sprague  v.  Brown, 
40  Wis.  612;  Ewing  v.  Blount,  20 
Ala.  694;  Hurlburt  v.  Green,  41 
Vt.  490;  Johannesson  v.  Borschen- 
ius,  35  Wis.  131;  Blewett  v.  Miller, 
131  Cal.  149,  quoting  the  text;  First 
Nat.  Bank  v.  Rush,  29  C.  C.  A.  333, 
85  Fed.  539,  citing  the  text. 

lODe  Celles  v.  Casey,  48,  Mont. 
568;  Whittler  v.  Sharp,  43  Utah, 
419,  49  L.R.A.(N.S.)  931;  Lyman 
V.  James,  87  Vt.  486;  Muenster  v. 
Fields,  89  Tex.  102,  affirming  Fields 
V.  Muenster,  quoting  the  text;  Kline 
V.  McCandless,  139  Pa.  223 ;  Fields  v. 
Williams,  91  Ala.  502;  Dodson 
V.  Cooper,  37  Kan.  346,  quoting  the 
text;  Sprague  v.  Brown,  40  Wis. 
612;  Lazarus  v.  Ely,  45  Conn.  504; 


§    156]  LEGAL    LIQUIDATIONS    ANT)    REDUCTIONS.  4S1 

action  of  trespass  for  goods  taken  and  carried  awav  it  apijcared 
tliat  the  plaintiff,  before  suing,  had  demanded  their  return,  and 
the  defendant  had  promised  to  return  them,  but  while  preparing 
to  do  so  they  were  attached  on  a  writ  against  the  [)laintitf ;  the 
measure  of  damages  was  the  same  as  though  the  defendant  Innl 
returned  tliem.''^  If  restoration  is  ol)tained  by  the  olTer  and  jiay- 
meiit  of  a  reasonable  reward  this  amount,  with  interest  from  the 
time  of  payment,  is  to  be  deducted  from  the  value  of  the  jirop- 
erty  returned. ^^  Trouble  and  loss  of  time  may  be  taken  into 
consideration  as  part  of  the  expense  of  obtaining  restoration.^^ 

Where  there  is  a  diminution  in  value  from  any  cause  inter- 
mediate the  taking  or  conversion  and  return,  the  loss  falli^  on 
the  wrong-doer,  and  will  lessen  the  mitigation  to  which  he  is 
entitled  because  of  the  return  of  the  property.^*  A  mere  oifer 
to  return  will  not  lessen  the  damages;  ^^  nor  will  the  tender  of 
part  of  the  value  by  an  officer  who  has  sold  under  a  void 
process.^^  A  court  may  in  a  proper  case,  if  the  action  is  trover 
or  trespass  de  bonis,  order  the  plaintiff  to  accept  the  property  in 
mitigation  of  damages,  which  will  then  be  reduced  to  those 
actually  sustained  by  the  taking,  with  intervening  costs  and 
losses.^'  In  an  action  for  damages  for  withholding  or  not  con- 
veying property,  a  tender  of  it  or  a  part  of  it  or  a  conveyance 
of  the  whole  or  a  portion  of  it  may  be  allowed  at  the  trial  in 

First  Nat.  Bank  v.  Rush,  29   C.  C.  18  L.R.A.(N.S.)    572,  16  Ann.  Caa. 

A.  333,  8.5  Fed.  .5.39,  citing  the  text:  -526;    Dooley    v.    Gladiator    Consol. 

Merrill  v.  How,  24  Me.  12G;  §  11.39.  Gold  Mines  &  Milling  Co.,  134  Iowa, 

11  Kaley  V.  Shed,  10  Mete.  (Mass.)  468,  13  Ann.  C'as.  297;  Arnesoii  v. 
317;  Lowell  v.  Parker,  id.  309,  43  Nerger,  34  S.  D.  201;  Norman  v. 
Am.  Dec.  436.  Rogers,    29    Ark.    30.5;    Stickiiey    v. 

12  Greenfield  Bank  v.  Leavitt,  17  Allen,  10  Gray,  352.  See  Worinan 
Pick.  1,  28  Am.  Dec.  268.  v.    Kramer,    73    Pa.    378;     Dow    v. 

13  Johannesson  v.  Borschenius,  35  ITnmhert,  91  U.  S.  294,  23  L.  ed. 
Wis.  131.  368. 

14  Lucas  V.  Tnimlmll,  15  Gray,  16  Clark  v.  Tlalluck.  16  Wend.  607. 
306;  Pcrham  v.  Coney,  117  Mass.  17  Yale  v.  Saniidcrs.  16  \'t.  24:!. 
102;    Barrolett   v.    Bellgard,   71    Til.  See  §  1140. 

280;    First  Nat.   Bank  v.   Rush,   m-  The    consignee    of    delayed    goods 

pra.  may  not  refuse  to  accept  them  witli- 

15  Georgia,  F.  &  A.  Ry.  Co.  v.  out  lessening  the  lialdlity  of  the 
Bli.sh  Milling  Co.,  15  Ga.  App.  142;  carrier.  Sonthern  1J.  C«i.  v.  Moody. 
Munier  v.   Zachary,   138  Iowa,  219,  151    Ala.   374. 

Suth.   Dam.  Vol.  L— 31. 


482  SUTHERLAND    ON    DAMAGES.  [§    156 

mitigation,  if  under  the  circumstances  such  a  course  is  reason- 
able." But  this  cannot  be  done  in  actions  of  assumpsit  for 
breach  of  contract. ^^  By  a  wrongful  conversion  of  property  a 
cause  of  action  arises  which  cannot  be  discharged  except  by 
the  owner's  act.^°  x\nd  his  acceptance  of  a  return  of  it  is  in 
general  required  to  relieve  the  wrong-doer  of  any  part  of  his 
liability  for  the  value;  but  as  damages  in  trover  are  assessed 
on  equitable  principles,  as  is  the  allowance  of  mitigations  gen- 
erally, if  property  wrongfully  taken  or  its  proceeds  have  been 
applied  to  the  payment  of  the  plaintiff's  debts,  or  otherwise  to 
his  use,  though  without  his  direction  or  consent,  such  application 
may,  under  certain  circumstances,  be  received  in  mitigation. 
An  executor  de  son  tort  may  show  that  he  has  applied  the  pro- 
ceeds of  the  property  with  which  he  intermeddled  in  payment 
of  the  debts  of  the  deceased.^^ 

§  157.  Same  subject.  Where  a  guardian,  having  no  power 
to  commit  waste  by  cutting  and  removing  timber,  unauthorized- 
ly  gave  a  license  to  another  to  commit  such  waste,  and  the  latter, 
with  the  former's  assent,  applied  the  proceeds  of  the  timber 
to  the  payment  of  taxes  upon  or  debts  against  the  infant's  estate, 
such  payments  were  allowed  to  be  shown  in  mitigation.^^  But 
it  has  been  held  that  a  voluntary  purchaser  from  an  executor 
de  son  iort,  when  sued  in  trover  by  the  rightful  representative, 
cannot  show  in  mitigation  of  damages  that  since  his  purchase 
sneh  executor  has  paid  debts  which  the  administrator  was  bound 
to  pay  in  due  course  of  administration.^^     A  defendant  in  an 

iSTowle   V.    Lawrence,    59    N.    H.  v.    Dirkmann,     (Mo.    App.)     124    S. 

501.  W.  29. 

19  Colby  V.  Eeed,  99  U.  S.  560,  22  Probate  Court  v.  Bates,  10  Vt. 
25  L.  ed.  484.  285;  Torry  v.  Black,  58  N.  Y.  185. 

20  Livermore  v.  Northrup,  44  N.  23  Carpenter  v.  Going,  20  Ala. 
Y.  107;  Franke  V.  Eby,  50  Mo.  App.  587.  In  this  case  Dargan,  C.  J., 
579;   Clark  v.  Brott,  71  Mo.  475.  said:     "But  the  question  is,  can  the 

21  Mountford  v.  Gibson,  4  East,  purchaser  from  the  executor  de  son 
441;  Saam  v.  Saam,  4  Watts,  4.32;  tort  be  substituted  to  this  equi- 
Hostler  v.  Scott,  2  Haywood,  179;  table  defense  that  the  executor  de 
Cook  V.  Sanders,  15  Rich.  63,  94  son  tort  might  himself  make?  We 
Am.  Dec.  1.36;  Hanson  v.  Herrick,  think  he  cannot,  at  least  in  a  court 
100  Mass.  323;  Perry  v.  Chandler,  of  law.  We  do  not  intend  to  deny 
2  Cush.  237;  Chesapeake  &  0.  R.  the  common  saying  that  trover  is 
Co.   V.   Lavin,    13G    Ky.    205;    State  an    equitable    action    and    that    the 


157] 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


•183 


action  of  trespass  de  honis  asporlatis  who  is  a  mere  tresiiasser, 
cannot  take  any  benefit  from  tlie  application  to  the  phiintilFs  use 
of  property  seized  by  him  without  the  hitter's  express  or  implied 
authority  or  consent,  although  a  lien  hehl  by  a  third  party 
thereon  is  satisfied.^*  ''One  who  has  wrongfully  taken  property 
cannot  mitigate  the  damages  by  showing  that  he  has  himself 
applied  the  property  to  the  owner's  use  without  his  consent;  but 
when  the  property  has  been  so  ai)i)lied  by  the  act  of  a  third 
person  and  the  operation  of  law,  that  fact  should  be  taken  int(j 
the  account  in  estimating  the  plaintiff's  damages."  ^^  In  trover 
by  the  mortgagee  of  crops  against  a  purchaser  with  notice,  or  in 
a  special  action  for  damages  in  the  nature  of  trover,  the;  uii- 
anthorized  sale  and  conversion  being  admitted,  the  defendant 
cannot  prove  in  mitigation  that  a  part  of  the  jiroceeds  of  the 
sale  received  by  the  mortgagor  was  applied  by  him  to  the  dis- 
charge of  a  lien  for  rent  which  was  superior  to  the  mortgage. ^^ 


plaintiff  can  recover  damages  only 
to  the  extent  of  the  injury  actually 
sustained;  as  if  the  mortgagee  bring 
trover  against  the  mortgagor  lie  can 
recover  only  the  amount  of  the  debt ; 
or  if  the  goods  be  sold  illegally  to 
discharge  a  lien  the  owner  can  re- 
cover of  the  purchaser  only  the 
value  of  the  goods,  deducting  the 
value  of  the  lien.  But  vpe  hold  that 
this  equity  or  right  must  be  person- 
al to  the  defendant  himself;  that 
is,  it  must  have  existed  in  him  at 
the  time  he  became  liable  to  the  ac- 
tion ;  or  if  acquired  afterwards  it 
must  have  been  acquired  by  his  own 
act;  for  at  law  he  cannot  be  subro- 
gated to  the  equities  of  another 
which  liave  sprung  up  after  the  lia- 
bility of  the  defendant  has  become 
perfect." 

24  Bird  V.  Womack,  09  Ala.  390; 
McMichael  v.  Mason,  L3  Pa.  214 
(wrongful  levy  by  sheriff)  ;  Dallam 
V.  Fitler,  6  W.  &  S.  323;  Hundley  v. 
Chadick,  109  Ala.  575,  584,  cit- 
ing the  text,  and  disapproving  a 
statement  in  City  Nat.  Bank  v.  Jef- 


fries, 73  Ala.  123,  to  tlie  effect  that 
if  it  be  shown  that  the  property 
attaclied  has  yieldetl  its  full  value 
this  may  be  considered  in  mitiga- 
tion. 

25  Higgins  V.  Whitney,  24  Wend. 
379. 

26  Keith  v.  Ham,  89  Ala.  590. 
The  court  say :  Had  this  action 
been  against  the  mortgagor,  there 
would  have  been  more  force  in  the 
position  that  the  damages  should  be 
mitigated,  for  it  was  his  duty  to 
discharge  the  landlord's  lien  for 
rent;  or  had  the  case  involved  tin- 
general  ownership  of  the  property, 
and  it  appeared  that  the  fruits  of 
the  conversion  had  been  applied 
by  tlie  consent,  express  or  implied, 
of  the  plaintiff,  or  through  legal 
proceedings,  had  at  the  instance  of 
a  third  person,  to  the  payment  of 
his  debt,  or  in  relieving  his  prop- 
erty from  a  lien,  the  damages  re- 
coverable by  him  in  trover  might 
lie  mitigated  l)y  the  amount  thu.s 
l)aid.  Bird  v.  Womack,  69  Ala.  392; 
Street   v.   Sinclair,   71   id.   110.     Or, 


484: 


SUTllERl.AND    ON    DAMAGES. 


[§  157 


Where  ii  lax  collector  became  a  purchaser  at  a  sale  made 
bj  him  the  sale  was  declared  voidable  in  trover  against  him: 
but  as  the  proceeds  were  applied  to  pay  the  plaintiif' s  tax  the 
amount  so  paid  was  deducted  from  the  damages.^'''  So  a  sale 
by  a  sheriJl"  without  giving  notice  has  been  held  a  conversion,  but 
the  damages  should  be  only  the  diminution  of  price  caused  by 
such  omission.^*  If  goods  are  tortiously  taken  and  a  creditor 
of  the  owner  afterwards  attaches  and  disposes  of  them  according 
to  law,  and  a})plies  the  proceeds  in  satisfaction  of  a  judgment 
against  the  owner,  such  proceeding  may  be  shown,  not  as  a 
justification  of  the  taking  but  in  mitigation  of  damages.  This 
is  because  it  would  be  palpably  unjust  for  the  owner  to  receive 


had  a  recovery  been  had  in  favor 
of  the  landlord  against  the  defend- 
ant, it  may  be  that  evidence  of  that 
fact  miglit  go  in  reduction  of  the 
mortgagee's  damages.  But  here, 
even  conceding  that  the  payment 
was  in  some  sort  to  the  advantage 
of  the  plaintiff,  we  cannot  conceive 
how  that  fact  will  avail  the  defend- 
ant in  this  action,  the  gravamen  of 
which  is  the  wrongful  purchase  and 
possession.  Tlie  wrong  was  fully 
consummated,  the  injury  resulting 
from  it  had  been  sustained,  and  the 
plaintiff's  right  to  sue  had  attaclied 
before  the  alleged  payment  to  the 
landlord.  The  payment  was  not 
made  by  the  defendant,  but  by  the 
mortgagor.  To  hold  that  he  is  en- 
titled to  a  credit  for  tlie  amount 
would  be  to  subrogate  him  to  an 
equity  created,  if  it  exists  at  all,  by 
an  act  with  which  he  had  no  con- 
nection and  to  give  him  the  benefit 
of  a  payment  which  he  has  not 
made. 

If  personal  property  is  sold  under 
a  condition  that  the  title  shall  be 
and  remain  in  the  vendor  until  a 
note  given  for  the  purchase  price  of 
it  is  fully  paid,  a  purchaser  of  a 
part  of  sucli  property  who  is  charge- 
able with  notice  of  the  contract  is 


liable  to  the  original  vendor  for  the 
value  of  the  property  purchased, 
and  cannot  claim  a  mitigation  of 
the  damages  because  the  money  he 
paid  his  vendor  was  by  him  paid 
to  the  owner  and  indorsement  there- 
of made  on  the  note  he  held.  The 
person  in  whom  Avas  the  title  had 
a  right  to  the  whole  security  until 
his  demand  was  fully  paid.  That 
was  not  affected  by  the  diminution 
of  the  debt  by  payments.  Defend- 
ant's vendor  had  no  right  to  dis- 
pose of  the  property  in  order  to 
make  a  payment.  The  wrong  to 
the  plaintiff,  resulting  from  the  sale 
and  conversion,  was  to  diminish  his 
security.  If  the  proceeds  of  the 
property  sold  had  paid  the  whole 
debt,  there  would  be  good  reason 
for  mitigating  the  damages,  al- 
tliough  the  sale  took  place  before 
tlie  debt  was  paid;  but  under  the 
facts  the  mitigation  would  not  bene- 
fit the  plaintiff  because,  though  the 
debt  due  him  was  lessened,  he  had 
lost  an  equivalent  amount  of  prop- 
erty. Morgan  v.  Kidder,  55  Vt. 
.367. 

27  Pierce    v.    Benjamin,    14    Pick. 
356. 

28  Wright  V 
576,   18  Am.  Dec.  76. 


Spencer,    1    Stewart, 


§     157  ]  LECJAl.    I^IQUIDATIONS    AND    KEDUCTIONS^ 


isr. 


the  full  value  of  his  goods  in  tlicir  a]»iilirati(in  to  ihi;  pavuu'iit 
of  his  debts,  aud  afterwards  recover  that  vahie  from  another 
who  has  derived  no  substantial  benetit  from  his  property.  This 
rule  is  not  only  in  conformity  with  justice,  but  has  the  saucti^u 
of  authority.^^     It  is  not  the  fact  of  the  seizure  that  uives  the 


29  Willis  V.  Jarrott  C.  Co.,  152 
N.  C.  100  (as  between  vendor  and 
vendee)  ;  Scanlan  v.  Guiling,  0:5 
Ark.  540;  Curtis  v.  Ward,  20  Conn. 
204. 

In  the  last  case  Ward,  an  attach- 
ing creditor,  and  the  ollicer  wiio 
executed  the  writ,  were  defendants. 
Ward  sued  out  an  attachment  and 
attached  property,  after  which  that 
writ  was  abandoned  and  the  in- 
dorsement of  service  erased.  Sub- 
sequently a  new  attachment  was 
sued  out,  followed  by  judgment  and 
execution,  on  which  the  goods  were 
sold.  The  defendant  in  the  execu- 
tion brought  trover  for  the  original 
taking.  As  the  defendants  could 
not  justify  that  taking  by  any  re- 
turn upon  the  first  attachment  tliey 
suffered  judgment  by  default,  but 
they  were  allowed  to  show  the  sub- 
sequent disposition  of  the  property 
in  mitigation,  on  the  authority  of 
previous  cases  cited.  Baldwin  v. 
Porter,  12  Conn.  473;  Clark  v. 
Whitaker,  3  9  id.  330.  Referring  to 
the  cases  in  New  York  denying  tlie 
benefit  of  such  mitigation  to  the 
wrong-doer  when  the  sale  is  made 
upon  process  sued  out  by  his  agency 
or  for  his  benefit,  Waite,  J.,  said: 
"We  are  unable  to  yield  our  assent 
to  the  correctness  of  that  doctrine 
as  applied  to  a  case  like  the  pres- 
ent, where  there  has  been  a  legal 
appropriation  of  the  property. 
Ward,  the  defendant  had  a  legal 
right  to  attach  the  goods  in  ques- 
tion;  and  as  they  were  subsequent- 
ly legally  appropriated  to  the  pay- 
ment of  the  plaintifl^'s  debt,  he  has 


in  that  way  n-fcivtil  thr  full  vaiiii' 
of  his  property.  The  (iefciidants 
admit  that  they  have  coiiiniitt<'d  a 
trespass  in  taking  tiie  gonds;  and 
that  they  are  liable  to  pay  tlu; 
plaintill  all  the  damage  he  has  sus- 
tained tlierehy,  and  no  more.  Tliese 
are  for  the  original  taking  and 
detention  until  the  second  attach- 
ment. Beyond  this  they  have  done 
him  no  wrong.  lie  has  no  more 
rigiit  to  complain  of  a  second  at- 
tachment tliaii  he  would  if  made  by 
any  otiicr  crcditoi',  or  if  there  luul 
been  no  previous  taking  of  tlie  prop- 
erty. Wiien  the  goods  were  al- 
tachinl  the  second  time  tlie  copy  left 
in  service  with  him  showed  their 
situation.  It  was  tlien  at  his  option 
to  regain  the  possession  eith<>r  hy 
writ  of  replevin  or  by  the  payment 
of  the  debt  upon  whicli  they  were 
attached,  or  sufTer  them  to* lie  a|)- 
plied  in  satisfaction  of  that  (irbt. 
Had  he  obtained  hi.s  goods  in  either 
of  the  former  modes  it  would  hard- 
ly be  claimed  that  he  could  after- 
wards recover  their  value  of  the  de- 
fendant. The  same  result  ouglit  to 
follow  if  lie  suffered  them  to  be  ap- 
plied in  due  form  of  law  to  the  pay- 
ment of  his  debt."  See  Wehle  v. 
Butler,  (il  X.  V.  24.'),  wliich  was 
apparently  a  similar  case,  in  wiiich 
the  New  York  doctrine  was  applied 
and  mitigation  denied.  Sec  Bates 
V.  Courtwright,  :iV>  111.  olS;  Wanna- 
niaker  v.  Bowes.  36  Md.  42;  Squire 
V.  llollenbeck,  9  Pick.  551,  20  Am. 
Dec.  50G. 

The  defendant  in  trespass  for  the 
wrongful  levy  of  an  attachment  may 


486 


SUTHERLAND    ON    DAMAGES. 


[§  157 


defense,  but  tluit  it  lias  been  seized  under  such  circumstances 
that  the  owner  has  had  or  could  have  the  benefit  of  it.^°  But  in 
New  York,  as  the  law  is  settled,  to  protect  the  wrong-doer  or  to 
entitle  him  to  prove  such  sale  and  application  of  proceeds  in 
mitigation  the  seizure  must  be  at  the  instance  of  a  third  person 
and  not  at  the  instance  of  the  wrong-doer  or  upon  process  in  his 
favor.^^  Where  the  wrong-doer  is  not  thus  excluded  by  the 
policy  of  the  law  in  reprobation  of  his  tort  from  the  benefit  of 
such  mitigation  it  is  generally  available  to  him.^^ 

If  animals  are  killed  through  negligence  it  is  the  duty  of 
their  owner,  if  their  carcasses  are  of  any  appreciable  value,  to 
use  such  measure  of  diligence  as  is  reasonable  considering  the 
circumstances,  to  realize  for  them  all  they  are  worth.  If  he 
fails  to  do  so  their  net  value  must  be  estimated  and  deducted 
from  the  damages  claimed.^^ 

Where  two  ships  were  injured  in  a  collision,  the  liability  of 
one  for  the  damage  being  admitted,  and  the  injured  ship  was 
dry  docked  for  repairs,  and  wdiile  in  dock  had  her  bottom 
cleaned  and  painted,  and  her  bilge  keels  fitted,  things  the  doing 
of  which  had  been  contemplated  but  not  decided  upon  before 
the  collision,  and  the  doing  of  which  in  no  way  delayed  or  other- 
wise interfered  with  the  making  of  the  repairs,  the  wrong-doer 
was  not  entitled  to  a  reduction  of  the  dock  charges  because  of 
these  facts.^*       There  is  no  principle  of  law  which  requires  a 


show  in  mitigation  that  the  property 
which  he  wrongfully  took  from  the 
plaintiff  has  been  applied  for  the 
benefit  or  advantage  of  the  owner 
thereof,  and  it  is  immaterial  that 
such  defendant  was  not  the  plaintiff 
in  the  attachment  suit.  Grisham 
V.  Bodman,  111  Ala.  194;  citing 
Squire  v.  Hollenbeck,  supra;  Perry 
V.  Chandler,  2  Cush.  237. 

30  Ball  V.  Liney,  48  N.  Y.  6,  8 
Am.  Rep.  511. 

31  Id.;  Otis  V.  Jones,  31  Wend. 
394;  Lyon  v.  Yates,  52  Barb.  237; 
Peak  V.  Lemon,  1  Lans.  295;  Hig- 
gins    V.    Whitney,    24    Wend.    379; 


Sherry    v.    Schuyler,    2    Hill,    204; 
Wehle  V.  Butler,  61  N.  Y.  245. 

32  Howard  v.  Cooper,  45  N.  H. 
339;  Doolittle  v.  McCullough,  7 
Ohio  St.  299;  Montgomery  v.  Wil- 
son, 48  Vt.  616. 

33  Case  V.  St.  Louis  R.  Co.  75  Mo. 
668;  Dean  v.  Chicago  &  N.  R.  Co., 
43  Wis.  305;  Georgia  Pac.  R.  Co. 
V.  Fullerton,  79  Ala.  298;  Illinois 
Cent.  R.  Co.  v.  Finnegan,  21  111. 
646;  Roberts  v.  Richmond  &  D.  R. 
Co.,  88  N.  C.  560;  Harrison  v.  Mis- 
souri Pac.  R.  Co.,  88  Mo.  625. 

34  The  Acanthus,  112  L.  T.  153, 
[1902]  Prob.  17.  Contra  in  princi- 
ple.    The  Sequoia,  132  Fed.  625. 


158] 


LEGAL    LIQUIDATIONS    AND    RP:DUCTI0NS. 


487 


person  to  contribute  to  an  outlay  inorcly  Iwcauso  lie  had  dcrivcHl 
a  material  benefit  from  it.^^  Xor  is  one  who  has  been  injured 
in  his  right  of  property  to  receive  less  than  compensation  be- 
cause he  did  not  contemplate  the  full  use  of  the  property,  as 
where  water  at  a  dam  was  appropriated.^^  One  wlio  has  become 
liable  because  of  his  breach  of  contract  may  not  lessen  his  lia- 
bility by  showing  that  a  contingent  benefit  may  result  to  the 
plaintiff  on  account  of  the  defendant's  liability  to  a  third  jx-rson 
whom  he  wronged.^' 

§  158.  No  mitigation  when  benefit  not  derived  from  defend- 
ant. Generally  there  can  be  no  abatement  of  damages  on 
the  principle  of  partial  compensation  received  for  the  injury 
where  it  comes  from  a  collateral  source,  wholly  independent  of 
the  defendant,  and  is  as  to  him  res  inter  alios  acta.^^  As  where 
a  man  whose  wife  was  killed  remarries ;  the  pecuniary  value  of 
the  services  rendered  by  the  wife  of  the  second  maiTiage  can- 
not avail  the  party  who  is  responsible  for  the  death  of  the  first 


35  Ruabon  S.  Co.  v.  London  Assur- 
ance, [1900]  App.  Cas.  6. 

36  Green  Bay,  etc.  C.  Co.  v.  Kau- 
kauna  W.  P.  Co.,  112  Wis.  323,  62 
L.R.A.  579 ;  Patterson  v.  Mississippi 
B.  Co.,  98  U.  S.  403,  25  L.  ed.  200; 
Jegon  V.  Vivian,  L.  R.  G  Ch.  App. 
742. 

37  Banewun  v.  Levenson,  171 
Mass.  1. 

38  Engleken  v.  Webber,  47  Iowa, 
558;  Ennis  v.  Shiley,  id.  552;  West- 
ern U.  Tel.  Co.  V.  Nye,  70  Neb.  251, 
63  L.R.A.  803,  quoting  the  text; 
Neiderstein  v.  Cusick,  126  App. 
Div.  (N.  Y.)  409,  citing  the  text; 
Toledo,  etc.  T.  Co.  v.  McFall,  28 
Ohio  C.  C.  362. 

In  an  action  against  a  railroad 
company  and  the  construction  com- 
pany which  built  its  road  to  re- 
cover for  damage  to  adjacent  prop- 
erty by  excavations  in  the  streets 
it  was  competent  to  prove  that  the 
damage    liad    been    repaired    by    the 


city  soon  after  it  was  done.  Ala- 
bama Midland  R.  Co.  v.  Coskry,  92 
Ala.  254. 

Cases  wliere  there  has  been  an  in- 
crease in  the  value  of  the  property 
involved  in  the  action,  aside  from 
any  action  by  the  wrongdoer,  are 
illustrative  of  the  principle.  Kl- 
well  v.  Skiddy,  77  N.  Y.  282;  Can- 
da  V.  Wick,  49  N,  Y.  Super.  497; 
Harrison  v.  Brega,  20  Up.  Can.  Q. 
B.  324. 

An  unauthorized  payment  made 
by  one  joint  tort  feasor  to  the 
beneficiary  of  the  deceased  does  not 
lessen  the  liabilitj'  of  the  otiier 
wrongdoer  against  whom  tlie  actit>n 
is  being  prosecuted.  Louisville  v. 
Hart.  14.1  Ky.  171.  35  L.R.A.  (N.S.) 
207. 

Tlic  jirofits  uiiulc  by  a  vciubjr  on 
tli(>  goods  the  vendee  has  refusi'<l  to 
accept  do  not  affect  the  liability  of 
the  latter.  Sliarpe  v.  Wiiil.',  25 
Ont.  L.  R.  298. 


488 


SUTHERLAND    ON    DAMAGES. 


[§  158 


wife.^^  A  man  who  was  working  for  a  salary  was  injured  by 
the  negligence  of  the  carrier;  the  fact  that  the  employer  did 
not  stop  the  salary  of  the  injured  party  during  the  time  he  was 
disabled  was  held  not  available  to  the  defendant  in  mitigation ;  *° 
nor  does  the  gratuitous  care  and  nursing  of  an  injured  plaintiff 
relieve  the  party  who  caused  the  injury  from  liability  for  their 
worth.'*^  Nor  will  proof  of  money  paid  to  the  injured  party  by 
an  insurer  or  other  third  person  by  reason  of  the  loss  or  injury 
be  admissible  to  reduce  damages  in  favor  of  the  party  by  whose 
fault  such  injury  was  done.*^  The  payment  of  such  moneys  not 
being  procured  by  the  defendant,  and  they  not  having  been 
either  paid  or  received  to  satisfy  in  whole  or  in  part  his  lia- 
bility, he  can  derive  no  advantage  therefrom  in  mitigation  of 


39  Davis  V.  Guarnieri,  45  Ohio  St. 
470,  4  Am.  St.  548. 

40  Pittsburgh,  C,  C.  &  St.  L.  Ry. 
Co.  V.  Bir,  —  Ind.  — ,  105  N.  E 
921;  Nashville,  etc.  R.  Co.  v.  Mil- 
ler, 120  Ga.  453,  67  L.R.A.  87,  cit- 
ing the  text  (payment  of  salary  as 
matter  of  grace)  ;  Houston  &  B.  T. 
R.  Co.  V.  Johansen,  (Tex.  Civ. 
App.)  14,3  S.  W.  1186;  Missouri 
Pac.  R.  Co.  v.  Jarrard,  65  Tex.  560; 
Ohio,  etc.  R.  Co.  v.  Dickerson,  59 
Ind.  317,  9  Am.  Neg.  CaS.  279.  But 
see  ch.  36. 

Where  the  plaintiff  made  the  loss 
of  wages  an  item  of  his  claim  and 
returned  sick  benefits  received  in 
order  that  he  might  claim  full 
wages,  which  he  recovered,  he  could 
not  recover  the  benefits.  Pitts- 
burgh, etc.  R.  Co.  V.  Fagin,  3  Ohio 
N.  P.  (N.  S.)  30,  (Cincinnati  supe- 
rior court,  general  term ) ,  citing 
Drinkwater  v.  Dinsmore,  80  N.  Y. 
390,  36  Am.  Rep.  624. 

41  Pennsylvania  Co.  v.  Marion, 
104  Ind.  239,  3  Am.  Neg.  Cas.  175. 
In  some  states  neither  of  the  two 
preceding  riiles  is  recognized.  See 
ch.  36. 

42  Dempsoy  v.  Baltimore  &  0.  R. 
Co..     219     Fed.     619;      Watson     v. 


Adams,  187  Ala.  490;  Blalack  v. 
Blacksher,  11  Ala.  App.  545;  Cin- 
cinnati, H.  &  D.  Ry.  Co.  V.  McCul- 
lom,  —  Ind.  — ,  109  N.  E.  206; 
Gray  v.  Boston  Elevated  Ry.  Co., 
215  Mass.  143;  Long  v.  Kansas 
City,  etc.  R.  Co.,  170  Ala.  635; 
Pace  v.  Louisville  &  N.  R.  Co.,  166 
Ala.  519;  Rome  v.  Rhodes,  134 
Ga.  650,  citing  the  text;  Devaney 
V.  Otis  E.  Co.,  251  111.  28;  Illinois 
Cent.  R.  Co.  v.  Prickett,  210  111. 
140,  citing  the  text:  Consolidated 
C.  Co.  V.  Shepherd,  112  111.  App. 
458;  Citizens'  G.  &  O.  M.  Co.  v. 
Whipple,  32  Ind.  App.  203;  Blanch-' 
ard  V.  Olds  G.  E.  Works,  142  Mo. 
App.  319 ;  Cornish  v.  North  Jersey 
St.  R.  Co.,  73  N.  J.  L.  273;  Nor- 
folk &  W.  R.  Co.  V.  Perrow,  101  Va. 
345;  Brewster  v.  Silverstein,  133 
N.  Y.  Misc.  473 ;  Cunningham  v. 
Evansville,  etc.  R.  Co.,  102  Ind. 
478,  .52  Am.  Rep.  683;  Hammond  v. 
Schiff",  100  N.  C.  161;  Baltimore  & 
O.  R.  Co.  V.  Wightman,  29  Gratt. 
431,  10  Am.  Neg.  Cas.  367,  26  Am. 
Rep.  384;  Pittsburg,  etc.  R.  Co.  v. 
Thompson,  56  111.  138;  Texas  &  P. 
R.  Co.  V.  Levi,  59  Tex.  674;  Hay- 
ward  V.  Cain,  105  Mass.  213;  Clark 
V.  Wilson,  103  id.  219,  4  Am.  Rep. 


158] 


LEGAL    LIQUIDATIONS    AND    ICEDUCTIONS. 


489 


damages  for  wliich  he  is  liable.  As  has  been  said  by  aiiothci-, 
to  permit  a  rediictiou  of  damages  on  such  a  ground  wouhl  be 
to  allow  the  wrong-doer  to  pay  nothing  and  take  all  the  bene- 
fit of  a  policy  of  insurance  without  paying  the  premium.*^  The 
same  princi[)lc  has  been  applied  to  life  insurance  in  recent 
eases.**  In  the  English  case  cited  in  Ihe  note  the  writer  of  the 
opinion  of  the  house  of  lords  said  that  money  provisions  made 
by  a  husband  for  the  maintenance  of  his  widow,  in  whatever 
form,  are  matters  proper  to  be  considered  by  the  jury  in  esti- 


532;  Propellor  Monticello  v.  Mol- 
lison,  17  How.  152,  15  L.  ed.  68; 
The  Yeager,  20  Fed.  653;  Owens  v. 
Baltimore  &  O.  R.  Co.,  35  id.  715; 
Weber  v.  Morris,  etc.  R.  Co.,  36  N. 
J.  L.  213;  Carpenter  v.  Eastern  T. 
Co.,  71  N.  Y.  574;  Briggs  v.  New 
York,  etc.  R.  Co.,  72  N.  Y.  26;  Per- 
rott  V.  Shearer,  17  Mich.  48;  Yates 
V.  Whyte,  4  Ring.  N.  C.  272 ;  Kings- 
bury V.  Westfall,  61  N.  Y.  356;  Al- 
thorf  V.  Wolfe,  22  N.  Y.  355,  16 
Am.  Neg.  Cas.  749;  Port  Glasgow  & 
N.  S.  Co.  V.  Caledonia  R.  Co.,  19 
Rettie.  608 ;  Lake  Erie  &  W.  R.  Co. 
V.  Griffin,  8  Ind.  App.  47,  52  Am. 
St.  465 ;  Allen  v.  Barrett,  100  Iowa, 
16;  Mathews  v.  St.  Louis,  etc.  R. 
Co.,  121  Mo.  298,  336,  25  L.R.A. 
161,  quoting  the  text;  Rolfe  v. 
Boston  &  M.  R.  Co.,  69  N.  H.  476; 
Lake  Eric  &  W.  R.  Co.  v.  Falk,  62 
Ohio  St.  297,  7  Am.  Neg.  Rep.  341; 
Lindsay  v.  Bridgewater  G.  Co.,  3 
Pa.  Dist.  Rep.  716,  citing  the  text; 
Anderson  v.  Miller,  96  Tenn.  35,  54 
Am.  St.  812,  31  L.R.A.  604;  Brown 
V.  McRae,  17  Ont.  712;  Chicago,  etc. 
R.  Co.  V.  Pullman  Southern  Car 
Co.,  139  U.  S.  79,  35  L.  ed.  97,  11 
Sup.  Ct.  Rep.  490;  Chesapeake  I. 
Works  V.  Hochschild,  119  Md.  303; 
Bachelder  v.  Morgan,  179  Ala.  339; 
Fitzgerald  v.  Union  S.  Co.,  91  Neb. 
493 ;  Texas  Cent.  R.  Co.  v.  Cameron 
(Tex.  Civ.  App.),  149  S.  W.  709; 
Nussbaum   v.   Trinity   &   B.   Valley 


R.  Co.  (Tex.  Civ.  App.),  H!l  S. 
W.  1083;  Heath  v.  Seattle  T.  Co., 
73  Wash.  177  (policemen's  pension 
fund). 

A  property  owner  wlio  seeks  re- 
course against  a  corporation  for  its 
negligence  in  not  furnisliing  fire  pro- 
tection and  wlio  has  insurance  on 
the  property  in  question  may  re- 
cover from  the  former  only  to  tlic 
extent  his  loss  was  not  made  good 
bj'  the  insurer.  Georgetown  W.,  etc. 
Co.  V.  Neale,  137  Ky.  197. 

43Mayne  on  Dam.  (8tli  ed.)  p. 
134;  Dillon  v.  Hunt,  105  Mo.  1.54, 
163,  24  Am.  St.  374  quoting  the 
whole  paragraph  of  the  text  as  it 
stood  in  the  first  edition;  Sbiclds 
V.  Cincinnati  T.  Co.,  13  Ohio  .\.  P. 
(N.  S.)    133. 

44  Brabham  v.  Baltimore  &  O.  R. 
Co.,  L.R.A.19]5E,  1201,  136  C.  C. 
A.  117,  220  Fed.  35;  Coulter  v.  Pine 
Township,  164  Pa.  543;  Harding  v. 
Townshend,  43  Vt.  536,  5  Am.  Rep. 
308;  Althorf  v.  Wolfe,  22  N.  Y. 
355;  Terry  v.  Jewett,  17  Hun,  395; 
Sherlock  v.  Ailing,  44  Ind.  184; 
Western  &  A.  R.  Co.  v.  Meigs,  74 
Ga.  857,  11  Am.  Neg.  Cas.  331; 
Grand  Trunk  R.  v.  Beckett.  16  Can. 
Sup.  Ct.  713,  13  Ont.  App.  174; 
Same  v.  Jennings,  13  App.  Cas. 
(1888),  800;  Chine  v.  Ristine,  94 
Fed.  745,  6  Am.  Neg.  Rep.  4*6,  36 
C.  C.  A.  450.  citing  the  text.  See 
§  1265. 


490  SUTIIEKLAND    ON    DAMAGES.  [§    158 

mating  her  loss  by  the  death  of  her  husband,  but  the  extent, 
if  any,  to  which  these  ought  to  be  imputed  in  reduction  of 
damages  must  depend  upon  the  nature  of  the  provision  and 
the  position  and  means  of  the  deceased.  When  the  deceased 
did  not  earn  his  own  living,  but  had  an  annual  income  from 
property,  one-half  of  which  has  been  settled  upon  his  widow, 
a  jury  might  reasonably  come  to  the  conclusion  that,  to  the 
extent  of  that  half,  the  wddow  was  not  a  loser  by  his  death, 
and  might  confine  their  estimate  of  her  loss  to  the  interest  which 
she  might  probably  have  had  in  the  other  half.  Very  different 
considerations  occur  when  the  widow's  provision  takes  the  shape 
of  a  policy  on  his  own  life  effected  by  a  man  in  the  position  of 
the  deceased,  whose  earnings  were  $75  a  month,  and  who  left 
no  estate.  "The  pecuniary  benefit  which  accrued  to  the  respond- 
ent from  his  premature  death  consisted  in  the  accelerated  re- 
ceipt of  a  sum  of  money,  the  consideration  for  which  had  already 
been  paid  by  him  out  of  his  earnings.  In  such  a  case  the  extent 
of  the  benefit  may  fairly  be  taken  to  be  represented  by  the  use 
or  interest  of  the  money  during  the  period  of  acceleration ;  and 
it  was  upon  that  footing  that  Lord  Campbell  *^  suggested  to  the 
jury  that,  in  estimating  the  widow's  loss,  the  benefit  which  she 
derived  from  acceleration  might  be  compensated  by  deducting 
from  their  estimate  of  the  future  earnings  of  the  deceased  the 
amount  of  premiums  which,  if  he  had  lived,  he  would  have  had 
to  pay  out  of  his  earnings  for  the  maintenance  of  the  policy." 
On  the  same  principle  it  would  be  no  defense  in  an  action  by  an 
annuitant  or  any  other  creditor  that  the  value  of  the  annuity 
had  been  recovered  against  the  plaintiff's  attorney  in  an  action 
for  negligence  in  its  negotiation,  or  that  the  sheriff  had  been 
forced  to  pay  the  debt  in  an  action  for  an  escape.*^  And  where 
a  number  of  plaintiffs  sued  for  damages  resulting  from  delay- 
ing their  ship  it  was  no  ground  for  reducing  the  amount  that 

45  In    Hicks   v.    Newport,    etc.    R.  under  which   the   English   case  was 

Co.,   4   B.   &   S.   403n.      For   a   con-  ruled.     Althorf  v.  Wolfe,  22  N.  Y. 

sideration  of  the  authority  of  this  ogg 
case  see  Harding  v.  Townshend,  43 

Vt.   636,   541,   5   Am.   Rep.   308.     A  ^^  ^^^^^   «"   ^^"^-    ^^^^   '^'^ '   ?" 

contrary  conclusion  has  been  arrived  l-'54;   Hunter  v.  Kmg,  4  B.  &  Aid. 

at  under  a  statute  similar  to  that  209. 


§    158]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  IIH 

some  of  these  plaintiffs  had  been  benefited  by  getting;  an  in- 
crease of  passengers  in  another  ship;  the  result  woiihl  liave 
been  the  same  if  there  had  been  only  one  jilaintill'  who  owned 
both  ships.*'''  So  general  benefits  resulting  to  the  plaintiff  from 
the  erection  and  proximity  to  his  property  of  the  defendant's 
mill  are  no  ground  for  a  reduction  of  the  damages  the  plaintiff 
suffers  by  the  overflowing  of  his  land  from  the  defendant's 
dam,**  and  so  the  damages  caused  by  the  breach  of  a  contract 
as  to  the  use  of  property  employed  in  making  an  improvement 
are  not  lessened  because  of  its  enhancement,  in  connection  with 
other  local  property,  by  the  improvement.*^  In  an  action  by 
the  master  for  seduction  of  his  servant  evidence  that  the  defend- 
ant offered  to  marry  the  girl  is  not  admissible  in  mitigation.*" 
In  an  action  against  one  of  several  co-trespassers  evidence  of 
payments  by  any  one  of  them,  though  not  received  in  full  satis- 
faction, is  admissible;  they  are  payments  made  on  account  of 
the  injury  by  those  primarily  liable;  full  satisfaction  from 
either  would  discharge  all  and  partial  compensation  should  have 
this  effect  pro  tanto}^  An  offer  by  a  wrong-doer  to  purchase 
property  which  has  been  injured  at  a  price  put  upon  it  by  a 
third  person  cannot  be  proven.^^  In  a  suit  to  recover  for  the 
breach  of  a  contract  to  furnish  employment  the  defendant  may 
show  that  wages  have  been  obtained  from  other  parties.*^  The 
release  of  the  plaintiff  from  liability  for  a  demand  against  him 

«Mayne   on   Dam.    (Sth   ed.),   p.  First  Xat.  Bank  v.   Rush,  29  C.  V. 

134;  Jebsen  v.  East  &  W.  India  D.  A.  333,  85  Fed.  539,  citin^j  the  text. 

Co.,  L.  E.  10  C.  P.  300.  See  White  v.  Murtland,  71  111.  250, 

48  Arminius    C.    Co.    v.    Landrum,  22  Am.  Rep.  100. 

113  Va.  7,  38  L.Il.A.(N.S.)   272,  cit-  51  Chamberlin   v.   Murpliy,  41    Vt. 

ing  the  text;  Mayrant  v.  Columbia,  110. 

82  S.  C.  273   (property  damaged  by  52  ^fayor   v.    Harris,   75    da.   701. 

general  causes)  ;  Covington  v.  Berry,  53  Owen  v.  Union  ]\r.  Co.,  48  ^licli. 

120    Ky.    582;    Ackerman    v.    True,  348. 

175  N.  Y.  353.    See  Jones  v.  Royster  An  agent  entitled  to  a  commission 

G.  Co.,  6  Ga.  App.  "506;   Francis  v.  for  the  sale  of  an  article  specially 

Schoelkopf,  53  N.  Y.  152;  Marcy  v.  manufactured  for  a  special  customer 

Fries,    18    Kan.     353;     Harrison    v.  and  use,  mitigates  the  recovery  for 

Brega,  20  Up.  Can.  Q.  B.  324.  lost   commission   thereon   by   selling 

49  Cherry  v.  Christian  County,  146  it   to   another   after   refusal   of   the 
Kv.  330.  customer    to   accept    it.      Cantonll. 

SOIngersoIl  v.  Jones,  5  Barb.  001;       P.  Co.  v.  Llera,  205  Fed.  20i). 


492 


SUTHERLAND    ON    DAMAGES. 


[§  159 


bj  bankruptcy  proceedings  does  not  affect  the  liability  of  a 
tort  feasor. ^^ 

§  159.  Fuller  proof  of  the  res  gestae  in  trespass,  negligence, 
etc.  Mitigation  of  damages  frequently  results  from  fuller 
proof  of  the  res  gestw,  or  the  disclosure  of  some  peculiar  or 
exceptional  feature  pertaining  to  the  particular  case,  making 
it  apparent  that  the  plaintiff's  injury  is  less  than  it  would  other- 


It  has  been  laid  down  in  a  case 
ruled  by  the  House  of  Lords  that 
when,  in  the  course  of  his  business, 
a  party  has  taken  action  arising 
out  of  the  transaction,  which  action 
has  diminished  his  loss,  the  effect 
in  actual  diminution  of  the  loss  he 
has  sustained  may  be  taken  into 
account  in  measuring  his  recovery 
against  the  other  party  to  the  con- 
tract which  was  the  basis  of  his 
action.  The  facts,  in  brief,  were 
that  turbines  supplied  were  not  in 
accordance  with  the  contract;  after 
using  them  for  a  time  the  purchaser 
replaced  them  by  others,  which  was 
a  reasonable  and  prudent  course  to 
take  to  mitigate  the  damages;  the 
substituted  turbines,  even  if  the 
others  had  met  the  prescribed  con- 
ditions, would  have  been  to  the 
pecuniary  advantage  of  the  pur- 
chaser if  he  had  obtained  them  at 
his  own  cost.  British  Westing- 
house  E.  &  Mfg.  Co.  V.  Undergi-ound 
E.  R.  Co.,  [1912]  App.  Cas.  673,  re- 
versing [1912]  3  K.  B.  128,  which 
affirmed  [1911]  1  K.  B.  575.  The 
court  referred  to  Stamforth  v. 
Lyall,  7  Bing.  169,  as  illustrative 
of  the  rule.  There  the  defendants 
had  chartered  a  ship  to  New  Zea- 
land, where  they  were  to  load  her, 
or  by  an  agent  there  to  give  the 
plaintiff,  the  owner,  notice  that  they 
abandoned  the  adventure,  in  which 
case  they  were  to  pay  500i.  The 
ship  went  there,  but  found  neither 
agent  nor  cargo,    and    the    captain 


made  a  circuitous  voyage  home  by 
way  of  Batavia.  This  voyage,  after 
making  every  allowance  for  in- 
creased expense  and  loss  of  time, 
was  more  profitable  than  the  origin- 
al venture  would  have  been.  It 
was  decided  that  the  action  was  for 
breach  of  contract  to  load  the  ves- 
sel and  that  the  plaintiff  was  en- 
titled to  recover  all  tlie  damages  in- 
curred, but  was  bound  to  bring  into 
account,  in  ascertaining  those  dam- 
ages, the  advantages  resulting  to 
him  from  the  course  pursued.  It 
was  said  that  the  subsequent  trans- 
action to  be  considered  must  be  one 
arising  out  of  the  consequences  of 
the  breach  and  in  the  ordinary 
course  of  business.  This  distinction 
eliminates  moneys  received  from 
insurers;  in  such  cases  it  is  not  the 
accident,  but  a  contract  wholly  in- 
dependent of  the  relation  between 
the  parties  which  gave  the  insured 
his  advantage;  and  so  in  an  action 
for  delay  in  discharging  a  ship 
whereby  the  plaintiff  lost  passengers 
he  had  contracted  to  carry  and  they 
took  passage  in  another  vessel  of 
his ;  the  recoverj'  was  not  affected 
because  the  mitigation  did  not  arise 
out  of  the  transactions  which  were 
tlie  subject-matter  of  the  contract. 
Jackson  v.  East  &  West  India  D. 
Co.,  L.  R.  10  C.  P.  300. 

54  Sibley  V.  Nason,  196  Mass.  125, 
12  L.R.-^.iN.S.)  1173,  124  Am.  St. 
520. 


§    159]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  40.'> 

wise  appear  to  be,  or  that  the  defendant  is  less  culpable.  A 
defendant  in  mitigation  of  damages  for  assault  and  battery 
may  rely  on  the  res  gestw  although  if  pleaded  it  woidd  amount 
to  a  justification  and  recpiirc  a  special  plea."  Tn  an  action  for 
breach  of  a  marriage  promise  it  may  be  shown  that  the  defend- 
ant's family  disapproved  of  the  match  on  the  ground  tiiat  this 
would  diminish  the  happiness  of  the  iinion,^*'  and  that  the  de- 
fendant was  afflicted  wdth  an  incurable  disease  at  the  time  of 
the  breach;  ^''  but  the  jury  cannot  consider  the  possible  conse- 
quences of  marrying  the  defendant  arising  from  a  want  of  that 
love  and  affection  which  a  husl)aud  should  have  for  his  wife'** 

In  trespass,  under  a  plea  of  not  guilty,  the  defendant  has 
been  permitted  to  show  title  in  himself  to  confine  the  plaintitV's 
recovery  to  the  quantity  of  his  interest,^'  and  in  an  action  to 
recover  for  damages  done  hy  cattle  it  may  Iw  shown  that  the 
animals  got  upon  the  plaintiff's  land  by  reason  of  the  defective- 
ness of  his  fence. ^°  An  officer  against  w^hom  an  action  is  brought 
for  entering  the  plaintiff's  house  and  assaulting  him  may  show 
in  mitigation,  but  not  to  prove  the  entry  lawful,  that  he  entered 
for  the  purpose  of  making,  and  did  in  fact  make,  service  under 
an  attachment,  although  the  attachment  was  unlawful  by  reas(jn 
of  the  writ  not  having  been  returned  into  court.^^  Where,  in 
consequence  of  the  defendant's  embankment,  the  flood  waters 
of  a  river  w^ere  pent  up  and  flowed  over  the  plaintiff's  laiul,  and 
it  appeared  that  had  the  embankment  not  been  constructed  the 
waters  would  have  flowed  a  different  way  but  would  have  reached 
his  land  and  done  damage  to  a  lesser  extent,  the  measure  of 
damages  was  the  diff'erence  between  the  two  amounts;  ^^  and  in 
an  action  for  a  nuisance  in  erecting  mills  and  nuiintaining  a 

55  Byers  v.  Horner,  47  Md.  23;  dcnce  of  his  had  liahits,  otlicr  tlian 
Russell  V.  Barrow,  7  Port.  TOO.  such  as  are  pleaded  in  Justifieatidn, 
But  see  Watson  v.  Christie,  2  Bos.  &  may  he  proven  in  mitigation.  Kcy- 
P.  224.  nolds  v.  Pliillii>s,   1:5  111.  Ap|).  5r)7 ; 

56  Irving  V.  Greenwood,  1  C.  &  P.  Dunlap  v.   Snyder,   17   Barh.  .'501. 
350.  60  Young  v.   TToover,  4  Cranch  C. 

57Sprague  v.  Craig,  51  111.  5S0.  C.   187. 

58  Piper  V.  Kingshury,  48  Vt.  480.  Gl  Paine  v.  Farr,  118  Mass.  74 

59  Ballard  v.  Leavell,  5  Call,  S.'Jl.  C2  Workman  v.  Creat  Xorth.Tii  l{. 
In  trespass  for  killing  a  dog  evi-  Co.,  .T2  T..  .1.    (Q.  B.)   279. 


494  SUTHERLAND    ON    DAMAGES.  [§    159 

.steam-engine  and  furnaces  in  the  vicinity  of  the  plaintiff's 
dwelling  the  defendant  was  entitled  to  show  the  general  charac- 
ter of  the  neighl)orhood,  the  various  kinds  of  business  carried  on 
there,  and  the  class  of  tenants  by  whom  the  dwelling-houses  were 
in  general  occupied,  and  also  the  probable  disadvantage  and  loss 
to  the  plaintiff  from  an  inability  to  rent  his  houses,  if,  in  con- 
sequence of  the  destruction  or  removal  of  the  defendant's  mills, 
there  were  no  longer  workmen  to  whom  they  could  be  leased.^^ 
The  concurrence  of  other  causes  with  the  defendant's  acts  in 
creating  a  nuisance  may  also  be  shown  in  mitigation.^^ 

On  an  assessment  of  damages  after  a  default  in  an  action  for 
negligence  the  defendant,  for  mitigation  and  to  reduce  them 
to  a  nominal  sum,  may  show  that  there  was  no  negligence;  for 
this  purpose  it  is  immaterial  whether  the  charge  is  of  injury 
to  person  or  property  or  that  the  damages  are  entire  and  indi- 
visible.^^ A  total  or  partial  want  or  failure  of  consideration, 
on  the  same  principle,  may  be  shown  in  an  action  upon  con- 
tract, ^^  or  any  defense  arising  out  of  the  plaintiff's  cause  of 
action  itself,  as  where  the  action  is  for  the  price  of  labor  or  of 
a  commodity  and  defects  are  proved.^'''  And  in  many  English 
cases  this  defense  is  recognized  where,  according  to  the  general 
course  of  American  decisions,  the  broader  defense  of  recoupment 
would  be  allowed. ^^ 

§  160.  Official  neglect.  In  actions  for  neglect  of  duty  or 
misconduct  of  ministerial  officers  affecting  parties  entitled  to 
call  on  them  for  service,  or  for  whom  such  officers  are  required 

63  Call  V.  Allen,  1  Allen,  137.  Camp.  451 ;  Baillie  v.  Kell,  4  Bing. 
Soc  Francis  v.  Schoellkopf,  53  N.  N.  C.  038;  Cutler  v.  Close,  5  C.  & 
Y.  152.  P.    337;  .Sinclair    v.    Bowles,    9    B. 

64  Sherman  v.  Fall  River  I.  g^  q  92 ;  Thornton  v.  Place,  1  M.  & 
Works,  5  Allen,  213.  j^^^^   218;  Kelly  v.  Bradford,  33  Vt. 

65Batchelder  v.  Bartholome\Y,  44       35.    j^j^Kinney   v.   Springer,   3   Ind. 

Conn.  494.  ^,9 .  J^]]^.J^  ^   McKibbin,  5  Mich.  449; 

66  Darnell   v.    Williams,   2    Stark. 


106;    Simpson  v.   Clarke,   2   Cr.,  M 
&  R.  342. 


Wood  V.  Schettler,  23  Wis.  501. 
68  Street  v.  Blay,  2  B.  &  Ad.  456; 


67Crookshank      v.      Mallory,      2  Parson  v.  Sexton,  4  C.  B.  899;  Poul- 

Greene,    257;    Basten    v.    Butter,    7  ton   v.   Lattimore,   9   B.   &   C.   259; 

East,  479;   Farnsworth  v.  Garrard,  Mondel   v.   Steel,    8   M.   &   W.   858; 

1   Camp.   38;    Denew  v.  Bavercll,   3  Dawson  v.  Collis,  10  C.  B.  523. 


§    IGO]  L,EGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


41)5 


by  law  to  perforin  duties,  as  well  as  in  like  actions  hy  employers 
against  agents  and  attorneys,  the  general  rule  is  that  the  injured 
party  is  entitled  to  compensation  commensurate  with  his  actual 
loss.^^  Where  such  neglect  or  misconduct  results  in  a  failure 
to  collect  a  debt  or  impairs  an  existing  security  and  the  pr'una 
facie  loss  is  the  amount  of  the  debt,  ordinarily  any  evidence  is 
properly  defensive  or  receivable  in  mitigation  which  negatives 
that  loss  either  wholly  or  in  part.'"  A  sheriff  in  an  action  for 
escape  or  any  neglect  in  respect  to  an  execution  may  show  that 
the  execution  debtor  was  wholly  or  partial!)'  ins()]\'enl,  tlml  if 
due  diligence  had  been  used  the  whole  judgment  or  some  part 
would  have  remained  unsatisfied.'''^ 

There  is  an  apparent  exception  to  the  general  proj)osiiiou 
that  the  party  injured  shall  only  recover  his  actual  loss  in  the 
case  of  ministerial  officers  through  whose  diligent  action 
the  party  interested  must  realize  a  debt  or  come  into  possession 
of  a  right.  Where  a  sheriff  suffers  an  escape  on  final  process  or 
fails  to  collect  and  return  an  execution,  or  to  perform  a  per- 
emptory duty  to  levy  a  tax  or  the  like,  the  fact  that  the  debt 


69  Hujje  V.  Somincr,  88  Kan.  561 , 
43  L.R.A.(N.S.)  565;  Amy  v.  Su- 
pervisors, 11  Wall.  136,  20  L.  ed. 
101;  Swan  v.  Bridgeport,  70  Conn. 
143;  Harris  v.  Murfree,  54  Ala. 
161;  Mechem  on  Public  Officers, 
§  766. 

70  Van  Wart  v.  Woolley,  3  B.  & 
C.  439;  Allen  v.  Suydam,  20  Wend. 
321,  32  Am.  Dec.  555;  Russell  v. 
Turner,  7  Johns.  189,  5  Am.  Dec. 
254;  Russell  v.  Palmer,  2  Wils,  325; 
Stowe  V.  Bank  of  Cape  Fear,  3  Dev. 
408;  Swan  v.  Bridgeport,  supra; 
Townsend  v.  Libbey,  70  Me.  162; 
Wilson  V.  Strobach,  59  Ala.  488; 
Mechem  on  Public  Officers,  §  766. 
In  §  759  Mechem  it  is  said  that  if 
the  escape  is  voluntary  the  officer 
is  liable  for  the  whole  amount  of 
the  debt  whether  the  debtor  be 
solvent  or  insolvent  (State  v. 
Hamilton,  33  Ind.  502),  while  if 
the    escape    is   the   result   of   negli- 


gence, though  the  whole  judgment 
is  prima  facie  the  measure  of  the 
damages,  the  officer  may  show  in 
mitigation  that  the  debtor  had  no 
property  with  which  he  could  have 
paid  or  secured  the  debt  in  whole 
or  in  part.  State  v.  Mullen,  50  Ind. 
598. 

71  Kellogg  v.  IManro,  f)  .Folins. 
300;  Patterson  v.  Wcstcrvelt,  17 
Wend.  543;  Ilootman  v.  Siiriner,  J 5 
Ohio  St.  43;  Ledyard  v.  Jones,  7 
N.  Y.  550;  Brooks  v.  lloyt,  6  J'ick. 
468;  Shackford  v.  Coodwin,  13 
Mass.  187;  Lush  v.  Falls,  (i3  N.  C. 
188;  West  v.  Rice,  9  Mete.  (Ma.ss.) 
564;  State  v.  Baden,  11  Md.  317; 
State  v.  Mullen,  50  Ind.  598;  Coe  v. 
Peacock,  14  Ohio  St.  187 ;  Cooper  v. 
Wolf,  15  id.  523;  Bank  v.  Curtiss, 
1  Hill,  275;  Pardee  v.  Robertson, 
0  id.  550;  Dunpby  v.  Wliii)ple,  25 
]\Iich.   10. 


49  G 


SUTliEKLAND    ON    DAMAGES. 


L§  ioo 


is  still  safe  and  collectible  hy  a  repetition,  of  the  resort  to  the 
defendant  officially  is  no  defense ;  "^^  otherwise,  as  AVatson,  J., 
said :  ^^  ''If  the  officer  is  sned  for  a  neglect  of  duty  he  can 
say  the  defendant  had  no  property  out  of  which  he  could  collect 
the  money,  and  that,  it  is  conceded,  is  a  good  defense;  or  he 
can  say  he  has  property  out  of  which  you  can  still  collect  it, 
and  therefore  nothing  but  nominal  damages  can  be  recovered. 
The  second  execution  issued  upon  the  same  judgment  would 
admit  of  the  same  defense,  and  so  on  as  often  as  they  might  be 
issued,  provided  the  judgment  debtor  did  not  in  the  meantime 
get  rid  of  his  property."  '^  In  an  action  against  a  supervisor 
of  a  town  who  was  re(piired  by  law  to  assess  the  damages  Avliich 
had  been  allowed  the  plaintiff  for  property  taken  for  public 
use,  and  who  had  omitted  to  do  so,  the  su^^ervisor  was  personally 
liable  for  the  whole  amount  which  the  plaintiff  had  been  unable 
to  obtain  by  reason  of  the  refusal  to  perform  his  duty.'''^  "It 
cannot  be  assumed  that  the  defendant  would  be  taught  by  the 
result  of  one  action  and  proceed  to  do  his  duty,  and  thus  avoid 
another.  The  plaintiff"  is  not  to  be  thus  put  off.  The  defend- 
ant's misconduct  has  deprived  him  of  obtaining  his  money,  and 
the  defendant  must  answer  to  the  whole  injury  which  he  has 
occasioned."  '®     This  rigorous  severity  is  exceptional  and  based 


72  Ledyard  v.  Jones,  7  N.  Y.  550 ; 
Bank  v.  Curtiss,  1  Hill,  275 ;  Pardee 
V.  Robertson,  6  id.  530;  Kellogg  v. 
Manro,  9  Johns.  300;  Arden  v. 
Goodacrc,  11  C.  B.  371;  Moore 
V.  Moore,  25  Beav.  8 ;  Hemming  v. 
Hale,  7  C.  B.  (N.  S.)  487;  Macrae 
V.  Clarke,  L.  R.  1  C.  P.  403;  Good- 
rich V.  Starr,  18  Vt.  227:  State  v. 
Hamilton,  33  Ind.  502;  Hodson  v. 
Wilkins,  7  Me.  113,  20  Am.  Dec. 
347;  Weld  v.  Bartlett,  10  Mass. 
470. 

73  Ledyard  v.  Jones,  7  N.  Y.  550. 

74  But  see  Tempest  v.  Linley, 
Clayton,  .34;  Norris'  Peake,  008; 
Stevens  v.  Rowe,  3  Denio,  327. 

75  Clark  V.  Miller,   54  N.  Y.  528. 

76  In  the  overruled  case  of  Stevens 
V.   Rowe,   3   Denio,   327,   which   was 


an  action  against  a  sheriff  for  neg- 
lecting to  return  an  execution, 
Beardsley,  J.,  said:  "At  common  law 
no  action  lay  for  such  violation  of 
duty,  although  the  sheriff  might  be 
attached  and  punished  for  it.  I 
admit,  however,  that  under  the  stat- 
ute an  action  may  be  maintained 
for  such  misconduct,  and  in  which 
the  party  aggrieved  is  entitled  to 
recover  'for  the  damages  sustained 
by  him'  (2  R.  S.  440,  §  77;  Pardee 
V.  Robertson,  G  Hill,  550).  The 
amount  to  be  recovered  is  thus  pre- 
scribed by  the  statute,  which  is  'the 
damage  sustained'  by  such  viola- 
tion of  duty,  whatever  the  amount 
may  be.  The  full  amount  to  be 
levied  and  made  on  the  execution  is 
not  necessarily  recoverable,  although 


^     IGOj  1.EGAL,    l.HiUlUATlUJNK    AAD    KKDUCTlOWa. 


497 


ou  cousidenitious  of  policy  to  iiisuru  the  iictivc  diJigciico  of  such 


prima  facio  tliat  may  I)c  the  just 
lueasuru  of  rciiaratioii  wiicre  noth- 
ing is  shown  to  induct'  a  belief  tliat 
the  real  loss  of  the  aggrieved  par- 
ty is  less  than  that  amount."  After 
referring  to  the  point  decided  in  Par- 
dee V.  Ilobertson,  supra,  and  in 
Uank  V.  Curtis,  1  Jlill,  275,  lu;  con- 
tinued: "1  must  say  that  I  should 
find  great  difficulty  in  following 
either  of  tliese  cases  as  authority, 
even  where  the  facts  and  circum- 
stances were  identically  the  same; 
and  I  am  by  no  means  disposed  to 
extend  them  as  authority  to  cases 
which  admit  of  a  plain  distinction 
in  matter  of  fact.  The  decision  in 
The  Bank  v.  Curtiss  was  said  to  be 
in  accordance  with  the  rule  laid 
down  in  two  cases  adjudged  in  Mas- 
sachusetts; but  as  I  read  those 
cases  they  have  no  application  to 
such  a  state  of  facts  as  was  shown 
to  exist  in  The  Bank  v.  Curtiss. 
In  that  case  it  appeared  that  the 
debt  had  not  been  lost,  although  its 
collection  had  been  delayed  by  the 
neglect  of  the  sheriff;  for  the  proof 
shows  that  the  debt  was  still  safe 
and  collectible.  Yet  the  court  held 
that  the  sheriff  was  liable  for  the  full 
amount  of  the  execution  in  his  hands. 
I  am  unable  to  see  any-  such  rule 
laid  down  in  either  of  the  Massa- 
chusetts cases.  In  the  first  of  these 
cases  in  order  of  time  ( Weld  v. 
Bartlett,  ]0  Mass.  474),  Parker,  J., 
said :  'that  where  an  officer  had  neg- 
lected to  do  his  duty,  so  that  the 
effect  of  the  judgment  appears  to 
be  lost,  the  judgment  in  the  suit  so 
rendered  ineffectual  is  prnrui  facie 
evidence  of  the  measure  of  injury 
which  the  plaintifT  has  sustained; 
but  it  may  be  met  by  evidence  of 
the  inability  of  the  debtor  to  pay.' 
The  other  case  (Young  v.  Hosmer, 
Suth.  Dam.  Vol.  I.— 32. 


11  Mass.  .S!»)  is  e(iually  explicit,  and 
makes  the  siierilT  lial)le  for  tlie  en- 
tire debt;  because  'tlie  benefit  of  the 
judgment  to  the  whole  amount  of  it 
is  to  be  presumed  lost  by  the  neg- 
ligence of  the  officer.'  This  princi- 
ple can  surely  have  no  bearing  ^n^  a 
case  in  wliich  it  appears  tiiat  tlie 
judgment  had  not  lieen  lost,  liut  was 
still  safe  and  collectible.  In  Kel- 
logg v.  Manro,  9  Johns.  .'{00,  wiiicli 
was  also  cited  as  sustaining  The 
Bank  v.  Curtiss,  the  rule  is  stated 
as  in  the  Massachusetts  cases.  It 
was  said  to  be  too  plain  for  discus- 
sion that  the  plaintiff  miglit  re- 
cover beyond  nominal  damages,  'lie 
is  entitled,'  say  the  court,  'priimi 
facie,  to  recover  his  whole  debt, 
irhich  is  presumed  to  be  lost  hif  the 
escape.'  I  make  no  objection  to 
tliis  rule  in  any  action  l)r()nglit 
against  an  officer  for  the  violation 
of  such  a  duty.  Prima  facie  it  nuiy 
well  be  taken  that  the  whole  debt 
has  been  lost  by  the  negligence  of 
tlie  officer;  and  if  such  be  the  fact, 
it  is  most  just  that  he  should  pay 
tlie  full  amount.  But  when  the 
proof  shows  that  the  debt  has  not 
been  lost,  although  the  collecti(»n 
has  been  delayed,  and  that  it  is  still 
safe  and  collectible,  it  seems  to  me 
entirciv  clear  that  the  rule  laid 
down  in  the  Massachusetts  cases 
and  in  Kellogg  v.  Manro  is  wholly 
inapplicable.  .  .  .  In  Pardee  v. 
Robertson  it  was  proved  that  the 
sheriff  iiad  actually  collectinl 
the  full  amount  of  the  execution  ;  the 
money  still  remaining  in  his  hands. 
But  in  the  case  now  to  be  decided 
the  fact  was  otherwise.  The  proof 
showed  that  the  money  had  not  been 
collected;  although,  if  the  judg- 
ment was  a  lien  on  real  estate  in 
the  county  of  Oswego,  as  tlie  plain- 


498 


SUTIIEELAJSTD    ON    DAMAGES. 


[§  i«o 


officers ;  it  is  iu  fact  punitive  in  its  nature  and  object.'^  In  the 
case  next  referred  to,  however,  the  rule  was  applied  to  an  officer 
who,  by  an  error  of  judgment,  omitted  to  assess  a  tax  for  a  sum 
due.  He  omitted  to  do  it  because  he  believed  the  law  requiring 
it  was  unconstitutional.  The  court  say  honest  ignorance  does 
not  excuse  a  public  officer  for  disobeying  the  law.'^  It  will 
exempt  him  from  punitive  damages.  In  a  case  for  escape 
Jarvis,  C.  J.,  said:  "The  rule  might  be  supposed  to  operate 
unjustly  towards  the  sheriff  where  the  execution  debtor  has  the 
means  of  paying  the  debt  at  the  moment  of  the  escape  and  still 
continues  notoriously  in  solvent  circumstances.  In  this  case 
the  value  of  the  custody  was  the  amount  of  the  debt,  and  the 
plaintiff  will  be  entitled  to  recover  substantial  damages.  It  is 
true  that  the  recovery  of  such  damages  will  not  satisfy  the 
execution,  and  the  debtor  may  be  retaken  by  the  plaintiff;  for 
the  debtor  cannot  take  advantage  of  his  own  wrong  and  avail 
himself  of  the  recovery  against  the  sheriff".  On  the  other  hand, 
the  sheriff'  is  not  damnified,  for  he  may  retake  the  debtor  or 


tiff  offered  to  show,  the  sheriff 
might  have  made  the  amount  as  re- 
quired by  the  execution.  .  .  . 
If  the  sheriff  should  be  compelled 
to  pay  the  full  amount  of  the  execu- 
tion, for  the  reason  that  the  judg- 
ment was  a  lien  on  real  estate  out 
of,  which  the  money  might  have 
been  collected,  as  was  offered  to  be 
proved  on  the  part  of  the  plaintiffs, 
he  would  be  entirely  remediless. 
He  could  not  enforce  the  judgment 
and  execution  for  his  own  indemni- 
ty, but  must  stand  the  entire  loss. 
This  would  be  too  severe  where  the 
debt  is  still  safe  and  the  only  in- 
jury sustained  has  resulted  from 
mere  delay.  It  is  just  that  the 
sheriff  should  make  the  party  good 
by  paying  all  the  damages  sustained 
by  him;  and  so  is  the  statute  on 
Avhich  the  action  is  founded;  but  to 
go  beyond  this  seems  to  me  quite 
too  rigorous.  Prima  facie  the 
sheriff  is  liable  for  the  full  amount 


of  the  execution  debt,  as  it  is  pre- 
sumed to  liave  been  lost  by  his  neg- 
lect. This,  in  my  estimation,  is 
not  a  very  violent  presumption,  but 
still  may  be  just  in  regard  to  the 
officer  who  is  in  default.  But  when 
it  is  shown  that  the  debt  has  not 
been  lost,  there  is  no  room  for  pre- 
sumption, and  the  prima  facie  case 
no  longer  exists.  By  the  statute 
the  measure  of  recovery  is  the  'dam- 
ages sustained,'  which,  presumptive- 
ly, I  admit  is  the  full  amount  of 
the  execution.  But  the  sheriff  may 
mitigate  the  amount  not  simply  by 
showing  his  inability  to  collect  the 
money,  but  by  proof  that  the  debt 
is  still  safe  and  collectible." 

77Hupe  V.  Sommer,  88  Kan.  561, 
43  L.R.A.(N.S.)  565,  quoting  the 
criticism  in  the  text. 

78  Clark  V.  Miller,  54  N.  Y.  528. 
See  Dow  v.  Humbert,  stated  in 
§  161. 


§    161]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  499 

recover  against  him  by  action  the  amount  he  has  been  compelled 
to  paj'/'  '^  Where  the  officer  fails  to  collect  an  execution  from 
a  debtor  Avho  is  "notoriously  in  solvent  circumstances,"  and  con- 
tinues so,  there  is  no  wrong  done  the  execution  debtor,  as  in  ;iii 
escape,  to  give  the  sheriff  any  action  against  him;  nor  do  the 
authorities  in  this  class  of  actions  proceed  on  the  theory  that 
such  a  recovery  against  the  sheriff  transfers  the  judgment  debt 
to  him.  Hence  the  recovery  of  the  full  amount  of  the  judgment 
or  other  demand  against  an  officer  who  has  neglected  to  do  some 
act  which  would  have  enabled  the  party  interested  to  realize  at 
once,  the  debtor  being  still  solvent,  or  the  debt  not  being  wholly 
lost  by  the  default,  is  not  a  measure  of  damages  which  is  strictly 
compensatory.  To  the  extent  of  the  actual  value  of  the  debt 
in  respect  to  which  the  negligence  occurred  at  the  time  of  the 
recovery  against  the  officer,  the  plaintiff  is  overcompensated 
when  he  has  recovered  from  the  officer  the  full  amount.  Ex- 
clusion of  proof  of  that  value  in  mitigation  cannot  rest  on  the 
argument  that  its  reception  and  consideration  would  deprive  the 
creditor  of  any  compensation  for  actual  loss. 

§  161.  Same  subject;  modification  of  the  old  rule.  The 
supreme  court  of  the  United  States  ^°  has  limited  the  applica- 
tion of  this  rigorous  rule  against  officers.  The  action  was  for 
neglect  of  duty  by  the  defendants  as  supervisors  in  refusing  to 
place  upon  the  tax  list  as  required  by  statute  the  amount  of 
two  judgments  recovered  by  the  plaintiff.  The  debtor  being 
a  township,  it  was  presumed  that  its  taxable  property  continued 
the  same  as  when  the  levy  should  have  been  made.  -Miller,  J., 
said :  "The  single  question  presented  is  whether  these  officers, 
by  the  mere  failure  to  place  on  the  tax  list  when  it  was  their 
duty  to  do  so,  the  judgTnent  recovered  by  the  plaintiff  against 
the  town,  became  thereby  personally  liable  to  the  plaintiff  for 
the  whole  amount  of  said  judgTnent  without  producing  any  other 
evidence  of  loss  or  damage  gi'owing  out  of  such  failure.  Tt  is 
not  easy  to  see  upon  what  principle  of  justice  the  plaintiff"  can 
recover  from  the  defendants  more  than  he  has  been  injured  by 

79Arden  v.  Goodacre,  11  V.  B.  2.'i  L.  od.  .108;  School  Dist  v.  l?iir- 
371. 

80  Dow  V.  TTumhcrt,  91   TT.  R.  294,       rt'sa,  2  Neb.   (llnof.)   r,^^A. 


500  SUTIIEKLAND    ON    DAMAGES.  [§    161 

tlieir  misconduct.  If  it  were  an  action  of  trespass  there  is  much 
authority  for  saying  that  the  plaintiff  would  be  limited  to  actual 
and  compensatory  damages  unless  the  act  were  accompanied 
with  malice  or  other  aggravating  circumstances.  How  much 
more  reasonable  that  for  a  failure  to  perform  an  act  of  official 
duty,  through  mistake  of  what  that  duty  is,  that  the  plaintiff 
should  be  limited  in  his  recovery  to  his  actual  loss,  injury  or 
damage.  Indeed,  where  such  is  the  almost  universal  rule  for 
measuring  damages  before  a  jury  there  must  be  some  special 
reason  for  a  departure  from  it.  .  .  .  The  expense  and  cost 
of  the  vain  eifort  to  have  the  judgment  placed  on  the  tax  list,  the 
loss  of  the  debt,  if  it  had  been  lost,  any  impairment  of  the  effi- 
ciency of  the  tax  levy,  if  such  there  had  been,  in  short,  any  con- 
ceivable actual  damage, — the  court  would  have  allowed  if 
proved.  But  plaintiff,  resting  solely  on  his  proposition  that  de- 
fendants by  failing  to  make  the  levy  had  become  his  debtors  for 
the  amount  of  his  judgment,  asked  for  that,  and  would  accept 
no  less."  The  court  reached  the  conclusion  "that  in  the  absence 
of  any  proof  of  actual  damage  .  .  .  the  defendants  were 
liable  to  nominal  damages  and  to  costs,  and  no  more."  In  a  later 
case,  which  was  very  aggravated,  the  defendants  having  refused 
to  obey  a  mmidamus  to  collect  the  amount  of  a  judgment  by 
adding  it  to  the  tax  roll,  the  court  allowed  the  plaintiff  his  coun- 
sel fees  and  costs.^^ 

§  162.  Plaintiff's  consent.  The  previous  consent  of  the 
plaintiff  to  the  act  which  he  complains  of,  though  not  given  in  a 
form  to  bar  him  or  support  a  plea  of  justification,  may  yet  be 
proved  in  mitigation  of  damages.  Thus  in  trespass  for  an  al=- 
leged  injury  to  the  plaintiff's  wall  by  inserting  joists  in  it,  evi- 
dence that  the  wall  was  so  used  by  the  defendant  in  the  erection 
of  an  adjoining  building  under  an  express  parol  agreement  with 
the  plaintiff  is  admissible  under  the  general  issue  in  miti- 
gation.^^    So  it  may  be  proved  that  the  injury  in  question  was 

81  Newark   Savings   Inst.   v.   Pan-  Stevens,   124   111.   App.   401    (act   of  ■ 
horst,    7    Biss.    99.      See    Branch   v.  the   plaintiff   in   drinking   with   her 
Davis,  29  Fed.  888.  liusband  in  a  saloon  and  giving  the 

82  Hamilton  v.  Windolf,  30  Md.  defendant  an  order  to  sell  her  hus- 
301,    1]    Ain.   Rep.  491;    Leverenz  v.  band    liqnor)  ;    McLeod    v.    Russell, 


§    1G3]  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  501 

inflicted  in  a  fight  by  mutual  consent. '^  In  a  suit  by  several 
heirs  at  law,  who  are  cotenants,  to  recover  for  injury  to  then- 
interests  by  cutting  timber  on  the  estate,  the  consent  of  one  of 
them  is  a  good  defense;  all  suing  in  the  same  right,  I  hey  must 
all  be  entitled  to  recover  or  none  cnn.^* 

§  163.  Injuries  to  character  and  feelings.  Any  exceptional 
conduct  or  character  of  the  plaintiff  which  impairs  his  title  to 
compensation  or  diminishes  the  injury  in  question  is  j)n)vablo 
in  mitigation.  In  those  actions  where  the  wrong  complained 
of  involves  injury  to  character  the  defendant  may  show,  in  order 
to  reduce  damages,  the  general  bad  character  of  the  plaintiff.'* 
The  weight  of  New  York  authority  favors  the  proposition  that 
in  an  action  by  a  female  for  an  indecent  assault,  the  injury  to 
her  feelings  being  an  element  of  damages,  specific  acts  of  lewd- 
ness with  others  than  the  defendant  may  be  shown  in  mitigation 
without  being  specially  pleaded.®^  Where  damages  are  sought 
for  shame  and  humiliation  it  may  be  shown  that  the  plaintiff 
had  often  been  arrested  upon  like  charges  as  that  on  which  the 
pending  action  was  brought.^'''  Evidence  that  the  plaintiff's 
marriage  with  his  reputed  wife  was  void  is  admissible  in  an 
action  for  seduction  of  his  reputed  daughter  to  rebut  the  pro- 
sumption  of  actual  service  by  showing  that  the  plaintiff  was  not 
legally  entitled  thereto  and  in  mitigation  of  damages.*^  In  an 
action  for  criminal  conversation  it  may  be  shown  that  the  plain- 

59    Wasli.    G76.      See    sec.    1285    for  84  Lowery    v.    Rowland,    104    Ala. 

the   rule   as   to   alienation   of   affoc-  420. 

tions.  ^^  Sclmltz  v.  Frankfort  Marine  .X. 
83  Adams  v.  Waggoner,  3.3  Ind.  &  P-  G.  Ins.  Co.,  151  Wis.  5.17.  4.T 
531,  5  Am.  Rep.  230;  §  151;  Cooley  L.R.A.(N.S.)  520  (action  for  open- 
on  Torts  {2d  ed.),  pp.  187,  18S.  ^Y  shadowing  tl.e  plaintiff  by  de- 
Compare    Bishop    on    Non-Contract  tectives)  ;    Fitzgibbon   v.   Brown,  43 

c  in^      T-                 1    IT       +1  „f       ^le.  109.     See  §  152 
Law,  S  196.     For  cases  holding  that  ,^  ^ 


consent  bars  an  action   for   a  tort, 
see   Goldnamer   v.   O'Brien,   98   Ky. 


86Guilcrette  v.  McKinley.  27 
TJun,  320,  reviewing  the  ca.ses  in 
New    York;    Younff   v.    Johnson.    4r> 


569,  56  Am.  St.  378,  30  L.R.A.  715;  ^^^    jg^ 

Courtney   v.   Clinton,   18   Ind.   App.  87  Texas  M.   R.   v.   Dean,   9S   Tex. 

020.     The  only  effect  of  consent  is  5^7^  79  l.r.a.  943,  citing  this  s.'c- 

to    confine    the     recovery    to     com-  tjo^ 

pensatory      damages.         Evans      v.  88  Uowland      v.       llowland.       lit 

Waite,  83  Wis.  286.     See  §  151.  Mass.  517,  19  Am.  Rep.  3S1. 


502 


SUTHERLAND    ON    DAMAGES. 


[§  163 


tiff  was  wanting  in  affection  for  his  wife  to  support  the  infer- 
ence that  his  loss  was  trifling,^^  or  that  there  was  but  slight 
intercourse  between  them ;  ^°  and  in  an  action  for  breach  of 
promise  of  marriage  that  the  plaintiff'  was  utterly  unfit  to  appre- 
ciate the  person  to  whom  he  engaged  himself.^^  Declarations  by 
the  plaintiff,  pending  the  action,  that  she  would  not  marry  the 
defendant  excejit  for  his  money  have  been  admitted.^^  The  fact 
of  a  female  plaintiff  having  had  an  illegitimate  child,  though 
known  to  the  defendant  at  the  time  of  the  promise,  may  be 
proved,^^  and  her  intercourse  with  another  man  before  and  after 
the  promise.®*  In  actions  for  seduction  proof  of  the  plaintift"'s 
careless  indiff'erence  to  the  defendant's  opportunities  for  crim- 
inal intercourse  with  her  daughter  may  be  shown  in  miti- 
gation ;  ®*  actual  connivance  by  the  plaintiff  would  be  a  bar.®^ 
The  fact  that  a  check  was  unintentionally  dishonored  is  ma- 
terial, as  are  the  attempts  made  by  the  defendant  to  repair  the 
injury  to  the  reputation  of  the  depositor.®'  The  previous  intoxi- 
cation of  the  plaintiff's  minor  son  may  be  shown  in  mitigation 
of  the  recovery  for  injury  to  her  feelings  in  an  action  under  a 
civil  damage  statute.®^ 

§  164.  Reduction  of  loss  or  benefit.    Whatever  diminishes  the 
loss  of  the  injured  party,®®  or  where  the  recovery  is  influenced 


89  Bromley  v.  Wallace,  4  Esp. 
237. 

.  90  Calcraft    v.    Harboroiigh.    4    C. 
&  P.  499. 

91  Leeds  v.   Cook,  4   Esp.   256. 

92  Miller  v.  Rosier,  31  Mich.  475. 
Contra.  Miller  v.  Hayes,  34  Iowa, 
496,  11  Am.  Rep.  154. 

93  Denslow  v.  Van  Horn,  16  Iowa, 
476. 

94  Burnett  v.  Simpkins,  24  111. 
264. 

95  Zerfing  v.  Mourer,  2  Greene, 
520;  Parker  v.  Elliott,  6  Munf.  587. 

96  Bunnell  v.  Greathead,  49 
Barb.  106;  Smith  v.  Masten,  15 
Wend.  270;  Sherwood  v.  Titman,  55 
Pa.  77. 

97  Spearing  v.  Whitney-Cent.  Nat. 
Bank,  129  La.  607. 


98  Bailey  v.  Briggs,  143  Mich. 
303. 

99  Robinson  v.  Moark-Nemo  Con- 
sol.  Min.  Co.,  178  Mo.  App.  531; 
Alderson  v.  Houston,  154  Cal.  1; 
Chappell  V.  Western  R.,  8  Ga.  App. 
787;  Pope  v.  Graniteville  Mfg.  Co., 
1  Ga.  App.  176;  Mendel  v.  Boyd,  3 
Neb.  (Unof.)  473;  Bovee  v.  Barrett, 
13  6  App.  Div.  (N.  Y.)  20;  Rhyne  v. 
Rhyne  151  N.  C.  400;  Caplen  v.  Cox, 
42  Tex.  Civ.  App.  297;  Curtley  v. 
Security  Sav.  See,  46  Wash.  50; 
Wertheim  v.  Chicoutimi,  P.  Co., 
[1911]  App.  Cas.  301;  Rantoul  Co. 
V.  Claremont  P.  Co.,  116  C.  C.  A. 
125,  196  Fed.  305;  Frankfort  &  C. 
R.  Co.  V.  Jackson,  153  Ky.  534. 

Payments  received  by  an  injured 
servant  from  the  master's  relief  de- 


§    164]  LEGAL    HQUlDArJOiMS    A^L    DEDUCTIONS.  50;5 

by  the  amount  of  benefit  derived  from  the  act  comphiincd  of  by 
the  defendant,  whatever  decreases  the  vahie  of  that  benefit  may 
be  proved  in  mitigation,  where  the  nuitter  dimiuishini;-  the  h)ss 
in  the  former  case,  or  impairing  the  benefit  in  the  other,  is  part 
of  the  transaction.^  Thus  in  an  action  against  a  contractor  lor 
failing  to  fulfil  his  contract  he  may  show  that  the  agreed  price 
has  not  been  paid,^  and  an  employer  may  show  that  another  con- 
tract was  so  profitable  to,  and  so  fully  occupied  the  time  of,  the 
contractor  that  the  loss  from  the  breach  of  the  contract  in  (|U('s- 
tion  was  offset  by  the  benefit  thus  obtained.^  Where  A.  took 
wrongful  possession  of  premises  on  the  2d  of  -June,  ami  a  sum 
of  money  became  due  for  ground  rent  on  the  24th  foi-  tlic  month 
ending  on  that  day,  which  A.  paid,  it  was  held  in  an  action  for 
mesne  profits  that  he  was  entitled  to  deduct  the  money  so  paid 
from  the  damages.  In  that  case  the  payment  of  the  ground  rent 
diminished  the  value  of  the  occupation  to  the  defendant,  and 
having  paid  what  the  plaintiff  must  otherwise  have  paid,  his  in- 
jury, for  which  mesne  profits  were  compensation,  was,  to  the 
amount  paid,  mitigated.*  So  a  tenant  has  a  right  to  deduct  from 
rent  all  expenses  or  taxes  which  he  has  been  compelled  to  pay 
for  the  lessor.^  If  a  mortgagee  who  has  brought  an  action  for 
damage  done  to  the  mortgaged  premises  by  a  removal  of  fixtures 
has  sold  the  premises  intermediate  the  injury  and  the  action  for 
more  than  enough  to  pay  his  debt  and  all  prior  incumbrances, 
this  fact  may  be  proven  in  mitigation  of  damages.^ 

partment  mitigate   the   lattei's   lia-  tion  in  so  far  as  he  used  it  for  pur- 

bility  where  they  do  not  amount  to  poses  tlie   court   would   sanction   us 

an  accord  and  satisfaction.    King  v.  being  for  his  advantage.     Worthy  v. 

Atlantic  C.  L.  R.  Co.,  1,57  N.  C.  44,  Jonesville  0.  Mill,   77   S.   C.  6!),   1 1 

48  L.R.A.(N.S.)  450;  Wacksmuth  V.  L.R.A.(N.S.)    690. 

Same,   157   N.   C.   34;    Pennsylvania  i  Ottowa  v.  Milroy,  144  Iowa,  «i31. 

Co.  V.  Chapman,  220  III.  428.  2  Reedy  v.  Tuskaloosa,  6  Ala.  327; 

The  plaintiff  is  not  to  be  charged  Gabay  v.  Doane,  77   App.   Div.    (N. 

with  expenses  incurred  on  his  behalf  Y.)   413. 

unless   they   have   produced   the   re-  3  Harrington-W.  Co.  v.  Blomstrom 

suit    stipulated    for.       Pattison    v.  Mfg.  Co.,  1G6  Mich.  276. 

Seattle,  etc.  R.  Co.,  64  Wash.   370,  4  Doe  v.  Hare,  2  Cr.  &  M,  145. 

35  L.R.A.(N.S.)    660.  5  Sapsford    v.    Fletcher,    4    T.    R. 

Money  received  by  a  minor  in  con-  511;    Taylor    v.    Zamira,    6    Taunt, 

sideration  for  a  release  is  to  be  con-  524;   Carter  v.  Carter,  5  Bing.  406. 

sidered  in  awarding  him  compensa-  6  King  v.  Bangs,  120  Mass.  514. 


504 


SUTIIEKI.ANI)    ON    DAMAGES. 


[§  104 


The  immediate  landlord  is  bound  to  protect  his  tenant  from 
all  paramount  claims,  and  when,  therefore,  the  tenant  is  com- 
pelled, in  order  to  protect  himself  in  the  enjoyment  of  the 
land  in  respect  to  which  the  rent  is  payable,  to  make  payments 
which  ought,  as  between  himself  and  his  landlord,  to  have  been 
made  by  the  latter,  he  is  considered  as  having  been  authorized 
by  the  landlord  so  to  apply  his  rent  due  or  accruing  due.'  Of 
this  nature  are  not  on'ly  payments  of  ground  rent  to  the  superior 
landlord,  but  interest  due  upon  a  mortgage  prior  to  the  lease,* 
an  annuity  charged  upon  the  land,^  and  rates  and  taxes.'^*'  But 
where  the  payment  of  the  ground  rent  or  other  like  charge  gives 
no  right  of  action  against  the  party  suing  for  the  rent,  this  right 
of  deduction  docs  not  exist.'^^ 

§  165.  Pleading  in  mitigation.  It  has  sometimes  been  held 
as  a  general  rule  that  matters  which  would  have  gone  in  bar 
of  the  action  cannot  be  given  in  evidence  to  reduce  damages 
unless  pleaded.^^  Lord  Abinger,  C.  B.,  said:  ^^  "It  is  a  princi- 
ple as  old  as  my  recollection  of  Westminster  Hall  that  matter 
of  justification  cannot  be  given  in  evidence  in  an  action  in  order 
to  mitigate  damages."  The  case  was  an  action  for  wrongfully 
discharging  the  plaintiff  from  the  defendant's  service ;  the  latter 
pleaded  only  payment  of  money  into  court.  It  was  contended 
in  his  favor  that  he  should  be  allowed  to  show  in  mitigation 
that  the  discharge  was  for  misconduct,  as  under  this  issue  there 
was  merely  an  inquiry  of  damages ;  that  the  same  evidence  was 
admissible  as  upon  a  writ  of  inquiry  after  a  judgment  by  de- 
fault. It  was  held  properly  rejected,  Alderson  B.,  said:  '"The 
question  is  whether  it  is  competent  to  the  defendant  in  miti- 
gation of  damages  to  give  evidence  to  contradict  a  fact  admitted 
on  the  record.  If  it  were,  the  grossest  injustice  might  be  done, 
because  the  other  party  does  not,  of  course,  come  prepared  to 


The  cost  of  raising  and  of  harvest- 
ing crops  mitigates  the  liability  of 
a  party  charged  with  tlieir  loss. 
Biggs  V.  Maulding,  —  Tex.  Civ.  App. 
— ,  147  S.  W.  681. 

'Graham  v.   Allsopp,   3   Ex.   186. 

8  Johnson  v.  Jones,  9  A.  &  E. 
809. 


9  Taylor  v.  Zamira,  6  Taunt.  524. 

10  Baker  v.  Davis,   3   Camp.  474; 
Andrew  v.  Plancock,  1  B.  &  B.  37. 

11  Graham    v.   Allsopp,   supra. 

12  Harmont  v.  Sullivan,  128  Iowa, 
309. 

13  Speck   v.   Phillips,   5   M.   &   W. 
279. 


§    165]  LEGAL    r.IQUIDATION'S    AND    REBUCTIONS.  505 

prove  the  fact  so  admitted,"  And  Manic,  B.,  said :  ''No  ques- 
tion was  made  that  the  plaintiff  was  wrongfully  discharged; 
and  I  think  it  was  not  competent  to  the  defendant  to  give  evi- 
dence to  negative  that  which  is  admitted  by  the  plea.  If  it 
were,  the  consequence  would  follow  that  no  defendant  would 
ever  plead  specially;  he  would  pay  a  shilling  into  court  and  set 
up  as  many  defenses  as  he  pleased,  and  succeeding  in  any  one  of 
them,  would  get  a  verdict  and  his  costs.  This  would  he  setting 
aside  not  only  the  new  rules,  hut  all  the  old  rules  whidi  icipiii-cl 
special  pleadings  in  actions  of  this  nature.^* 

In  trespass  against  a  constable  for  arresting  the  })laintilf  and 
imprisoning  him  the  declaration  stated  it  to  have  been  without 
reasonable  or  probable  cause;  the  court  said  a  constable  may 
justify  an  arrest  for  reasonable  cause  on  suspicion  alone;  and 
in  this  respect  he  stands  on  more  favorable  ground  than  a 
private  person,  who  must  show,  in  addition  to  such  cause,  that 
a  felony  was  actually  committed ;  that  the  difficulty  was  to 
determine  whether  circumstances  of  suspicion  which  might  have 
been  pleaded  in  justification  were  competent  to  go  to  the  jury 
under  the  general  issue  in  mitigation.     They  say  the  objection 

14  In  Watson  V.  Christie,  2  B.  &  P.  discipline,    or    justified    it    on    any 

224,  tried  before  Lord  Eldon,  C.  J.,  ground;  iiiat  much  evil  beyond  the 

the  action  was  for  assault  and  hat-  mere  act  had  been  actually  suffered, 

tery,    and    not    guilty    pleaded.      It  wiiich  evil  had  been  occasioned  by  a 

was   offered   to   be   shown   that  the  cause  which  the  defendant  admitted 

beating  was  given  by  way  of  pun-  he   could   not   justify:    that    in    liia 

ishment    for    misbehavior    on    ship-  lordship's   judgment,    thcroforc,    the 

board.     The  jury  were  directed  that  evil  actually  sulVered  in  consequence 

the  only  questions  for  their  consid-  of  what  was  not  justified  ought  to  be 

eration  were  whether  the  defendant  compensated   for   in   damag(>3:    that 

was  guilty  of  the  beating,  and  what  j.]^g  j^^y  ghould  give  damages  to  the 

damages  the  plaintiff  had  sustained  ^^^^^^^^  ^^  ^,j^,  ^,^.j,   g^^ff^^.^,^^  without 

in  consequence  of  it;  that  although  ,^.ggpni„^,    them    on    account   .)f    the 

the  beating  in  question,  however  se-  ^■^.^^^^^^^,,,^^   „„,,er   whi.-h    it   was 

vere,  might  possilily  be  justified  on  .,,..,     ,,    .   -r  .,  „..     ,   „„ 

'        '^       '  ....  inflicted;  that  if  thcv  gave  damages 

the  ground  of  the  necessity  of  main-  ■•    *  r       xi      •    • 

.    .        ,.     .   ,.  ,        ',  ,,       ,  •  hevond  compensation  for  the  in|urv 

taming  discipline  on  board  the  ship,  ■'  .    .      ,   x,  •  i  .  '  • 

yet  such  a  defense  could  not  be  re-  '-^^t^^H-V  s"sta.ned   they   wouhl  give 

sorted  to  unless  put  upon  the  record  ^^^  "i"-'*  =  '""^  '^  ^'^''^  f^'"^''  >-«-^  ^''^^^ 

in  the  shape  of  a  special  justifica-  W(.nl.l   not  give  .nough.      See  Pu.,o- 

tion;    that    the    defendant    had    not  las   v.    Holland.   :?    Irish    C.   L.   rvA:\: 

aid  on  the  record    that    this    was  Gelston  v.  Tloyt,  1:5  .lohns.  501. 


506  SUTHERLAND    ON    DAMAGES.  [§    165 

rests  on  the  rule  which  requires  matter  of  justification  to  be 
pleaded  specially.  At  the  first  blush  one  would  not  perceive  a 
reason  to  preclude  a  party  who  had  waived  the  benefit  of  a  full 
defense  from  showing  the  purity  of  his  motives  to  shield  him 
from  exemplary  damages ;  and  there  is  in  truth  none  except 
that  the  plaintiff  is  not  apprised  by  the  pleadings  of  the  de- 
fendant's intention.  Yet  where  the  defendant  is  not  at  liberty 
to  apprise  him  by  pleading  in  justification  the  matter  is  for 
that  very  reason  allowed  to  be  given  in  evidence.  But  whatever 
inconsistency  there  may  seem  to  be  in  point  of  principle  the  de- 
fendant when  charged  with  making  an  arrest  without  probable 
cause  may  rebut  the  charge.^^ 

§  166.  Same  subject.  In  actions  for  slander  this  rule  was 
adopted  long  ago  and  has  since  been  generally  adhered  to  for 
special  reasons.  These  have  more  or  less  force  in  other  actions 
where  the  matter  sought  to  be  proved  in  mitigation  would  be  a 
serious  surprise  to  the  plaintiff  if  introduced  at  the  trial  with- 
out any  notice  in  the  pleadings.  Under  the  common-law  system 
matter  of  mitigation  which  could  not  be  used  in  bar  of  the  plain- 
tiff's cause  of  action,  nor  of  any  severable  .part  of  it,  was  for 
that  reason  provable  without  being  pleaded.  But  under  this 
rule  matter  which  could  have  been  made  available  in  bar  by 
plea  was  not  necessarily  admissible  in  mitigation.  The  ad- 
mission of  such  defense  was  not  within  the  reason  and  necessity 
of  that  rule.  Courts  may  therefore  properly  exercise  a  dis- 
cretion to  require  notice  of  some  sort  as  they  do  of  defenses 
by  way  of  recoupment.  It  is  believed,  however,  not  to  be  a 
general  rule,  at  least  in  this  country,  except  in  actions  for  liljel 
and  slander,  that  matter  which  might  be  set  up  in  bar  and  is 
not  so  pleaded  cannot  be  proved  in  mitigation.  The  existence 
of  such  rule  has  been  denied  in  ISTew  York.^®  Judge  Selden 
said :  "It  was  never  any  objection  to  evidence  in  mitigation 
that  under  a  different  state  of  the  pleadings  it  would  amount  to 
a  full  defense."  And  again :  "It  seems  to  have  been  supposed 
that  there  was  some  sound  legal  objection  to  admitting  proof  of 
facts  under  the  general  issue  in  mitigation  merely  which,  if 

i5Russoll  V.   Sinister,  8  W.  &  S.  16  Bush  v.  Prosser,  11  N.  Y.  347, 

398.  362,  365. 


§    166]  LEGAL    LIQUIDATIONS    A.M)    KEDLCTIONS.  507 

specially  pleaded,  would  amount  to  a  full  defcnso.  Hut  there  is 
not,  and  never  was,  any  such  objection."  In  \'enii(>iit  it  has 
been  held  in  trover,  after  a  default,  that  nuattcr  which  shows 
that  the  plaintiif  had  no  right  to  recover,  and  which  iiiii^ht  have 
been  given  in  evidence  under  the  general  issue,  may  avail  in 
mitigation  of  damages."  In  a  case  in  Connecticut,  in  a  hearing 
for  the  ascertainment  of  damages  after  a  default  in  an  action  for 
negligence  in  setting  a  fire  by  which  property  of  the  plaintilT 
w^as  injured  to  the  amount  of  $400,  the  defendants  wore  allowed 
to  introduce  evidence,  for  the  purpose  of  reducing  the  damages 
to  a  nominal  sum,  that  they  were  guilty  of  no  negligence  what- 
ever. The  plaintiff  objected  to  the  reception  of  the  evidence  on 
the  ground  that  the  defendants  by  their  neglect  to  traverse  the 
declaration  and  by  suffering  a  default  conclusively  admitted 
that  they  were  guilty  of  negligence  sufficient  for  the  plaint  ill"  to 
maintain  his  action,  and  that,  in  a  case  of  damage  to  j)roj)crty 
incapable  of  division,  the  least  sum  the  court  could  assess  as 
damages,  consistent  with  the  declaration,  was  the  actual  dam- 
age done.  The  court  said :  "From  a  time  early  in  the  history 
of  the  jurisprudence  of  this  state  the  law^  has  been  that  where, 
in  an  action  on  the  case  for  the  recovery  of  unliquidated  dam- 
ages, the  defendant  has  suffered  a  default,  that  is,  has  omitted 
to  make  any  answer,  the  assessment  of  damages  has  been  made 
by  the  court  without  the  intervention  of  a  jury;  also  that  by 
his  omission  to  deny  them  the  defendant  is  held  to  have  admitted 

17  Mug  V.  Ostendorf,  49  Ind.  App.  principles  defendants  in  actions 
71;  Indiana  T.  Co.  v.  Finitzer,  160  sounding  in  damages  were  jiermitted 
Ind.  647;  Schwartzel  v.  Karnes,  2  to  give  in  evidence  in  mitigation,  not 
Kan.  App.  782;  Creighton  v.  Water  only  matters  having  a  tendency  to 
Com'rs,  143  N.  C.  171;  Houston  &  reduce  the  amount  of  the  jilaintilF's 
T.  Cent.  K.  Co.  v.  Batchler,  37  Tex.  claim,  hut  in  many  cases  facts  show- 
Civ.  App.  116;  Hardin  v.  Hodges,  33  ing  that  the  plaintilT  had  in  truth 
Tex.  Civ.  App.  155.  no    claim    whatever.      It    was    not 

In   McKyring  v.    Bull,    16   N.   Y.  necessarily  an   objection    to   matter 

297,  304,  the  same  judge  said:     "As  oflered  in  mitigation  that  if  jtroper- 

the  code  contains  no  express  rule  on  ly  pleaded  it  would  have  constituted 

the  subject  of  mitigation,  except  in  a  complete  defense."     See  Smithies 

a  single  class  of  actions,  this  ques-  v.  Harrison.  1   Ld.  Kaym.  727;   Ab- 

tion  cannot  be  properly  determined  hot  v.  Chapman,  2  U-v.  81;  Nicholl 

without  a  recurrence  to  the  princi-  v.  Williams,  2  M.  &  W.  758. 
pies  of  the  common  law.     By  those  18  Collins  v.  Smith.  Ifi  Vt.  9. 


508  SUTIIEELAND    ON    DAMAGES.  [§    166 

the  truth  of  all  well-pleaded  material  allegations  in  the  declara- 
tion, and  the  conse<|uent  right  of  the  plaintiff  to  a  judgment  for 
a  limited  sum  for  nominal  damages  and  costs,  without  the  intro- 
duction of  evidence.  The  defendant  standing  silent,  the  law 
imputes  the  admission  to  him ;  but  it  does  it  with  this  limitation 
upon  its  meaning  and  effect,  it  does  it  for  this  special  purpose 
and  no  other ;  and  our  courts  have  repeatedly  explained  that  the 
admission  foimded  on  a  default  is  not  an  admission  of  which 
the  writers  upon  the  law  of  evidence  treat.  The  silent  defend- 
ant, having  been  subjected  to  a  judgment  for  nominal  damages 
from  which  no  proof  can  relieve  him,  the  default  has  practically 
exhausted  its  effect  upon  the  case;  for  if  the  plaintiff  is  un- 
willing to  accept  this  judgment,  evidence  is  received  on  his 
part  to  raise  the  damages  above  and  on  the  part  of  the  defend- 
ant to  keep  them  down  to  that  immovable  base  of  departure, 
the  nominal  point,  precisely  as  if  the  general  issue  had  been 
pleaded;  and  although  the  evidence  introduced  by  the  latter 
has  so  much  force  that  it  would  have  reduced  them  to  nothing 
but  for  the  barrier  interposed  by  the  default,  it  cannot  avail 
to  deprive  the  plaintiff  of  his  judgment;  in  keeping  that  the 
law  perceives  that  he  has  all  that  the  truth  entitles  him  to  and 
therefore  refuses  to  hear  any  objection  from  him.  .  .  .  The 
plaintiff  argues  that  his  case  differs  from  ...  all  others 
which  have  gone  before  it,  in  that  his  damages  are  entire  and 
indivisible  and  arise  from  a  single  act  of  the  defendants.  But 
the  destruction  of  a  life  would  seem  to  be  an  entire  and  indivisi- 
ble wrong  ^^  in  as  complete  a  sense  as  the  destruction  of  the 
plaintiff's  grass,  fence  and  wood ;  a  single  blow  killed  the  man, 
a  single  spark  fired  the  grass.  The  rule  cannot  be  at  all  af- 
fected by  the  question  as  to  whether  the  injury  is  inflicted  upon 
person  or  property.  In  either  case,  at  the  outset,  the  damages 
are  uncertain ;  in  both  they  are  made  certain  by  the  same  tribu- 
nal, governed  by  the  s^me  rules,  informed  by  evidence  of  the 
same  character,  received  in  the  same  order.  An  injury  to  the 
person  may  be  the  breaking  of  a  finger  or  the  tearing  of  botli 
arms  from  the  body ;  an  injury  to  property  may  be  the  destruc- 
tion of  a  tree  or  of  a  forest.     It  is  of  course  a  much  more  diffi- 

19  Carey  v.  Day,  36  Conn.  352. 


§    107 J  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


500 


cult  and  delicate  task  to  reduce  to  the  standard  ol'  coin  llic  valiio 
of  a  leg  or  an  arm  than  to  detenuinc  the  uuirket  j)rice  of  a  cord 
of  wood,  or  for  a  standing  tree  of  given  dini(*nsious;  ncvei'the- 
less,  probably  in  every  week,  some  one  of  the  nunu'ntus  courts  of 
the  country  find  for  some  plaintiff,  presumably  the  money  value 
of  a  lost  limb.  The  judicial  system  has  but  one  bahmce;  in  tliis 
is  weighed  every  loss,  even  that  of  life."  '^° 

In  trespass  for  an  injury  to  the  plaintill's  wall  by  inserting 
joists  into  it  evidence  is  admissible  under  the  general  issue  of 
a  previous  license  in  mitigation,  which  would  have  l^een  a  bar 
if  specially  pleaded;  ^^  and  a  defendant  in  mitigation  for  assault 
and  baljtery  may  rely  on  the  re.s  gestae,  although  if  pleaded  it 
would  amount  to  a  justification  and  reijuiro  a  special  plea.^'^  In 
trespass  for  taking  a  slave  from  the  plaintiff's  close,  on  a  plea 
of  not  guilty,  evidence  was  received  in  mitigation  that  the  title 
to  the  slave  was  in  the  defendant. ^^  Under  the  codes  of  some 
states  matter  in  mitigation  must  be  pleaded.^*  The  plaintiil" 
may  allege  the  means  taken  by  him  to  ameliorate  the  effects  of 
the  wrong.^^ 

§  167.  Payments.  Payments  made  either  before  or  after 
suit  brought  may  be  proved  in  mitigation,  but  not  in  bar  with- 
out plea  nor  under  the  general  issne.^®    If  full  payment  is  made 


20  Batchelder  v.  Bartholomew,  44 
Conn.  494 ;  Saltus  v.  Kipp,  12  How. 
Pr.  342. 

21  Hamilton  v.  Windolf,  36  Md. 
301,  11  Am.  Rep.  491. 

22  Bycrs  v.  Horner,  47  Md.  23. 

23  Billiard  v.  Leavcll,  5  Call  531; 
Harstad  v.  Olson,  57  Wash.  264; 
Bartlett  Est.  Co.  v.  Fairhaven  L. 
Co.,  56  Wash.  434.  See  Moore  v. 
McNairy,  1  Dev.  319. 

24  Springer  v.  .Jenkins,  47  Ore. 
502;  Ramsay  v.  ISleade,  37  Colo. 
465;  Cincinnati,  etc.  R.  Co.  v.  Crab- 
tree,  30  Ky.  1000.  A  carrier  must 
plead  a  limitation  of  his  common - 
law  liability.  Louisville  &  N.  R. 
Co.  V.  Woodford,   152  Ky.  398. 

25  Atlantic  C.  L.  R.  Co.  v.  Towell, 
327  Ga.  805,  9  L.R.A.(N.S.)   769. 


26  Travis  v.  Louisville  &  N.  R.  Co., 
183  Ala.  415;  Dana  v.  Sessions,  46 
N.  H.  509;  Shirley  v.  Jacobs,  2  Bing. 
N.  C.  88 ;  Lediard  v.  Bouelier.  7  C.  & 
P.  1;  Britton  v.  Bishop,  11  Vt.  70; 
Bischof  V.  Lucas,  6  Ind.  26;  Moore 
V.  McNairy,  1  Dev.  319;  Nicholl  v. 
Williams,  2  M.  &  W.  758;  Wet  more 
V.  San  Francisco,  44  Cal.  294,  300. 
See  McKyring  v.  Bull,  16  N.  Y.  297. 

In  Plevin  v.  Henshall.  10  Bing.  24, 
after  a  verdict  for  the  plaint  iff  in 
trover,  the  goods  were  seized  in  tlic 
hands  of  the  defendant  for  rent 
wliich  the  plaintiff  was  liable  to 
pay;  tlie  defendant  having  paid  the 
rent,  the  court  allowed  him  to  de- 
duct the  amount  from  the  verdict. 
But  sec  Buell  v.  Flower.  39  Conn. 
462,  12  Am.  Rep.  414. 


510  SUTllEKLAND    ON    DAMAGES.  [§    107 

after  suit  brought  and  is  accepted  for  the  debt  and  costs,  the 
defendant  will  be  entitled  to  a  verdict.^'''  It  is  necessary  that 
the  payment  be  made  to  cover  the  costs  which  have  accrued,^' 
and  it  should  be  pleaded  to  the  further  maintenance  of  the 
action.^^ 

Section  4. 

kecoupment  and  countek-ceaim. 

§  168.  Definition  and  history  of  recoupment.  The  term 
recoupment,  derived  from  the  French  w^ord  ixcouper,  to  cut 
again,  sigiiifics  in  the  law  a  cutting  off  and  keeping  back  a 
part  of  the  plaintiff's  claim  in  satisfaction,  by  set-off,  of  cross- 
demands  of  the  defendant  growing  out  of  the  same  contract  or 
transaction  on  which  the  claim  is  founded.  The  same  thing 
is  meant  by  defalcation  and  discount.  Literally  understood, 
recoupment  would  include  mere  mitigation  of  damages,  and  the 
instances  of  this  defense  in  the  old  books  are  mostly  of  that 
nature.^"  In  the  endeavor  to  reduce  the  controversy  to  a  single 
point  or  issue  ver^^  little  scope  was  given  by  the  early  common 
law  to  defenses  which  rested  on  the  principle  of  allowing  cross- 
claims  in  favor  of  the  defendant. 

At  one  time  it  was  doubted  that  in  an  action  on  a  quantum 
meruit  for  services  the  defendant  was  entitled  to  reduce  the 
damages  by  showing  that  the  work  had  not  been  well  done.^^ 

27  Thame  v.  Boast,  V2  Q.  B.  808;  word  when  it  said  that  "recoup- 
Bendit  v.  Annesley,  27  How.  Pr.  ment,  in  its  strict  common-law 
184.  sense,    is   a   mere   reduction    of   tlie 

28  Belknap  v.  Godfrey,  22  Vt.  288.  damages  claimed  by  the  plaintiff  by 

29  Thame  v.  Boast,  supra;  Dana  v.  proof  under  tlie  general  issue  of 
Sessions,  46  N.  H.  509 ;  Bank  v.  mitigating  circumstances  connected 
Brackett,  4  id.  558;  §  232.  with  or  growing  out  of  the  transac- 

30  Dyer,  2;  8  Vin.  Abr.  556-7;  tion  upon  which  the  plaintiff's  claim 
Croke's  Eliz.  631;  Taylor  v.  Beal,  is  based,  showing  that  it  would  be 
Croke's  Eliz.  222;  Shetelworth  v.  contrary  to  equity  and  good  con- 
Neville,  1  T.  R.  454.  See  Medart  science  to  suffer  the  plaintiff  to  re- 
P.  Co.  V.  Dubuque  T.  &  R.  M.  Co.,  cover  the  full  amount  of  his  claim." 
121  Iowa,  244.  Wadhams  v.   Swan,  109  111.  46,  62. 

The  Illinois  court  must  have  had  31  Farnsworth      v.      Garrard,      1 

in   mind  the   older   meaning   of  the       Camp.  38. 


§    168]  LEGAL    LIQUIDATIONS    AND    RKDUCTIONS.  511 

The  allowance  of  such  defenses  was  the  result  of  a  consultation 
of  the  judges  in  England.  In  an  action  of  that  character  Lord 
Ellenborough  said :  ''This  is  an  action  founded  on  a  claim  for 
meritorious  services.  The  plaintiif  is  to  receive  what  he  de- 
serves. It  is  therefore  to  be  considered  how  much  he  deserves, 
or  if  he  deserves  anything.  If  the  defendant  has  derived  no 
benefit  from  his  services  he  deserves  nothing,  and  there  must 
be  a  verdict  against  him.  There  was  formerly  considerablo 
doubt  on  this  point.  Mr.  Justice  Buller  thought  (and  T,  in 
deference  to  so  great  an  authority,  have  at  times  ruled  the  same 
way)  that  in  cases  of  this  kind  a  cross-action  for  the  negligence 
was  necessary;  but  that  if  the  work  be  done  the  plaintiff  must 
recover  for  it.  I  have  since  had  a  conference  with  the  judges 
on  the  subject,  and  now  I  consider  this  as  the  correct  rule :  that 
if  there  has  been  no  beneficial  service  there  shall  be  no  pay ;  but 
if  some  benefit  has  been  derived,  though  not  to  the  extent  ex- 
pected, this  shall  go  to  the  extent  of  the  plaintiff's  demand, 
leaving  the  defendant  to  his  action  for  the  negligence."  ^^  He 
also  remarked  that  where  a  specific  sum  has  been  agreed  to  bo 
paid  by  the  defendant  "the  plaintiff  may  have  some  ground  to 
complain  of  surprise  if  evidence  be  admitted  to  show  that  the 
work  and  materials  provided  were  not  worth  so  much  as  was 
contracted  to  be  paid  because  he  may  only  come  prepared  to 
]^rove  the  agreement  for  the  specified  sum  and  the  work  done, 
unless  notice  be  given  to  him  that  the  payment  be  disputed  on 
the  ground  of  the  inadequacy  of  the  work  done.  l>nt  where  the 
plaintiff  comes  into  court  upon  a  quantum  meruit  he  must  come 
prepared  to  show  that  the  work  done  was  worth  so  much,  and 
therefore  there  can  be  no  injustice  in  suffering  the  defense  to 
be  entered  into  even  without  notice."  ^^  The  right  to  make  such 
defenses  is  no  longer  in  question ;  the  plaintiff  must  show  his 
performance  of  a  condition  precedent  as  a  basis  of  the  recovery 

'32Basten   v.  Butter,  7   East,  470.  pel    parties    to    brinpr    two    aetionn 
"The  doctrine  of  recoupment  is  in  when,  with  equal  convenience,  their 
general   applicable   whenever    in   the  ^..^j^^^  ^^^  ,^^  settled  in  one-."    .John- 
trial  of  the  plaintiff's  action  an  in-  .,     ,,       *   •     /-i     »     •      ,.<> 
,.      ,.        '    ,      ,     ^             1-  1.  XV-  son  V.  \Vhite  Mountain  C.  Ass  n,  dS 
vestigation  of  the  facts  on  which  the 

claim   of   the   defendant   depends  is  ^^-  ^T.  437,  7.3  Am.  St.  010. 

necessary.     The  law  does  not  com-  33  fasten  v.  P.utter,  supra. 


512  suriiKur.AND  on  damages.  [§  168 

either  of  an  agTeed  sum  or  on  a  quantum  mei'uit,  and  there  is 
included  in  the  mere  right  to  make  a  defense  the  right  to  rebnt 
the  evidence  of  performance,  and  where  the  value  is  not  fixed 
by  agi-eement  the  amount  reasonably  due  for  such  performance. 
In  such  cases,  to  the  extent  that  the  plaintiff's  recovery  pro- 
ceeds on  proof  of  performance  or  its  reasonable  value,  the  de- 
fendant, if  he  dispute  cither  as  shown  by  the  plaintiff,  must 
defend,  or  lose  all  right  to  contest  the  conclusions  so  arrived  at 
or  to  redress  for  the  deficiencies  of  the  performance.^*  The 
direct  defense  by  negativing  the  facts  which  the  plaintiff  as- 
sumes to  prove  to  measure  his  compensation,  or  those  which,  on 
the  theory  of  his  action,  enter  into  the  price  and  fix  the  amount 
of  damages,  is  not  recoupment,^^  nor  is  a  defense  which  consists 
of  a  denial  of  facts  which  the  plaintiff  must  prove  to  maintain 
his  action,  as  the  performance  of  a  condition  precedent.^®  The 
defense  which  is  allowed  under  the  name  of  recoupment  is  not 
a  keeping  Imck  a  part  of  the  plaintiff's  prima  facie  damage  on 
the  case  he  seeks  to  establish  by  evidence  of  the  character  ex- 
plained under  the  title  "mitigation  of  damages,"  but  a  reduction 
of  the  plaintiff's  recovery  by  the  allowance  against  him  in  his 
action  of  damages  due  the  defendant  on  a  substantive  cause  of 
action  in  his  favor,  growing  out  of  the  same  transaction  on  which 
the  plaintiff's  claim  or  demand  arises. 

§  169.  Same  subject.  Until  near  the  close  of  the  eighteenth 
century  the  strict  rules  of  the  common  law  as  to  the  iiule- 
jiendency  of  covenants  and  the  entirety  of  conditions  were  rigid- 
ly enforced.  A  defendant  ■sustaining  damages  from  the  breach 
of  any  counter  or  reciprocal  obligation  in  the  contract  sued  upon 
was  put  to  his  cross-action,  unless  he  had  made  the  performance 
of  such  ol)ligation  strictly  a  condition  precedent  to  his  under- 
taking to  the  plaintift'.^^  These  rules  were  often  attended  with 
hardship,  as  where  the  plaintiff'  was  insolvent  and  unable  to 

34  Kelliogg  V.  Denslow,  14  Conn.  36  Thompson  v.  Richards,  14  Mich. 
411;  Davis  v.  Tallcot,  12  N.  Y.  184.        172;   Stoddard  v.  Treadwoll,  20  Cal. 

35  Steamboat  Wcllavillp  v.  Ueisse,       294. 

?>  Ohio  St.  333.  37  7  Am.  L.  Review,  392. 


§    169]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  ol.'3 

respond  afterwards  or  in  a  separate  action.  Tlius,  in  an  action 
for  breach  of  a  covenant  to  recover  nnliquidnted  diuna<2;os  tlie 
defendant  pleaded  set-olf  of  like  damages  for  the  plaintiff's 
breach  of  his  covenants  in  the  same  instrument.  This  defense 
was  nrged  on  grounds  which  now  support  recoupment.  It,  how- 
ever, was  rejected  without  any  allusion  to  the  right  of  recouj)- 
meiit  because  the  statute  of  set-offs  only  applied  to  mutual  (lei)ts, 
which  did  not  include  demands  for  unliquidated  damages.'' 
Until  this  s])ecies  of  defense  had  become  firmly  established  the 
severe  adlierence  to  the  old  practice  was  in  no  eases  more  marked 
than  in  actions  between  landlord  and  tenant; — the  former  was 
allowed  to  collect  his  rent,  notwithstanding  his  covenant  to  re- 
pair remained  unperformed,  even  if  he  was  himself  insolvent. "^^ 
The  doctrine  of  recoupment  has  attained  its  growth  since  the 
revolution ;  but  the  courts  of  this  country  and  of  England  have 
not  given  it  the  same  expansion ;  nor  has  it  made  the  same 
progress  in  all  the  states  of  the  Ilnion.^" 

In  New  York  the  defense  was  at  first  admitted  in  mitiga- 
tion of  damages  where  there  was  fraud  in  respect  to  the 
consideration  ;  *^  next  where  there  was  breach  of  warranty  with- 
out fraud.'*^  At  this  time  it  elicited  increased  discussion  and 
received  more  emphatic  judicial  recognition.  ]\farcy,  J.,  said: 
"From  an  examination  of  the  cases  I  am  satisfied  that  in  those 
where  the  damages  arising  from  a  breach  of  warranty  in  the 
sale  of  chattels  have  been  allowed  to  be  given  in  evidence  by 
the  defendant  to  reduce  the  amount  of  recovery  below  the 
stipulated  price,  the  decisions  of  the  court  have  not  proceeded 
upon  the  ground  that  the  express  contracts  were  void  by  rea- 
son of  fraud,  and  a  recovery  had  upon  a  qimntuin  me  mil  or 
quantum  valebat  upon  implied  contract;  but  upon  a  jtriuciplc 
somewhat  different  from  tuose  adverted  to  in  this  cas(>  in  the 


38  Howlet  V.   Strickland,   1    Cowp.  41  Rocker   v.   \'rooman,    LT   .Folins. 

56 

,".02. 

39  Taylor's  Landlord  &  T.,  §  .373: 

7  Am.  L.  Review,  392.  *2  Spaldinir     v.      Vandercook,     2 

Wend.    431:    .Mc.Mlister    v.    rjcab.    4 


40  See  Johnson  v.  White  Mountain 
C.  Ass'n,  G8  N.  H.  437,  73  Am.  St. 
Gio.  Wend.  483 

Sutli.  Dam.  Vol.  T.— 33. 


514  SUTHERLAND    ON    BAIMAOES.  [§    160 

court  below;  upon  a  principle  which  has  of  late  years  been 
gaining  favor  with  courts  and  extending  the  range  of  its  opera- 
tions. Such  a  defense  is  admitted  to  avoid  circuity  of  action." 
Hence  he  insisted,  and  the  court  decided,  that  damages  arising 
from  breach  of  warranty  should  be  allowed  to  reduce  the  re- 
covery as  well  where  there  was  no  fraud  as  where  there  was. 
So  true  was  it  that  this  new  principle  of  avoiding  circuity  of 
action  "was  gaining  favor  with  the  courts  and  extending  the 
range  of  its  operations,"  that  the  discrepancies  at  any  given  time 
to  be  noticed  between  the  decisions  of  courts  of  different  states 
have  indicated  a  relative  progress  ratlier  than  a  permanent  dis- 
agreement.*^ 

§  170.  Nature  of  defense.  This  defense  is  founded  on  the 
natural  equity  that  mutual  demands  growing  out  of  the  same 
transaction  should  compensate  each  other  by  deducting  the  less 
from  the  greater  and  treating  the  difference  as  the  sum  justly 
due.'**  It  is  also  founded  on  the  policy  and  convenience 
of  settling  an  entire  controversy  in  one  action  where  it  can  be 
justly  done,  thus  saving  needless  delay  and  litigation.  By 
proper  pleading,  in  the  application  of  the  doctrine  of  recoup- 
ment, the  court  nuiy  look  through  the  whole  contract,  treating 
it  as  an  entirety,  and  the  things  done  and  stipulated  to  be 
done  on  each  side  as  the  consideration  for  the  things  done 
and  stipulated  to  be  done  on  the  other.  When  either  party 
seeks  redress  for  the  breach  of  stipulations  in  his  favor  the 
grievances  on  each  side  are  summed  up,  instead  of  those  only 
on  the  plaintiff's  side ;  a  balance  is  struck,  and  the  plaintiff  can 
recover  only  when  that  balance  is  in  his  favor. *^  Some  con- 
fusion has  arisen  from  treating  this  defense  as  one  of  failure  of 

43  The    principle    of    recoupment,  44  Hoover  Commercial  Co.  v.  Hum- 

vmder     various     names,     has     been  phrey,  —  Miss. — ,  G6  So.  214;  Green 

adopted  in  the  general  jurisprudence  v.  Farmer,  4  Burr.  2214,  2220;  Reab 

of  this  country.     And  it  is  believed  v.    McAlister,    8    Wend.    309,    115; 

tliat  it  is  now  imiversally  in  force  Myers  v.  Estell,  47  Miss.  4,  17-21. 

either     by     statute     or     otherwise;  45  Luf burrow  v.  Henderson,  30  Ga. 

though    in    some   states,    in   contro-  482;    Myers   v.   Estell,   47   Miss.   4; 

versies   at   law   where   title   to   real  Michigan  Y.  &  P.  Co.  v.  Busch,  75 

estate  is  involved,  tlie  doctrine  is  not  C.  C.  A.  109;  143  Fed.  929;  Penn  L. 

applied.  Co.  v.  McPherson,  13.".  N.  C.  287. 


§  170] 


I^KGAL    LKiUiDATiUJMS    AND    KKDUOTlOiSS. 


515 


consideration.*^  In  an  Alabama  case  *''  the  plaintill  sued  on  a 
note  which  had  been  given  for  a  clock  sold  by  him  to  the  de- 
fendant with  warranty  that  it  would  keep  good  time.  The 
clock  was  shown  to  be  worthless  as  a  time-piece;  but  tiic  case 
alone  was  worth  more  than  a  nominal  suui,  and  it  was  held 
that  the  defendant  might  claim  an  abatement  on  the  n«ite  to  the 
amount  of  damage  that  he  had  sustained,  llaviug  kept  the 
clock,  however,  judgment  must  go  against  him  tor  what  it  was 
actually  worth.  By  this  decision  the  breach  of  warranty  avoided 
the  special  contract  and  recovery  proceeded  on  a  quanlum 
meniit}^  This  is  in  accordance  with  the  English  rule ;  the  daiu- 
ages  are  reduced  by  showing  how  much  less  the  article  is  worth 
by  reason  of  the  breach  of  warranty;  in  other  words,  the  plain- 
tiff having  failed  to  perform  the  agreement  ^hich  was  the  con- 
sideration of  the  defendant's  promise,  the  judicial  iu<|uiry  is 
what  is  the  property  or  service  which  the  defendant  has  re- 
ceived worth.  Thus,  .V.  sold  B.,  for  95Z.,  two  pictures,  repre- 
senting them  to  be  ''a  couple  of  Poussins;"  they  were  in  fact 
not  originals,  but  very  excellent  copies.  B.  did  not  offer  to 
return  them,  and  it  was  held  that  if  the  jury  thought  that  he 


46  The  courts  of  Illinois  indorse 
the  view  of  Mr.  Freeman  as  ex- 
pressed in  his  note  to  Van  Epps  v. 
Harrison,  40  Am.  Dec.  323:  "In 
its  modern  application  the  founda- 
tion of  recoupment  is  failure  of  con- 
sideration. The  defendant  in  olfect 
admits  his  failure  to  perform  the 
contract  upon  which  he  is  sued,  and 
seeks  to  extenuate  his  default  by 
showing  that  the  plaintiff  has  failed 
in  some  particular  to  do  that  which 
was  the  consideration  of  the  defend- 
ant's promise,  and  to  that  extent, 
therefore,  the  plaintiff  has  no  right 
to  hold  the  defendant  liable;  hence 
it  is  essential  that  tlie  wrong  of 
which  the  defendant  complains 
should  in  some  way  impair  the  con- 
sideration of  his  contract — in  other 
words,  it  must  appear  that  the  ex- 
press or  implied  promise  broken  by 
the  plaintJr   ^'V.  ^he  consideration 


for  tlie  defendant's  promise."  Kce- 
gan  V.  Kinnare,  123  111.  280;  Lyon 
V.  Bryant,  54  111.  App.  331.  8ce 
Watkins  v.  Hopkins,  13  Gratt.  743. 
Compare  Perlcy  v.  Balch,  23  Pick. 
283,  34  Am.  Dec.  5U;  Comparet  v. 
Johnson,  6  Blackf.  59;  llerl)ert  v. 
Ford,  29  Me.  54G;  Drew  v.  Uowle, 
27  N.  H.  412,  59  Am.  Dec.  380; 
Wlieat  V.  Dotsun,  12  Ark.  fiOfl;  Van 
Buren  v.  Digges,  11  How.  4GI,  13 
L.  ed.  771 ;  Van  Epps  v.  Harrison,  5 
Hill,  63;  Withers  v.  Greene,  It  How. 
213;  Wynn  v.  Hiday,  2  Blackf.  123; 
KIminger  v.  Drew,  4  McLean,  388; 
Washburn  v.  Picot,  3  Dev.  390;  Pul- 
sifer  V.  PTotchkiss,  12  Conn.  234; 
Avery  v.  Brown,  31  Conn.  398; 
Poden  V.  Moore,  1   Stew.  &  Port.  71. 

47  Davis  V.   Dickey,   23   Ala.   848; 
Grisham  v.  Bodman.  Ill  Ala.  194. 

48  Harman  v.  Sanderson,  fi  Sm.  & 
M.  41,  45  Am.  Dec.  272 


516  SUTJIEKLAJMU    ON    DAMAGES.  [§     170 

believed  from  the  representation  of  A.  that  they  were  origi- 
nals, he  was  not  bound  to  pay  the  price  agreed ;  but  that,  as  he 
kept  them,  he  was  liable  to  pay  such  sum  as  the  jury  might 
consider  to  be  their  value.^^  In  an  English  case  ^°  Parke,  B., 
said:  "'Formerly  it  was  the  practice  where  an  action  was 
brought  for  an  agreed  price  of  a  specific  chattel  sold  with  a 
warranty,  or  of  work  which  was  to  be  performed  according  to 
contract,  to  allow  the  plaintiff  to  recover  the  stipulated  sum, 
leaving  the  defendant  to  a  cross-action  for  breach  of  the  war- 
ranty or  contractr;  in  which  action,  as  well  the  difference  be- 
tween the  price  contracted  for  and  the  real  value  of  the  arti- 
cle or  of  the  work  done,  as  any  consequential  damage,  might 
have  been  recovered;  and  this  course  was  simple  and  consist- 
ent. In  the  one  case,  the  performance  of  the  warranty  not 
being  a  condition  precedent  to  the  payment  of  the  i)rice,  the 
defendant  who  received  the  chattel  warranted  has  thereby  the 
property  vested  in  him  indefeasibly,  and  is  incapable  of  re- 
turning it  back ;  he  has  all  he  stipulated  for  as  the  condition 
of  paying  the  price,  and  therefore  it  was  held  that  he  ought  to 
pay  it  and  seek  his  remedy  on  the  plaintiff's  contract  of  war- 
ranty. In  the  other  case  the  law  appears  to  have  construed 
the  contract  as  not  imj)orting  that  the  performance  of  every 
jiortion  of  the  work  should  be  a  condition  precedent  to  the  pay- 
ment of  the  stipulated  price,  otherwise,  the  least  deviation 
would  have  deprived  the  plaintiff  of  the  whole  price;  and  there- 
fore the  defendant  is  obliged  to  pay  it,  and  recover  for  any 
breach  of  contract  on  the  other  side.  But  after  the  case  of 
Basten  v.  Butter,®^  a  different  practice,  which  had  been  partially 
adopted  before  in  the  case  of  King  v.  Boston,®^  began  to  prevail, 
and  being  attended  with  much  practical  convenience  has  been 
since  generally  followed ;  and  the  defendant  is  now  permitted 
to  show  that  the  chattel,  by  reason  of  the  noncompliance  with 
the  warranty  in  the  one  case,  and  the  work  in  consequence  of 

49Lomi  V.  Tucker,  4  C.  &  P.  15;  456;  Mondel  v.  Steel,  8  M.  &  W.  858. 

De  Sewhanbery  v.  Buchanan,  5  C.  &  50  Mondel  v.  Steel,  supra. 

P.  343;   Poulton  v.  Lattimorc,  n  B.  Sly  East,  479. 

&  C.  259;  Street  v.  Blay,  2  B.  &  Ad.  52  7  East,  481,  note. 


§    170J  LEGAL,    LIQUIDATIONS    AND    REDUCTIONS.  517 

the  non-performance  of  the  contract  in  the  other,  were  diiiiiii- 
ished  in  value.^^  The  same  practice  has  not,  however,  exlcinlcd 
to  all  cases  of  work  and  labor,  as  for  instance  that  of  an  attor- 
ney,** unless  no  beneht  whatever  has  been  derived  from  it ;  nor 
in  an  action  for  freight.**  It  is  not  so  easy  to  reconcile  these  de- 
viations from  the  ancient  practice  with  principle  in  those  jiarlic- 
nlar  cases  above  mentioned  as  it  is  in  those  where  an  execiitory 
contract,  such  as  this,  is  made  for  a  chattel  to  be  manufacturetl 
in  a  particular  manner  or  goods  to  be  delivered  according 
to  a  sample;  *^  where  the  party  may  refuse  to  receive  or  may 
return  in  a  reasonable  time  if  the  article  is  not  such  as  bargained 
for;  for  in  these  cases  the  acceptance  or  non-return  atlords  evi- 
dence of  a  new  contract  on  a  quantum  valebat;  whereas,  in  a 
case  of  delivery  with  a  warranty  of  a  specific  chattel  there  is 
no  power  of  returning  and  consequently  no  ground  to  imply  a 
new  contract;  and  in  some  cases  of  work  performed  there  is 
difficulty  in  hiiding  a  reason  for  such  })rcsumption.  It  iimst, 
however,  be  considered  that  in  all  these  cases  of  goods  sold  and 
delivered  with  a  warranty,  and  work  and  labor,  as  well  as  the 
case  of  goods  agreed  to  be  supplied  according  to  a  contract,  the 
rule  which  has  been  found  so  convenient  is  established  ;  and  that 
it  is  competent  for  the  defendant  in  all  of  these  not  to  set  olf, 
by  a  proceeding  in  the  nature  of  a  cross-action,  the  amount  of 
damages  which  he  has  sustained  by  breach  of  the  contrtid,  but 
simply  to  defend  himself  by  showing  how  much  less  the  sub- 
ject-matter of  the  action  was  w'orth  by  reason  of  the  breach 
of  contract;  and  to  the  extent  that  he  obtains  or  is  capalde  of 
obtaining  an  a])atement  of  price  on  that  account  he  must  be 
considered  as  having  received  satisfaction  for  the  contract  and 
is  precluded  from  recovering  in  another  action  to  that  extent, 
but  no  more."  The  defendant  was  not  entitled  to  show  damages 
resulting  from  such  breach  nor  the  breach  of  any  other  stijuila- 
tion." 

63Kist  V.  Atkinson,  2  Camp.  63;  56  (Jonnainc    v.    Bnrton,    ;]    Stark. 

Thornton  v.  Place,  2  M.  &  Rob.  218.       32 


57    Francis  v.  Baker,  10  Ad.  &  K. 

(i42;    Bartlett    v.    Holmes,    i:?    ('.    H. 

^^^-  iVM):   Davis  v.  Hodges,  L.   It.  (I  (,».  H. 


54TempIer  v.  McLachlan,  2  N.  R. 
56. 
55  Sheels  v.  Davics,  4  Camp.  Hi).       tiSJ. 


518 


SUTllEKJ.AJVD    OJN    DAMAGES. 


L^  171 


§  171.  Same  subject.     It  is  true  that  the  phiiiiLiU's  breach  of 
stipulations  iu  favor  of  the  defeudaut  impairs  the  consideration 


In  IMcAllister  v.  Reab,  4  Weiid. 
490,  the  theory  of  recoupment  is 
thus  discussed  by  Marcy,  J.:  "Upon 
wiuit  principle  are  tlie  damages  for 
tlic  breach  of  warranty  allowed  in 
u  case  where  there  is  fraud  to  be 
given  in  evidence  to  reduce  the  re- 
covery below  the  stipulated  price? 
Not  on  the  ground  of  (statutory) 
set-off,  because  these  damages  are 
unliquidated.  Is  it  upon  the  ground 
that  the  contract  is  destroyed  Ijy  the 
fraud?  If  it  is  rendered  void,  upon 
what  principle  can  the  vendor  re- 
cover at  all  ?  I  know  it  has  been 
said  he  recovers  upon  a  quantum 
nuruit  or  quantum  valehatj  but  if 
there  was  no  contract  by  reason  of 
his  fraud,  there  was  no  sale;  no 
passing  of  title.  Can  an  implied 
sale  be  set  up  in  lieu  of  the  express 
one?  This,  I  think,  may  well  be 
doubted,  although  the  express  con- 
tract may  be  void.  The  case  of 
Beecker  v.  Vrooman  (13  Johns.  302) 
seems  to  have  been  put  on  the 
ground  that  the  sale  is  valid.  The 
language  of  the  court  does  not  coun- 
tenance the  idea  that  the  question  in 
that  case  was  the  mere  value  of  the 
horse.  It  is  there  intimated  that  a 
different  rule  now  prevails  from 
what  formerly  governed,  which  com- 
mends itself  to  the  court,  because  it 
is  calculated  to  do  final  and  com- 
plete justice  between  the  parties, 
most  expeditiously  and  least  expen- 
sively; but  if  the  parties  were  j^ro- 
ceeding  without  regard  to  the  ex- 
])ress  contract  upon  an  implied  one, 
and  were  only  establisliing  the  true 
value  of  the  horse,  there  was  no  new 
rule,  and  the  language  of  the  court 
was  not  very  appropriate  to  the 
question  before  them.  In  the  case 
of  Leggett  V.  Cooper    (2  Stark  ie  N. 


P.  103),  where  the  counsel  for  the 
defendant  resisted  the  recovery  on 
the  contract  for  the  sale  of  hops  on 
account  of  fraud.  Lord  Ellenboruugh 
said,  'if  there  is  no  contract  for  tlie 
sale  of  the  goods  at  the  stipulated 
price,  there  is  no  contract  upon  tiie 
quantum  meruit  for  goods  sold  and 
delivered.'  The  action  in  the  case  of 
Frisbce  v.  Iloffnagle  (11  Johns.  50) 
was  on  a  note  for  the  consideration 
of  a  deed  with  warranty  for  land. 
The  defense  was  that  the  vendor  had 
no  title,  and  it  v^as  allowed  to  pre- 
vail, not  upon  the  ground  that  the 
contract  of  sale  was  invalid  by  rea- 
son of  fraud,  but  for  the  purpose 
of  avoiding  circuity  of  action.  The 
decision  in  the  case  of  Spalding  v. 
Vandercook  (2  Wend.  431)  does  not, 
I  apprehend,  proceed  on  the  ground 
of  fraiid  alone.  The  consideration 
of  the  note  was  the  fulfillment  of  the 
contract  to  deliver  barrels.  If  the 
whole  contract  was  cut  up  by 
the  fraudulent  conduct  of  the  plain- 
tiff, the  note  was  entirely  without 
consideration ;  but  it  was  not  so 
considered.  So  in  the  case  of  Burton 
V.  Stewart  (3  Wend.  230,  20  Am. 
Dec.  692 ) ,  there  Avas  fraud  in  the 
sale  of  the  horse,  yet  the  note  given 
on  the  sale  was  not  adjudged  to  be 
w  ithout  consideration.  The  contract 
was  broken,  but  it  had  a  valid  ex- 
istence; and  the  court  entertained 
no  doubt  in  that  case  that  if  there 
had  been  a  proper  notice  the  amount 
of  recovery  would  have  been  greatly 
abated  by  the  proof  of  what  was 
offered;  it  was,  however,  rejected  for 
the  want  of  such  notice."  He  con- 
cludes that  the  recovery  of  the 
plaintiff  is  based  on  the  express  con- 
tract, and  the  amount  of  it  reduced 
by  the  allowance  of  damages  on  the 


§    172]  LEGAL    LIQUIDATIONS    AND    nKDITCTIONS.  510 

of  his  agreement  in  favor  of  the  plaintiff;  but  the  defense  of 
recoupment  is  not  based  on  the  principle  of  treating  the  defend- 
ant as  relieved  from  his  obligation  to  i)erform  his  undertaking 
because  the  consideration  is  impaired.  On  the  contrary,  it  is 
based  on  the  opposite  principle,  namely,  the  enforcement  of  the 
contract  on  both  sides,  and  that  the  damages  which  the  plaintiff 
has  sustained  from  the  breach  of  the  engagements  in  his  favor 
shall,  in  whole  or  in  part,  be  compensation,  by  allowance  in 
favor  of  the  defendant,  and  application  thereto  of  such  danuiges 
as  ho  has  suffered  from  the  infraction  of  the  cori-elative  duties 
and  stipulations  of  the  plaintiff"  which  were  the  consideration. 
The  law  will  cut  off  so  much  of  the  plaintiff''s  claim  as  the  cross- 
damages  may  come  to.^^  Wherever  recoupment,  strictly  such,  is 
allowed,  distinct  causes  of  action  are  set  oft'  against  each  other.^^ 
It  is  not  a  bar  to  the  plaintiff's  action  like  the  technical  plea  in 
avoidance  of  circuity  of  action,  but  in  pursuance  of  the  same 
policy  of  the  law  it  seeks  to  satisfy  and  discharge  the  whole  (»r 
a  part  of  the  plaintiff's  claim  with  damages  for  which  lie  is 
liable  in  respect  of  the  same  transaction.^" 

§  172.  Constituent  features  of  recoupment.  For  the  purpose 
of  discussing  the  principal  constituent  features  of  recoup- 
ment the  following  propositions  are  sufficiently  comprehensive: 
1.  The  claim  or  demand  for  which  the  defendant  seeks  to  re- 
coup must  be  a  valid  cause  of  action  upon  which  a  separate 
suit  might  be  maintained  against  the  party  beneficially  inter- 
ested in  the  plaintift''s  action,  or  his  assignor.  2.  It  must  arise 
from  the  same  subject-matter  or  spring  out  of  the  same  contract 
or  transaction  on  which  the  plaintiff  relies  to  maintain  his 
action.     3.  It  is  immaterial  whether  it  be  in  itself  or  is  set  u)) 

defendant's    cross-claim    to    save    a  3!'l -.    Grant    v:   lUitton,    14    .lolins. 

multiplicity    of    actions,    and    as    a  377;  Gillespie  v.  Torrance,  2.5  N.  Y. 

Rul)stitiite  for  a  cross-action  liy  the  300,    309,   82    Am.    Dec.    :^r,ri:    Price 

defendant.  v.  Reynolds,  39  N.  J.  L.  171. 

58  Hoover  Commercial  Co.  v.  Hum-  60  McCullough    v.    Cox,    ti     Harb. 

phrey,  —  Miss.  — ,  GG  So.  214;  Ives  3S7 :  Andrus  v.  Dyckman  Hold  Co., 

V.   Van   F.pps,   22    Wend.    155,    15G:  12(i  Minn.  40G;  La  Mesa  Conininnity 

McAllister   v.   Reab,   4   Wend.   4S3;  Ditch  v.  Apple/.oeller,  —  N.  M.  — , 

Reab    v.    McAlister,    S    Wend.    109;  110    Pac.    1051;    Hooker    v.    Groom 

Batterman  v.  Pierce,  3  Hill,  171.  (Steulien  Co.  Ct..  N.  V.)    14S  N.  Y. 

59Minnaujfh   v.   Parllin,  07    Midi.  Siijip.  20S. 


520  SUTHERLAND    ON    DA^MAGES.  [§    lY2 

as  a  defense  against  a  claim  for  liquidated  or  unliquidated 
damages.  Nor  is  it  necessary  that  the  claims  on  both  sides  be 
of  the  same  nature.  4.  Generally  it  is  available  only  as  defense, 
for,  except  by  statute,  it  can  have  no  further  effect  than  to 
answer  the  plaintiff's  damages  in  whole  or  in  part ;  the  defend- 
ant cannot  recover  any  balance  or  excess.^^  5.  A  defendant  has 
an  election  to  use  such  a  cross-demand  as  a  defense  or  bring  a 
separate  action  upon  it;  but  he  will  not  have  the  election  to  set 
11])  his  claim  by  way  of  recoupment  unless  it  would  be  just  and 
practicable  to  adjust  it  in  the  plaintiff's  action.  G.  When  made 
the  subject  of  recoupment  the  defendant  assumes  the  burden  of 
proof  in  respect  to  it,  and  the  same  rule  or  measure  of  damages 
applies,  subject  to  the  limitation  just  stated,  as  would  be  applica- 
ble if  the  defendant  had  brought  a  separate  action.  7.  When 
submitted  as  a  subject  of  recoupment  the  judgment  will  be  a 
bar  to  any  other  suit  or  recoupment  upon  it. 

§  173.  Remedy  by  counter-claim.  The  counter-claim  of  the 
code  includes  recoupment  and  is  more  comprehensive;  and  the 
remedy  by  both  has  been  made  more  useful  and  complete  by 
statutory  provision  against  voluntary  discontinuance  of  the  ac- 
tion by  the  plaintiff  without  the  defendant's  consent  after  this 
defense  has  been  interposed,  and  for  judgment  on  the  adverse 
claim,  if  any  amount  is  established  after  satisfying  the  plain- 
tiff's claim,  or  where  no  claim  in  favor  of  the  plaintiff  is  ad- 
judged. 

§  174.  Validity  of  claim  essential.  The  claim  or  demand  to 
be  recouped  must  be  a  valid  cause  of  action  for  which  a  sep- 
arate suit  could  be  maintained.^^    Hence  it  is  essential  that  the 

eiMcConnell   v.    Stubbs,    124   Ga.  Graysburg  Mfg.  Co.,  132  N.  C.  167; 

1038.  Finnie   v.    Montreal,    32    Can.    Sup. 

By  statute  in  New  Hampshire  the  Ct.  335;  Eeilly  v.  Lee,  85  Hun,  315, 

defendant   may   recover   an   allirma-  affirmed    without    opinion,    155    N. 

tive  judgment  against  the  plaintiff  Y.     691;     Walker     v.     Millard,     29 

if    he    shows    he    is    entitled    to    it.  N.  Y.  375;   Woodward  v.  Fuller,  80 

Johnson     v.     White     Moimtain     C.  N.  Y.  312;  Lennon  v.  Smith,  124  N. 

Ass'n,  08  N.  H.  437,  73  Am.  St.  010.  Y.  578;  Peck  v.  McCormick  H.  Mach. 

62  Heite  v.  Cowgill,  —  Del.  — ,  91  Co.,  94  111.  App.  586,  196  111.  295;  Os- 
Atl.  052;  Hillman  v.  Luzon  Cafe  good  v.  Bauder,  82  Iowa  171;  How- 
Co.,  49  Mont.  180;  Bostrom  v.  Beck-  ell  v.  Dimock,  15  App.  Div.  (N.  Y.) 
er,    172    111.    App.    410;     Leigh    v.  102;  Cincinnati  Daily  Tribune  Co.  v. 


174] 


LEGAL    LIQUIDATIONS    AND    KKDUCTIONS. 


521 


subject  of  it  he  such  as  tlie  court  in  wliidi  it  is  pIcMdcd  lias 
jurisdiction  of;^^  tliat  tlie  (laiiiagcs  set  up  were  not  iucnrrcil 
through  the  defendant's  fault  or  negligence,**  that  the  contract 
sued  npon  and  out  of  which  the  claim  arises  is  valid ;  **  that  the 
plaintiff  is  a  party  subject  to  suit ;  ®^  that  the  allowance  of  the 
counter-claim  will  not  deprive  the  plaintiif  of  the  cxciupf inns 
given  him  bv  statute,^'  or  affect  his  rights  as  assignee,  which 
are  governed  by  the  statute  existing  when  the  assignment  was 
made.^*       • 

Reduction  of  damages  nuiy  often  be  claimed  ujxm  fa<'ts 
which  do  not  constitute  a  cause  of  action  in  favor  of  the  de- 
fendant. Of  this  class  and  nature  are  those  provable  in  niH- 
igation  of  damages.  The  distinction  is  important;  for  it  is 
necessary  to  use  the  latter  in  defense ;  the  benefit  of  such 
facts  will  be  lost  if  they  are  not  then  introduced.  But  if  the 
defense  consists  of  a  substantive  cause  of  action  it  will  not  be 
lost  or  barred  by  the  defendant  failing  to  put  it  forward  when 


Bruck,  (il  Ohio  St.  489,  76  Am.  St. 
433;  Harper  v.  Moffat  C.  Co.,  151 
111.  84,  100;  Van  Winkle  v.  Wilkins, 
81  Ga.  93,  12  Am.  St.  299  (the  dam- 
ages claimed  must  be  the  proximate 
result  of  the  wrong;  Hess  Co.  v. 
Dawson,  149  111.  138;  Davidson  v. 
Eountree,  69  Wis.  655;  Sylte  v.  Kel- 
son, 26  Minn.  105;  Rhymney  R.  Co. 
V.  Rhymney  I.  Co.,  25  Q.  B.  Div. 
146;  Barnes  v.  McMullins,  78  Mo. 
260;  Widrig  v.  Taggart,  51  Mich. 
103,  and  cases  cited  to  this  section. 
See  §  177  as  to  the  effect  of  tlie  stat- 
ute of  limitations. 

63  People  V.  California  Safe  De- 
posit &  Trust  Co.,  168  Cal.  241, 
L.R.A.1915A,  299;  In  re  Bell's  Es- 
tate, 168  Cal.  253;  Cragin  v.  Lovell, 
88  N.  Y.  258. 

64  Provenzano  v.  Thayer  Mfg.  Co., 
9  Daly,  90. 

65  Ryan  V.  Dumphy,  4  Mont.  342, 
354;  American  T.  Co.  v.  Siegel,  221 
111.  145. 

66  A  tax  is  not  a  debt  or  obliga- 


tion to  pay  money  founded  upon  con- 
tract and  cannot  be  counter-claimed 
against.  Catling  v.  Commissioners, 
92  N.  C.  536,  53  Am.  Rep.  4.32;  Cobb 
V.  Elizabeth  City,  75  N.  C.  1  ;  Finne- 
gan  V.  Fernandina,  15  Fla.  379. 

A  defendant  cannot  plead  a  coun- 
ter-claim against  the  state  witiioiit 
its  consent.  State  v.  Bradley,  37  1-a. 
Ann.  623;  People  v.  Dcnnison,  V>\ 
N.  Y.  272;  Battle  v.  Thompson,  65 
N.  C.  406. 

A  set-off  cannot  be  maintained  on 
a  debt  contracted  by  the  plaintiff 
during  infancy  and  not  ratified  by 
him  after  becoming  of  full  age. 
Rawley  v.  Rawlcy,  1  Q.  B.  Div.  460; 
Widrig  V.  Taggart,  51  Mich.  103; 
McCarthy  v.  Henderson.  138  ^lass. 
310. 

67  Bauer  v.  Teasdale,  25  Mo.  App. 
25:  Curlee  v.  Thomas,  74  N.  C.  51; 
Wilson  V.  McElroy,  32  Pa.  82. 

68  Fourth  Nat.  Bank  v.  City  Nat. 
Bank,  68  111.  398,  18  Am.  Rep.  556. 


522  suTUEKi^Ajsri)  on   jjamaues.  [§   174 

there  is  an  u})|)ortimity  to  make  it  available.  The  fact  that 
the  defendant  has  the  option  to  avail  himself  of  matter  of  re- 
coupment or  bring  a  cross-suit  upon  it  necessarily  implies 
that  such  matter  constitutes  a  cause  of  action,®^  In  an  action 
to  recover  for  labor,  if  the  benefit  of  the  labor  is  lost  by  causes 
for  which  the  plaintiif  would  be  answerable  in  a  cross-action, 
the  same  matter  which  would  support  a  cross-action  may  be 
given  in  evidence  in  defense  of  the  suit  to  recover  payment.^" 
''That  doctrine  (of  recoupment)  does  not  rest  on*the  nature 
of  the  right  which  the  plaintiff  has  in  the  contract  which  he 
seeks  to  enforce,  nor  on  the  fact  that  his  interest  in  it  is  the 
same  at  the  time  of  suit  brought  as  when  it  was  originally 
entered  into.  The  essential  elements  on  w^hich  its  application 
depends  are  two  only.  The  first  is  that  the  damages  which  the 
defendant  seeks  to  set  off  shall  have  arisen  from  the  same  sub- 
ject-matter or  sj)rung  out  of  the  same  contract  or  transaction 
as  that  on  which  the  plaintiff  relies  to  maintain  his  action. 
The  other  is  that  the  claim  for  damages  shall  be  against  the 
plaintiff,  so  that  their  allowance  by  way  of  set-off",  or  defense  to 
the  contract  declared  on,  shall  operate  to  avoid  circuity  of  ac- 
tion, and  as  a  substitute  for  a  distinct  action  against  the  plain- 
tiff to  recover  the  same  damages  as  those  relied  on  to  defeat  the 
action."  '^ 

§  175.  Parties.  The  cause  of  action  set  up  for  recoupment 
must  be  one  against  the  party  beneficially  interested  in  the 
'plaintiff"'s  action ;  a  claim  against  the  nominal  plaintiff'  j^erson- 
ally,  when  he  sues  in  a  fiduciary  capacity  or  for  the  benefit  of 
another,  is  not  available.  Thus,  where  property  attached  by 
an  officer  upon  mesne  process  was  replevied  from  him,  and 
on  the  failure  of  the  plaintiff"  in  that  suit  to  comply  with  the 
judgment  for  return  of  the  property  suit  v/as  brought  on  the 
bond  by  the  officer,  the  other  party  could  not  recoup  the  dam- 
ages adjudged  in  his  favor  against  such  officer  for  false  return 
on  the  process  upon  which  he  originally  attached  the  property 

69  Brown   v.   Gallaudct,   80  N.   Y.  70  Austin  v.   Foster,  9  Pick.  341; 

413 ;    Gillespie    v.    Torrance,   25    id.  Heite  v.  Cowgill,  —  Del.  — ,  91  Atl. 

309.     See  Houston  v.  Young,  7  Ind.  652. 

200;   Clark  v.  Wjldridge,  5  id.  176.  Vl  Sawyer  v.  Wiswell,  9  Allen,  39. 


§    175]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  523 

because  the  damages  recovered  by  the  officer  on  the  bond 
would  be  held  in  trust  for  the  bencHt  of  the  attaching  creditor 
and  his  debtor,  and  tlie  damages  sought  to  be  recouped  were 
assessed  against  him  personally  for  a  wrong  committed  hy 
him.'''^  So  in  an  action  by  executors,  as  snch,  for  the  recovery  of 
purchase-money  of  land  sold  by  them  the  purchaser,  nud<ing 
no  olfer  or  attempt  to  rescind  the  contract,  cannot  avail  him- 
self of  false  and  fraudulent  representations  made  by  them  at 
the  time  of  the  sale  in  respect  to  the  subject-matter  either  as  a 
defense  or  by  way  of  recoupment  or  counter-claim.  His  rem- 
edy, if  he  has  any,  is  against  the  executors  personally.'''^ 

It  is  not  essential  to  the  exercise  of  the  right  of  recoupment 
that  the  suit  in  which  the  right  is  asserted  should  be  brought 
in  the  name  of  the  party  who  is  liable  for  the  cross-claim, 
nor  need  it  be  against  the  party  who  is  entitled  to  the  benetit 
of  such  claim.  It  is  enough  that  the  suit  is  substantially  be- 
tween them ;  that  the  claim  sued  on  is  subject  to  this  defense, 
or  that  the  proceeding  be  of  such  a  nature  that  the  mntnal 
claims  can  be  adjusted  in  it;  that  whatever  is  recovered  is  en- 
forcible  against  the  property  of  the  party  seeking  to  recoup, 
and  whatever  is  deducted  upon  the  cross-claim  properly  inures 
to  his  benefit.^*    By  the  water-craft  law  of  some  states  demands 

72  Wright  V.  Quirk,  105  Mass.  44.  oil'  against  the  debtor.  Olmstcad  v. 
See    Beckman   v.    Manlove,   IS   Cal.       Scntt,  55  Conn.  ]25. 

388.  74  See  Munroe  v.  Adaiiio,   \'M'}  K\. 

73  Westfall  V.  Dungan,  14  Ohio  St.  252 ;  Crawford  v.  McDonald,  84  Ark. 
276;  Cumberland  Island  Co.  v.  415;  Vaugh  v.  Walsh,  122  Wis.  480. 
Bunkley,  108  C4a.  756.  The  owner  of  property  may  defend 

A  plaintiir  who  sues  an  assignee  against  the  claim  of  a  subconlractor 

for  the  benefit  of  creditors  to  recov-  for  a  lien  if  the  contractor  fails  to 

er  the  price  of  goods  is  not  subject  do  so  and  reduce  it  to  the  extent  de- 

to  a  coimter-claim  for  damages  re-  fects  in  the  work  or  material  iiave 

suiting  from  the  malicious  prosecu-  diminished   the   benefit  of   jierform- 

tion  by  him  of  a  former  suit  for  the  ance.     Wiciiita  S.  &  D.  Co.  v.  Weil, 

same   cause    of   action   unless   it   is  80  Kan.  606;   West  Allis  L.  Co.  v. 

shown    that    his    cestuis    que    truM  Wiesenthal,  .141   Wis.   460;    Fossett 

participated     in     or.   approved     his  v.    Rock   Island   L.   &   Mfg.   Co.,   70 

wrongful  act.  Kan.     428,     14    L.R.A.(N.S.)     018: 

Gelshenen  v.  ?Iarris,  26  Fed.  680.  Julin  v.  Poths  Mfg.  Co.,  54  111.  Ai>|i. 

If    the    beneficial     interest     in     a  460:    Cheney   v.   Tory    H.    Ass'n,   65 

claim    or    demand    remains    in    the  N.   Y.  282;    McBean   v.  Kinnear,  23 

as.^ignor  the  assignee  cannot  set   it  Out.    .'{l.T.      See    Crosby    v.    Scott-G. 


i24 


SUTHERLAND    ON    DAMAGES. 


[§  175 


of  certain  descriptions  are  liens  upon  and  enforcible  against  the 
water-craft,  which  maj  be  discharged  by  bond  or  some  form  of 
undertaking  in  behalf  of  the  owners  conditioned  for  the  pay- 
ment of  amounts  found  to  be  liens.  In  actions  upon  such  se- 
curity, or  against  the  water-craft  not  bonded,  any  matter  of 
recoupment  in  respect  to  the  demand  alleged  to  be  a  lien  may 
be  set  up.^^  The  surety  of  a  principal  entitled  to  recoupment 
may,  as  a  general  rule,  avail  himself  of  that  defense  because  of 
the  natural  equity  that  mutual  debts  and  liabilities  growing  out 
of  the  same  transaction  shall  compensate  each  other.'^  In  New 
York,  however,  this  application  of  recoupment  is  refused ;  '' 
and  so  under  a  Tennessee  statute  unless  the  principal  gives  con- 
sent.''^^  The  prevailing  view  is  that  a  counter-claim  or  cross- 
claim  must  be  against  all  the  plaintiffs  and  them  only  and  in 
favor  of  all  the  defendants  and  no  others.^^    In  an  action  upon 


I.  Co.,  93  Minn.  475.  In  an  action 
by  A.  against  B.  and  C.  they  sought 
to  recoup  his  demand.  It  appeared 
that  D.,  who  was  not  a  party  to  the 
record,  was  a  partner  of  the  defend- 
ants in  the  original  contract  was 
interested  in  the  reduction  of  A's 
claim  and  suffered  in  common  with 
til  em  the  damages  souglit  to  be  re- 
couped. A  recoupment  was  allowed. 
Baltimore  United  O.  Co.  v.  Barber, 
2  Mackey  (D.  C.)  4.  But  compare 
Flynn  v.  Seale,  2  Cal.  App.  GG5. 

If,  contemporaneously  with  the 
execution  of  notes  for  the  purchase- 
money  of  land,  tlie  parties  agree  in 
writing  that  the  vendor  shall  fur- 
nish the  vendee  a  complete  chain  of 
title  to  the  land  purchased,  for  the 
performance  of  which  it  is  stipu- 
lated that  the  notes  shall  be  bound, 
tlie  damages  resulting  from  the  non- 
performance of  such  agreement  may 
be  recouped  against  the  notes  al- 
though the  latter  were,  at  the  vend- 
or's request,  made  payable  to  a 
third  party,  no  consideration  mov- 
ing from  him.  Hooper  v.  Arm- 
strong, 69  Ala.  343.     See  last  note. 


'i'^  ISteaniboat  Wellsville  v.  Geisse, 
3  Ohio  St.  333;  Ward  v.  Willson,  3 
Mich.  1. 

76  Reeves  v.  Chambers,  67  Iowa, 
81 ;  McHardy  v.  Wadsworth,  8  Mich. 
349;  Waterman  v.  Clark,  76  111. 
428;  Janett  v.  Martin,  70  N.  C. 
459.    See  Hobbs  v.  Duff,  23  Cal.  596. 

77  Lasher  v.  Williamson,  55  N.  Y. 
619;  Gillespie  v.  Torrance,  25  id. 
306.  See  Queen  City  Bank  v.  Brown, 
75  Hun,   259. 

78  Phcenix  I.  Works  Co.  v.  Rhea, 
98  Tenn.  461. 

79narrell  v.  Neill,  56  Ind.  App. 
547 ;  Reveruzzi  v.  Caruso,  86  N. 
J.  L.  556;  Doyle  v.  Nesting,  37 
Colo.  522;  Flynn  v.  Seale,  2  Cal. 
App.  665;  Carr  v.  Tucker,  42 
Tex.  330;  Brown  v.  Morris,  83 
N.  C.  221;  Sloteman  v.  Thom- 
as &  W.  Mfg.  Co.,  69  Wis.  499; 
Chase  v.  Evoy,  58  Cal.  348;  Jen- 
kins V.  Barrows,  73  Iowa  438; 
Hopkins  v.  Lane,  81  N.  Y.  501;  Mc- 
CuUoch  V.  Vibbard,  51  Hun  227; 
Tomlinson  v.  Nelson,  49  Wis.  679; 
Kirby  v.  Spiller,  83  Ala.  481;  Wood 
V.  Brush,  72  Cal.  224;  Thalheiraer  v. 


§    175]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  525 

a  contract  a  balance  due  the  defendant  npon  an  unsettled  part- 
nership account  between  the  parties,  the  iirni  iuiviuir  hccii  dis- 
solved prior  to  the  commencement  of  the  action,  is  a  proper 
counter-claim.*"  Damages  may  be  recoiiped  against  a  partner- 
ship where  the  contract  out  of  which  they  arose  was  made  with 
one  of  the  partners  prior  to  the  formation  of  the  iirm.'^  If 
some  of  the  defendants  set  up  that  the  contract  sued  upon  was 
made  with  them  they  may  plead  a  counter-claim  th»iui:h  the 
other  defendants  have  no  interest  in  it.**^  Where  the  plaintill's 
conduct  indicates  that  he  considered  the  defendants  as  the  jiar- 
ties  with  whom  he  was  dealing  and  he  has  sued  theiu  botli  Ik; 
cannot  controvert  their  right  to  establish  a  counter-claini.*^  In 
an  action  brought  by  an  executor  or  administrator  upon  a  con- 
tract made  by  him  after  the  death  of  his  testator  or  intestate 
or  to  recover  assets  belonging  to  the  estate  in  the  hands  ot'  a 
third  person  a  claim  due  from  the  deceased  to  the  defendant  cun- 
not  be  counter-claimed.  "The  reason  of  the  rule  is  that  in  all 
such  cases  the  allowance  of  such  set-oif  or  counter-claim  would 
necessarily  destroy  the  equal  and  just  distributi(»n  of  the  assets 
belonging  to  the  estate  among  the  creditors  in  every  case  where 
the  assets  were  insufficient  to  pay  all  the  debts  of  the  de- 
ceased." **     An  administrator  who  is  sued  upon  personal  claim 

Crow,  13  Colo.  397;  Roberts  v.  Don-  327;   Fish  v.  Suiulalil.  82  Xd).  r,4\. 

ovan,  70  Cal.   108;    City  Council  v.  Seo    Tondergast    v.    (Jrc.iili.ld,     i(» 

Montgomery    Water-works,    79    Ala.  Ilun,  494. 

233;    Copeland   v.   Young,   21    S.   C.  81  I'osey  v.  West  C.  Co.,  92  Miss. 

275;  Casey  v.  Hanrick,  69  Tex.  44;  730. 

King  V.  Wise,  43  Cal.  628;   Lemon  ^^  Clegg  v.  Cramer,  32  Hun.   102. 

V.  Stevenson,  36  111.  49;  Spofford  v.  83  Drew   v.  Edmunds,  CO   Vt.  401. 

Rowan,  124  N.  Y.  108.  6  Am.  St.   122. 

An   individual  demand  cannot  be  84  Pcr  Taylor,  J.,   in   McLaughlin 

used   as  a  counter-claim  to  a  joint  v.  Winner,  63  Wis.  120,  124.  .'i3  Am. 

indebtedness  unless  the  insolvency  of  Rep.  273,  citing  .Aldrich  v.  Campbell, 

the    plaintiff    is    shown.      Collier    v.  4    Gray,    2S4;     Smith    v.    Boyer.    2 

Erwin,   3  Mont.   142;    Kemp  v.  Mc-  Watts,  173;   Aiken  v.  Bridgman.  37 

Cormick,  1  id.  420.  Vt.  249;   Woodward  v.  McGaugh.  8 

An  agent  liable  on  a  contract  be-  Mo.  161;  Newhall  v.  Turney.  14  111. 

cause  he  did  not  disclose  his  agency  338;   Patterson  v.  Patterson,  59  N. 

may  not  plead  a  recoupment  avail-  Y.  574,  17  Am.  Rep.  384;  Lawrence 

able  to  his  principal.     Gibhoney  v.  v.  Vilas,  20  Wis.  381,  389-.391 ;  Txim- 

Wayne,   141   Ala.   300.  barde  v.  Older,  17  Beav.  542;  Wrout 

SOWaddell   v.   Darling,   51    N.   Y.  v.  Dawes,  25  id.  369;   Root  v.  Tay- 


526  SUTHERLAND    ON    DAMAGES.  [§    175 

cannot  counter-claim  a  debt  which  is  due  from  the  plaintiff  to 
him  in  his  representative  capacity.**  Under  a  statute  which 
provides  that  in  an  action  brought  bj  an  executor  or  adminis- 
trator in  his  representative  capacity  a  demand  against  the  de- 
cedent belonging  at  the  time  of  his  death  to  the  defendant  may 
be  set  up  as  a  counter-claim,  the  wrongful  acts  of  an  executor 
cannot  give  the  defendant  a  right  to  counter-claim  against  a 
demand  owing  to  the  testator  in  his  life-time.*^ 

§  176.  Same  subject.  The  question  arose  in  Newfoundland 
V.  Newfoundland  E.  Co.*^  whether  a  right  of  set-off  existing 
in  favor  of  the  government  was  available  against  such  of  the 
plaintiff's  as  were  assignees  of  the  original  corporation.  The 
facts  were  that  the  plaintiff  was  incorporated  for  the  pur- 
pose of  constructing  and  working  a  railway  in  pursuance  of  a 
contract  with  the  government,  for  which  the  latter  was  to  pay 
a  subsidy  and  grant  lands.  The  assignees  took  whatever  right 
the  company  had  to  the  subsidy  and  the  grants  of  land  in  re- 
spect to  a  particular  portion  of  the  road.  The  contention  of 
the  plaintiff"  was  that  the  government  was  bound  to  pay  a 
certain  amount  of  subsidy  and  to  make  grants  of  land  for  a  com- 
pleted portion  of  the  road,  though  it  was  not  finished  as  a 
whole.  This  was  disputed,  but  if  such  liability  existed  it  was 
asserted  that  the  government  could  set  up  counter-claims  against 
the  company  for  its  breach  of  contract  in  not  completing  the 
road.  It  was  held  by  the  privy  council  that  the  counter-claim 
was  good  as  against  the  assignees  of  the  company,  it  and  the 
claim  having  their  origin  in  the  same  portion  of  the  contract  and 
the  obligations  which  gave  rise  to  them  being  closely  inter- 
twined. ''The  claim  of  the  government  does  not  arise  from  any 
fresh  transaction  freely  entered  into  by  it  after  notice  of  assign- 

lor,    20   Joluis.    137;    Steel   v.    Steel,  claim  in  favor  of  the  receiver  of  the 

12   Pa.   G4;    Shipman    v.   Thompson,  trust  company  against  the  estate,  it 

Willes,    103.      Thompson    v.    Whit-  l)eing  solvent.     People  v.  California 

marsh,  100  N.  Y.  30,  is  to  the  same  Safe  Deposit  &  Trust  Co.,   IGS  Cal. 

cfl'ect.  241. 

But    an    administratrix   who    has  85  Courley  v.  Walker,  GO  Iowa,  80. 

deposited   funds  of  the  estate   in  a  86  Wakeman   v.   Everett,   41    Him, 

trust  company  may   set  off  lier  de-  27S. 

posit     claim     against     an     allowed  87  12  App.  Cas.  199. 


§    177]  -LEUAL    LIQUIDATIONS    AND    IJEDUCTIONS.  527 

ment  by  the  company.  It  was  utterly  powerless  to  prevent  llio 
company  from  inflicting'  injury  on  it  by  breaking  the  contract. 
It  would  be  a  lamentable  thing  if  it  were  found  to  be  the  law 
that  a  party  to  a  contract  may  assign  a  portion  of  it,  perhaps  a 
beneficial  portion,  so  that  the  assignee  shall  take  tlic  benefit, 
wholly  discharged  of  any  counter-cliiim  by  the  other  party  in 
respect  of  the  rest  of  the  contract,  which  may  be  biirdeiisoine. 
There  is  no  universal  rule  that  chiims  arising  out  of  tiie  saiiio 
contract  may  be  set  against  one  another  in  all  ciiTiimstances. 
But  their  lordships  have  no  hesitation  in  saying  that  in  this 
contract  the  claims  for  subsidy  and  for  non-constriiction  ought 
to  be  set  against  one  another."  ®*  Where  the  plaintiff  sues  an 
assignee  and  is  not  entitled  to  protection  as  a  bona  fulc  holder 
of  negotiable  |)aper,  his  action  is  subject  to  any  defense  by  way 
of  recoupment  which  would  be  good  against  the  party  to  whom 
the  plaintiff's  demand  accrued.*^  Where  a  note  for  the  price 
of  property  sold  was  made  payable  to  the  vendor's  wife,  and  im 
portion  of  the  consideration  moved  from  her,  the  note  was  sub- 
ject to  the  same  defense  Ijy  way  of  recoupment  for  the  vendor's 
fraud  in  the  sale  as  if  it  had  been  made  payable  to  himself.'"^ 
A  counterclaim  may  be  maintained  against  the  state  though  it 
could  not  have  been  sued  on  without  the  state's  conseut.^^ 

§  177.  Maturity  of  claim  or  demand;  statute  of  limitations. 
Must  the  matter  of  rei^oupment  be  a  mature  cause  of  action  at 
the  time  of  the  commencement  of  the  plaintiff's  action,  or  will 
it  be  sufficient  that  it  is  such  at  the  time  of  pleading '(  ( Campbell, 
J.,  ^^  said:  "The  purpose  of  recoupment  would  be  del"eatcd  if 
the  party  cannot  be  allowed  to  plead  what  he  might,  at  the 

88  Americau  M.  Co.  v.  Boaton,  202  iJ  Aui.  Kcp.  7Jr>:  lliiisdcll  v.  Wcol, 
Mass.  374,  approving  Rockwell  v.  ;">  Deiiio,  172;  Kockwcil  v.  Daiiicl.s, 
Daniels,  4  Wis.  432.  4  Wis.  432. 

If  the  party  who   agrees  to   per-  9°  Kelly  v.  rembur,  35  Vt.  183. 

form   makes   an   assignment   of   the  9^  Comnionwealth    v.   Barker,    12G 

entire  contract  before  any  money  is  Ky.  200. 

due  under  it  the  other  party  may  re-  92  In  Piatt  v.  Brand,  26  Mich.  175. 

coup  his  damages  for  a  breach  there-  To  the  same  effect:  California  C.  Co. 

of  by  the  assignors.     Smith  v.  Wall,  v.  Pacific  S.  M.  Works,  104  Fed.  f)78, 

12  Colo.  363.  in   C.  C.  A.  106;    Smith  v.   French, 

89  Wood  V.  Brush,  72  Cal.  224,  141  N.  C.  1;  Slaughter  v.  Standard 
McKnight  v.  Devlin,  52  N.  Y.  399,  Mach.  Co.,  148  N.  C.  471. 


52)B  SUTHERLAND    OiN"    DAMAGES.  [§    177 

time  of  pleading,  have  declared  upon.  The  object  of  this  prac- 
tice is  to  diminish  litigation  by  consolidating  controversies  into 
one  action.  The  whole  doctrine  is  one  of  the  equitable  out- 
growths of  the  improvement  of  legal  practice,  and  no  obstacle 
should  be  thrown  in  the  way  of  its  encouragement.  Our  legis- 
lation has  indicated  this  design  by  enlarging  the  defense  and  per- 
mitting defendants  to  recover  damages  beyond  the  plaintiff's 
claim.  We  do  not  feel  disposed  to  accept  any  technical  doctrines 
which  would  prevent  its  full  efficacy  unless  compelled  by  a 
weight  of  authority  which  we  do  not  find  here."  But  it  was 
said  by  Jarvis,  C.  J.,  ^^  "It  seems  to  me  we  should  carry  the 
doctrine  respecting  the  avoiding  of  circuity  of  action  very  much 
further  than  any  case  has  yet  carried  it  if  we  were  to  hold  that 
the  damages  may  be  reduced  by  showing  a  breach  of  the  con- 
tract on  the  plaintiff's  part  subsequently  to  the  commencement 
of  the  plaintiff's  action.  There  are  many  cases  where  circum- 
stances existing  before  action  brought  have  been  allowed  to  be 
given  in  evidence  to  mitigate  or  reduce  the  damages ;  but  none 
that  I  am  aware  of  where  matters  arising  after  action  brought 
have  been  so  received."  Under  the  English  judicature  act  of 
1873  ^*  relief  can  be  given  on  a  counter-claim  in  respect  of  a 
cause  of  action  accrued  to  the  defendant  subsequently  to  the  is- 
sue of  the  writ  in  the  original  suit.^^  It  had  previously  been 
ruled  otherwise.^^  The  later  case  is  rested  on  the  generality  of 
the  language  of  the  statute,  the  orders  nuide  ])ursuant  thereto 
and  the  nature  of  a  counter-claim  which  had  been  before  spoken 
of  as  being  an  wholly  indejDendent  suit  from  the  claim.'''^    It  is 

93  Bartlett    v.    Holmes,    13    C.    B.  iug,  and  as  the  said  courts  respec- 

630.  tively,  or  any  judge  thereof,  might 

9*  Sec.  24,   subsec.  3 :      ''The   said  have  granted  in  any  suit  instituted 

courts  respectively,  and  every  judge  for   that   purpose   by   the   same   de- 

thereof,  shall  also  liave  the  power  to  fendant   against   tlie   same   plaintiff' 

grant   to   any    defendant    in    respect  or  petitioner." 

of  anj'  equitable  estate  or  right,  or  95  Beddall  v.  Maitland,  17  Ch.  Div. 

other  matter  of  equity,  and  also  in  174. 

respect  of  any  legal  estate,  right  or  96  Original    Hartlepool    C.    Co.    v. 

title  claimed  or  asserted  by  him,  all  Gibb,  5  Ch.  Div.  713. 

such  relief  against  any  plaintiff  or  97  Winterfield  v.  Bradnum,  3  Q.  B. 

petitioner   as   such    defendant   shall  Div.    324;    Stooke   v.   Taylor,    5    id. 

have  properly  claimed  by  his  plead-  569. 


§    177]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  520 

uow  settled  in  Kiii!,l;ni(l  that  a  counter-cLiiiii  must  Ito  troalccl  as 
if  it  were  a  proceeding  in  an  action,  though  it  is  not  the  latter 
because  it  is  not  commenced  by  a  writ  or  summons,  and  that 
the  plaintiff  cannot  after  a  counter-claim  has  been  delivered 
discontinue  his  action  so  as  to  prevent  the  defendant  from  ow- 
forcing  his  cause  of  action.^'  The  weight  of  authority  in 
America  is  that  a  demand  which  is  not  due  at  the  time  the 
action  was  brought  cannot  be  counter-claimed  or  set  off.'®  Tho 
codes  of  some  states  express  that  the  right  to  counter-claim  must 
exist  at  the  commencement  of  the  action.^  This  means  that  it 
must  then  exist  in  the  hands  of  those  who  plead  it.^  In  New 
York  in  an  actioisfor  rent  the  tenant  cannot  recoup  his  (bunages 
for  a  breach  of  covenant  on  the  part  of  the  plaintiff  after  the 
commencement  of  the  suit.^  But  in  a  later  case  the  court  of 
appeals  affirmed  a  judgment  on  a  counter-claim  for  conversion 
of  property  after  the  commencement  of  the  action.*  The  court 
say:  "Strictly  speaking,  the  act  of  the  plaintiff  in  procuring 
and  serving  the  injunction  would,  ordinarily,  be  an  act  at  or 
after  the  commencement  of  the  action,  and  therefore  one  the 
damages  for  which  could  not  be  set  up  as  a  counter-claim  in  a 
jdeading  which  is  presumed  to  state  the  claims,  of  the  parties  as 
existing  at  the  time  of  bringing  the  suit;  but  as  the  act  of  the 
plaintiff  related  to  the  very  property  which  was  the  subject 
of  tho  action  and  materially  affected  the  defendant's  rights 
and  defense  therein,  I  do  not  see  why  it  could  not  have  l)con  set 
up  in  a  subsequent  or  supplemental  answer  and  have  thus  been 
rendered  effectual  to  the  defendant." 

The  connection  between  a  plaintiff's  cause  of  action  and  a 
defendant's  cross-claim  is  so  close  that  until  the  former  is 
barred  by  the  statute  of  limitations  the  latter  is  available.^ 

98McGowan    v.   Middleton,    11   Q.  i  Davis  v.  Frederick,  6  Mont.  300. 

B.  Div.  464,  overruling  Vavasseur  v.  2  ^layo  v.  Davidfie,  44  Hun,  ."342; 

Krupp,   15   Ch.  Div.  474.  D'Amelio    v.     Aljraham,    54    N.    Y. 

99  Ellis  v.   Cothran,  117   III.  458;  .Misc.  3S6,  citing  local  cases. 

Orton  v.  Noonan,  29  Wis.  541;  Simp-  3  ITarger  v.  Edmonds.  4  Barb.  256. 

son  V.  Jennings,  15  Neb.  671 ;   Tes-  «  .\sliloy  v.  Marsball,  29  N.  Y.  494. 

sier  v.  Engleliart,  18  Neb.  167;  Ho-  5  Beccher    v.    Baldwin,    55    Conn, 

gan  V.  Kirkiand,  64  N.  C.  2.50;  Lee  419,    3    Am.    St.    57;     Bnimblo    v. 

V.  Eure,  93  id.  5,  9.  Brown,    71    N.   C.   513;    Stillwcll   v. 
Suth.  Dam.  Vol.  I.— 34. 


iao 


SUTHERLAND    ON    DAMAGES. 


[§    177 


"Not  only  does  the  bringing  of  an  action  stop  tlic  operation 
of  the  statute  as  to  a  proper  matter  of  set-off,  but  it  also  seems 
that  it  revives  a  claim  which  is  actually  barred  out,  which  is 
the  proper  subject  of  recoupment  in  the  action,  as  damage 
growing  out  of  the  same  transaction.  Thus,  in  an  action  to 
recover  the  price  of  goods  sold,  unsoundness  may  be  set  up  by 
way  of  defense  although  an  action  to  recover  damages  is 
barred."  ^  In  an  action  on  a  note  a  total  failure  of  consider- 
ation and  a  parol  warranty  of  the  property  for  which  the  ob- 
ligation was  given  were  pleaded  in  defense,  and  the  latter  was 
sustained,  although  the  period  for  bringing  an  action  upon  the 
parol  agreement  had  passed.'''  If  a  contract  is  not  satisfacto- 
rily performed,  the  right  to  recover  under  it  is  qualified.  To 
the  extent  that  the  contractee  has  been  injured  by  the  method 
of  the  contractor's  performance  or  by  his  neglect  to  perform 
he  may  defeat  the  latter's  demand.  If  the  statute  of  limita- 
tions does  not  bar  the  contractor  the  other  party  may  plead  a 
counter-claim.  The  statute  is  tolled  by  the  commencement  of 
an  action,  and  though  the  counter-claim  is  not  pleaded  until 
more  than  the  statutory  period  fixed  for  bringing  an  action 
on  the  contract  has  gone  by,  it  is  in  time  if  it  is  pleaded  within 
the  period  fixed  for  answering  the  complaint.*  In  Pennsylva- 
nia the  running  of  the  statute  is  not  stopped  until  the  defend- 
ant pleads  his  set-off'  or  gives  the  plaintiff"  notice  of  it.^ 

§  178.  Cross-claim  must  rest  on  contract  or  subject-matter 
of  action.  It  must  arise  from  the  same  subject-matter,  or  spring 
out  of  the  same  contract  or  transaction  on  which  the  plaintiff 
relies  to  maintain  his  action.^"    The  same  thing  is  substantially 


Eertrand,  22  Ark.  375;  Eve  v. 
Louis,  91  Ind.  457 ;  Walker  v.  Clem- 
ents, 15  Q.  B.  1046. 

6  Wood's  Lim.,  §  282;  Riddle  v. 
Kreimbricht,  12  La.  Ann.  297;  La- 
strapes  v.  Rocquct,  23  id.  68. 

7  Morrow  v.  Hanson,  9  Ga.  398,  54 
Am.  Dec.  346. 

8  Herbert  v.  Dey,  15  Abb.  N.  C. 
(N.  Y.)    172. 

9  Gilmore  v.  Reed,  76  Pa.  462. 

10  First    Nat.    Bank    v.    John    A. 


Bryant  Piano  Co.,  185  111.  App.  119; 
Raymond  v.  Varnum,  185  111.  App 
2S9;  Marrone  v.  Ehrat,  175  111.  App 
649;  Bostrom  v.  Becker,  172  III 
App.  410;  Van  Zandt  v.  Hanover 
Nat.  Bank,  149  Fed.  127,  79  C.  C.  A 
23;  Dalton  v.  Bunn,  3  52  Ala.  577 
Higbie  v.  Rust,  211  111.  333,  103  Am 
St.  204;  Robidoux  v.  Baltz,  153  111 
App.  100;  Turnbull  Joice  L.  Co.  v 
Cliicago  L.  &  C.  Co.,  152  111.  App 
347;    Weatherbee    v.    Lillybeck,    86 


§    178]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


531 


necessary  to  coustituto  one  branch  of  the  counter-claim  of 
the  modern  codes  in  which  it  is  required  that  it  arise  out  of  the 
same  transaction  set  forth  in  the  complaint  as  the  foundation 
of  the  plaintiff's  claim  or  be  connected  with  the  subject  of  the 
action.-^^     In  a  tort  action  the  pleading  must  show  on  its  face 


Miss.  150;  Roth  v.  Roiter,  213  Pa. 
400;  Snyder  v.  Lingo,  30  Pa.  Super. 
651;  Sawyer  v.  Wiswell,  9  Allen, 
39;  Logie  v.  Black,  24  W.  Va.  1,  20; 
Bozarth  v.  Dudley,  44  N.  J.  L.  804, 
43  Am.  Rep.  373;  Gilchrist  v.  Part- 
ridge, 73  Me.  214;  Washington  v. 
Timberlake,  74  Ala.  259;  Keegan 
V.  Kinnare,  123  111.  280;  Forrest  v. 
Johnson,  100  Mich.  321;  Bartlett  v. 
Holmes,  13  C.  B.  630  (matter  aris- 
ing after  suit  brought ) . 

11  Inland  Box  &  Label  Co.  v. 
Richie,  57  Colo.  532;  Wills  v. 
Young,  15  Ga.  App.  352;  Atlantic 
Coast  Line  R.  Co.  v.  A.  T.  Snodgrass 
&  Co.,  14  Ga.  App.  668;  Strickland 
V.  Bank  of  Cartersville,  111  Ga. 
565;  Sleepy  Eye  Milling  Co.  v.  Hart- 
man,  184  111.  App.  308;  Harrell  v. 
Neill,  56  Ind.  App.  547;  W.  W.  Kim- 
ball Co.  V.  Massey,  126  Minn.  461; 
La  Mesa  Community  Ditch  v.  Apple- 
zoeller,  —  N.  M.  — ,  140  Pac.  1051; 
George  v.  Murray,  87  Misc.  (N.  Y.) 
175;  Brady-Neely  Grocer  Co.  v.  De 
Foe,  —  Tex.  Civ.  App.  — ,  169  S.  W. 
1135;  Dodge  v.  Brown  &  Hill,  74 
W.  Va.  466;  Sydney  v.  Mugford 
Printing  &  Engiaving  Co.,  214  Fed. 
841;  Ajax-Grieb  R.  Co.  v.  Byars,  — 
Tex.  Civ.  App.  — ,  153  S.  W.  921; 
Epstein  v.  Buckeye  C.  0.  Co.,  106 
Ark.  241;  Dowdy  v.  Calvi,  14  Ariz. 
148;  Baer  v.  Sleicher,  153  Fed.  129, 
82  C.  C.  A.  281;  Louisville  &  N.  R. 
Co.  V.  Empire  State  C.  Co.,  189  Fed. 
174;  California  C.  Co.  v.  Pacific  S. 
M.  Works,  144  Fed.  886;  Greene  v. 
IToroford,  12  Ariz.  85;  Stevens 
V.  Whalen,  95  Ark.  488;  Davis  v. 
Davis,     93     Ark.     93;     Mitchell     v. 


Moore,  87  Ark.  166;  Daniel  v.  (jor- 
dy,  84  Ark.  218;  Harron  v.  WilHon, 
4  Cal.  App.  488;  Goldl)erger  v.  Ivcib- 
owitz,  42  Colo.  99;  Downing  v. 
Wilcox,  84  Conn.  437;  Biackslicar 
Mfg.  Co.  V.  Stone,  8  Ga.  App.  661; 
Jester  v.  Bainbridge  Stale  Bank,  4 
Ga.  App.  469;  Gem  K.  Mills  v.  Em- 
pire P.  &  B.  Co.,  3  Ga.  App.  TO!": 
Powers  V.  Woolfolk,  132  Mo.  App. 
354;  Kaufman  v.  Cooper,  39  Mont. 
146;  Excelsior  C.  Works  v.  DeCamp, 
40  Ind.  App.  26;  Cartan  v.  Tacka- 
berry,  139  Iowa,  586;  llinchman  v. 
Joiinson,  108  Md.  601 ;  Thomssen  v. 
Ertz,  93  Minn.  280;  Curleev.  Rogan, 
(Tex.  Civ.  App.)  136  S.  W.  1126; 
McCormick  v.  Schtrenck  (Tex.  Civ. 
App.)  130  S.  W.  720;  Brooks  T. 
Mach.  Co.  V.  Shields,  48  Tex.  Civ. 
App.  531;  Orrick  v.  Dawson,  67  W 
Va.  403;  Grills  v.  Farah,  21  Ont.  L. 
R.  457 ;  Xenia  Branch  Bank  v.  Lee, 
7  Abb.  Pr.  372;  Epperly  v.  Bailey, 
3  Ind.  72;  Slayback  v.  Jones,  9  Ind. 
472;  Barhyte  v.  Plughes,  33  Barb. 
320;  Bazemore  v.  Bridgers,  105  N. 
C.  191;  Demartin  v.  Albert,  68  Cal. 
277;  Allen  v.  Coates,  29  Minn.  46; 
Schmidt  v.  Bickenl)acli,  29  Minn. 
122;  Standley  v.  Northwestern  Mut. 
L.  Ins.  Co.  95  Ind.  254 :  Tx!c  v.  luire, 
03  N.  C.  5;  Wilkerson  v.  Farnham, 
82  Mo.  672;  Clark's  Cove  G.  Co,  v. 
Appling,  33  W.  Va.  470;  Tx)gie  v. 
Black,  24  W.  Va.  1  ;  Wigmore  v. 
Buell.   116   Cal.  24. 

If  the  plaintifT  fails  (o  prove  the 
contract  upon  which  he  sues  the 
defendant  cannot  prove  another  and 
different  contract  and  recoup  dam- 
apes  for  the  breacli  (hereof.     Ilnlde- 


532 


SUTHERLAND    ON    DAMAGES. 


[§  178 


or  in  connection  with  the  complaint  that  it  so  arose.^^  A  partial 
satisfaction  of  the  demand  sued  upon  does  not  prevent  the 
defendant  from  recovering  to  the  full  extent  of  his  injury.^^ 

§  179.  Recoupment  for  fraud,  breach  of  warranty,  negli- 
gence, etc.  If  a  party  in  negotiating  a  contract  commits  an 
actionable  fraud  upon  the  other  contracting  party  touching 
the  subject  of  their  negotiation  the  latter,  though  he  has  not 
exercised  his  privilege  to  repudiate  the  contract  on  the  dis- 
covery of  the  fraud,  may  recoup  his  damages  therefor  in  any 
action  brought  by  the  guilty  party  upon  the  contract.  Such 
a  cross-claim  does  not  grow  out  of  the  contract,  but  it  is  part 
of  the  same  transaction  and  is  connected  with  the  subject  of 
the  action.^^  A.  executed  in  February  a  memorandum  under 
seal  stating  that  he  had  hired  of  W.  a  certain  lot  for  one  year 
from  the  1st  of  May  following,   at  a  rent  of  $1,000.       He 


man  v.  Berry,  74  Mich.  424;  More- 
house V.  Baker,  48  Mich.  335;  Hol- 
land V.  Rea,  48  Mich.  218 ;  Brighton 
Bank  v.  Sawyer,  132  Mass.  185;  Bo- 
zarth  V.  Dudley,  44  N.  J.  L.  304, 
43  Am.  Rep.  373;  The  Zouave,  29 
Fed.  296;  The  C.  B.  Sanford,  22  id. 
863. 

The  pleading  may  be  good  as 
against  a  demurrer  in  so  far  as  the 
subject  matter  of  it  is  so  connected. 
Wild  Rice  L.  Co.  v.  Benson,  114 
Minn.  92. 

A  counterclaim  for  damages  aris- 
ing out  of  the  wrongful  issuance  of 
an  attachment  cannot  be  pleaded  in 
answer  to  a  complaint  in  the  orig- 
inal action  although  it  was  filed 
after  the  dissolution  of  the  attach- 
ment. Tacoma  M.  Co.  v.  Perry,  32 
Wash.  650;  Veysey  v.  Thompson, 
49  W^ash.  571.  Compare  Reed  v. 
Chubb,  9  Iowa,  178. 

12  Winkler  v.  O'Donovan,  142  Wis. 
412;  Finney  v.  Raudabaugh,  182 
Mo.  App.  246. 

13  McAlester  v.  Landers,  70  Cal. 
79. 

14  Burroughs   v.    Solleck,    185    Til. 


App.  446;  Gross  v.  Hochstim,  72  N. 
Y.  Misc.  343;  Steckbauer  v.  Leykom, 
130  Wis.  438;  Tilley  v.  Bowman, 
(1910)    1   K.  B.  745. 

Barbour  v.  Flick,  126  Cal.  628; 
Bell  V.  Sheridan,  21  D.  C.  370; 
Johnson  v.  St.  Louis  Butchers'  S. 
Co.,  60  Ark.  387 ;  Walker  v.  France, 
112  Pa.  203;  Dowagiac  Mfg.  Co.  v. 
Gibson,  73  Iowa,  525,  6  Am.  St. 
097;  Birdsey  v.  Butterfield,  34  Wis. 
52 ;  Van  Epps  v.  Harrison,  5  Hill, 
03;  Myers  v.  Estell,  47  Miss.  4,  17, 
21;  Estell  v.  Myers,  54  id.  174,  56 
id.  800;  Kelly  v.  Pember,  35  Vt. 
183;  Kennedy  v.  Crandall,  3  Lans. 
1  ;  Rotan  v.  Nichols,  22  Ark.  244 ; 
Perley  v.  Balch,  23  Pick,  283,  34 
Am.  Dec.  56;  Timmons  v.  Dunn,  4 
Ohio  St.  680;  Avery  v.  Brown,  31 
Conn.  398;  Caldwell  v.  Sawyer,  30 
Ala.  283;  Cage  v.  Phelps,  38  Ala. 
383;  Moberly  v.  Alexander,  19 
Iowa,  162;  Johnson  v.  Miln,  14 
Wend.  195;  President,  etc.  v.  W^ad- 
leigh,  7  Blackf.  102,  41  Am.  Dec. 
214;  Light  v.  Stoever,  12  S.  &  R. 
431 ;  Haynes  v.  Harper,  25  Ark.  541 ; 
Warden  v.   Fosdick,  13  Johns.   325, 


§    179]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  533 

was  induced  to  make  the  contract  by  the  fraudulent  represen- 
tations of  W.  that  the  lot  embraced  a  certain  other  parcel  of 
land  which  belonged  to  the  corporation.  A.  discovered  the 
fraud  before  the  1st  of  May,  and  on  that  day,  having  obtained 
a  lease  of  the  parcel  owned  by  the  corporation,  took  posses- 
sion of  the  whole  and  occupied  it  during  the  year.  It  was 
held  in  an  action  by  W.  for  the  rent  that  A.  was  entitled  to  a 
deduction  by  reason  of  the  fraud  of  at  least  what  he  was  obliged 
in  good  faith  to  pay  for  the  corporation  lease."  And  in  action 
for  fraudulent  representations  made  on  the  exchange  of  prop- 
erty the  defendant  may  recoup  his  damages  resulting  there- 
from.^^ Where  an  action  was  brought  to  recover  a  balance  due 
on  a  contract  of  sale  of  two  separate  patented  processes,  des- 
cribed and  contracted  for  in  a  single  written  agreement  for 
an  entire  sum  payable  in  instalments,  the  vendee  was  entitled 
to  set  off  damages  arising  out  of  the  vendor's  fraudulent  repre- 
sentations as  to  one  of  the  processes,  although  the  other  proved  to 
be  more  valuable  than  the  amount  paid  for  both."  If  several 
distinct  purchases  are  made  at  the  same  time,  though  by  differ- 
ent instruments,  they  will  be  regarded  for  the  purposes  of  re- 

78  Am.  Dec.  383;  Brown  v.  Tuttle,  Mo.  195;  Christy  v.  Ogle,  33  111. 
66  Barb.  169;  Hogg  v.  Cardwcll,  4  295;  Reynolds  v.  Cox,  11  Ind.  202; 
Sneed,  151 ;  Nelson  v.  Johnson,  25  Cox  v.  Reynolds,  7  id.  257 ;  House  v. 
Mo.  430;  Withers  v.  Greene,  9  How.  Marshall,  18  Mo.  369;  Shute  v.  Tay- 
213,  13  L.  ed.  109;  Estep  v.  Fenton,  lor,  5  Mete.  (Mass.)  61;  Owens  v. 
66  111.  467;  Sawyer  v.  Wiswell,  9  Rector,  44  Mo.  389;  James  v.  Law- 
Allen  39 ;  Bradley  v.  Rea,  14  id.  20 ;  renceburgh  Ins.  Co.,  6  Blackf .  525 ; 
Mixer  v.  Colnirn,  11  Mete.  (Mass.)  Burton  v.  Stewart,  3  Wend.  236,  20 
561,  45  Am.  Dec.  230;  Westeott  v.  Am.  Doc.  092;  Hamraatt  v.  Emerson, 
Nims,  4  Cush.  215;  Cook  v.  Castner,  27  Me.  308,  40  Am.  Dec.  598;  Wiiite 
9  Cush.  266;  Harrington  V.  Stratton,  v.  Sutherland,  04  111.  181;  Gibson 
22  Pick.  510;  Hall  v.  Clark,  21  Mo.  v.  Marquis,  29  Ala.  668;  Isham  v. 
415;  Rawley  v.  Woodruff,  2  Lans.  Davidson,  52  N.  Y.  237;  Simmons 
419;  More  v.  Rand,  60  N.  Y.  208;  v.  Cutreer,  12  Sm.  &  M.  584;  Hol- 
Price  V.  Lewis,  17  Pa.  51,  55  Am.  ton  v.  Noble,  83  Cal.  7. 
Dec.  536;  Graham  v.  Wilson,  6  16  Allaire  v.  Whitney,  1  Hill,  484; 
Kan.  489;  Allen  v.  Shackelton,  15  Whitney  v.  Allaire,  1  N.  Y.  305; 
Ohio  St.  145;  Sumpter  v.  Welsh,  2  Holton  v.  Noble,  83  Cal.  7. 
Bay,  558;  Wheat  v.  Dotson,  12  Ark.  16  Carey  v.  Guillow.  105  Mass.  18, 
699;  Tunno  v.  Fludd,  1  McCord,  7  Am.  Rep.  494 ;  Chandler  v.  Childs, 
121 ;  Abercrombie  v.  Owings,  2  Rich.  42  Mich.  128. 

127 ;   Adams    v.    Wylie,    1    Nott  &  n  Rawley   v.   Woodruff,    2     Lans. 

McC.  78;   McFarland  v.  Carver,  34  419. 


534 


SUTHERLAND    ON    DAAfAGES. 


[§  l'i(9 


coiipment  as  being  connected.^'  So,  in  actions  for  the  price  of 
property  sold,  damages  for  breach  of  any  warranty  made  by 
the  vendor  of  the  property,  whether  it  be  express  or  implied, 
may  be  recouped,^^  so  far  as  he  is  not  otherwise  reimbursed  for 
his  loss,  as  by  insurance  paid  in  consequence  of  the  destruction 
of  the  property.^" 

If  there  is  a  sale  and  delivery  of  property  in  praesenti  which 


18  Benjamin  v.  Eicliards,  51  Midi. 
110.  Contra.  Barlow  Mfg.  Co.  v. 
Stone,  200  Mass.   158. 

It  is  held  that  it  is  a  question 
of  fact  whether  sales  are  so  inde- 
pendent as  to  prevent  recoupment. 
Gem  K.  Mills  v.  Empire  P.  &  B. 
Co.,  3  Ga.  App.  709. 

If  several  suits  are  brought  in 
an  inferior  court  on  notes  given  for 
property  which  is  not  of  the  quality 
bargained  for,  the  defendant  may 
set  up  the  breach  of  warranty  in 
each  suit  until  the  damages  are 
neutralized,  and  on  appeal  and  con- 
solidation of  the  actions  the  whole 
damage  suffered  may  be  recouped. 
Hurst  v.  Everett,  91  N.  C.  399. 

19  Buss  V.  Allison  W.  G.  Co.,  146 
Mo.  App.  71;  Wilson  v.  Hughes,  94 
N.  C.  182;  Bitting  v.  Thaxton,  72 
id.  541;  Walsh  v.  Hall,  66  id.  233; 
Hurst  v.  Everett,  91  id.  399;  Du- 
shane  v.  Benedict,  120  U.  S.  630,  30 
L.  ed.  810;  Spalding  v.  Vandercdok, 
2  Wend.  431  ;  Hoover  v.  Peters,  IS 
Mich.  51;  McAllister  v.  Pvcab,  4 
Wend.  483;  Reab  v.  MeAlister,  8 
W^end.  109;  Herbert  v.  Ford,  29 
Me.  546;  Kellogg  v.  Denslow,  14 
Conn.  411;  Hitchcock  v.  Hunt,  28 
Conn.  343;  Mercer  v.  Hall,  2  Tex. 
284;  Mears  v.  Nichols,  41  111.  207, 
89  Am.  Dee.  381;  Miller  v.  Smith, 
1  Mason,  437;  Love  v.  Oldham,  22 
Ind.  51 ;  Getty  v.  Eountree,  2  Pin. 
379;  McAlpin  v.  Lee,  12  Conn.  129, 
30  Am.  Dec.  609;  Withers  v. 
Greene,  9  How.  214.  13  L.  ed.  109; 


Van  Buren  v.  Digges,  11  How.  461, 
13  L.  ed.  771 ;  Fisk  v.  Tank,  12  Wis. 
276,  78  Am.  Dec.  737;  Deen  v.  Ilor- 
rold,  37  Pa.  150;  Ketchum  v.  Wells, 
19  Wis.  25;  Steigleman  v.  Jeffries, 
1  S.  &  R.  477,  7  Am.  Dec.  626; 
Murphy  v.  Gay,  37  Mo.  535;  Barth 
V.  Burt,  43  Barb.  628;  Brown  v. 
Tuttle,  66  Barb.  169;  Westcott 
V.  Nims,  4  Cush.  215;  Miller  v. 
Gaither,  3  Bush.  152;  Culver  v. 
Blake,  6  B.  Mon.  528;  McMillion  v. 
Pigg,  3  Stew.  165;  Lemon  v.  Trull, 
13  How.  Pr.  248;  Plant  v.  Condit, 
22  Ark.  454;  Jemison  v.  W^oodruff, 
34  Ala.  143 ;  Hoe  v.  Sanborn,  3  Abb. 
Pr.  (N.  S.)  1S9;  Harman  v.  Sander- 
son, 6  Sm.  &  M.  41,  45  Am.  Dec. 
272;  Paimsey  v.  Sargent,  21  N.  H. 
397 ;  Williams  v.  Miller,  21  Ark.  469 ; 
Goodwin  v.  Morse,  9  Mete.  (Mass.) 
278;  Harrington  v.  Stratton,  22  Pick. 
510;  Flint  v.  Lyon,  4  Cal.  17;  Den- 
nis v.  Belt,  30  Cal.  247;  Hodgkins 
V.  Moulton,  100  Mass.  309;  Burnett 
v.  Smith,  4  Gray,  50;  Allen  v.  Fur- 
bish, id.  504,  64  Am.  Dec.  87;  Stacy 
V.  Kemp,  97  Mass.  166;  Darnell  v. 
Williams,  2  Stark.  166;  Parish  v. 
Stone,  14  Pick.  198;  Judd  v.  Den- 
nison,  10  Wend.  513;  Murray  v. 
Carlin,  67  111.  286;  Owens  v.  Stur- 
ges,  id.  366;  Nixon  v.  Carson,  38 
Iowa,  338;  Walker  v.  Iloisington, 
43  Vt.  60S;  Parker  v.  Pringle,  2 
Strobh.  242;  Babcock  v.  Trice,  18 
111.  420,  §  676. 

20  Eureka  F.  Co.  v.  Baltimore  C. 
S.  &  R.  Co.,  78  Md.  179. 


179] 


LKGAL    M(iL'll>AT10JNS    AND    IMODUOTIONS. 


535 


is  expressly  warranted  and  the  warranty  is  not  true,  the  ven- 
dee does  not  lose  his  rij^ht  to  recoup  the  daniai;es  by  r('c'eiviii<>- 
and  u.siuu'  ihe  property. ^^  In  some  states,  where  the  contract 
of  sale  is  executory  and  a  time  is  agreed  uihui  l<.r  makiui:-  a 
test  of  the  jiroperty  which  is  the  subject  of  the  contraet,  the 
acceptance  and  use  of  it  after  the  test  has  been  made  waives 
the  right  to  chiim  a  breach  of  the  warranty.^^  'I'his  is  init  llie 
rule  in  Illinois.^^  It  is  l)clieved  "the  better  doctrine  ;iii(l  the 
one  ordinarily  prevailing  is  that  while  snch  acceptance  and  use 
are  evidence  from  which,  with  other  circumstances,  a  waiver  of 
the  claim  may  be  found,  yet,  ordinarily  speaking,  the  pui'chaser 
may  accept  the  delayed  delivery  and  reconp  the  damages  in  an 
action  by  the  vendor  for  the  price."  ^*  But  if  payment  has  been 
made  with  knowledge  of  the  right  of  a  third  party  to  claim  dam- 
ages from  the  vendee  the  right  of  recou])ment  is  gone.^^  It" 
goods  are  warranted  the  purchaser  uiay,  after  he  h;is  admitted 


2l(;ctty  V.  Eountrce,  2  Tin.  37'J; 
bMsk  V.  Tank,  12  Wis.  27(J,  78  Am. 
Dec.  737;  Dailey  v.  Green,  15  Pa. 
118;  Polhcmus  v.  Ileiman,  45  Cal. 
573 ;  Warder  v.  Fisher,  48  Wis.  334 ; 
Vincent  v.  Leland,  100  Mass.  432; 
Lewis  V.  Eountree,  78  N.  C. 
323;  Gurney  v.  Atlantic,  etc.  11.  Co., 
58  N.  Y.  358;  Day  v.  Pool,  52  id. 
416,  11  Am.  Rep.  719;  Queen  City 
G.  Co.  V.  Pittsburg  C.  P.  Co.,  97 
Md.  629. 

In  Locke  v.  Williamson,  40  Wis. 
377,  the  property  was  accepted  with 
knowledge  that  it  was  not  such  as 
the  contract  called  for.  The  buyer 
set  up  the  defect  in  the  quality  and 
the  court  said:  "We  have  concluded 
to  hold  this  rule  in  respect  to  an 
executory  contract,  that  when  the 
defects  in  the  goods  are  patent  and 
obvious  to  the  senses,  when  the  pur- 
chaser has  a  full  opportunity  for 
examination  and  knows  of  such  de- 
fects, he  must,  either  when  he  re- 
ceives the  goods  or  within  a  rea- 
sonable time  thereafter,   notify   the 


.seller  tliat  the  irodds  arc  not  ai'crpt- 
ed  as  fulliliing  the  warranty,  otluT- 
wise  the  defects  will  be  deemed 
waived."  See  Nye  v.  Iowa  (  ity  A. 
Works,  51  Iowa,  129,  33  Am.  Pep. 
121;  Peed  v.  Pandall,  29  .\.  V. 
.'loS;  -McCormick  v.  Sarson,  45  id. 
256;  Gaylord  Mfg.  Co.  v.  Allen,  53 
id.  515.  Compare  thes(!  New  York 
cases  with  the  two  cited  above. 

22  Fraser  v.  Eoss,  1  Penne.  348 ; 
Toplitz  V.  King,  20  N.  Y.  Misc.  576; 
Mcl'arlin  v.  Boynton,  8  Jlun,  449; 
aflirmed  by  a  majority  of  one  and 
witliout  opinion,  71  N.  Y.  CiUl. 

23  Underwood  v.  Wolf,  131  III. 
425,  19  Am.  St.  40,  citing  and  dis- 
cussing local  cases. 

24  Medart  P.  Co.  v.  Dulmcpie  T.  & 
R.  M.  Co.,  121  Iowa,  244,  citing  Jef- 
frey Mfg.  Co.  V.  Central  C.  &  I.  Co., 
93  Fed.  408;  Ramsey  v.  TuUy,  12 
111.  App.  463;  RufT  v.  Rinaldo,  55 
N.  Y.  664;  Merrick  Mfg.  Co.  v. 
Quintard,   107   Mass.   127. 

26  Medart  P.  Co.  v.  DiibiKiue  Co., 
supra. 


53G  SUTHERLAND    ON    DAMAGES.  ^  [§171) 

that  they  correspond  with  the  contract  and  promised  to  pay  the 
purchase  price,  recoup  any  damages  resulting  from  a  breach  of 
the  warranty,  or  he  may,  after  paying  the  price,  recover  such 
damages  in  a  separate  suit.^^  Giving  a  renewal  note  after 
knowledge  of  the  breach  of  a  warranty  is  presumptive,  but  not 
conclusive,  evidence  of  a  waiver  of  the  claim  for  damages.^' 
In  suits  for  labor  or  goods  the  warranty  of  either  is  not  a  matter 
altogether  collateral;  it  forms  an  essential  portion  of  the  con- 
sideration for  the  defendant's  undertaking,  and  therefore  the 
breach  of  it  is  proper  to  be  shown  in  reduction  of  the  stipulated 
price.^*  When  damages  for  the  breach  of  a  warranty  as  to  the 
quality  of  a  chattel  are  established  they  are  to  be  applied  in 
reduction  of  plaintiff's  recovery  as  of  the  date  of  the  contract."^ 
§  180.  Same  subject.  Whatever  the  nature  of  the  contract, 
however  numerous  or  varied  its  stipulations,  and  whether  they 
are  all  written  and  embodied  in  one  or  several  instruments,  or 
only  partly  written  or  partly  implied,  if  they  are  connected,  so 
that  what  is  undertaken  to  be  done  on  one  side  altogether  is 
the  consideration,  or  part  of  the  consideration,  either  in  prom- 
ise or  performance,  for  what  is  engaged  to  be  done  on  the  other, 
the  range  of  the  right  of  recoupment  is  co-extensive  with  the 
duties  and  obligations  of  the  parties,  respectively,  both  to  do 
and  to  forbear, — as  well  those  imposed  at  first  by  the  lan- 
guage of  the  contract  as  those  which  subsequently  arise  out  of 
it  in  the  course  of  its  performance.^"    It  extends  to  damages  re- 

26Bretz  V.   Fawcctt,   29   111.  App.  Druecker,  15  Ind.  App.  512;  Nation- 

319;     Harrington    v.     Stratton,    22  al  Oak  L.  Co.  v.  Armour-C.  P.  Co., 

Pick.  510;  Hodgkins  v.  Moulton,  100  99  Ky.  667. 

Mass.  309;   Ruff  v.  Jarrett,  94  111.  29  Wilson  v.  Reedy,  33  Minn.  503. 

474 ;  Shackelton  v.  Lawrence,  65  id.  30  Burnett   C.    Co.    v.    Art   W.    P. 

175;  Reed  v.  Hastings,  61  id.  266.  Co.,  164  Ala.  547;   Modern  Steel  S. 

27  Aultman  v.  Wheeler,  49  Iowa,  Co.  v.  Van  Buren  County,  126  Iowa, 
647;  Cantralt  v.  Fawcett,  2  III.  606;  Owensboro  W.  Co.  v.  Wilson, 
App.  571.  See  Hinchman  v.  John-  79  Kan.  633;  Klauck  v.  Federal  Ins. 
son,  108  Md.  661.  Co.,    131    App.    Div.    (N.    Y.)    519; 

28  Schwartz  v.  Kuhn,  71  N.  Y.  Penn  L.  Co.  v.  McPherson,  133  K 
Misc.  149;  Allen  v.  Hooker,  25  Vt.  C.  287;  Green  v.  Batson,  71  Wis. 
137;  Cole  v.  Colburn,  61  N.  H.  499;  54;  Bross  v.  Cairo  &  V.  R.  Co.,  9 
Hoerner  v.  Giles,  53  111.  App.  540;  111.  App.  363;  Wilson  v.  Greensboro, 
McCormick  H.  Mach.  Co.  v.  Robin-  54  Vt.  533;  Babbitt  v.  Moore,  51  N. 
son,     60     id.     253;     Zimmerman    v.  J.   L.   229;    Deitz  v.   Leete,   28   Mo. 


§    180]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


0:57 


suiting  from  negligence  where  care,  activity  and  diligence  are 
required ;  '^   where  damages  accrue  from  excess  of  action,   as 


App.  540;  Logie  v.  Black,  24  W.  Va. 
1,  19;  Brigham  v.  Hawley,  17  111. 
38;  Lee  v.  Clements,  48  Ga.  128; 
Satchwell  v.  Williams,  40  Conn. 
371;  Fowler  v.  Payne,  49  Miss. 
32;  Branch  v.  Wilson,  12  Fla. 
543;  Mell  v.  Moony,  30  Ga.  413; 
Rogers  v.  lTiiinphr(\y,  39  Me.  382; 
Winder  v.  Caldwell,  14  How. 
434,  14  L.  ed.  487;  Cherry  v. 
Sutton,  30  Ga.  875;  Bowker  v. 
Hoyt,  18  Pick.  555;  Fabbricotti  v. 
Launitz,  3  Sandf.  743;  Van  Biiren 
v..  Digges,  11  How.  461,  13  L.  ed. 
771;  Dennis  v.  Belt,  30  Cal.  247; 
Logan  V.  Tibbott,  4  Greene,  389; 
Heaston  v.  Colgrove,  3  Ind.  265; 
Keyes  v.  Western  Vermont  S.  Co., 
34  Vt.  81;  Wildey  v.  Fractional 
School  Dist.,  25  Mich.  419;  Elliot 
V.  Heath,  14  N.  H.  131;  Bloodgood 
V.  Ingoldsby,  1  Hilt.  388;  Walker  v. 
Millard,  29  N.  Y.  375;  Guthman  v. 
Castleberry,  49  Ga.  272;  Mack  v. 
Patchin,  42  N.  Y.  167,  1  Am.  Rep. 
506;  Eldred  v.  Leahy,  31  Wis.  546; 
Whitney  v.  Meyers,  1  Duer,  267; 
Peden  v.  Moore,  1  Stew.  &  Port. 
71,  21  Am.  Dec.  649;  Wilder  v. 
Boynton,  63  Barb.  547;  Cook  v. 
Soule,  56  N.  Y.  420,  45  How.  Pr. 
340;  Holzworth  v.  Koch,  26  Ohio 
St.  33;  Myers  v.  Burns,  33  Barb. 
401,  35  N.  Y.  269;  Ives  v.  Van  Eppg, 
22  Wend.  155 ;  Warfield  v.  Booth,  33 
Md.  63;  Mayor  v.  Mabie,  13  N. 
Y.  151,  64  Am.  Dec.  538;  Rogers  v. 
Ostrom,  35  Barb.  523;;  Westlake  v. 
De  Graw,  25  Wend.  669;  Goodwin 
V.  Morse,  9  Mete.  (Mass.)  278; 
Sanger  v.  Fincher,  27  111.  346;  Bee 
P.  Co.  V.  Hichborn,  4  Allen  63; 
Turner  v.  Gibbs,  50  Mo.  556;  Der- 
mott  V.  Jones,  2  Wall.  1,  17  L.  ed. 
762;  Overton  v.  Phelan,  2  Head 
445;    Bloom    v.    Lehman,    27    Ark. 


489;  Berry  v.  Diamond,  19  Ark.  262; 
Desha  v.  Robinson,  17  Ark.  228; 
Springdale  Ass'n  v.  Smith,  32  111. 
252 ;  Porter  v.  Woods,  3  Humph.  56, 
39  Am.  Dec.  153;  Crouch  v.  Miller, 
5  Humph.  586;  Fisk  v.  Tank,  12 
Wis.  276,  78  Am.  Dec.  737;  Luf- 
burrow  v.  Henderson,  30  Ga.  482; 
Molby  v.  Johnson,  17  Mich.  382; 
Stow  V.  Yarwood,  14  111.  424;  Stew- 
art v.  Bock,  3  Abb.  Pr.  1 18 ;  Hoopea 
V.  Meyer,  1  Nev.  433;  Caldwell  v. 
Pennington,  3  Gratt.  91  ;  Burroughs 
V.  Clancey,  53  111.  30;  Lunn  v. 
Gage,  37  111.  19;  Evans  v.  Hughey, 
76  111.  115;  Hubbard  v.  Rogers,  64 
111.  434;  Ecklos  v.  Carter,  26  Ala. 
563;  Ewart  v,  Kerr,  2  McMuU.  141  ; 
Moore  v.  Caruthers,  17  B.  Mon. 
669;  Whitbeck  v.  Skinner,  7  Hill, 
53;  Chatterton  v.  Fox,  5  Duer,  64; 
Hill  v.  Soutliwick,  9  R.  I.  299,  11 
Am.  Rep.  250;  Fitcliburg,  etc.  R. 
Co.  V.  Hanna,  6  Gray,  539,  66  Am. 
Dec.  427;  Allen  v.  McKibbin,  5 
Mich.  449;  Key  v.  Henson,  17  Ark. 
254;  Hutt  v.  Bruckman,  55  111.  441; 
McDowell  v.  Milroy,  69  111.  498; 
Latham  v.  Sumner,  89  111.  233; 
Cooke  V.  Preble,  80  111.  381;  Bishop 
V.  Price,  24  Wis.  480. 

31  Bell  V.  Mutual  Mach.  Co.,  150 
N.  C.  Ill;  Spears  v.  DuRant,  76  S. 
C.  19;  Huntsville  Elks'  Club  v.  Gar- 
rity-H.  B.  Co.,  176  Ala.  128;  Sinker 
V.  Digging,  76  Mich.  557;  Macgowan 
v.  Whiting,  9  Daly,  86;  Whitellegge 
V.  De  Witt,  12  Daly,  319;  Lee  v. 
Clements,  48  Ga.  128;  Fowler  v. 
Payne,  49  Miss.  32;  Plielps  v.  Paris, 
39  Vt.  511;  Still  V.  Hall,  20  Wend. 
51 ;  Briggs  v.  Montgomery,  3  Heisk. 
673;  Denew  v.  Daverell,  3  Camp. 
451 ;  Grant  v.  Button,  14  Johns.  377 ; 
Shipman  v.  State,  43  Wis.  381; 
Garlicld   v.   Huls,   54   111.   427;    For- 


)38 


SUTHERLAND    ON    DAMAGES. 


[§  180 


where  it  injuriously  transcends  the  limits  of  duty  or  authority  ;^~ 
from  ignorance,  where  knowledge  and  skill  are  due ;  ^^  and 
honesty  and  good  faith,  being  always  obligations  upon  contract- 
ing parties,  all  damages  which  result  from  any  covinous  prac- 
tice or  tort  within  the  scope  of  the  transaction  which  the 
plaintiif's  action  involves  may  be  the  subject  of  recoupment.^* 
Thus  money  paid  to  contractors  by  government  officers  with- 
out authority,  or  in  violation,  of  law  may  be  recovered  on  a 
counter-claim  in  a  suit  on  the  contract  under  which  such  pay- 
ment was  made.^®  An  employer  may  recoup  against  a  serv- 
ant's wages  not  only  the  damages  arising  from  his  negligence 
and  want  of  skill  and  knowledge,  but  for  any  fraudulent  or 
tortious  waste,  conversion  or  destruction  of  property  intrusted 
to  him  or  placed  in  his  care  in  the  course  of  his  employment.^® 
If  a  servant  lives  in  the  family  of  his  employer  and  while 


man  v.  Miller,  5  McLean  218; 
Doan  V.  Warren,  11  Up.  Can.  C.  P. 
423;  McCracken  v.  Hair,  2  Speer, 
256;  Marshall  v.  TTann,  17  N.  J.  L. 
425;  Eaton  v.  Woolly,  28  Wis.  628; 
Cloyd  V.  Steiger,  130  111.  41,  1  Am. 
Neg.  Cas.  447;  Hattin  v.  Chase,  88 
Me.  237,  quoting  the  text. 

32  ISTortliwestern  Port  Huron  Co. 
V.  Iverson,  22  S.  D.  314,  133  Am. 
St.  1)20;  :\IcEwon  v.  Kerfoot,  37  Til. 
530. 

33  Do  Witt  V.  Cullings,  32  Wis. 
298;  Stoddard  v.  Treadwell,  26  Cal. 
294;  Goslin  v.  Hodson,  24  Vt.  140; 
Hunt  V.  Picrpont,  27  Conn.  301  ; 
Shipman  v.  State,  43  Wis.  381  ; 
Pvobinson  v.  Mace,  10  Ark.  97 ;  Hop- 
ping V.  Quin,  12  Wend.  517;  Glcason 
V.  Clark,  9  Cow.  57 ;  Hill  v.  Feather- 
stonehaugh,  7  Bing.  569;  Cardell  v. 
Bridge,  9  Allen,  355;  Eaton  v. 
Woolly,  28  Wis.  628;  Whitesell  v. 
Hill,  101  Iowa,  629,  2  Am.  Neg.  Pvcp. 
134,  37  L.R.A.  830. 

34  Modern  Steel  S.  Co.  v.  Van 
Buren  County,  120  Iowa,  006. 

35  Barnes  v.  District  of  Colum- 
bia, 22  Ct.  of  CIs.  366;  McRlrath  v. 


United  States,  102  U.  S.  426,  440, 
26  L.  ed.  189,  192;  Morse  v.  Moore, 
83  Me.  473,  13  L.R.A.  224;  Sapp  v. 
Bradfield,  137  Ky.  308;  Aultman 
Co.  V.  McDonough,  110  Wis.  263  (in 
action  of  replevin  by  nonresident 
mortgagee  to  recover  the  sul)ject  of 
the  contract) . 

36  Flat  Lick  S.  Co.  v.  Kinning- 
liam,  140  Ky.  306;  Shick  v.  Sut- 
tle,  94  Minn.  135;  Slaughter  v. 
Standard  Mach.  Co.,  148  N.  C.  471; 
Johnson  v.  White  Mountain  C. 
Ass'n,  68  N.  H.  437,  73  Am.  St. 
610;  Barretts,  etc.  Dyeing  Est.  v. 
Wharton,  101  N.  Y.  031;  Gibson  v. 
Carlin,  13  Lea  440;  Wilder  v.  Stan- 
ley, 49  Vt.  105;  Heck  v.  Shener,  4 
S.  &  II.  249,  8  Am.  Dec.  700 ;  Allaire 
Works  V.  Guion,  10  Barb.  55;  Coit 
V.  Stewart,  50  N.  Y.  17;  Hatchett 
V.  Gibson,  13  Ala.  587;  Pierce  v. 
Hoffman,  4  Wis.  277;  Brigham  v. 
Hawley,  17  111.  38;  Brady  v.  Price, 
19  Tex.  285.     See  §  095. 

In  Ward  v.  Willson,  3  Mich.  1, 
where  it  was  held  that  proof  that 
the  plaintiff,  while  employed  as  a 
cook   on   lioard   a   boat,   wilfully  de- 


§  ISO] 


J.EGAT>    LHiUIDATIONS    AND    HKDUC'I'IONS. 


539 


there  seduces  the  latter's  daughter,  the  (huiiages  result inj;  may 
be  recouped  in  an  action  to  recover  wages."  Tlie  sauu;  reuiedy 
is  available  where  the  eini)loyee  (piits  the  service  withnut  ;:iv- 
ing  the  notice  reijuired  by  his  contract;  ^^  and  against  a  jiledgeo 
suing  for  the  debt  secured  bj  the  pledge  where  he  has  con- 
verted it.^^  So  in  an  action  by  the  pledgor  against  tlie  pledgee 
for  conversion  of  the  pledge  the  latter  may  recoup  the  anioiiut 
of  the  debt  secured  thereby;  *°  and  a  broker  may  recouj)  his  ad- 
vances, interest  and  commissions  in  an  action  for  the  conversion 
of  stocks  held  on  margin,  regardless  of  whether  the  action  is 
for  the  tort  or  breach  of  contract.^^  Where  a  carrier  injures 
or  loses  goods,  or  any  of  them,  or  incurs  a  liability  for  negligent" 
delay  in  transportation  and  delivery,  the  damage  therefor  may 
be  recouped  in  an  action  for  freight  ;^^  damages  for  the  cul- 


stroyed  the  lioso  bL-loiigiiig  to  tlie 
boat  should  be  excluded  in  an  ac- 
tion to  enforce  the  payment  of  lii.s 
wages,  the  tort  not  appearing  to 
have  any  connection  with  his  du- 
ties as  cook.  Nashville  R.  Co.  v. 
Chumley,  6  Heisk.  325.  See  also, 
Chamberlain  v.  Townscnd,  72  Ore. 
207. 

37  Bixby  V.  Parsons,  49  Conn.  483. 

38  Stockwell  V.  Williams,  40  Conn. 
371. 

39Bulkelcy  v.  Welch,  31  Conn. 
339;  Ainsworth  v.  Bowen,  9  Wis. 
348;  Harrell  v.  Citizens'  B.  Co., 
Ill  Ga.  846;  Waring  v.  CJaskill,  95 
Ga.  731. 

Where  the  defendant  deposited  a 
bond  as  collateral  security  for  the 
payment  of  his  note,  and  the  bond 
was  stolen  after  the  note  became 
due  and  before  it  was  paid,  the 
value  of  the  bond  could  not  be  re- 
couped in  a  suit  on  the  note.  To 
make  the  defense  of  recoupment 
available  some  stipulation  in  the 
contract  sued  upon  must  have  been 
violated  by  the  plaintiflF.  The  de- 
posit of  the  bond  was  perhaps  a  part 
of    the    transaction    of    giving    the 


note,  but  it  was  not  tliu  same  trans- 
action. The  note  was  a  contract  in- 
<l('l)endeiitlv  of  the  pledging  of  the 
bond  in  itself.  Winthrop  Bank  v. 
Jackson,  67  Me.  570,  24  Am.  Rep. 
56.  The  same  rule  was  applied 
where  the  pledgee  sold  notes  given 
him  to  secure  the  payment  of  the 
note  in  suit,  which  made  no  refer- 
ence to  the  collateral.  Fletcher  v. 
Harmon,  78  Me.  465. 

40Bolden  v.  Perkins,  78  111.  449; 
Jarvis  v.  Rogers,  15  Mass.  389; 
Stearns  v.  Marsh,  4  Denio,  227,  47 
Am.  Dec.  248;  Fowler  v.  Gilman,  13 
:\letc.  (Mass.)  267;  Work  v.  Ben- 
nett, 70  Pa.  484;  Brown  v.  Pliillips, 
3  Bush.  656. 

The  right  to  recoup  does  not  rest 
upon  the  principle  of  lien;  it  exists 
after  the  lien  has  been  destroyed  by 
a  tortious  act  of  the  party  in  whose 
favor  it  was  originally  obtained. 
Ludden  v.  Buffalo  B.  Co.,  22  III. 
App.  415. 

41  Barber  v.  Ellingwood,  l.'iT  .\pp 
Div.    (N.  Y.)    704. 

42Gwynn  v.  Citizens'  Tel.  Co.,  09 
S.  C.  434,  104  Am.  St.  819,  07 
L.R.A.  Ill    (damages  caused  by  fail- 


540  SUTIIEBLAND    ON    DAMAGES.  [§    180 

pable  negligence  of  a  physician  wlio  carries  infection  from 
patients  having  small-pox  to  the  defendant's  family,  when  called 
to  prescribe  for  other  diseases,  may  be  recouped  against  his 
charges  for  services.*'  The  remedy  extends  to  the  vendor  of 
rags  sold  as  clean  and  free  from  infection  and  fit  to  be  manu- 
factured into  paper  if  in  fact  they  are  infected  with  small-pox 
and  cause  that  disease  to  break  out  in  the  paper  mill  of  the 
vendee,  whereby  some  of  his  workmen  lose  their  lives  and 
others  are  disabled,  causing  a  loss  of  business  and  increase  of 
expense  to  the  purchaser  of  the  rags.**  A  borrower  sued  by 
the  lender  for  conspiracy  in  failing  to  satisfy  certain  prior 
mortgages  with  the  borrowed  funds  may  set  up  that  the  lender 
had  sold  his  note  before  due  and  that  his  agent  converted  the 
borrowed  money  before  its  delivery  to  the  borrower,  and  that 
the  lender  is  indebted  to  the  borrower  to  the  extent  of  the  value 
of  the  note  converted.*^ 

§  181.  What  acts  may  be  the  basis  of  recoupment.  If  the 
contract  has  been  executed  on  the  part  of  the  jdaintiff  and, 
therefore,  the  defendant's  contract  sued  on  is  based  upon  an 
executed  consideration,  then  any  tortious  act  of  the  former 
subsequently  impairing,  in  fact,  that  consideration  has  been 
deemed  an  independent  tort,  and  not  a  part  of  the  transaction, 
or  not  connected  with  the  subject  of  the  action  for  breach  of 
the  defendant's  undertaking.*^  Thus,  it  has  been  held  to  be  no 
defense  to  an  action  on  a  bill  of  exchange  given  for  the  price 

ure  to  furnish  telephonic  eommuiii-  377,  and  Sheels  v.  Davies,  4  Camp. 

cation)  ;  Empire  T.  Co.  v.  Boggiano,  119. 

52  Mo.  294;   Ewart  v.  Kerr,  2  Mc-  « piper   v.    Menifee,    12    B.    Mon. 

Mull.  141;   Sears  v.  Wingate,  3  Al-  465,  54  Am.  Dec.  547. 

len,   103;     Boggs    v.    Martin,   13   B.  44  Dushane  v.  Benedict,  120  U.  S. 

Mon.  239;  The  Nathaniel  Hooper,  3  030,   30   L.   ed.   810. 

Sumn.  542;   Jordan  v.  Warren  Ins.  45  Bowman  v.  Lickey,  86  Mo.  App. 

Co.,    1    Story,     352;     Bradstreet    v.  47. 

Heron,  1  Abb.  Adm.  209 ;  Fitchburg,  46  See  First  Nat.  Bank  v.  Fowler, 

etc.  Co.  V.  Hanna,  6  Gray,   539,  66  54  Wash.  65. 

Am.  Dec.  427;  Davis  v.  Pattison,  24  In   an   action   for   wages   the   em- 

N.  Y.  317;   Edwards  v.  Todd,  2  111.  plover    cannot   recoup    damages   for 

463;   Leech    v.    Baldwin,    5    Watts,  an  injury  done  by  the  plaintiff  be- 

446;   Humphrey  v.  Reed,  6  Whart.  yond  the  scope  of  his  employment. 

435;  Hinsdell  V.  Weed,  5  Denio,  172.  Nashville    R.     Co.     v.     Chumley,    6 

But  see  Bornman  v.  Tooke,  1  Camp.  Heisk.  327. 


§    181]  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  511 

of  goods  sold  that  two  months  after  tlieir  del  ivory  to  tlio 
vendco  the  vendor  foreihly  retook  possession.'*'  15nt  where 
a  note  was  given  for  a  judgment  assigned,  proof  that  the  as- 
signor afterwards  collected  part  of  the  judgment  was  held  a 
defense  pro  tanto  to  the  note.**  Tn  an  action  for  the  price  of 
specific  articles  bargained  and  sold,  but  not  dcliverc^d,  th(!  de- 
fendant may  set  up  by  way  of  recoupment  any  injury  to  such 
articles  occasioned  by  the  fault  or  negligence  of  the  vendor 
subsequent  to  the  sale  and  prior  to  the  time  of  delivery;  *^  for 
the  vendor's  duty  was  to  keep  the  articles  sold  with  (trdinai-y 
care,  and  he  is  responsible  for  the  want  of  such  care  or  of  good 
faith.^°  So  a  vendee,  when  sued  for  the  price  of  land  sold,  may 
recoup  for  the  vendor's  tort  which  diminishes  the  value  of  the 
property  j^urchased,^^  or  which  consists  of  carrying  away  crops 
or  fixtures  before  the  sale  is  consummated  by  deed  and  delivery 
of  possession.^^  Where  suit  was  brought  on  a  note  given  for 
wood  the  maker  recouped  against  the  note  the  amount  of  his 
loss  because  the  plaintiff  refused  to  permit  him  to  convert  the 
wood  into  charcoal  on  the  land  on  which  it  was  when  it  was  sold ; 
it  was  not  necessary  that  the  wood  should  be  returned,  it  having 
been  removed  and  coaled  elsewhere.^^  A  tenant  in  common,  in 
control  of  the  premises  held  in  common  for  the  purpose  of  rent- 
ing them,  when  sued  by  his  co-tenant  for  his  share  of  the  rents 
may   counter-claim   the   damages   sustained   by   the    plaintilf's 

Damages     for     maliciously     suing  48  Harper  v.  Coliimlius  l'"aet()ry,  ',\^ 

out  an  attachment  are  not  to  be  re-  Ala.  127. 

couped  in  the  same  suit  because  the  49  Barrow  v.  Window,  71   III.  '214. 

wrong  was   in     no    way     connected  50  McCandlish  v.  Newman,  25  Pa. 

with   the  consideration   of  the  con-  460;    Chinery   v.    \'iall.   5    IT.   &    N. 

tract  sued  on.     Nolle  v.  Thompson,  288. 

3  Mete.  (Ky.)   121.     Nor  for  slander  51  Streeter  v.  Stroeter,  l.S  111.  IT);-.; 

in  an  action  by  the  indorsee  before  Sanderlin  v.  Willis,  94  Ga.  171. 

maturity   of   a  note.     Lyon  v.   Bry-  52  Cordon  v.  Bruner,  40  Mo.  .570; 

ant,  54  111.  App.  331.  Grand  Lodge  v.  Knox,  20  Mo.  433; 

47  Stephens  v.  Wilkinson,  2  B.  &  Patterson   v.   Ilulings,   10   Pa.   500; 

Ad.   320;    Huelet  v.   Reyns,   1   Abb.  Owens  v.  Rector,  44  Mo.  380.     But 

Pr.    (N.  S.)    27;   Slayback  v.  Jones,  see  Slayback  v.  Jones,  0  Tnd.  472,  (IS 

9  Ind.  472.     See  Martin   v.   Brown,  Am.   Dec.  650. 

75  Ala.  442;   Gerding  v.  Adams,  65  53  ITarman     v.     Baiinon.     71     Md. 

Ga.  79.  429. 


542  SUTilEJiLAJSfD    OiSl    DAMAtiJfiS.  [§    181 

wrongful  acts  iu  inducing  lessees  to  leave  the  premises  before 
their  leases  expired.^* 

Where  a  contract  for  particular  worlds  has  been  entered  into, 
or  for  service,  or  for  the  sale  and  delivery  of  property,  and 
there  has  been  a  part  performance  for  which  an  action  in 
general  assiiinpsit  is  maintainable,  the  special  contract  is  a  part 
of  the  transaction  in  question.  Although  the  plaintiff  does  not 
bring  his  action  uj)on  it,  it  is  connected  with  the  subject  there- 
q£  55  Though  the  performance  of  the  plaintiff's  part  of  the 
contract  may  at  first  have  been  a  condition,  yet  the  defendant 
may  v/aive  the  right  to  forfeit  the  contract  for  nonperformance 
and  retain  his  right  to  damages.  These  he  may  recoup  in  an 
action  on  a  quantum  meruit  or  a  quaututn  valebai,  or  in  an 
action  upon  the  contract.^^  In  such  cases  if  the  defendant 
thinks  proper  to  present  his  cross-claim  by  way  of  recoup- 
ment the  court  will  consider  the  whole  contract  under  which 
the  plaintiff's  demand  arose,  and  direct  a  deduction,  from 
what  he  would  otherwise  be  entitled  to  recover,  of  all  damages 
sustained  by  the  defendant  in  consequence  of  the  plaintiff's 
failure  to  fulfill  any  or  all  of  the  stipulations  on  his  side," 

54  Dale  V.  Hall,  64  Ark.  221.  man,  45  Cal.  573;   Wheelock  v.  Pa- 

55Twitty  V.  McGuire,  3  Murphy,  cific,  P.  G.  Co.,  51  Cal.  223;  Upton 

501;     Grannis    v.    Linton,    30    Ga.  v.  Julian,  7  Ohio  St.  95;   Harris  v. 

330;  Steamboat  Wellsville  v.  Geisse,  Rathbun,  2  Keyes,  312;  Hayward  v. 

3  Ohio  St.  333;   Bishop  v.  Price,  24  Leonard,  7  Pick.  181;   Allen  v.  Mc- 

Wis.   480;    Hayward   v.   Leonard,    7  Kibbeii,   5  Mich.  449;    McKinney  v. 

Pick.  181;  Bowker  V.  Hoy t,  18  Pick.  Springer,     3    Ind.    59;     Bostromv. 

555;    Barber    v.    Rose,    5    Hill,    76;  Becker,   172   111.   App.   410;    Seretto 

Winslow  V.  Robinson,  173  111.  App.  v.   Rockland,   etc.   R.,    101    Me.    140. 

84;   Burton  v.  Gee  0.  Co.,  id.  548.  See  Medart  P.  Co.  v.  Dubuque  T.  & 

56  Woodrow  V.  Hawving,  105  Ala.  R.  M.   Co.,   121   Iowa,  244. 

240;    Madison    v.    Danville    M.    Co.,  57  Id.;  Lomax  v.  Bailey,  7  Blackf. 

64   Mo.   App.   564;    Wiley   v.   Athol,  599;      Hollinsead     v.     Mactier,     13 

150     Mass.     426,     6     L.R.A.     342;  Wend.  275;   Adams  v.  Hill,  ]6  Me. 

Reynolds  v.  Bell,  84  Ala.  496;   Bell  215;    Koon   v.  Greenman,    7     Wend. 

V.  Reynolds,  78  Ala.    511,    56    Am.  121;   Ladue  v.  Seymour,  24  id.  60; 

Rep.    52;    Schweickhart    v.    Stuevve,  Brewer  v.  Tyriiigham,  12  Pick.  547; 

71   Wis.  1,  5  Am.  St.   190;   Fabbri-  Coe  v.  Smith,  4  Ind.  79;   Major  v. 

cotti  V.  Launitz,  3  Sandf.  743;  Van-  McLester,   id.   591;    Milnes   v.   Van- 

derbilt  V.  Eagle  I.  Works,  25  Wend.  horn,     8     Blackf.     198;     Fenton    v. 

665;  Van  Buren  v.  Digges,  11  How.  Clark,  11   Vt.  557;   Britton  v.  Tur- 

461,  13  L.  ed.  771;  Polhemus  v.  Hei-  ner,  6  N.  H.  481,  26  Am.  Dec.  713; 


§    181]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


543 


and  the  computation  will  be  brought  down  to  tlie  time  of  the 
trial.'' 

On  the  sale  of  a  quantity  of  standing  wood  the  vendor  agreed 
to  indemnify  the  vendees  against  any  damage  that  might  ha|)]ton 
to  the  wood  in  conseqnence  of  the  burning  of  an  adjoining  fal- 
low. The  latter  gave  their  notes  for  the  price ;  and,  afterwards, 
the  fallow  being  burned  over,  the  wood  in  (luestion  was  de- 
stroyed by  the  fire;  in  an  action  by  the  vendor  u))on  the  note, 
the  vendees  recouped  their  damages  arising  from  the  loss  of  tlie 
\V(iod.^^.  Tlio  phiintiH"  in  one  agreement  stii)uhited  to  chiliver 
forthwith  a  ((uantity  of  dressed  pork  to  the  defenchint  (or  a  cer- 


Seaver  v.  Morse,  20  Vt.  620 ;  Epper- 
ly  V.  Bailey,  3  Ind.  72;  Goodwin  v. 
Morse,  9  Mete.  (Mass.)  278;  Wil- 
kinson V.  Ferree,  24  Pa.  190;  Hig- 
gins  V.  Lee,  16  111.  495;  Van  Deusen 
V.  Blum,  18  Pick.  229,  29  Am.  Dec. 
582;  Lee  v.  Aslibrook,  14  Mo.  .378, 
55  Am.  Dee.  110;  White  v.  Oliver, 
.36  Me.  92:  Merrow  v.  Iliintoon,  25 
Vt.  9;  Blood  V.  Enos,  12  Vt.  025, 
.36  Am.  Dec.  363;  Preston  v.  Finney, 
2  W.  &  S.  53;  Ligget  v.  Smith,  3 
Watts,  331,  27  Am.  Dec.  358;  Dan- 
ville B.  Co.  V.  Poniroy,  15  Pa.  151; 
Allen  V.  Robinson,  2  Barb.  341; 
Rogers  v.  Humphreys,  39  Me.  382 ; 
Philadelphia  Veneer  &  Lumber  Co. 
v.  Garrison,  160  Ky.  329;  American 
B.  Co.  V.  Camden  R.  I.  Co.,  135 
Fed.  323,  08  C.  C.  A.  131;  Hall  v. 
Parsons,  105  Minn.  90. 

58ITolser  v.  Skae,  169  Mich.  484. 

59  Batterman  v.  Pierce,  3  Plill, 
171.  This  was  an  early  and  leading 
case  on  the  subject  of  recoupment, 
and  Bronaon,  J.,  comprehensively 
stated  the  doctrine  underlying  and 
governing  it.  He  said:  "When  the 
demands  of  ))otli  ])aj'ties  s])ring  out 
of  the  same  contract  or  transaction, 
the  defendant  may  recoup,  although 
the  damages  on  both  sides  are  un- 
liquidated. .  .  .  It  was  former- 
ly   sup])()sed    that    tiiere   could    ohIv 


be  a  recoupment  where  some  fr;iud 
was  imputable  to  tlie  j)laintilV  in 
relation  to  the  contract  on  whicli 
tiie  action  is  founded :  but  it  is 
now  well  settled  that  the  doctrine 
is  also  applicable  when  tiie  defend- 
ant imputes  no  fraud  and  only  com- 
plains tliat  there  lias  been  a  bi-eaeli 
of  tiie  contract  on  the  part  of  (lie 
plaintiff.  For  the  ])urj)ose  of  aNoid 
ing  a  circuity  or  the  multiplication 
of  actions,  and  doing  complete  jus- 
tice to  both  pju'ties,  tliey  are  al- 
lowed and  compelled,  if  the  defend- 
ant so  elect,  to  adjust  all  llieir 
claims  growing  out  of  the  same  con- 
tract in  one  action.  It  was  well  re- 
marked by  Chancellor  \V'alwortii,  in 
Reab  v.  McAlister,  8  Wend.  109, 
that  'there  is  a  natural  equity, 
especially  as  to  claims  arising  out 
of  tlie  same  transaction,  that  one 
claim  siiould  compensate  the  other, 
and  that  tlie  balance  only  should  bo 
recovered.'  Tlie  defendant  has  the 
election  whether  he  will  set  uj)  his 
claim  in  answer  to  the  plaintill's  de- 
mand, or  resort  to  a  cros.s-action : 
and  whatevipr  may  be  the  amount  of 
his  damages,  he  can  only  set  tliem 
up  by  way  of  abatement,  eitiier  in 
whole  or  in  part  of  <lie  plaintiff's 
(lematiil.  11(  cannof,  as  in  case  of 
sei-oir,   ixo   iie\oii(l   lliat.   and    lia\e  a 


;44 


SUTIIEKXAND    ON    DAMAGES. 


[§  181 


tain  price,  and  also  to  sell  him,  upon  their  arrival,  at  a  different 
price,  a  number  of  live  hogs  then  on  the  way  and  expected  in  a 
few  days,  no  stipulation  being  made  as  to  the  time  of  payment 
for  either.  The  plaintiff  recovered  the  sum  stipulated  for  the 
dressed  pork,  notwithstanding  that,  after  it  became  due,  a 
breach  of  the  stipulation  in  respect  to  the  live  hogs  had  accrued, 
but  subject  to  recoupment  of  the  defendant's  damages  for  such 
breach.^" 


balance  certifierl  in  liia  favor.  Tt 
is  no  objection  to  the  defense  that 
the  plaintiff  is  not  suing  upon  the 
original  contract  of  sale,  but  upon 
a  note  given  for  the  purchase-money. 
The  promise  of  the  defendants  to 
pay  the  purchase-money  has  under- 
gone the  slight  modification  of  be- 
ing put  into  the  form  of  a  written 
obligation,  and  on  that  the  action 
is  founded;  but  still  the  plaintiff  is 
in  effect  seeking  to  enforce  the 
original  contract  of  sale,  and  the 
question  must  be  settled  in  the  same 
manner  as  though  the  action  was,  in 
form,  upon  that  contract.  But  the 
objection  still  remains,  and  it  has 
been  strenuously  urged  against  the 
defense,  that  the  damages  claimed 
by  the  defendants  do  not  spring  out 
of  the  contract  of  sale,  but  arise  un- 
der the  collateral  agreement  of  the 
plaintiff  to  indemnify  against  fire. 
It  is  undoubtedly  true  that  there 
can  be  no  recoupment  by  setting  up 
the  breach  of  an  independent  con- 
tract on  the  part  of  the  plaintiff. 
But  that  is  not  this  case.  Here 
there  were  mutual  stipulations  be- 
tween the  parties,  all  made  at  the 
same  time,  and  relating  to  the  same 
subject-matter;  and  there  can  be 
no  difference,  in  principle,  whether 
the  whole  transaction  is  embodied 
in  one  written  instrument  setting 
forth  the  cross-obligations  of  both 
parties,  or  whether  it  takes  the 
form  of  a  separate  and  distinct  un- 
dertaking by  each  party.    The  plain- 


tiff proposed  to  sell  his  wood  at 
auction,  and  as  an  inducement  to 
obtain  a  better  price  he  stipulated 
with  the  bidders  that  they  should 
have  two  winters  and  one  summer 
to  get  away  the  wood,  and  that  in 
the  meantime  he  would  insure  them 
against  the  consequence  of  setting 
fire  to  his  adjoining  fallow  grounds. 
Upon  these  terms  the  purchase  was 
made  by  the  defendant.  .  .  . 
The  nature  of  the  transaction  can- 
not be  changed  by  putting  the  sev- 
eral stipulations  of  the  parties  into 
distinct  written  contracts;  nor  can 
it  make  any  substantial  difference 
that  the  undertaking  of  one  party 
lias  been  reduced  to  writing,  while 
the  engagement  of  the  other  party 
remains  in  parol.  In  substance  it 
is  still  the  case  of  mutual  stipula- 
tions between  the  same  parties, 
made  at  the  same  time  and  relat- 
ing to  the  same  subject-matter.  The 
forms  which  the  parties  may  have 
adopted  for  the  purpose  of  manifest- 
ing their  agreement  cannot  affect 
their  riglits  so  far  as  this  question 
is  concerned.  Whether  all  the  mut- 
ual undertakings  have  been  em- 
bodied in  one  written  instrument, 
or  in  several,  or  whether  some  have 
been  put  upon*  paper  while  others 
rest  in  parol,  the  reason  still  re- 
mains for  allowing  the  claims  of 
both  parties  growing  out  of  the 
same  transaction  to  be  adjusted  in 
one  action." 

60  Tipton   v.    Feitner,     20    N.     Y. 


§    ISl  I  LEGAL    LTQITTOATIONR    AND    lM':nTTCTIONS.  T)  1 T) 

Til  ;ni  aclioii  to  I'ocover  diimagos  for  tlio  cumcrsioii  of  a  iinlc 
made  bv  tlic  })laiii(in"  and   also  ol"  certain   collaterals,   the   de- 
fendant may  plead  a  connter-elaim  setting-  up  the  note  and  its 
non-payment  at  maturity  and  asking  to  recover  the  sum  due 
with  interest,  although,  after  the  note  hecamc^  due,  the  plaint  ill' 
had  tendered  to  the  defendant  the  sum  due  on  it,  and  denianch'd 
the  note  with  the  collaterals,  whicli  the  defendant  refused  to 
surrender.     The  eonrt  agreed  that  it  is  not  enough  that  the 
claims  set  forth  in  the  com])laint  and  alleged   in   the  connter- 
elaim  had  a  comnKni  origin  and  were  coincident  in  the  lime  of 
their  creation.     They  must  be  so  related  that  the;  couuter-claini 
properly  tends  to  diminish  or  defeat  the  plaintiff's  recovery. 
Ihit  the  case  was  snch.     The  })laintiir  attempted  to  meet  this  by 
saying  that  upon  his  tender  of  the  amount  due  upon  the  note  the 
defendant's  lien  upon  the  collaterals  was  discharged  and  liis 
right  to  the  latter  became  absolute.    This,  however,  did  not  solve 
the  question.    We  must  still  go  back  to  the  transaction  set  forth 
in  the  complaint.    What  is  that  transaction  ?    The  plaintiff  lim- 
its it  to  the  technical  conversion ;  that  is,  to  the  legal  formula  of 
his  action,     l^uf  that  is  not  the  entire  transaction  set  forth  in 
the  complaint  as  the  foundation  of  the  plaintiff's  claim.     It  is 
what  that  transaction  comes  to  when  reduced  to  the  concrete 
charge.     But  the  transaction  itself — that  is  the  entire  transac- 
tion— consists  of  all  the  facts  averred  in  the  complaint;  the 
niaking  and  delivery  of  the  note ;  the  giving  of  the  collaterals, 
the  tender  of  the  amount  due  and  the  refusal  thereupon  to  sur- 
render the  securities.     The  note  is  a  part  of  the  transaction  thus 
set  forth.    It  is  interwoven  with  it.     The  facts  with  regard  to  it 
are  in  part  the  foundation  of  the  plaintift"'s  claim.     If  the  plain- 
tiff is  entitled  to  the  value  of  his  securities,   the  •defendant   is 
equally  entitled  to  the  amount  of  his  note.      It  is  entirely   just 
that  the  plaintiff"'s  claim  should  be  diminished  by  the  amount  of 
the  latter  debt."    On  the  other  hand,  the  defendant  in  an  action 
for  the  value  of  goods  sold  and  for  services  rendered  cannot 
recoup  damages  resulting  from  an  abuse  of  the  writ  of  attach- 

423;    Prairie    F.    Co.    v.    Taylor,    (i!)  61  R,,!]. ire    0.    F.    Co.   v.    Cliatlmm 

111.   440,   18    Am.   Dec.    021;    Clicrry  Nat.    I'.aiik,   .-iO    .\iii>-    "iv.    (N.    V.) 

V,  Sutton,  30  Ga.  STf).  47U. 
Suth.  Dam.  Vol.  1.-35. 


546  SUTHERLAND    ON    DAlSrAOES.  [§    IRl 

ment  issued  by  the  plaintiff,  there  being  no  connection  between 
these  and  the  subject  of  the  action. ^^  The  same  is  true  of  a 
claim  for  storage  asserted  in  an  action  brought  for  the  conver- 
sion of  property  stored. ^^  Where  accounts  containing  usurious 
interest  have  been  closed  and  settled  by  note  and  an  action  is 
brought  on  the  note  the  defendant  cannot  counter-claim  for 
double  the  usury.^*  In  an  action  for  the  unlawful  seizure  of 
exempt  property  the  indebtedness  of  the  plaintiff  to  the  defend- 
ant cannot  be  offset  against  the  damages.^^ 

These  are  instances  of  cross-claims  arising  from  the  same 
contract  or  transaction.  Stipulations  are  parts  of  the  same 
contract  for  the  purpose  of  this  defense  though  they  relate  to 
distinct  subjects,  and  a  different  time  of  performance,  and  a 
distinct  and  severable  compensation  is  provided  for  each ;  so 
any  implied  or  express  warranty  or  guaranty  which  forms 
part  of  the  consideration  of  the  defendant's  undertaking,  which 
is  the  foundation  of  the  plaintiff's  action,  is  part  of  the  same 
contract ;  and  all  damages  to  which  the  defendant  is  entitled 
thereon  may  be  recouped  in  such  action.  Many  examples  have 
been  given.^^  In  England  the  damages  which  may  be  recouped 
are  limited  to  those  which  directly  result  from  the  character  of 
the  property  or  the  work  done ;  consequential  damages  must  be 
recovered  in  a  separate  action.^'  "But  in  this  country  the 
courts,  in  order  to  avoid  circuity  of  action,  have  gone  further 
and  have  allowed  the  defendant  to  recoup  damages  suffered  by 
him  from  any  fraud,  breach  of  warranty  or  negligence  of  the 
plaintiff  growing  out  of  or  relating  to  the  transaction  in  ques- 
tion." ^8 

62  Jones  V.  Swank,  54  Minn.  259.  breach   of  warranty    being    alleged, 

63  Schaeffer  v.  Empire  L.  Co.,  28  the  defendant  may  interpose  a  coiin- 
App.  Div.  (N.  Y.)  469.  See  Born-  ter-claim  for  his  entire  damage, 
heimer  v.  Hartmayer,  50  App.  Div.  Geiser  T.  Mach.  Co.  v.  Farmer,  27 
(N.  Y.)   316.  Minn.   428;    Minneapolis   H.   Works 

64Witte  V.    Weinberg,    37     S.    C.  v.  Bonnallie,  29  Minn.  373.     Contra, 

579.  Aultman  &  T.  Co.  v.  Hetherington, 

65  Craddock  v.  Williams,  54  Tex.  42  Wis.  622;  Same  v.  Jett,  id.  488. 
578;  Cone  v.  Lewis,  64  Tex.  331,  53  67  Mondel  v.  Steel,  8  M.  &  W. 
Am.  Rep.  767;  Pate  v.  Vandeman,  858;  Davis  v.  Hedges,  L.  E.  6  Q.  B. 
—  Tex.  Civ.  App.  — ,  141  S.  W.  317.  637. 

66  In  an  action  upon  one  of  sev-  68  Carolina  P.  C.  Co.  v.  Alabama 
eral  notes  given    for    a    chattel,  a  C.  Co.,  162  Ala.  380;   McConnell  v. 


183] 


LEGAL    LIQUIDATIONS    AND    KEDUCTIONS. 


147 


§  182.  Cross-claims  between  landlord  and  tenant.  As  iK'twcon 
landlord  and  tenant  tliey  have  each  tlic  right  to  recoup 
damages  in  the  other's  action  brought  on  the  covenants  in  the 
lease  or  those  which  are  implied  from  the  relation.  Although 
there  be  a  written  lease  or  even  an  indenture  containing  express 
stipulations  and  covenants  if  others  are  implied,  the  latter 
belong  to  and  are  parts  of  the  same  contract.^^  The  landlord, 
impliedly,  in  the  absence  of  an  express  agreement  defining  his 


Stubbs,  124  Ga.  1038;  Dushano  v. 
Benedict,  120  U.  S.  630,  30  L.  ed. 
810;  Harrington  v.  Stratton,  22 
Pick.  510;  Withers  v.  Greene,  9 
How.  213,  13  L.  ed.  109;  Van  Bnren 
V.  Digges,  11  How.  61,  13  L.  ed.  771 ; 
Winder  v.  Caldwell,  14  How.  434,  14 
L.  ed.  487;  Lyon  v.  Bertram,  20 
How.  149,  15  L.  ed.  847;  Railroad 
Co.  V.  Smith,  21  Wall.  255;  Marsh 
V.  McPherson,  105  U.  S.  709,  26  L. 
ed.  1139;  Maywood  v.  Logan,  stated 
in  note  to  §  182. 

69  Harmony  Co.  v.  Eaiicli,  62  111. 
App.  97 ;  Culver  v.  Hill,  68  Ala.  66, 
44  Am.  Rep.  134;  Vandegrift  v.  Ab- 
bott, 75  Ala.  487;  Jones  v.  Horn, 
51  Ark.  19,  14  Am.  St.  17;  Gocio  v. 
Day,  51  Ark.  46;  Lewis  v.  Chisholm, 
68  Ga.  46;'  Stewart  v.  Lanier  House 
Co.,  75  Ga.  582,  598;  Howdyshcll 
V.  Gary,  21  111.  App.  288;  Burroughs 
V.  Clancey,  53  111.  30;  Dodds  v. 
Toner,  3  Ind.  427;  Blair  v.  Clax- 
ton,  18  N.  Y.  529;  Caldwell  v.  Pen- 
nington, 3  Gratt.  91 ;  Vining  v.  Lce- 
raan,  45  111.  248;  Hobein  v.  Drewell, 
20  Mo.  450;  Lynch  v.  Baldwin,  69 
111.  210;  Whitbeck  v.  Skinner,  7 
Hill,  53;  Mack  v.  Patchin,  42  N. 
Y.  167,  1  Am.  Rep.  506;  Mayor  v. 
Mabie,  13  N.  Y.  151,  64  Am.  Dec. 
538;  Lindley  v.  Miller,  67  111.  244; 
Westlake  v.  DeGraw,  25  Wend.  669 ; 
Lunn  V.  Gage,  37  111.  19;  Guthman 
V.  Castleberry,  49  Ga.  272;  Tone  v. 
Brace,  8  Paige,  597;  Graves  v.  Ber- 
dan,  26  N.  Y.  498;  Vernam  v.  Smith, 


2  5  N.  Y.  328;  Myers  v.  Burns,  35 
N.  Y.  269;  Hcxtcr  v.  Knox,  63  N. 
Y.  561;  Eldred  v.  Leahy,  31  Wis. 
546;  Morgan  v.  Smith,  5  Hun,  220; 
Commonwealth  v.  Todd,  9  Bush. 
708;  Ilolbrook  v.  Young,  108  Mass. 
83.     See  generally,  §  876. 

If  the  landlord  does  not  furnish 
the  agreed  quantity  of  land  the  ten- 
ant may  recoup  his  damages  in  an 
action  brought  to  recover  advances 
made.  Ilorton  v.  Miller,  84  Ala. 
537. 

If  tlie  tenant  makes  special  in- 
quiry as  to  the  condition  of  water 
on  the  premises  he  leases,  and  it  is 
in  fact  unfit  for  use,  and  the  land- 
lord, knowing  it,  fails  to  remove 
the  cause,  the  tenant  is  justified  in 
regarding  the  condition  of  the  water 
as  an  eviction  from  the  premises, 
and  in  an  action  to  recover  rent  may 
recoup  the  expenses  of  sickness,  in- 
cluding physician's  fees,  resulting 
from  tlie  use  of  sucli  water.  May- 
wood  V.  Logan,  78  Midi.  135,  IS 
Am.  St.  431. 

In  a  statutory  contest  between 
landlord  and  tenant  as  to  the 
amount  of  rent  dm'  tlie  former  may 
meet  violation  of  tiic  lease  with  vio- 
lation, damages  with  damages,  have 
a  full  reckoning,  and  uphold  his 
warrant  to  the  extent  of  the  sum 
due  liim  for  rent  after  a  settlement 
of  the  damage  account.  Johnston 
V.  Patterson,  91  Ga.  531. 


548 


SUTIlEIiLAND    ON    DAMAGES. 


[§  182 


obligation  in  that  regard,  undertakes  for  the  quiet  enjoyment 
of  the  jjremises  by  his  tenant  as  against  any  hostile  assertion 
of  a  paramount  title,  and  that,  so  far  as  he  is  concerned,  he  wil] 
do  no  act  to  interrupt  the  tenant's  free  and  peaceable  possession 
during  the  term  granted.'''°  For  any  violation  or  breach  of  this 
obligation  the  tenant  may  recoup  his  damages  in  any  action  by 
the  landlord  against  him  based  on  his  liabilities  as  a  tenant.'^ 
But  for  mere  tortious  acts  of  interference  by  the  landlord  with 
the  demised  premises,  not  done  in  the  assertion  of  a  right  nor 
amounting  to  an  eviction,  damages  by  way  of  recoupment  have 
been  denied, ^^  as  for  the  malicious  prosecution  of  suits  for  un- 
lawful detainer  because  they  do  not  arise  out  of  the  contract  and 
are  not  connected  with  the  subject-matter  of  the  suit.'^  Where 
a  cross-claim  exists  in  favor  of  the  tenant  he  may  avail  himself 
of  it  not  only  in  an  action  against  him  by  the  landlord  on  the 
contract,  but  also  in  replevin  of  property  distrained  for  rent;  '^ 


70  Keating  v.  Springer,  146  111. 
481,  37  Am.  St.  175,  22  L.R.A.  544; 
-Mayor  v.  Mahie,  13  N.  Y.  151,  64 
Am.  Dec.  538;  Dexter  v.  Manley, 
4  Cusli.  14;  Bradley  v.  Cartwriglit, 
36  L.  J.  (C.  P.)  218;  Maule  v.  Ash- 
mead,  20  Pa.  482;  Hart  v.  Smith, 
2  A.  K.  Marsh.  301  ;  Young  v.  Har- 
grave,  7  Ohio,  394. 

71  Weaver  v.  Roberson,  134  Ga. 
149;  Smith  v.  Green,  128  Ga.  90; 
AIcAlester  v.  Landers,  70  Cal.  79; 
Kelsey  v.  Ward,  38  N.  Y.  S3 ;  Mayor 
V.  Mabie,  supra;  Wade  v.  Ilalligan, 
16  111.  507;  Lynch  v.  Baldwin,  69 
III.  210;  Rogers  v.  Ostram,  35  Barb. 
523;  Chatterton  v.  Fox,  5  Duer,  G4. 

The  fact  that  the  lessee  has  paid 
tlie  rent  for  the  greater  part  of 
the  term  will  not  deprive  him  of  the 
right  to  counter-claim  his  damages 
for  tlie  entire  term.  IMcAlester  v. 
Landers,  svpra. 

72  Smith  V.  Green,  supra;  Edger- 
ton  V.  Page,  20  N.  Y.  281;  Ilulme 
V.  Brown,  3  Heisk.  679;  Bartlett  v. 
Farrington,  120  Mass.  284;  Camp- 
bell  V.    Shields,    11    How.   Pr.   565; 


Drake  v.  Cockroft,  10  id.  377; 
Walker  v.  Slioemaker,  4  Hun,  579 ; 
Lounsbery  v.  Snyder,  31  N.  Y.  514; 
Ogilvie  v.  Hull,  5  Hill,  52;  Vatel  v. 
Herner,  1  Hilt.  149;  Cram  v.  Dres- 
ser, 2  Sandf.  120;  Crowe  v.  Kell,  7 
Ind.  App.  683.  But  see  Kamerick 
v.   Castleman,  23  Mo.  App.  481. 

73  Dietrich  v.  Ely,  11  C.  C.  A. 
266,  63  Fed.  413. 

74  Nichols  V.  Dusenbury,  2  N.  Y. 
283;  Fowler  v.  Payne,  49  Miss.  32; 
Breese  v.  McCann,  52  Vt.  498;  Fair- 
man  v.  Fluck,  5  Watts,  516;  Guth- 
man  v.  Castleberry,  49  Ga.  272; 
Phillips  v.  Monges,  4  Whart.  225; 
Hatfield  v.  Fullerton,  24  111.  278; 
Lindley  v.  Miller,  67   111.  244. 

Where  the  hoard  of  supervisors 
allowed  a  claim  for  repairing  a 
bridge,  and  issued  a  warrant  there- 
for, and  afterwards  the  claimant 
committed  a  breach  by  failing  to 
keep  it  in  repair  pursuant  to  his 
bond,  and  he  and  his  sureties  be- 
came insolvent,  held,  that  the  board, 
in  an  action  of  mandamus  to  com- 
pel payment  of  the  warrant,  could 


§    183]  LEGAL    LIQUIDATIONS    AND    KEDUCTIONS.  549 

but  not  ill  a  suminarj  proceeding  for  possession  based  on  the 
determination  of  the  lease  by  forfeiture.'*  Tn  an  action  for  rent 
the  defendant  may  show  that  the  plaiutitF  has  failed  to  build  a 
fence  or  make  certain  repairs  or  other  impidvements  as  af'recd."'^ 

§  183.  Cause  of  action,  connection  between  and  cross-claim. 
Where  the  basis  of  the  transaction  between  the  })arti('s  is  a  con- 
tract and  its  breach  amounts  to  a  trespass  or  entitles  the  injured 
party  to  an  action  for  negligence  or  fraud,  or  to  any  action  e.i 
delicto,  he  is  not  deprived  of  his  right  to  set  oft"  such  a  claim, 
nor  the  other  party  to  set  oft'  a  claim  arising  upon  the  contract 
against  such  a  cause  of  action.  In  all  such  cases,  there  being  a 
contract  in  fact,  the  party  in  default  is  not  allowed  to  (lo])rivc  tlie 
injured  party  of  the  right  to  take  advantage  of  such  default  by 
way  of  recoii})ment  or  counterclaim  by  alleging  that  the  contract 
was  tortiously  violated.''  Where  there  was  an  exchange  of  chat- 
recoup  the  breach,  occurring  before  37S,  41  J  low.  Pr.  12.1;  Starbinl  v. 
notice  of  assignment,  against  the  P^arrons,  4.3  X.  Y.  200;  Wadley 
assignee  of  the  warrant.  Jefferson  v.  Davis,  fi3  l^;irb.  500;  Griliin  v. 
County  V.  Arrglii,  51  Miss.  668.  Moore,   52    liid.    2115;    :\!cArtliur    v. 

75McSloy  V.  Ryan,  27  Mich.  110;  Green  Bay,  etc.  Co.,  34  Wis.  l:!0; 
D'Armond  v.  Pullen,  13  La.  Ann.  Bitting  v.  Thaxton,  72  X.  C.  541: 
137;  Johnson  v.  Hoifman,  53  Mo.  Price  v.  Lewis,  17  Pa.  St.  51,  r,r) 
504.     See  §  876.  Am.  Dec.  536;    Scott  v.   Kenton,  SI 

76  Miller  v.  Gaither,  3  Bush,  152;  111.  'M',:  Walsli  v.  City  of  Clii.'ago, 
Myers  V.  Burns,  35  N.  Y.  269 ;  Hex-  185  111.  App.  521.  S.e  Scheunert 
ter  V.  Knox,  63  X.  Y.  561;  Guth-  v.  Kaeliler,  23  Wis.  523;  Sample  v. 
man  v.  Castleberry,  49  Ga.  272:  Karson,  174  111.  .\[i]i.  ;!.".4. 
Fairman  v.  Fluck,  5  Watts,  510;  In  all  cases  in  wJiicli  (he  parlies 
Lunn  V.  Gage,  37  III.  19;  Kimball  v.  Jiave  entered  into  an  e\|)vess  con- 
Doggett,  62  111.  App.  52S;  Baker  tract  and  in  which  a  tort  lias  l»ei-n 
V.  Fawcett,  60  id.  300.                                 sufVered,     which     the     sulVenr     may 

The    tenant    may    rely    upon    his  \\ai\c  and  sue  in  dsNinniisil,  a  cunii 

landlord  to  repair  according  to  liis  ter-claini    may    bi'    made    under    the 

agreement,  and  is  not  barred  of  the  contract.      I'-aiius   v.    MiMullins,   7S 

righti  to    recoup    because    he    might  'Sin.  200.     .\nd  where  the  actor  electa 

have  made  the  repairs  at  small  cost.  to  sue  in  tort  for  a  wrong  originat- 

Culver  V.  Hill,  68  Ala.  66,  44  Am.  ing  in  or  growing  out  of  a  contract 

Rep.  134.  wliich   he   pleads  as  an   inducement, 

77  Davidson  v.  Wheeler,  17  R.  1.  the  defendant  may  countcr-(daim 
433;  Cole  v.  Colburn,  61  X.  H.  499:  for  damage  sustained  by  the  breach 
Morrison  v.  Lovejoy,  6  Minn.  319;  of  the  contract.  Kamerick  v. 
Hatchett  v.  Gibson,  13  Ala.  587;  Castleman,  23  Mo.  App.  481. 
V.illiams  v.  Schmidt,  54  111.  205;  The  rule  in  Peiuisylvania  is  that, 
Chamboret    v.    Cagney,    2    Sweeny,  independently   of  statute,   any   nuit- 


550 


SUTHERLAND    ON    DAMAGES. 


[§  183 


tels  the  court  said: 


damages  growing  out  of  one  transaction 


Here  are  mutual  and  adverse  claims  for 
Each  party  sold  to 


ter  either  of  contract  or  of  tort, 
immediately  connected  witli  the 
plaintiff's  cause  of  action,  may  be 
set  up  by  way  of  defense  to  the  ac- 
tion and  in  abatement  of  the  plain- 
tiff's damages  only;  any  matter  of 
contract  may  be  set  up  by  way  of 
counter-claim  under  the  statute,  not 
only  to  defeat  the  action  but  for  the 
purpose  of  establishing  a  liability 
of  the  plaintiff  to  the  defendant  in 
excess  of  the  latter's  demand.  !No 
mere  matter  of  tort  can  be  availed 
of  by  the  defendant  under  the  stat- 
ute. Dushane  v.  Benedict,  120  U. 
S.  630,  644,  30  L.  ed.  810,  813,  cit- 
ing many  Pennsylvania  cases. 

In  Conner  v.  Winton,  7  Ind.  523, 
the  court  defined  a  counter-claim  to 
be  that  which  might  have  arisen  out 
of,  or  could  have  had  some  connec- 
tion with,  the  original  transaction 
in  the  view  of  the  parties,  and  which 
at  the  time  the  contract  was  made 
they  could  have  intended  might  in 
some  event  give  one  a  claim  against 
the  other  for  compliance  or  noncom- 
pliance with  its  provisions. 

In  Slayback  v.  Jones,  9  Ind.  472, 
the  court,  referring  to  recoupment 
and  counter-claim,  said:  '"They  re- 
late more  especially  to  damages  for 
breach  of  contract  which  may  be 
recouped  in  a  suit  for  what  may 
have  been  done  or  rendered  in  part 
performance  of  a  contract.  In  such 
cases  the  cause  of  action  and  de- 
fense are  part  of  the  same  transac- 
tion." 

In  Lovejoy  v.  Robinson,  8  Ind. 
399;  Terre  Haute  &  I.  R.  Co.  v. 
Pierce,  95  Ind.  496,  15  Am.  Neg. 
Cas.  734,  the  court  say  that  tres- 
passes cannot  be  made  to  compen- 
sate each  other. 

Independent  torts  cannot  b«  coun- 


ter-claimed. Allen  V.  Coates,  29 
Minn.  46. 

In  Barhyte  v.  Hughes,  33  Barb. 
320,  and  Loewenberg  v.  Rosenthal, 
18  Ore.  178,  the  word  "transaction" 
was  construed  to  refer  to  business 
dealings,  and  did  not  include  torts. 
Macdougall  v.  Maguire,  35  Cal.  274, 
95  Am.  Dec.  98. 

A  counter-claim  founded  on  con- 
tract cannot  be  interposed  in  an 
action  based  on  fraud.  People  v. 
Dcnnison,  84  N.  Y.  272;  Davis  v. 
Frederick,  6  Mont.  300;  Humbert  v. 
Brisbane,  25  S.  C.  506;  Copeland  v. 
Young,  21  id.  275. 

Where  there  is  no  contract  rela- 
tion between  the  parties  touching 
the  subject  in  question  mutual 
torts  committed  at  the  same  time 
or  in  such  succession  or  sequence  as 
would  make  them  parts  of  the  res 
gestce  cannot  be  made  the  basis  of 
recoupment  or  counter-claim.  In  an 
action  for  assault  and  battery  the 
defendant  cannot  counter-claim  or 
recoup  for  a  battery  committed  at 
the  same  affray  by  the  plaintiff  on 
the  defendant  ( Schnaderbeck  v. 
Worth,  8  Abb.  Pr.  37 )  ;  nor  can  the 
defendant  in  an  action  for  slander 
counter-claim  for  slanderous  words 
uttered  by  the  plaintiff.  Kemp  v. 
Amacker,  13  La.  65. 

In  Askins  v.  Hearns,  3  Abb.  Pr. 
184,  Justice  Emott  thought  a  coun- 
ter-claim could  not  be  sustained 
upon  the  following  facts:  The  plain- 
tiff sued  for  damages  for  conversion 
of  a  ring.  The  defendant  alleged 
an  exchange  of  rings,  each  to  be 
kept  until  the  other  should  be  re- 
turned, and  averred  a  tender  of  the 
one  and  demand  of  the  other,  and 
asked  judgment  for  his  ring.  Such 
a   counter-claim    would   now   be   al- 


183] 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


5r,i 


the  other  a  chattel  and  took  another  chattel  in  payment.     For 
misrepresentations  of  the   character   alleged  each   party   may 


lowed  without  hesitation.  Hoffman, 
J.,  said  of  this  case,  tliat  "'a  dis- 
tinction may  be  suggested,  that 
where  the  ground  of  each  claim  is 
really  a  contract,  although  the  form 
of  action  under  the  old  system  would 
be  for  a  wrong,  then,  when  the 
transaction  that  gives  rise  to  each 
is  the  same,  the  code  is  broad  enough 
to  include  a  counter-claim.  The  ex- 
change alleged  of  the  rings  was  in 
fact  a  mutual  agreement."  Xenia 
Branch  Bank  v.  Lee,  7  Abb.  Pr.  377. 
In  this  case  Woodruff,  J.,  said: 
"The  great  question  in  controversy 
is,  in  an  action  in  the  nature  of 
trover  by  a  plaintiff  who  has  in- 
dorsed notes  or  bills  of  exchange, 
brought  to  recover  the  value  there- 
of from  a  defendant  in  whose  pos- 
session they  are,  and  who  claims 
title  thereto  through  the  plaintiff's 
indorsement,  can  the  defendant  set 
up  title  in  himself,  demand  of  pay- 
ment, protest  and  notice,  and  ask 
by  way  of  counter-claim  a  judgment 
against  the  plaintiff  as  indorser?" 
It  was  decided  in  the  atfirmative. 
After  quoting  subdivisions  1  and  2 
of  section  150  of  the  New  York 
code,  the  judge  said:  "This  divi- 
sion of  the  section  shows  that  there 
may  be  a  counter-claim  when  the 
action  itself  does  not  arise  on  con- 
tract; for  the  second  clause  is  ex- 
pressly confined  to  actions  iipon  con- 
tract and  allows  counter-claims  in 
such  cases  of  any  other  cause  of  ac- 
tion also  arising  on  contract;  and 
this  may  embrace  probably  all  cases 
heretofore  denominated  'set-off,'  le- 
gal or  equitable,  and  any  other  legal 
or  equitable  demand,  lifpiidatod  or 
unliquidated,  whether  within  tlie 
proper  definition  of  set-off  or  not  if 
it    arise    on    contract.      Gleason    v. 


Moen,  2  Duer,  639.  The  first  sub- 
division would  therefore  l)e  unmean- 
ing as  a  separate  definition  if  it 
neither  contemplated  cases  in  whicli 
the  action  was  not  brought  on  the 
contract  itself  in  the  sense  in  which 
these  words  are  ordinarily  used,  nor 
counter-claims  which  did  not  tiiem- 
selves  arise  on  contract.  The  first 
subdivision  by  its  terms  as.sumes 
that  the  plaintiff's  complaint  may 
set  forth,  as  the  foundation  of  the 
action,  a  contract  or  a  transaction. 
The  legislature  in  using  both  words 
must  be  assumed  to  have  designed 
that  each  should  have  a  meaning; 
and  in  our  judgment  this  construc- 
tion should  be  according  to  the  na- 
tural and  ordinary  signification  of 
tlie  terms.  In  this  sense  every  con- 
tract may  be  said  to  be  a  transac- 
tion, but  every  transaction  is  not 
a  contract.  Again,  the  second  sub- 
division having  provided  for  all 
counter-claims  arising  on  contract — 
in  all  actions  arising  on  contract 
— no  cases  can  be  supposed  to  which 
the  first  subdivision  can  be  applied 
unless  it  be  one  of  three  classes, 
viz.:  1st.  In  actions  in  which  a 
contract  is  stated  as  the  plaintiff's 
claim — counter-claims  which  arise 
out  of  the  same  contract;  or,  2d. 
In  actions  in  which  some  transac- 
tion, not  being  a  contract,  is  set 
forth  as  the  foundation  of  the  plain- 
tiff's claim — counter-claims  whicli 
arise  out  of  the  same  transaction ; 
or,  3d.  In  actions  in  wliich  either 
a  contract,  or  a  transaction  whicli 
is  not  a  contract,  is  set  forth  as  the 
foundation  of  the  plaintiff's  claim — 
counter-claims  whioii  neither  arise 
out  of  the  same  contract,  nor  out 
of  the  same  transaction,  but  which 


r,n9 


SUTHERLAND    ON    DAMAGES. 


[§  18' 


generally  sue  in  contract  or  tort.    If  the  plaintiff  bad  declared  in 
contract,  alleging  that  the  defendant  agTeed  that  his  horse  was 


are  connected  witli  the  subject  of 
the  action." 

In  Glen  &  H.  M.  Co.  v.  Hall,  6^ 
N.  Y.  220,  19  Am.  Rep.  278,  an  ac- 
tion was  brought  to  restrain  the  de- 
fendant from  using  the  plaintiff's 
trade-mark ;  the  defendant  claimed 
it  was  his,  and  asked  damages  for 
plaintiff's  use  of  it  by  way  of  coun- 
ter-claim, and  it  was  held  to  be 
proper. 

A  claim  on  the  part  of  the  defend- 
ant for  the  price  and  value  of  the 
identical  goods  which  are  the  sub- 
ject of  the  action  is  a  cause  of  ac- 
tion arising  out  of  the  same  trans- 
action alleged  as  the  foundation  of 
the  plaintiff's  claim,  or  is  at  least 
connected  with  the  subject  of  the 
action.  Thompson  v.  Kessel,  30  N. 
Y.  383;  Brown  v.  Buckingham,  11 
Abb.  Pr.  387. 

The  words  "subject  of  the  action" 
refer  to  the  origin  and  ground  of 
tlie  plaintiff's  right  to  recover  rather 
tlian  to  the  thing  itself  in  contro- 
versy. Collier  v.  Erwin,  3  Mont. 
142. 

In  an  action  for  assault  and  bat- 
tery the  injury  which  provoked  tin; 
defendant  to  commit  the  wrong  is 
not  connected  with  the  subject  of 
the  action.  Ward  v.  Blackwood,  48 
Ark.   390. 

The  debauchery  of  the  defendant's 
daughter  is  not  ground  for  a  coun- 
ter-claim in  an  action  brought  by 
one  guilty  thereof  to  recover  money 
obtained  by  duress.  Heckman  v. 
Swartz,  55  Wis.  173. 

In  an  action  against  a  judgment 
creditor  for  the  unlawful  seizAire  of 
exempt  propertj^  the  defendant  can- 
not set  up  the  judgment  under  which 
the  seizure  was  made  as  a  counter- 


claim. Elder  v.  Frevert,  18  Nev. 
446. 

Tlie  "subject  of  the  action"  is  the 
facts  constituting  the  plaintiff's 
cause  of  action.  The  mere  fact  that 
the  defendant  sets  up  acts  on  the 
part  of  the  plaintiff  which  are  preju- 
dicial to  liis  rights,  and  alleges 
that  these  acts  on  his  part  give  the 
reason  the  defendant  conducted 
himself  as  complained  of  by  the 
plaintiff,  does  not  show  such  a  con- 
nection as  is  necessary  to  constitute! 
such  acts  a  counter-claim.  Mulber- 
ger  V.  Koenig,  62  Wis.  558.  The 
word  "connected"  may  have  a  nar- 
row or  broad  signification,  accord- 
ing to  the  facts  of  the  case. 

"The  counter-claim  must  have 
such  relation  to  and  connection 
with  the  subject  of  the  action  that 
it  will  be  just  and  equitable  that 
the  controversy  between  the  parties 
as  to  the  matters  alleged  in  the  com- 
plaint and  the  counter-claim  should 
be  settled  in  one  action  by  one  liti- 
gation; and  that  the  claim  of  the 
one  should  be  offset  against  or  ap- 
plied upon  tlie  claim  of  the  other." 
This  rule  includes  a  case  where  a 
second  mortgagee  in  possession  of 
land  committed  waste  for  the  al- 
leged purpose  of  depriving  the  de- 
fendant, the  first  mortgagee,  of  his 
security.  In  an  action  for  the  con- 
version of  wood  cut  by  the  second 
mortgagee  the  damage  sustained  by 
the  prior  incumbrancer  was  connect- 
ed with  the  subject  of  the  action. 
Carpenter  v.  Manliattan  L.  Ins.  Co., 
93  N.  Y.  552.  See  Thomson  v.  San- 
ders, 118  id.  252. 

In  an  equitable  action  to  cancel 
an  insurance  policy  a  counter-claim 
alleging  a  cause  of  action  on  the 
policy  for  the  loss  of  property   in- 


§    183]  LEGAL    LIQUIDATIONS    AND    DEDUCTIONS. 


n.-)!] 


sound  as  far  as  lie  knew,  knowiiig  him  to  be  unsound,  il  cannot 
be  doubted  that  the  defendant  may  recoup  liis  damages.  The 
fact  that  the  defendant  sues  in  tort  does  not  i-omplicato  Ihe 
matter.  It  is  not  more  difficult,  or  less  desirable,  in  sucii  an 
action  to  have  the  whole  litii2,atifin  adjusted  in  a  sinjiic  suit.'"* 

If  the  buyer  of  goods  brings  an  action  against  the  seller  for 
not  completing  the  contract  the  latter  may  counter-claim  or 
recoup  for  the  goods  already  delivered.'^  And  so,  in  an  action 
by  the  vendor  to  recover  the  price  of  goods  sold  and  only  deliv- 
ered in  part  the  purchaser  may  recoup  any  danuigcs  sustained 
by  him  by  reason  of  the  failure  or  refusal  to  deliver  the  resi- 
due; *°  and  in  replevin  for  goods  sold  with  reservation  of  title 
until  payment,  for  failure  to  deliver  at  the  time  fixed ;  *^  and 
generally  for  failure  to  deliver  as  agi'eed  although  the  contract 
is  severable  and  part  delivery  has  been  accepted;  *^  and  in  an 
action  by  the  seller  for  the  price  the  buyer  may  recoup  for  any 
deficiency   in  quantity,   delay  in   delivery  or   breach   of   war- 


sured  is  connected  with  the  subject 
of  the  action.  Revere  F.  Ins.  Co. 
V.  Chamberlin,  56  Iowa,  508. 

The  right  to  recoup  is  not  affect- 
ed because  the  party  asserting  it 
was  in  default  in  paying  the  claim 
made  the  basis  of  the  action.  Rob- 
erts M.  Pub.  Co.  V.  Wise,  140  111. 
App.  443. 

The  penalty  imposed  upon  a  na- 
tional bank  for  taking  an  unlawful 
rate  of  interest  cannot  be  counter- 
claimed  in  an  action  upon  the  in- 
strument discounted  by  it.  Barnet 
V.  Nat.  Bank,  98  U.  S.  555.  See, 
generally,  Keegan  v.  Kinnare,  12.'} 
111.  280;  Evans  v.  Hughey,  76  111. 
115;  Nolle  v.  Thompson,  3  Mete. 
(Ky.)  12]  ;  Kingman  v.  Draper,  14 
111.  App.  577;  Cow  Run  Co.  v.  Leh- 
mer,  41  Ohio  St.  384;  Tarwater  v. 
Hannibal,  etc.  R.  Co.,  42  Mo.  193; 
McArthur  v.  Green  Bay,  etc.  Co., 
.34  Wis.  139;  Walsh  v.  Hall,  66  N. 
C.  233;  Walker  v.  .Tohnson,  28 
Minn.  147 :  Poston  v.  Rose,  87  N.  C. 
279;    Whitlock   v.   Lcdford,   82   Ky. 


300;    Cornelius   v.   Kessel,    58    Wis. 
237. 

78  Carey  v.  CUiillow,  105  .Ma.ss. 
IS,  7  Am.  Rep.  494. 

79  Leavenwortli  v.  Packer,  52 
Barb.  132. 

SOHarrolson  v.  Stein.  50  Ahi.  :',A7 : 
Piatt  V.  Brand,  26  Mich.  173;  Bow- 
ker  V.  Iloyt,  18  Pick.  555;  Cali- 
fornia C.  Co.  V.  Pacific  S.  M.  Works, 
144  Fed.  886;  Wilson  v.  Alcatraz 
A.  Co.,  142  Cal.  182. 

81  Ames  I.  Works  v.  Rca,  50  Ark. 
450;'  Gilbert  Co.  v.  llnsted.  50 
Wash.  61;  Burt  v.  Garden  City  S. 
Co.,  237  111.  473;  Mark  v.  William.s 
C.  Co.,  204  :\lo.  242. 

82Gomer  v.  McPhee,  2  Colo.  .\p|). 
287;  Raleigh  L.  Co.  v.  Wilson,  69 
W.  Va.  598;  Booth  v.  Tyson,  15  Vt. 
515;  Evans  v.  Chicago,  etc.  R.  Co., 
26  111.  189. 

Separate  sales  constitute  different 
transactions.  Seymour  v.  Davis,  2 
Sandf.  239.  .And  so  of  .separate  de- 
liveries settled  for  as  made.  Dom- 
ing v.  Kemp,  4  id.  147. 


554  SUTHERLAND    ON    DAMAGES.  [§    183 

ranty.'^  So  iu  an  action  on  a  note  given  for  the  good  will  of 
a  business  the  defendant  may  recoup  his  damages  resulting  from 
the  plaintiff's  resumption  of  that  business ;  ^*  and  in  an  action 
on  an  agreement  not  to  set  up  business  in  a  certain  place  the 
defendant  may  recoup  the  amount  agreed  to  be  paid  for  the 
good  will.**  A  contract  which  gives  the  sole  right  to  sell  an 
article  in  a  specified  place  is  not  so  disconnected  with  a  note 
executed  at  the  same  time  for  the  purchase-money  of  the  article 
to  be  sold  as  that  the  damages  resulting  from  the  breach  of  the 
former  cannot  be  recouped  in  a  suit  on  the  latter.*® 

§  184.  Recoupment  between  vendor  and  purchaser.  On  the 
same  principles  recoupment  is  reciprocally  available  between 
vendor  and  purchaser  of  real  estate  as  well  as  of  personal  prop- 
erty. Recoupment  may  be  had  against  the  vendor  for  false  rep- 
resentations affecting  the  identity  ai^  value  of  the  land.*'  The 
purchaser's  right  to  do  so  is  not  affected  by  the  fact  that 
the  sale  included  both  personal  and  real  property,  and  that  the 
misrepresentation  related  to  only  one  class,  if  the  transaction 
and  the  consideration  were  an  entirety.**  If  tenants  in  common 
make  partition  to  each  other  by  quitclaim  deeds  the  law  implies 
a  Avarranty  that  each  will  make  good  to  the  other  any  loss  re- 
sulting from  a  superior  title ;  *^  hence  a  counterclaim  may  be 
maintained  by  the  tenant  who  is  evicted,  on  that  account,  against 
his  co-tenant.®"  In  debt  on  a  bond  given  for  real  estate  or  other 
action  for  the  price  the  defendant  may  recoup  his  damages  for 

83  Cooke    V.    Preble,    80    111.    318;  86  Andre  v.  Morrow,  65  Miss.  315, 

Hitchcock   V.   Hunt,   28   Conn.   343;  7  Am.  St.  658. 

Stiegleman  V.Jeffries,  1  S.&R. -477,  87  Burroughs   v.    Selleck,    185    111. 

7  Am.  Dec.  626.  ^PP-  ^'*^'   ^^"1^3  v.   Elliot,  44   Ga. 


Damages  for  delivery   of  inferior 


237;  Estell  v.  Myers,  56  Miss.  800; 

Warvelle    on    Vendors    (2d   ed.),    § 

quality  of  goods  under  one  contract  „„„     ,^   .               ^^.         „_    ^,  .     ^, 

*         ''        °  962;    Mulvey   v.   King,   39   Ohio  St. 

of  sale  cannot  be  set-off  m  an   ac-  ^g^.     jj^^^;^    ^     ^^^^^^^    gS    Ark. 

tion  by  the  vendor  for  vendee's  re-  ^^j.      Hammatt     v.     Emerson,     27 

fiisal  to  accept  goods  under  a  subse-  -j^^    ^Qg    ^g  ^^^    -^g^    ^gg 

quent  contract.     Sleepy  Eye  Milling  gs  Bau'ghman   v.   Gould.   45   Mich. 

Co.  v.  Hartman,  194  111.  App.  308.  43^ 

84Warfield  v.  Booth,  33  Md.  63;  89  Nixon  v.  Lindsay,  2  Jones'  Eq. 

Herbert  v.  Ford,  29  Me.  546;  Burk-  230;  Rogers  v.  Turley,  4  Bibb,  355; 

bardt  v.  Burkhardt,  36  Ohio  St.  261.  Morris  v.  Harris,  9  Gill,  26. 

85  Baker  v,  Connell,  1  Daly,  469.  90  Huntley  v.  Cline,  93  N.  C.  458. 


§    184]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  555 

the  plaintiff's  breach  of  an  agreement  to  give  possession,  as  well 
as  for  injury  to  the  premises,^^  or  for  the  violation  of  an 
agreement  to  dig  a  well  on  the  premises  sold.^^  So  a  vendee's 
action  to  recover  the  purchase-moncv  is  subject  to  rec<»)i])nioiit 
for  his  negligent  destruction  of  the  subject  of  the  pureliase.®^ 
Recoupment  has  been  allowed,  in  a  suit  for  purchase-money,  for 
damages  done  to  the  premises  by  an  adverse  claimant,  pending  a 
litigation  with  the  vendor,  in  which  the  hitter's  title  was  main- 
tained; because,  as  plaintiff,  he  could  have  indemnified  himself 
against  the  spoliator  by  the  recovery  of  mesne  profits.^*  In  a 
suit  for  specific  performance,  cancellation  of  deeds,  an  iiij mic- 
tion and  damages  the  defendant  may  recoup  damages  caused  by 
the  plaintiff's  trespass  on  the  land  in  question  and  obtain  af- 
firmative relief,  including  damages  inflicted  since  the  original 
plea  was  filed.^^ 

It  is  well  settled  that  when  a  deed  has  been  made  and  ac- 
cepted and  possession  taken  under  it,  defects  in  the  title  will 
not  enable  the  purchaser  to  resist  the  payment  of  the  purchase- 
money,  or  recover  more  than  nominal  damages  on  his  cove- 
nants for  title,  except  in  some  states  on  the  covenant  of  seizin, 
while  he  retains  the  deed  and  possession,  and  has  been  sub- 
jected to  no  inconvenience  or  expense  on  account  of  the  defect.'^ 
Though  if  no  title  or  possession  passed  by  the  deed  it  would 
seem  that  any  undertaking  for  payment  of  the  purchase-money 

91  Patterson    v.    Hillings,    10    Pa.  Norris,   7    Johns.    358,   5   Am.    Dec. 

506;   Owens  v.  Rector,  44  Mo.  389;  281;  "    Stanard      v.      Eldridge,      10 

Gordon    v.    Bruner,    49    Mo.    570;  Johns.  254;   Stepliens  v.   Evans,   30 

Grand     Lodge     v.     Knox,     20     Mo.  Ind.  39;   Brandt  v.  Foster,  5  Iowa, 

433;  Streeter  V.  Streeter,  43  111.  155;  287;     McCaslin    v.    State,    44    Ind. 

Fetternecht  V.  McKay,  47  N.  Y.  420:  151;   Edwards  v.  Bodine,  20  Wend. 

Abrahamson  v.  Lamberson,  72  Minn.  109;   Abbott  v.   Allen.  2  .Johns.  Ch. 

308.  519;   Bumpus  v.  Platner,  1  id.  213; 

92Maguire  v.  Howard,  40  Pa.  391.  Farnham  v.   Ilotchkiss,  2   Keyes  9; 

93  Hatchett  V.  Gibson,  13  Ala.  587.  Warvelle    on    Vendors    (2d    ed.).    § 

94Weakland   v.    Hoffman,   50    Pa  8G2.     But  see  Walker  v.  Wilson,  13 

513,  88  Am.  Dec.  560.  Wis.  522;  Hall  v.  Gale,  14  Wis.  54; 

95  Becker    v.    Donalson,    133    Ga.  Akerly  v.  Vilas,  21   Wis.  88;  Lowry 
864.  V.   Hurd,   7   Minn.   356;    Scantlin   v. 

96  Whisler  V.  Hicks,  5  Blackf.  100,  Allison,    12    Kan.    85;    Tarpl.'v    v. 
33    Am.    Dec.    454;     Delavergne    v.  Poage,  2  Tex.  139. 


556 


SUTITERLAI^D    ON    DAMAGES. 


[§  184 


\\(juld  be  \oid  for  \\'aiit  of  consideration  notwithstanding  the 
covenants  in  the  deed.^' 

A  vendee  is  authorized  to  extinguish  an  incumbrance  or  to 
remedy  a  defect  of  title  after  a  breach  of  the  covenant  of  war- 
ranty, without  a  special  request  from  or  the  consent  of  the 
vendor,  and  may  recoup  the  amount  reasonably  paid  for  that 
purpose  in  an  action  for  purchase-money,  where  there  are  cove- 
nants for  title  and  against  incumbrances.^*  So  the  vendee  may 
recoup  his  damages  on  the  covenant  of  warranty  after  the  title 
has  failed  and  there  has  been  an  eviction,  or  what  is  equal 
thereto.^^  In  some  states,  however,  the  defense  for  partial 
failure  of  title  to  real  estate  is  not  allowed  at  law  in  actions  for 
the  price.^  Generally  no  difference  is  made  as  to  the  exer- 
cise of  the  right  of  recoupment  whether  the  plaintiff's  action 
is  brought  on  the  original  contract,  or  on  a  note,  or  other 
security  given  for  the  price,  and  the  latter  under  seal.^     Such 


97  Dickinson  v.  Hall,  14  Pick. 
217;  Rice  v.  Goddard,  id.  293;  Trask 
V.  Vinson,  20  id.  105;  Key  v.  Hen- 
son,  n  Ark.  254;  Tillotson  v. 
Grapes,  4  N.  H.  444. 

98Weatherbee  v.  Lillybeck,  80 
Miss.  156;  Delavergne  v.  Norris, 
Stanard  v.  Eldridge,  supra;  Johnson 
V.  Collins,  116  Mass.  393;  Leffing- 
well  V.  Elliott,  10  Pick  204;  Brooks 
V.  Moody,  20  Pick  474;  Norton  v. 
Babcock,  2  Mete.  (Mass.)  510;  Dore- 
nuis  V.  Bond,  8  Blackf.  368;  Baker 
V.  Railsback,  4  Ind.  533;  Brandt  v. 
Foster,  5  Iowa,  287;  McDaniel  v. 
Grace,  15  Ark.  465;  Lamerson  v. 
Marvin,  8  Barb.  11;  Detroit  &  M. 
R.  Co.  V.  Griggs,  12  Mich.  45;  Still- 
well  V.  Chappell,  30  Ind.  72;  Brown 
V.  Crowley,  39  Ga.  370,  99  Am.  Dee. 
462;  Deen  v.  Herrold,  37  Pa.  150; 
Key  V.  Henson,  17  Ark.  254;  Brown 
V.  Starke,  3  Dana,  316;  Burk  v. 
Clements,  16  Ind.  132;  Schuchmann 
V.  Knoebel,  27  111.  175;  Christy  v. 
Ogle,  33  111.  295;  Kent  v.  Cantrall, 
44  Ind.  452;  Robiniiis  v.  Lister,  30 
Ind.   142,   05   Am.   Dec.   674;    Davis 


V.  Bean,  114  Mass.  358,  19  Am.  Rep. 
364;  Scantlin  v.  Allison,  12  Kan. 
85;  McKee  v.  Bain,  11  Kan.  509. 

99  McDaniel  v.  Grace,  15  Ark. 
487 ;  Tallmadge  v.  Wallis,  25  Wend. 
107;  Sargeant  v.  Kellogg,  10  111. 
273;  Wilson  v.  Burgess,  34  id.  494; 
Coster  V.  Monroe  Mfg.  Co.,  2  N.  J. 
Eq.  467;  Tone  v.  Wilson,  81  111. 
529;  McDowell  v.  Milroy,  69  id. 
498 ;  Brantley  v.  Johnson,  102  Ga. 
850. 

iCiillum  V.  Bank,  4  Ala.  21,  37 
Am.  Dec.  725;  Starke  v.  Hill,  6 
Ala.  785;  Tankersly  v.  Graham,  8 
id.  247 ;  Helvenstein  v.  Higgason,  35 
Ala.  259;  Morrison  v.  Jewell,  34 
Me.  146;  Thompson  v.  Mansfield,  43 
Me.  490;  Wheat  v.  Dotson,  12  Ark. 
699;  Bowley  v.  Holway,  124  Mass. 
395. 

2  Harrington  v.  Stratton,  22  Pick. 
510;  Van  Epps  v.  Harrison,  5  Hill, 
63;  Judd  V.  Dennison,  10  Wend.  512; 
Payne  v.  Cutler,  13  Wend.  605; 
Goodwin  v.  Morse,  9  Mete.  (Mass.) 
278;  Purkett  v.  Gregory,  3  111.  44; 
Christy  v.  Ogle,  33  111.  295;  Hitch- 


§    184  ]  I.EGAL    T.IQUIDATIONS    AND    REPT'CTIONS.  557 

a  distinction,  however,  seems  to  be  rec-oo;ni/.(Ml  in  Xcw  ,I(M-s(n' 
and  in  England.  In  an  action  on  a  bill  of  e.\clianii:c  for  iiiddds 
supplied,  which  were  "to  be  of  good  qnalitv  and  moderate 
price,"  and  to  be  estimated  at  about  -!()0/.,  hills  haviiiir  been 
given  for  that  amount,  it  was  no  defense  that  the  goods  turned 
out  to  be  worth  much  less  than  the  estimated  price;  Lord 
Tenterdeu  said:  "The  cases  cited  by  the  jdnintiifs  have  com- 
pletely established  the  distinction  l)et\vceu  an  action  I'cir  the 
price  of  the  goods  and  an  action  on  the  security  given  for 
tliem.  In  the  former,  o\\]y  the  value  can  be  recovered  ;  in  the 
latter,  I  take  it  to  have  been  settled  ))v  these  eases,  and  acted 
upon  ever  since  as  law,  that  a  party  liolding  bills  given  for 
the  price  of  goods  supplied  can  recover  upon  them  unless  there 
has  been  a  total  failure  of  consideration.  If  the  consideration 
fails  partially,  as  by  the  inferiority  of  the  article  furnished  to 
that  order,  the  buyer  must  seek  his  remedy  by  cross-action.  The 
warranty  relied  on  in  this  action  makes  no  difference."  ^ 

In  Wisconsin  it  has  been  held  that  where  notes  are  given 
for  the  contract  price  they  are  not  payment  unless  so  agreed ; 
and  in  a  suit  upon  one  of  several  such  notes  it  will  be  pre- 
sumed, in  the  absence  of  evidence,  that  those  not  yet  due  are 
still  in  the  vendor's  hands,  and  that  it  is  error  to  render  judg- 
ment for  the  defendant  on  a  counter-claim  for  the  e.xcess  of 
his  damages  for  breach  of  warranty  over  the  note  in  suit.^  It 
was  held  to  be  unjust  to  allow  the  defendants  full  damages  for 
breach  of  warranty,  the  same  as  though  they  had  paid  for  the 
])roperty,  when  these  damages  largely  exceed  the  amount  sued 

cock  V.  Himt,  28  Conn.  343;   Mears  3  Price   v.    Reynolds,   3f)   X.   J.    L. 

V.  Nichols,  41  111.  207,  Sn  Am.  Dec.       171.   Hunter  v.  Reiley,  43   id.  4Sn. 

381;    Kellogg  v.   Denslow,   14  Conn.  ^  riui      j          t>  xi            at         0     m 

„    ,  "^           „           '         „,      ,  4  0bbard    v.    lletham,    Moo.    &    .^  . 
411;     Wilmot    v.    Hurd,    11    Wend. 

585;    Dailey  v.   Green,   15   Pa.   118;  ^83;      Morgan     v.      Richardson.      1 

Ward  V.  Reynolds,  32  Ala.  384;  Key  Camp.   4nn.;    Day   v.   Nix.   9   Moore 

V.  Henson,  17  Ark.  254.  159;    Trickey  v.   Larne.  6  M.  &  W. 

In  an  action  by  the  vendee  upon  278;  Gaacoyne  v.  Smith,  :\rcC.  &  Y. 

the  covenants  in  his  deed  the  ven-  g^g.  -^v^rwich  v.  Nairn,  in  Ex.  7(52. 

dor    may    recoup    the    unpaid    pur-  „    _ 

,             -^                  ...  5  Aultman  &  T.  Co.  v.  TTethering- 

chase-money  or  notes  given  to  rcpre-  "^ 

.sent  the  same.  Reecher  v.  Baldwin,  *«"-  42  Wis.  G22;  Same  v.  .Tett,  id. 
55  Conn.  419,  3  Am.  St.  57.  488. 


558  SUTHERLAND    ON    DAMAGES.  [§    184 

for.  In  Minnesota  the  decisions  are  to  the  contrary  and  rest 
upon  the  principle  that  the  defendant's  cause  of  action  is  one 
and  indivisible ;  that  a  recovery  of  a  part  of  the  damages  would 
bar  a  subsequent  counter-claim  to  recover  for  the  remainder.^ 

§  185.  Liquidated  and  unliquidated  damages  may  be  recouped. 
It  is  immaterial  whether  the  damages  which  a  defendant  seeks  to 
recoup  or  counter-claim  are  liquidated  or  unliquidated ;  nor  is 
it  material  whether  the  plaintiff's  demand  is  liquidated  or  not.' 
The  theory  of  this  defense  being  the  setting  off  of  the  damages 
on  one  cause  of  action  against  those  recoverable  on  another  to 
avoid  the  necessity  of  other  suits,  where  both  arise  out  of  the 
same  transaction,  the  defend^int  puts  forward  a  substantive 
cause  of  action,  becomes  an  actor  to  assert  and  prove  it,  with 
no  other  hampering  conditions  than  would  apply  to  him  as  plain- 
tiff in  a  separate  action  upon  his  claim.  When  it  appears  to  be 
so  connected  with  the  subject  of  the  plaintiff's  action  as  to  be 
available  as  a  counter-claim  or  by  way  of  recoupment,  it  must 
be  pleaded  and  proved  according  to  the  same  rules  as  when  it  is 
made  the  basis  of  an  action ;  the  damages,  if  of  such  nature  as  to 
be  submitted  to  the  consideration  of  a  jury  in  a  suit  brought  for 
their  recovery,  are  equally  subject  to  determination  by  a  jury 
for  the  purpose  of  redress  in  favor  of  a  defendant.     The  policy 

6  Geiser  T.  Macli.  Co.  v.  Farmer,  Lierz  v.  Morris,  19  id.  73;  Weaver 
27  Minn.  428;  Minneapolis  H.  v.  Penny,  17  111.  App.  628;  Batter- 
Works  V.  Bonnallie,  29  Minn.   373.  man  v.  Pierce,  3  Hill,  171  ;  Ward  v. 

7  The  Standard  Brewery  v.  Swee-  Fellers,  3  Mich.  281;  Winder  v. 
ney,  185  Til.  App.  430;  Richardson  Caldwell,  14  How.  434,  14  L.  ed. 
Const.  Co.  V.  Whiting  Lumber  Co.,  487;  Van  Buren  v.  Digges,  11  How. 
116  Va.  490;  Fitzgerald  v.  Wiley,  ^CA,  13  L.  ed.  771;  McLure  v.  Rush, 
22  App.  D.  C.  329;  Holmes  v.  Mc-  9  D^na,  64;  Bayne  v.  Fox,  18  La. 
Kennon,  20  HI.  App.  320;  Wanna-  gQ.  Stoddard  v.  Treadwell,  26  Cal. 
maker  v.  Quinn,  27  Pa.  Super.  288;  204;   Keyes  v.  Western  Vermont  S. 


Co.,  34  Vt.  81 ;  Hubbard  v.  Fisher, 
25  Vt.  539;  Dennis  v.  Belt,  30  Cal. 
247 ;   Kaskaskia  B.  Co.  v.  Shannon, 


Sucrerie  Centrale  Coloso  v.  Es 
tevea,  4  Porto  Rico  Fed.  25;  Hamil- 
ton V.  Dismukes,  53  Tex.  Civ.  App. 
129;  Tidewater  Q.  Co.  v.  Scott,  105 
Va.  160,  115  Am.  St.  864;  New-  «  I"-  ^^'  Schubert  v.  Harteau,  34 
port  News,  etc.  R.  Co.  v.  Bickford,  ^arb.  447;  Speers  v.  Sterrett,  29 
105  Va.  182;  Commissioner  of  Pub-  Pa.  192;  Hayne  v.  Prothro,  10  Rich, 
lie  Works  v.  Hills,  [1906]  App.  218;  Raleigh  L.  Co.  v.  Wilson,  69 
Cas.  368;  North  German  Lloyd  S.  W.  Va.  598.  See  Fink  v.  United 
Co.  V.  Wood,  18  Pa.  Super.  Ct.  488;       States  C.  &  C.  Co.,  72  W.  Va.  507. 


§    186]  LEGAL    LIQUIDATIONS    AND    liEDUCTlOJNS.  559 

uf  rtdmittiiig  this  defense  to  avoid  circuity  of  action  obviously 
embraces  all  cases  where  the  rights  of  the  parties  are  of  such 
a  character  as  to  be  susceptible  of  adjustment  in  one  action. 
Accordingly,  where  the  defense  has  the  necessary  connection 
with  the  subject  of  the  plaintiff's  action  and  the  rights  of  both 
parties  may  be  finally  and  justly  settled  by  one  adjudication, 
it  is  not  essential  that  the  damages  on  either  side  should  be 
liquidated,  nor  of  the  same  nature; — they  may  be  liquidated 
on  one  side  and  unliquidated  on  the  other;  on  one  side  they 
may  be  claimed  strictly  for  violation  of  contract,  and  on  the 
other  for  fraud,^  or  negligence,^  or  other  tort,^°  or  for  tort  on 
both  sides.^^  In  Michigan  unliquidated  damages  may  not  be 
recouped  in  replevin,  and  this  seems  to  be  the  rule  as  to  other 
damages.^^ 

§  186.  Affirmative  relief  not  obtainable.  Recoupment  is  gen- 
erally available  only  as  a  defense;  for,  except  by  statute,  it 
can  have  no  further  effect  than  to  answer  the  plaintiff's  damages 
in  whole  or  in  part;  the  defendant  cannot  recover  any  balance 
or  excess.^^  It  is  not  necessary  that  it  be  a  full  defense ;  ^*  it 
cuts  off  so  much  of  the  plaintiff's  damages  as  the  cross-claim 

8  See  §  179.  12  Bearing  W.  L.  B.  Co.  v.  Thomp- 

9§  180.  son,  156  Mich.  36.5,  24  L.R.A.(N.S.) 

10  King  V.  Coe  Com.  Co.,  9.3  Minn.  74S.  Sec  also,  Westminster  Metal 
52;  Northwestern  Port  Huron  Co.  &  Foundry  Co.  v.  CofTman,  ]2.3  Md. 
V.  Iverson,   22   S.   D.   314,   133   Am.  619. 

St.  920;   Tyson  v.  Jackson,  41  Tex.  13  Heite   v.    Cowgill,   —   Del.    — , 

Civ.  App.  128;   Dowdy  v.  Calvi,  14  91    Atl.   652;    Burroughs  v.   SelhTk, 

Ariz,  148;   §  180.  185  111.  App.  446;   Hay  v.  Short,  49 

11  Carey  V.  Guillow,  105  Mass.  IS;  Mo.  139>;  Ward  v.  Fellers,  3  Midi. 
Estell  V.  Myers,  54  Miss.  174;  Dea-  281;  Estell  v.  Myers,  ,54  Mi.ss.  174; 
gan  V.  Weeks,  67  App.  Div.  (N.  Y.)  Fowler  v.  Payne,  52  Miss.  210; 
410;  Pelton  v.  Powell,  96  Wis.  473;  Daniels  v.  Wilber,  60  111.  ,526; 
Morgan  v.  Langford,  126  Ga.  58;  United  States  v.  Cillio.s,  144  Fed. 
McNatt  V.  McRae,  117  Ga.  898.  Con-  991  ;  Mark  v.  Williams  C.  Co.,  204 
tra,  Eoberts  v.  Jones,  71  S.  C.  404;  Mo.  242;  Beakey  v.  Vander  Meer- 
Replogle  V.  Toledo,  St.  L.  &  W.  Ry.  schen,  78  Kan.  538;  Ashland  C.  & 
Co.,  184  111.  App.  338;  Terre  Haute  C.  Co.  v.  Hull  C.  &  C.  Co.,  67  W. 
&  I.  R.  Co.  V.  Pierce,  95  Ind.  496,  Va.  503;  Bostrom  v.  Becker,  172 
15  Am.  Neg.  Cas.  734.  But  com-  Til.  App.  410.  See  Schwartz  v. 
pare  Excelsior  C.  Works  v.  DeCamp,  Kiilm,  71   N.  Y.  Misc.  149. 

40  Ind.  App.  26,  which  seems  to  be  14  poss  v.  Longmuir,  15  Abb.  Pr. 

in  accord  with  the  text.  326. 


5G0  SUTllEKLANJJ    ON    DAMAGES,  [§    186 

comes  to/^  and  when  sufficient  in  amount  may,  of  course,  satisfy 
his  claim  entirely. ^^  The  verdict  will  then  be  for  the  defendant. 
In  this  respect  it  is  different  from  mere  mitigation,  for  damages 
can  never  be  mitigated  below  a  nominal  sum.  But  however 
large  the  damages  assessable  in  respect  of  the  defendant's  cross- 
claim  set  up  by  way  of  recoupment,  if  it  exceed  the  plaintiff's 
damages  only  so  much  is  taken  into  account  as  is  required  to 
annul  his  demand ;  the  excess  is  lost.^'^  This  limitation  has  been 
obviated  by  the  defendant  bringing  a  cross-suit  as  well  as  setting 
up  the  claim  by  way  of  recoupment  and  having  the  actions  con- 
solidated or  tried  together. ■^^  If  two  cross-actions  are  so  tried, 
one  for  the  price  of  property  sold  and  the  other  for  fraud  in  the 
vendor,  the  jury,  if  they  find  the  fraud  and  that  the  damages 
equaled  or  exceeded  the  purchase-money,  may  render  a  verdict 
for  the  defendant  in  the  first  action  and  for  the  plaintiff"  in  the 
second  for  the  excess,  if  any,  of  such  damages.'^^  But  in  such 
case  a  party  who  defends  by  recoupment  and  brings  a  cross-suit, 
on  the  trial  of  both  together  is  not  entitled  to  have  damages  as- 
sessed in  l)oth  actions  for  the  same  breach  of  contract,  nor  to 
divide  his  claim  for  damages  as  he  sees  fit  between  the  two.^° 
Both  actions  being  tried  together,  however,  his  entire  damages 
for  breaches  of  the  contract,  or  in  respect  of  his  cross-demand, 
must  be  assessed  and  applied  first,  to  cancel  in  whole  or  in  part 
the  damages  of  the  plaintiff  in  the  first  action;  then,  if  there 
be  an  excess,  it  should  be  returned  in  a  verdict  for  the  plaintiff 
in  the  cross-action,^^  Very  generally  in  this  country  authority 
has  been  given  to  render  judgment  in  favor  of  the  defendant  for 
any   excess  of  danuiges   after   satisfying  the   demand   against 

15  Ives    V.    Van    Epps,    22    Wend.  18  Cook  v.  Castner,  9  Cush.  260; 
1,55.                                                                   i^tar    G.    Co.    v.    Morey,    108    Mass. 

16  Deagan  v.  Weeks,  07  App.  Div.       570. 

(N.  Y.)   410.  19  Cook   V.   Castner,  supra. 

l7Brunson     v.     Martin,     17     Ark.  20  p.rown  v.  First  Nat.  Bank,   1.^2 

270;    Burlingame   v.    Davis,    13    111.  Fed.    450,    OG    C.    C.    A.    203,    citing 

App.    602;    Kingman    v.    Draper,    14  tlic  text. 

id.  577;  Waterman  v.  Clark,  70  111.  21  Watkins      v.      American      Nat. 

428;    Stow  v.  Yarwood,   14  id.  424;  Bank,  134  Fed.  30.  07  T.  C.  A.  110, 

Charles  City  P.  &  Mfg.  Co.  v.  Jones,  citing    the    te.xt;     Star    G.    Co.    v 

71  Iowa  234.  ]\Iorcy,  supra. 


§    187]  LEGAL    LiiiUlDA'noNa    AND    llEbUCTlOJNS.  501 

which  his  cross-claim  is  prei'erred.^^  JUit  when  the  phiiiiliir 
sues  as  assignee  of  the  demand,  the  defendant  having  a  cross- 
claim  against  the  assignor  can  only  use  it  for  defense;  to  that 
extent  it  is  avaihible  the  same  as  thtiugh  the  suit  were  in  tlio 
name  of  the  assignor.^^ 

§  187.  Election  of  defendant  to  file  cross-claim  or  sue  upon 
his  demand.  A  defendant  has  an  election  to  use  such  cross- 
demand  as  a  defense  by  way  of  recoupment  or  to  bring  a  sepa- 
rate action  upon  it;  but  he  will  not  have  an  election  to  set  up 
his  claim  by  way  of  recoupment  unless  it  would  be  just  and 
equitable,  and  it  is  practicable  to  adjust  and  allow  it  in  the 
plaintiff's  action.  The  omission  to  take  advantage  of  matter 
of  recoupment  or  counter-claim  as  a  defense  is  no  bar  to  a  cross 
or  separate  action  upon  it;  so  that,  though  the  cross-claim  lie 
admissible  by  way  of  defense,  the  defendant  has  an  option  to 
avail  himself  of  it  in  that  form  or  to  sue  upon  it  in  another 
action.^*  The  reason  for  allowing  the  defendant  an  option  is 
that  it  would  greatly  diminish  the  benefit  to  which  he  is  entitled 
and  in  some  cases  wholly  neutralize  it,  because,  while  the  right 
of  action  exists,  the  extent  to  which  the  breach  of  warranty  or 
of  contract  may  afford  a  defense  is  usually  uncertain,  it  may 
require  some  time  for  the  development  of  all  the  injui-y  which 
will  result  from  the  plaintiff's  misconduct  or  default.  Tt  is 
unreasonable,  therefore,  that  he  should  have  the  right  to  fix  the 
time  at  which  the  money  value  of  his  wrongdoing  or  negligent 
omission  shall  be  ascertained.^^ 

But  the  defendant  will  be  denied  the  right  of  recoupment 
when  it  cannot  be  justly  and  equitably  allowed. "^^     It  is  a  de- 

22JIolmcs  V.   McKennan,   320   III.  25  Davis  v.  TTcdjrcs,  L.  K.  (i  (,)    I'. 

.\pp.  320.  087. 

23  See  Carolina  P.  C.  Co.  v.  Ala-  26  .Tudgiiicut  may  lip  ordered  for 
bania  C.  Co.,  162  Ala.  380;  §  176;  the  plaintifT  on  tlie  pleadinps  if  the 
Desha  v.  Robinson,  17  Ark    228.  answer    states    a    counter-claim    for 

24  Watkins  v.  American  Nat.  merely  nominal  damages  and  tlm 
Bank,  1.3-4  Fed.  .36,  67  C.  C.  A.  110,  costs  will  not  be  affected  by  doing 
citing  the  text;  Brown  v.  First  Nat.  so.  TTitclicock  v.  Turnbiill,  44  Minn. 
Bank,    132    Fed.    4.50,    66    C.    C.   A.  475. 

293,  citing  the  text;   Barth  v.  Burt,  Where  notes  are  given  on  a  settle- 

43  Barb.  628;  Mimnangii  v.  I'artlin,  mcnt  for  a  balance  found  due  after 

()7  Mich.  391.  all   the  grounds   for  claiming  a  re- 
Huth.  Dam.  Vol.  I.— 36. 


562  SUTIIEKLAND    OJST    DAMAGES.  [§    187 

fense  on  principles  borrowed  from  equity,  and  if  a  superior 
equity  intervene  it  will  be  denied ;  and  when  any  equitable 
barrier  exists  and  the  whole  controversy  cannot  be  settled  in 
the  plaintiff's  action  a  separate  suit  must  be  brought.  On  this 
ground,  in  several  states,  defenses  of  this  kind  in  suits  for  the 
purchase-money  of  land  based  on  breaches  of  covenants  for 
title  will  not  be  allowed  in  actions  at  law,^'  The  owner  of  a 
lot  entered  into  a  contract  with  others  for  the  latter  to  build 
a  warehouse  upon  it  for  a  specified  sum.  The  contract  also 
contained  a  lease  to  this  party  for  thirteen  years  from  the  date 
fixed  for  its  completion  at  a  stated  yearly  rent.  After  the 
building  had  been  erected  the  builders  and  lessees  entered  a 
mechanic's  lien  for  the  work  and  materials,  and  two  years 
afterwards  the  property  was  sold,  and  it  had  to  be  determined 
how  the  fund  should  be  distributed.  The  lessees  bad  occupied 
for  two  years  without  paying  any  rent,  and  during  that  time 
the  lessor  became  indebted  to  them  on  account  to  an  amount 
nearly  equal  to  the  rent  for  that  period.  The  court  below  ex- 
cluded the  lessee's  account  as  a  set-off  against  the  rent,  and 
set  off  the  rent  against  the  lien  debt  because  these  latter  were 
part  of  one  transaction.  This  decision  was  the  subject  of  re- 
view. Thompson,  J.,  said :  "There  are  undoubtedly  cases  in 
which  the  transaction  is  so  entirely  a  unit  tliat  it  is  most  just 
and  proper  when  litigation  arises  that  matters  arising  directly 
out  of  it  should  be  determined  in  one  suit.  These  cases  are 
not  parallel  with  this.  Here  the  same  paper,  it,  is  true,  con- 
tains the  contract  out  of  which  the  lien  arises  as  well  as  that 
out  of  which  the  rent  accrued ;  but  they  are  as  distinct  and 
separate  covenants  as  if  written  on  separate  sheets  of  paper. 
There  is  a  complete  contract  for  building,  describing  the  kind 
of  structure,  and  the  time  when  to  be  completed  and  paid  for. 
Then  follows  a  complete  lease  of  the  building  for  a  long  term, 
to  commence  shortly  before  its  completion  and  to  continue  for 
thirteen  years.  The  former,  the  building  contract,  was  to  be 
finished  in  about  eight  months,  and  to  be  then  paid  for.     The 

coupment  arc  known  to  their  maker  matters  in  defense  to  an  action  upon 
he  is  estopped  from  urging  any  such       them.     Hill  v.  Parsons,  IJO  HI.  107. 

27  See  §  184. 


§    187]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  5G3 

first  year's  rent  would  nut  fall  due  for  near  a  year  after.  These 
things  show  the  distinctiveness  of  the  covenants  as  contracts. 
Now  the  lien  might  have  been  reduced  under  the  principle 
invoked  by  showing  defectiveness  in  the  work  and  the  like,  and 
so  might  the  rent  if  the  landlord  had  been  suing  for  it  on 
account  of  interference  with  the  tenant's  possession,  not  amount- 
ing to  eviction,  but  acts  against  quiet  enjoyment.  These  would 
be  instances  of  claims  arising  in  the  sauie  transaction  being 
allowed  to  be  given  in  evidence  to  extinguish  the  claim  by  a 
liberal  construction  of  our  defalcation  act.  .  .  .  Tt  was  im- 
possible to  settle  the  entire  covenants  in  one  action.  They  were 
of  dift'erent  and  distinct  natures,  and  to  be  performed  at  dif- 
ferent and  distinct  periods.  In  applying  the  rent,  therefore, 
to  the  extinguishment  of  the  lien,  on  this  principle  alone,  when 
the  plaintiffs  had  other  claims  entitled  to  its  application  on 
equitable  principles,  was  of  course  error  in  the  absence  of  ap- 
propriation by  the  debtor  and  creditor.  They,  therefore,  should 
have  been  allowed  to  put  in  evidence  their  book  account;  if  it 
was  unpaid  and  unsecured,  and  no  appropriation  by  the  parties 
of  the  rent,  equity  would  apply  it  to  the  book  account  in  prefer- 
ence to  the  old  debt  secured  by  the  lien.  This  is  the  well 
settled  rule."^^ 

In  an  action  on  a  note  against  the  executor  of  an  accom- 
modation indorser  it  appeared  that  the  note  was  made,  in- 
dorsed and  transferred  to  the  plaintiff  in  payment  of,  or  as 
collateral  security  for,  an  antecedent  debt  of  a  firui  of  which 
the  maker  was  a  member;  that  afterwards  the  firm  made  an 
assignment  to  the  plaintiff  for  the  benefit  of  the  creditors,  pre- 
ferring the  plaintiff  and  the  defendant's  testator.  The  answer 
setting  up  these  facts  alleged  also  that  the  assets  were  more 
than  sufficient  to  pay  in  full  all  the  preferred  creditors.  Hut 
as  these  facts  could  not  be  established  without  an  accountiug, 
and  the  plaintiff  was  entitled,  when  compelled  to  account,  to 
do  so  entirely,  which  could  not  occur  in  that  action  for  the 
want  of  necessary  parties,  all  evidence  touching  the  couuter- 
claim  was  properly  rejected.^^ 

aSMcQuaide    v.    Stewart,    48    Pa.  29  Bailoy  v.  BcrRcn.  fi7  N.  Y.  340. 

19S.     See  Howe  Maoli.  Co.  v.  Hick-       See    Duncan    v.    Stanton,    :W    Fiarh. 

ox.  100  111.  461.  r.3:j. 


)64 


SUTHERLAND    ON    DAMAGES. 


[§  188 


§  188.  Burden  of  proof;  measure  of  damages.  When  a  de- 
fendant sets  up  a  cross-claim  by  way  of  recoupment  he  assumes, 
like  a  plaintiff,  the  burden  of  proof  in  respect  to  it;  and  the 
same  rule  or  measure  of  damages  applies  as  would  be  applicable 
in  a  separate  suit  upon  such  claim;  subject,  however,  to  the 
limitation  already  mentioned,  that  there  can  be  no  recovery  by 
a  defendant  for  any  balance  found  in  his  favor  beyond  the 
damages  established  on  the  part  of  the  plaintiff,  in  the  absence 
of  a  statute  authorizing  it.  The  bui'den  of  proof  rests  upon  him 
because  he  asserts  a  claim  or  right,  and  must  therefore  produce 
the  proof  necessary  to  make  good  his  contention.^"  That  the 
same  rule  of  damages  applies  has  been  repeatedly  held,^^  and 
it  is  universally  assumed  by  actually  applying  it.^^  But  the 
rule  is  the  rule  of  compensatory  damages — no  recovery  on  a 
claim  set  up  for  recoupment  can  be  had  for  malice  or  any 
aggravation  in  the  form  of  exemplary  damages.^^     The  con- 


so  Carolina  P.  C.  Co.  V.  Alabama 
C.  Co.,  162  Ala.  380;  Leifer  Mfg. 
Co.  V.  Gross,  93  Ark.  277;  Gem  K 
Mills  V.  Empire  P.  &  B.  Co.,  3  Ga. 
App.  709;  Burt  v.  Garden  City  S. 
Co.,  237  111.  473;  Russell  v.  Ekc.-I- 
sior  S.  &  Mfg.  Co.,  120  111.  App. 
23;  Wyandotte  P.  C.  Co.  v.  Brunor, 
147  Mich.  400 ;  Sayles  v.  Quinn,  196 
Mass.  492;  Franklin  Mfg.  Co.  v 
Lamson  &  G.  Mfg.  Co.,  189  Mass. 
344 ;  Sucrerie  Centrale  Coloso  v.  Es- 
teves,  4  Porto  Rico  Fed.  25;  Mendel 
V.  Fink,  8  111.  App.  378;  1  Whart. 
Ev.,  §  356. 

The  defendant  has  the  burden  of 
establishing  all  the  elements  of  a 
cause  of  action  (Ileedstrom  v. 
Baker,  13  111.  App.  104)  ;  and  must 
plead  them.  Rawson  v.  Pratt,  91 
Ind.  9. 

31  Goodwin  v.  Morse,  9  Mete. 
(Mass.)  278;  Myers  v.  Estell,  47 
Miss.  4;  Hitchcock  v.  Hunt,  28 
Conn.  343;  Timmons  v.  Dunn,  4 
Ohio  St.  080. 

32Blanchard  v.  Ely,  21  Wend. 
342;  Tinsley  v.  Tinsley,  15  B.  Mon. 


454;    Rogers    v.    Ostram,    35    Barb. 
523;  Stoddard  v.  Treadwell,  20  Cal. 
294;      Satchwell     v.     Williams,     40 
Conn.  371  ;   Cook  v.  Soule,  56  N.  Y. 
420;   Warfield  v.  Booth,  33  Md.  63; 
Bradley  v.  Rea,   14  Allen,  20;   Har- 
ralson  v.  Stein,  50  Ala.  347 ;  Haven 
V.    Wakefield,   39    111.    509;    Bounce 
V.  Dow,  57  N.  Y.  16;  Aultraan  &  T. 
Co.   V.   Hetherington,   42   Wis.   622 
Van   Epps  v.  Harrison,  5  Hill,  63 
Overton    v.    Phelan,    2    Head,    445 
Timmons  v.  Dunn,  4  Oliio  St.  680 
Rotan  V.  Nichols,  22  Ark.  244;  Har- 
ris V.  Rathbun,  2  Keyes,  312;  Rail- 
road Co.  V.  Smith,  21  Wall.  255,  22 
L.  ed.  513. 

33  Allaire  Works  v.  Guion,  10 
Barb.  55.  This  case  has  sometimes 
been  cited  as  holding  that  special 
damages  are  not  the  subject  of  re- 
coupment ( Benkard  v.  Babcock,  2 
Robert.  175)  ;  and  Dorwin  v.  Potter, 
5  Denio,  300,  has  also  been  cited  as 
holding  the  same.  Neither  case  ad- 
vances any  such  doctrine.  In  the 
latter  case  a  landlord's  action  for 
rent  was  defended  by  Avay  of  recoup- 


§    ISO]  LEGAL    LTQtnnATIONS    AND    REDUCTIONS.  rtCt") 

sideratioii  tlml  this  defense  is  to  avoid  circuity  of  action,  and 
when  resorted  to  is  a  substitute,  renders  it  (K'sirai>h'  and  neces- 
sary to  its  usefulness  that  the  defendant,  to  the  extent  of  fidl 
defense,  should  have  the  benefit  of  the  rule  of  daniaiics  to  w  hich 
he  would  be  entitled  if  he  elected  to  bring  a  separate  action. 

§  189.  A  cross-claim  used  in  defense  cannot  be  sued  upon. 
When  a  eross-cdaiui  is  subndtted  as  a  (Ud'ense  by  way  of  r(^- 
coupnient  the  judgnienl  will  be  a  bar  to  aiiotlier  a<'tion  or 
recoupment.  A  defendant  has  an  election  to  avail  liiinsell'  <>( 
a  cross-claim  by  way  of  recoupment,  or  under  the  code  as  a 
counter-claim,  or  to  bring  an  action  n|ton  it.  'i'lds  choice, 
however,  is  only  final  when  submitted  for  adjudication,  and  is 
so  to  prevent  a  second  recovery.  ISTeither  pleading  it  in  de- 
fense nor  bringing  an  action  up(ui  it  will  determine  the  elec- 
tion.'* Where  it  appeared  in  a  suit  in  which  a  cross-claim  was 
set  up  by  way  of  recoupment  that  the  defendants  had  previ- 
ously brought  an  action  for  the  same  damages,  which  was  still 
pending,  and  the  trial  court  had  rejected  the  defense,  the  ap- 
pellate court  said :  ''The  court  [])elow]  seemed  to  have  re- 
garded the  pendency  of  the  other  action  as  a  sort  of  abatement 
of  the  defendants'  plea,  or  to  have  deemed  the  bringing  of  the 
suit  (by  the  defendants)     ...     as  a  conclusive  election  to 

ment  for  his  neglect  to  put  the  barns  llie  true  rule  of  damages  is  the  siun 
on  the  demised  premises  in  that  necessary  to  place  the  barns  in  that 
state  of  repair  required  by  liis  agree-  state  of  repair  in  which  they  were  to 
ment.  The  court  say,  Wliittlesey,  l)o  put  according  to  the  agreement, 
J.:  "The  material  question  here  is  with  interest  thereon,  if  the  refer- 
as  to  the  proper  rule  of  damages  for  ees  tiiought  proper  to  allow  inter- 
such  neglect  to  repair.  We  do  not  est."  There  is  no  hint  tliat  this 
know  what  the  referees  adopted,  but  rule  was  adopted  because  tiie  plain- 
the  questions  put  to  the  witnesses  tifl's  breacli  of  contract  was  set  up 
after  objection  would  only  be  ad-  I)y  way  of  recoupment;  but  it  is  laid 
missible  upon  the  ground  tliat  the  down  as  "the  proper  rule  of  damages 
defendant  was  entitled  to  all  tlic  for  such  neglect  to  repair;"  on  that 
damages  which  he  might  have  sus-  subject  see  Myers  v.  Burns,  .i'y  N.  Y. 
taincd  by  the  injuries  to  the  cows  ,  269;  Hexter  v.  Knox,  03  N.  Y.  .'iCl. 
and  young  cattle,  the  increase  of  34  McDonald  v.  Christie,  42  Barb, 
food  required,  and  the  decrease  of  .36;  Fabbricotti  v.  Launitz,  3  Sandf. 
produce  by  reason  of  the  state  of  the  743;  Rankin  v.  Barnes,  5  Bush,  20; 
barns  in  question.  It  strikes  me  (TJlmore  v.  Reed,  76  Pa.  462.  See 
that  such  damages  arc  altogether  Cook  v.  Castner,  0  Cush.  2(56 :  Alillcr 
too  remote  and  contingent,  and  that  v.  Freeborn,  4  Robert.  008. 


566  SUTHERLAND    ON    DAMAGES.  [§    189 

prosecute  a  cross-action,  and  not  to  recoup  or  use  the  claim  as 
a  defense  under  any  circumstances  while  that  action  should 
continue.  There  is  in  this  holding  a  misapprehension  of  the 
defendants'  position.  They  are  not  prosecuting  two  actions, 
one  of  which  abates  the  other.  In  an  endeavor  to  recover 
their  damages  they  find  themselves  prosecuted  by  their  adver- 
sary. They  may  defend  by  setting  up  any  matter  which  the 
law  recognizes  as  a  defense,  whether  it  be  a  cause  of  action, 
or  whether  it  be  a  judgment  actually  recovered  therein — the 
only  difference  being  that  after  judgment  it  must  be  used  as  a 
judgment  and  by  way  of  set-off.  The  election  made  by  the 
defendants  was  not  an  election  not  to  recoup.  At  that  time  it 
was  an  election  between  prosecuting  to  establish  their  claim,  or 
suffering  the  injury  without  seeking  any  redress.  And  when 
the  plaintiff  forced  them  into  court,  .  .  .  their  opportunity 
to  use  their  claim  by  way  of  defense  first  arose,  and  they  had 
a  right  to  embrace  it.  Until  judgment  in  one  of  the  suits, 
the  right  to  press  the  claim  in  the  other  continued."^*  But 
after  a  judgment  in  a  separate  action  upon  the  claim  it  is 
merged  in  the  judgment;  or,  if  rejected,  barred;  if  the  issue 
embraces  it,  the  judgment  is  conclusive.^^ 

35Naylor    v.    Schenck,    3    E.    D.  36  Davis  v.  Tallcot,  12  N.  Y.  184; 

Smith,  135;  Lindsay  v.  Stewart,  72  Kane  v,  Fisher,  2  Watts,  246;  Grant 

Cal.  540.  V.  Button,  14  Johns.  377;  O'Connor 

If  the  matter  pleaded  in  recoup-  v.  Varney,  10  Gray,  231 ;  Burnett 
ment  can  be  set  up  in  defense  to  a  v.  Smith,  4  Gray,  50;  Salem  India 
suit  upon  the  contract  out  of  which  R.  Co.  v.  Adams,  23  Pick.  256;  Stev- 
it  arose  and  which  is  pending  it  will  ens  v.  Miller,  13  Gray  283;  Huff  v. 
not  be  proper  to  plead  it  in  another  Broyles,  26  Gratt.  283;  Beall  v. 
suit  in  the  same  court.  Jefferson  L.  Pearre,  12  Md.  550;  McLane  v.  Mil- 
Co.  V.  Williams,  68  Tex.  656.  ler,  10  Ala.  856;  Britton  v.  Turner, 

A  plaintiff  is  not  estopped  from  6  N.  H.  481,  495,  26  Am.  Dec.  713. 

prosecuting  a  suit  for  work  and  la-  In  Davis  v.  Tallcot,  supra,  it  was 

bor  by  reason  of  the  payment  of  a  held  that  a  recovery  in  a  suit  upon 

judgment  recovered  against  him  by  an  agreement,  wherein  the  right  to 

the  defendant  pending  such  suit  for  recover    depended   by   the   pleadings 

damages  for  the  improper  perform-  upon   the   truth    of   the   allegations 

ance  of  the  work  and  labor  sued  for;  made   in   the  complaint  and  denied 

the  claim  is  not  res  judicata  because  by  the  answer,  that  the  plaintiff  had 

one   suit    sounded   in   tort  and   the  fully  performed  the  agreement,  is  a 

other   in   assumpsit.     Mimnaugh   v.  bar  to  an  action  brought  subsequent- 

Partlin,  67  Mich.  301,  ly  by  the  defendant  in  the  first  suit 


189] 


LEGAL    LIQUIDATIONS    AAJ)    KLDUCTIOXS. 


0(j7 


In  iiu  action  for  breacli  nf  warraiilv  in  ilic  sale  of  personal 
property  these  facts  appeared:     A  note  given  for  tlic  [Jiiicliasc- 


against  tlie  plaintilV  thcroin  to  re- 
cover damages  for  the  alleged  non- 
performance of  the  same  agreement. 
The  record  of  the  recovery  estops  the 
defendant  from  controverting  that 
the  plaintiff  therein  fully  performed 
the  contract.  The  rule  is  not  other- 
wise, although  in  the  first  suit  the 
defendant,  in  addition  to  the  allega- 
tion of  performance,  alleged  breaches 
by  the  plaintiff,  and  claimed  to  re- 
coup damages,  and  at  the  trial  e.\- 
pressly  withdrew  the  claim  for  dam- 
ages, gave  no  evidence  touching  the 
alleged  breaches,  and  the  second  suit 
v/as  to  recover  damages  for  such 
breaches. 

Gardiner,  C.  J.,  said:  "The  de- 
fendants in  that  (the  former)  ac- 
tion, the  present  plaintiffs,  insisted 
upon  the  non-performance  of  the 
agreement  upon  the  part  of  Tallcot 
and  Canfield,  the  manufacturers  of 
the  machinery,  for  two  purposes  en- 
tirely distinct  in  their  nature  and 
objects.  First,  as  a  complete  de- 
fense to  the  action,  by  a  denial  of 
that  which  the  makers  of  the  ma- 
chinery had  averred  and  must  prove 
before  they  could  recover  anything. 
Second,  as  a  foundation  for  a  claim 
in  the  nature  of  a  cross  action  for 
damages  to  be  deducted  from  the 
amount  which  the  then  plaintiff 
might  otherwise  recover.  It  is  obvi- 
ous that,  by  withdrawing  their 
claim  to  damages,  the  then  defend- 
ants did  not  waive  the  right  to 
insist  upon  their  defense.  The  plain- 
tiffs, notwithstanding,  must  have 
established  their  title  to  the  price 
stipulated,  by  proof  that  the  machin- 
ery was  made  within  the  time  and 
in  the  manner  called  for  l)y  the 
agreement;  and  the'vendees  were  at 
liberty    to   meet    and   combat   these 


[)roofs  l)y  counter  evidence  on  their 
part.  Now,  tliis  was  precisely  what 
was  done,  or  rather  the  necessity  for 
introducing  evidence  to  sustain  tiic 
action  was  superseded  by  the  admis- 
sion of  the  then  defendants  in  open 
court  'that  they  were  indel)ted  to 
the  manufacturers  for  tlie  causes  of 
action  mentioned  in  their  com- 
plaint.' As  the  cause  of  action  and 
the  indebtedness  of  the  defendants 
were  by  the  complaint  made  depend- 
ent upon  a  full  performance  of  the 
contract  by  the  parties  who  insti- 
tuted tlie  suit,  the  concession  of  tlie 
defendants  was  equivalent  to  an  ad- 
mission on  the  record  to  that  effect; 
and  the  report  of  the  referee  fol- 
lowed by  the  judgment  of  the  court 
consequently  estops  the  parties  to 
that  suit  from  ever  after  question- 
ing that  fact  in  any  controversy 
upon  the  same  agreement  (2  Cow, 
&  H.  N.  843;  10  Wend.  80,  3  Comst. 
173).  In  the  suit  now  pending, 
iiowever,  the  vendees  bring  their 
suit  upon  the  same  contract  against 
the  manufacturers,  and  aver  a  non- 
performance by  the  defendants  as 
the  sole  cause  of  action.  They  have 
succeeded  in  the  court  below,  not- 
witlistanding  the  objection  we  have 
considered;  and  there  are,  conse- 
quently, two  records  in  the  same 
court  between  the  same  jjarties,  each 
importing  absolute  verity,  one  of 
which  affirms  that  the  manufactur- 
ers faithfully  performed  said  agree- 
ment 'in  every  respect  on  or  before 
the  7th  of  June,  1850;  the  other, 
that  they  did  not  perform  it  in  any 
respect  at  any  time.'  This  Hat  con- 
tradiction is  attempted  to  be  rec- 
onciled by  the  assertion  that  the 
record  in  the  first  suit  only  8how.s 
that    this    point    might    have    been. 


568  SUTIIEKLANU    ON    DAMAUJiS.  [§    181) 

money  Las  been  collected  by  suit;   to  that  the  now   })laintiff 

had  pleaded  non  assumpsit^,  and  it  was  agreed  that  under  that 

plea  he  might  offer  the  special  matter  in  evidence  as  fully  as  if 

he  had  specially  pleaded  the  same  or  given  notice  thereof;  the 

breach  of  warranty  now  sued  for  the  then  defendant  offered 

to  prove  as  a  defense,  but  it  was  rejected  by  the  court  because 

it  did  not  tend  to  show  a  total  failure  of  consideration.     On 

thesev  facts  the  judgment  in  the  former  action  was  held  to  be  a 

bar.^'''     The  defense  being  admissible  in  the  former  action  and 

erroneously  rejected,  the  judgment  had  the  same  effect  as  though 

the  claim  had  been  admitted.     The  error  of  its  rejection  should 

have  been  corrected  by  proceedings  taken  in  that  case ;  therefore  il 

the  exclusion  of  the  defense  by  the  court  had  the  same  effect  ^ 

as  a  disallowance  by  a  jury.^^      Where,   notwithstanding  the 

cross-claim  is  pleaded,   the  judgment  is  afterwards  taken  by 

default  by  the  plaintiff,  and  so  appears  by  the  record,   such 

claim  is  not  barred.^^     The  fact  that  the  judgment  was  upon 

default  makes  it  as  certain  that  the  counter-claim  was  not  passed 

upon  by  an  actual  adjudication  as  though  the  plea  had  been 

formall}^  withdrawn.     If  several  notes  have  been  given  for  a 

chattel  and  they  become  due  at  different  times,   and  the  de- 

not    that     it    was,     litigated.      The  adviser  is  evidenced  by  the  fact  that 

answer   is   that   the   record   in   that  while   the   manufacturers   recovered 

case   proves   that   that   question    of  in    their    suit    less    than    $650,    the 

performance    was    directly    in  issue  present     plaintiffs     have     obtained 

and     must     have     been     litigated:  judgment  in  the  case  under  review 

that   a   recovery   without   establisli-  for    upwards    of    $900.      The    with- 

ing    the    fact    of    performance    was  drawal  of  their  claim  to  recoup  was 

a    legal    impossibility.      Again,    the  therefore   not   onlj'   consistent   with 

parol    evidence,    if   admissible,   only  the  determination  to   insist  upon  a 

proves  that  the  vendees  did  not  rely  breach  of  the  contract  on  the  part 

upon  a  breach  of  the  contract  upon  of    the    manufacturers    in    order    to 

the  part  of  the  makers  of  the  ma-  defeat    the    suit   then    pending,    but 

chinery  to  support  their  claim  to  re-  this  was   indispensable  to  the  ulti- 

coup.     This  is  the  course  they  Avould  mate  recovery  of  their  full  damages 

naturally  adopt  if  their  damages,  in  in  a  subsequent  action."     See  Mer- 

their  opinion,  exceeded  the  sum  to  riam  v.  Woodcock,  104  Mass.  326. 

be   paid   for  the  machinery.     Their  ^7  Beall  v.  Pearre,  12  Md.  550. 

only   remedy   for   the   excess   would  38  Grant  v.  Button,  14  Johns.  377 ; 

depend    upon    defeating    the    action  Smith  v.  Whiting,  11  Mass.  445.  ' 

then  pending,  and  subsequently  su-  39  Bascom  v.   Manning,   52   N.   H. 

ing   on    the    agreement.      That   this  132;   Bodurtha  v.  Phelon,   13  Gray, 

was  really  the  object  of  their  legal  413. 


§    190]  LEGAL    LTQTTIDATTONS    AND    REDUCTIONS. 


nno 


fendaut  iu  an  action  upon  the  one  wliicli  iiui hires  first  eoniiter- 
claims  for  damages  arising  from  the  breach  cd"  the  warranty, 
judgment  in  his  favor  estoi)S  liim  from  pleading  such  defense 
in  an  action  subsequently  brought  upon  the  other  notes. *° 

§  190.  Notice  of  cross-claim.  This  defense  being  a  substi- 
tute for  an  action  and  to  avoid  the  necessity  of  another  suit, 
some  pleading  must  be  adopted  by  which  the  defendant  e\inces 
his  election  to  insist  on  his  cross-claim  as  a  defense.  It  must 
make  the  necessary  allegations  and  inform  the  ])laiiiliir  so  th:it 
he  may  not  be  taken  by  surprise.  And  it  must  be  set  up  in 
the  answer  under  the  code.'*^  The  defendant  is  as  much  con- 
cluded by  the  amount  of  damages  he  claims  in  his  counter- 
claim as  the  plaintiff  is  by  his  complaint.*^  Recoupment 
cannot  extend  beyond  the  specific  matters  sued  upon  unless  the 
notice  or  pleading  infonns  the  plaintifi'  that  the  defendant  will 
go  into  others.*^  The  notice  must  be  sufficiently  certain  to  ap- 
prise the  plaintiff  of  the  nature  of  the  defendant's  claim,  and 
in  case  of  a  suit  upon  contract  it  must  specify  the  breach  coui- 


40Geiser  T.  Mach.  Co.  v.  Filmier, 
27  Minn.  428;  Minneapolis  H. 
Works  V.  Bonnallie,  29  Minn.  373. 
Compare  Aultman  &  T.  Co.  v.  Heth- 
erington,  42  Wis.  622;  Same  v.  Jett, 
id.  488. 

41  West  Coast  Timber  Co.  v.  Hug- 
iiitt,  ]85  111.  App.  500;  Gait  v. 
Provan,  131  Iowa,  277;  Central  M.. 
Co.  V.  Thaler,  133  Mo.  App.  SG; 
Trowbridge  v.  Mayor,'  7  Hill,  429; 
J3urton  v.  Stewart,  3  Wend.  23G; 
Barber  v.  Rose,  5  Hill,  76 ;  Crane  v. 
llardman,  4  E.  D.  Smith,  448 ;  Lam- 
son  &  G.  M.  Co.  V.  Russell,  112 
Mass.  387 ;  Lansing  v.  Van  Alstyne, 
2  Wend.  .561;  Steamboat  Wellsville 
V.  Geisse,  3  Ohio  St.  333;  Young  v. 
Plumeau,  Harp.  543;  ]\Iaverick  v. 
(libbs,  3  McCord,  315;  McLure  v. 
Hart,  19  Ark.  119;  Hill  v.  Austin, 
id.  230;  Spink  v.  Mueller,  77  Mo. 
App.  85;  Rawson  v.  Pratt,  01  Ind. 
9;  Conway  v.  Mitchell,  97  Wis.  290; 


Detroit  River  T.  Co.  v.  Aldriili,  176 
Mich.  357. 

42Annis  v.  Upton,  66  Barb.  370; 
Taylor  v.  Butters  &  P.'s  S.  &  L.  Co., 
103  Mich.  1;  Sturges  &  Burn  Mfg. 
Co.  V.  Root  Dairy  Supply  Co.,  ISO 
111.  App.  52. 

In  Paragon  Ref.  Co.  v.  I^ee,  98 
Tenn.  643,  the  excess  over  the  sum 
claimed  by  the  defendant  was  abated 
in  the  appellate  court  though  no 
objection  was  made  below. 

43  Frederick  Mfg.  Co.  v.  Devlin, 
127  Fed.  71,  62  C.  C!  A.  53;  Beck  D. 
Co.  V.  Fulghum,  118  Ga.  836;  Truax 
V.  Heartt,  135  Mich.  150;  Mark  v. 
Williams  C.  Co.,  204  Mo.  242;  Pitts- 
burg P.  G.  Co.  V.  Monroe,  79  S.  C. 
564;  McKevitte  v.  Feige,  57  Mich. 
374. 

If  the  jiotice  counts  upon  a  con- 
tract there  cannot  be  a  recovery  uj)- 
on  a  quantum  meruit,  ^fisaouri  Pac. 
K.  Co.  V.  Kan.sas  City  &  I.  A.  1...  ISO 
Mo.  538. 


570  •  SUTTrERI.AND    ON    DAMAGES.  [§    190 

plained  of.^*  An  averment  in  a  cross-bill  claiming  a  recoup- 
ment of  special  damages  for  the  breach  of  a  contract,  the  gen- 
eral damages  for  which  appear  to  be  only  nominal,  should  be 
special ;  if  it  only  alleges  that  the  defendant  has  been  damnified 
to  a  specified  amount  it  is  insufficient.*^  A  reduction  of  dam- 
ages by  way  of  recoupment  cannot  be  shown  under  a  special 
plea  in  bar,  but  may  be  obtained  under  the  general  issue.*° 
Statutes  concerning  notice  will  be  liberally  construed ;  the  rules 
in  relation  to  a  variance  between  the  pleadings  and  the  proof 
will  not  be  ajiplied  to  the  notice,  which  is  good  if  it  states  the 
ground  and  substance  of  the  defense,  though  it  is  defective  in 
matters  of  form.*'''  The  only  way  to  make  the  objection  that  a 
cause  of  action  pleaded  as  a  counter-claim  is  not  such  in  the 
particular  case  because  it  is  in  no  way  connected  with  the  sub- 
ject of  plaintiff's  action  is  by  demurrer.  If  there  is  no  demurrer 
on  that  ground  and  issue  is  taken  on  the  facts  alleged  the  right 
to  object  is  waived.** 

Section  5. 

marshaling  and  distribution.   . 

§  191.  Definition.  Marshaling  is  the  setting  of  debts  or 
assets  in  a  certain  order ;  distribution  is  the  application  of 
funds  to  the  payment  of  debts  marshaled.  There  are  therefore 
two  kinds  of  marshaling,  one  of  assets,  the  other  of  debts. 
Marshaling  is  resorted  to  whenever  it  becomes  necessary  prac- 
tically to  answer  either  the  question  in  what  order  certain  dis- 
tinct funds  or  properties  shall  bear  the  burden  of  paying  or 
contributing  to  pay  a  debt  which  is  directly  or  indirectly  a 
charge  upon  all;  or,  secondly,  when  there  are  several  debts 
directly  or  indirectly  charged  upon  one  fund  or  property  which 

44  Sayles  V.  Qiiinn,  196  Mass.  492;  McCormick  H.  Mach.  Co.  v.  Robin- 
Sinker  V.  Diggins,  76  Midi.  557.  ^on,  60  id.  253. 

47  Merrill  v.  Everett,  38  Conn.  40. 

48  Ayrea    v.    O'Farrell,    10    Bosw. 
143;    Hammond   v.    Terry,    3   Lans. 

46Wadliamg  v.  Swan.  109  111.  46:  igQ.  Walker  v.  Jolinson,  28  Minn. 
Hoerner  v.  Giles,  .53  111.  App.  540;        147. 


45  Hooper   v.   Armstrong,   69   Ala 
343. 


§    192]  LEGAL,    LIQUIDATIONS    AND    REDUCTIONS. 


571 


is  insufficient  to  pay  them  in  lull,  lo  (Iclci-iniiic  in  \\li;il  nrdcr 
such  fund  shall  be  applied  as  far  as  it  will  ^o.  In  answerini^ 
the  first,  the  court  settles  the  order  of  liability  anioni:  I  he  fnnds 
that  must  pay;  the  second,  the  priorities  of  the  claims  t<»  be 
paid.  Under  the  first  inquiry  two  classes  of  persons  are  liable 
to  be  affected:  those  having  proprietary  interests  in  the  fund 
or  property  marshaled,  and  creditors  havinc;  liens  thereon. 

§  192.  Sales  of  incumbered  property  in  parcels  to  different 
purchasers.  For  the  protection  of  purchasers  this  rule  obtains: 
if  the  creditor's  lien  be  upon  several  parcels  of  land  for  the 
payment  of  the  same  debt,  and  some  of  those  parcels  belong  to 
the  person  who  in  equity  and  justice  owes,  or  ought  to  pay,  the 
debt,  and  other  parcels  have  l)Con  transferred  by  him  to  third 
persons,  his  part,  as  between  himself  and  them,  shall  be  pri- 
marily chargeable  with  the  debt.*^  Ami  if  there  have  been  suc- 
cessive alienations  by  him  of  parts  of  the  incumbered  property, 
and  the  portion  retained  is  insufficient  to  discharge  the  entire 
incumbrance,  the  parcels  transferred  will  be  subject  to  sale  in 
the  inverse  order  of  alienation.^"     The  operation  of  this  rule 


«  2  Story's  Eq.,  §  1233 ;  Clowes  v. 
Dickenson,  5  Johns.  Ch.  235,  9  Cow. 
403;  Cowden's  Est.,  1  Pa.  267,  274; 
Mason  v.  Payne,  Walk.  Ch.  459; 
Cooper  V.  Bigly,  13  Mich.  4G3; 
Barnes'  Appeal,  46  Pa.  350;  Ammer- 
man  v.  Jennings,  12  B.  Mon.  135. 
See  Blanchard  v.  Naquin,  116  La. 
806. 

In  Clowes  v.  Dickenson,  9  Cow. 
403,  it  was  held  that  if  the  creditor 
or  any  other  person  having  control 
of  his  judgment  cause  a  sale  of  the 
aliened  part  before  resorting  to  that 
retained  by  the  judgment  debtor,  the 
latter  part  being  sufficient  to  pay 
his  debt,  though  no  order  or  decree 
be  obtained  directing  the  remaining 
portion  to  be  first  sold,  such  cred- 
itor will  be  required  to  restore  tlie 
real  estate  so  sold;  or,  if  sold  to  a 
bona  fide  purchaser,  to  account  to 
the  alienee  for  the  value  of  the  real 
estate    so    sold,    if    the    other    part 


would  have  satislicd  tlic  jtidgmcnt: 
or,  if  not,  to  restore  or  account  for 
the  value  beyond  what  would,  with 
the  other,  have  satisfied  the  judg- 
ment. That  such  alienee,  having 
stood  by  and  allowed  the  legal  estate 
to  pass  from  him,  shall  not  be  al- 
lowed tlie  land  itself,  with  improve- 
ments made  subsequent  to  tlic  execu- 
tion sale  and  before  lie  asserted  hia 
claim.  Tiie  true  value  of  the  aliened 
estate  in  market  at  the  time  of  tlic 
execution  sale,  not  tlie  price  bid  for 
it,  is  the  measure  of  compensation, 
sold.;  Wieting  v.  Bellinger,  50 
llun,  3M;  Gage  v.  McGregor,  CI  N. 
II.  47;  Vogle  v.  Brown,  120  III.  338; 
12  id.  252;  Gill  v.  Lyon,  1  Johns. 
Cli.  447;  Stevens  v.  Cooper,  id.  425; 
James  v.  Hubbard,  1  Paige,  228; 
Gouverneur  v.  Lynch,  2  id.  300; 
Guion  v.  Knapp,  6  id.  35;  Skeel  v. 
Spraker,  8  id.  182;  Patty  v.  Pease, 
id.  277,  35  Am.  Dec.  683;  Schryver 


572 


SUTHERLAND    ON    DAMAGES. 


[§  192 


may  be  waived,  limited  or  modified  by  the  instrument  executed 
to  the  earlier  grantee,  which  will  bind  all  who  claim  under 
him." 

§  193.  Sale  subject  to  incumbrance.  If  a  portion  of  the 
land  covered  by  mortgage  is  conveyed  subject  to  the  payment 
of  the  entire  mortgage  by  the  grantee  the  subsequent  purchaser 
of  another  parcel,^^  or  the  mortgagor,^^  has  a  right  to  insist 
that  the  parcel  so  conveyed  shall  be  first  sold  to  satisfy  the 
mortgage.  The  lot  so  sold  becomes,  as  to  the  parties  to  the  con- 
veyance, the  primary  fund  for  the  payment  of  the  mortgage, ^^ 
and  the  grantee  thereby  becomes  the  party  who  in  justice  ought 
to  pay  the  debt.     The  mortgagor  becomes  then  a  quasi-surety, 


V.  Teller,  9  Paige,  173;  New  York 
Life,  etc.  Co.  v.  Cutler,  3  Sandf.  Ch. 
176;  Commercial  Bank  v.  Western 
Reserve  Bank,  11  Ohio,  444,  38  Am. 
Dec.  739;  Green  v.  Ramagc,  18  Ohio, 
428,  51  Am.  Dec.  458;  Stuyvcsant  v. 
Hone,  1  Sandf.  Ch.  419;  Stuyvesant 
V.  Hall,  2  Barb.  Ch.  151 ;  Averall  v. 
Wade,  Lloyd  &  Gould,  252;  Lyman 
V.  Lyman,  32  Vt.  79,  76  Am.  Dec. 
151;  Hurd  v.  Eaton,  28  111.  122; 
Carter  v.  Neal,  24  Ga.  346,  71  Am. 
Dec.  136;  Root  v.  Collins,  34  Vt. 
173;  Brown  v.  Simons,  44  N.  H. 
475;  Jenkins  v.  P'reyer,  4  Paige,  53; 
Howard  Ins.  Co.  v.  Halsey,  4  Sandf. 
565;  La  Farge  Ins.  Co.  v.  Boll,  22 
Barb.  54;  Gates  v.  Adams,  24  Vt. 
71;  Chase  v.  Woodbury,  6  Cush. 
143;  Black  v.  Morse,  7  N.  J.  Eq. 
509 ;  Shannon  v.  Marselis,  1  id.  412 ; 
Henkle  v.  Allstadt,  4  Gratt.  284; 
Jones  V.  Myrick,  8  Gratt.  179 ;  Brit- 
ton  V.  Updike,  3  N.  J.  Eq.  125; 
Wikofif  V.  Davis,  4  id.  224. 

Judge  Story  (2  Story's  Eq.,  § 
1233b)  doubts  whether  this  last  po- 
sition is  maintainable  upon  princi- 
ple; for  as  between  the  subsequent 
purchasers  or  incumbrancers,  each 
trusting  to  his  own  security  upon  the 
separate  estates  mortgaged   to  liim, 


it  is  difficult  to  perceive  that  either 
has,  in  consequence  thereof,  any  su- 
periority of  right  or  equity  over  the 
other.  On  the  contrary,  there  seems 
strong  ground  to  contend  that  the 
original  incumbrance  or  lien  ought 
to  be  borne  ratably  between  them, 
according  to  the  relative  value  of 
the  estates.  And  so  the  doctrine 
has  been  asserted  in  the  ancient  as 
well  as  modern  English  cases  on  the 
subject  (Harbert's  Case,  3  Co.  12; 
Barnes  v.  Racster,  1  Y.  &  C.  New 
Cas.  401 ;  Lanoy  v.  Duchess  of 
Athol,  2  Atk.  448;  Aldricli  v.  Coop- 
er, 8  Ves.  391;  Averall  v.  Wade, 
Lloyd  &  Gould,  252;  Bugden  v.  Big- 
nold,  2  Y.  &  C.  New  Cas.  377;  Green 
V.  Ramage,  18  Ohio,  428,  51  Am. 
Dec.  458)  ;  and  the  law  is  so  settled 
in  Kentucky.  Dickey  v.  Thompson, 
8  B.  Mon.  312;  Morrison  v.  Beck- 
vvith,  4  T.  B.  Mon.  76;  Hughes  v. 
Graves,  1  Litt.  319;  Burk  v.  Chris- 
man,  3  B.  Mon.  50. 

51  Vogcl  V.  Shurtliff,  28  111.  App. 
516;   Briscoe  v.  Powers,  47  111.  447. 

52  Caruthers  v.  Hall,  10  Mich.  40. 

53  Mason   v.   Payne,   Walker's   Ch. 
401. 

54  Cox   v.   Wheeler,  7   Paige,  248; 
Jiuncl   V.  Jumel,  id.  591. 


§    10;]]  LEGAL    LIQUIDATIONS    AKD    JJKDUCTIONS.  i>7'6 

and  has  the  right  to  insist  ujxiii  the  ('ollcftioii  ot"  the  dehl  lirst 
out  of  the  laiid.^^ 

The  rule  being  intended  for  the  benefit  of  jiarlies  liaving 
separate  interests  in  the  property  or  fund  on  wliich  the  debt  is 
a  lien,  their  relation  between  themselves  is  considered  in  deter- 
mining whether  the  burden  rests  upon  them  equally,  or  if  un- 
equally, in  what  order  their  several  properties  may  be  resorted 
to  for  payment.  Where  there  arc  several  heirs,  or  where  several 
persons  join  in  a  recogiiizanee,  one  heir,  or  one  conusor,  should 
not  be  charged  exclusively,  for  their  relations  and  duties  are 
equal. ^^  And  the  same  principle  would  ap[)ly  l)etween  several 
purchasers  of  the  same  date.  But  the  property  of  the  party  who 
is  in  equity  bound  to  pay  the  debt,  as  between  him  and  the 
owner  of  other  property  bound  for  the  same  debt,  is  the  primnry 
fund;  and  the  coiirt  will  establish  the  oi-der,  between  any  num- 
ber of  persons  whose  property  is  subject  to  the  (l(>l>t.  in  whir-h 
resort  may  be  had  to  properties  so  separated  in  ownership. 
Thus,  in  an  action  of  foreclosure  against  G.  and  L.  as  mort- 
gagors, where  it  appears  that  G.  is  possessed  of  a  portion  of  the 
premises  in  his  own  right,  and  L.  of  another  portion,  and  that  a 
third  portion  is  held  jointly,  and  it  also  appears  that  L.  person- 
ally owes  the  mortgage  debt,  or  is  equitably  bound  to  pay  it,  the 
judgment  should  be  so  entered  that  the  interest  of  L.  be  first 
sold ;  secondly,  the  joint  interest ;  and  lastly,  the  interest  of  G." 

Jjut  these  equities  between  co-debtors,  by  which  one  part  of 
incumbered  premises  becomes  the  primary  fund  for  the  pay- 
ment of  the  mortgage,  may  be  defeated  by  the  bona  fide  purchase 
of  that  part  by  one  without  notice  of  the  facts  which  raise  these 
equities.  Where  A.  and  B.,  owning  lands  in  severalty,  joined 
in  mortgaging  them  to  secure  the  payment  of  a  joint  debt,  and 
A.  afterwards  executed  a  bond  of  indemnity  to  B.  agreeing  to 
pay  the  whole  mortgage  debt,  but  subsequently  executed  on  his 
lands  other  mortgages  for  a  valuable  consideration,  to  parties 
who  had  no  notice  of  the  bond  or  agreement  between  him  and 

55IIairia    v.    Jex,    GG    Barb.    232;  enson,  5  Johns.  Ch.  235,  241. 

Bcarse  v.  Lcbowidi,  212  Mass.  .'541.  57  Ogdon   v.   Glidd.'ii,   0    Wis.   4G; 

56  Harvey    v.    Woodhouse,    Select  Warren  „v.  Boyiiton.  :.  Harl).  i;i :  Cor- 

Cas.  in  Ch.  80.     See  Clowes  v.  Dick-  iioll   v.    I'rescott.   id.    IG. 


574  SUTllEELAND    ON    DAMAGES.  [§    193 

B.,  it  was  held  on  the  foreclosure  of  the  mortgage  that  B.  could 
uot,  as  against  the  subsequent  mortgagees,  compel  the  collection 
of  the  whole  of  the  original  mortgage  debt  from  the  land  of  A. 
to  thejr  prejudice,  and  that  half  of  it  was  collectible  from  B.'s 
land.^' 

§  194.  Effect  of  creditor  releasing  part.  A  creditor,  having 
notice  of  such  equities  between  several  parties  owning  property 
subject  to  his  debt,  cannot  defeat  them  by  releasing  the  property 
first  liable.  A  release  by  the  mortgagee  of  a  portion  of  the 
land  mortgaged,  with  knowledge  of  a  prior  sale  of  another 
portion,  will  operate  as  to  such  prior  purchaser  as  a  discharge 
pvu  tanto  of  the  mortgage  debt.^^  But  a  release  without  such 
knowledge  will  not  be  a  discharge.^" 

§  195.  Rights  where  one  creditor  may  resort  to  two  funds  and 
another  to  only  one.  A  rule  for  the  protection  of  creditors  hav- 
ing junior  liens  exists.  If  one  creditor  can  resort  to  two  funds 
and  another  to  but  one  of  those  funds,  the  former  will  be  com- 
pelled to  seek  satisfaction  out  of  the  fund  which  the  other  can- 
not reach,  if  adequate,^^  and  it  can  be  done  without  prejudice 
to  such  double  fund  creditor.^^  The  rule  is  founded  in  social 
duty  and  is  never  enforced  to  the  prejudice  of  such  creditor, ^^ 

58  Hoyt  V.  Dougherty,  4  Sandf.  44  111.  53;  Goss  v.  Lester,  1  Wis. 
462;   Root  v.  Collins,  34  Vt.  173.  43;    Worth    v.    Hill,    14    Wis.    559; 

59  Brown  v.  Simons,  44  N.  H.  Ogden  v.  Glidden,  9  Wis.  46;  Lloyd 
475;  Guion  v.  Knapp,  6  Paige,  43;  v.  Galbraith,  32  Pa.  103;  Nailer  v. 
Patty  V.  Pease,  8  id.  277;  La  Farge  Stanley,  10  S.  &  R.  450;  Cowden's 
Ins.  Co.  V.  Bell,  22  Barb.  54;  Tay-  Estate,  1  Pa.  267;  Bank  v.  Vance, 
lor  V.  Maris,  5  Rawle,  51.  See  Coop-  5  Litt.  168.  See  Union  Nat.  Bank 
er   V.    Bigly,    13   Mich.   463;    James  v.  Moline,  etc.  Co.,  7  N,  D.  201. 

V.  Brown,  11  Mich.  25 ;  Howard  Ins.  62  Bagley  v.  Weaver,  72  Ark.  29 ; 

Co.  V.  Halsey,  4  Sandf.  565;   Union  Logan  v.  Anderson,  18  B.  Mon.  114; 

Nat.  Bank  v.  Moline,  etc.  Co.,  7  N.  Jervis  v.  Smitli,  7  Abb.  Pr.   (N.  S.) 

D.  201.  23  7;   Wise  v.  Shepherd,  13  III.  41; 

60  Id.  Cannon  v.  Hudson,  5  Del.  Ch.  112; 

61  Ball  V.  Setzer,  33  W.  Va.  444;  Hudkins  v.  Ward,  .30  W.  Va.  204,  8 
Hall  V.  Stevenson,  19  Ore.  153;  Am.  St.  22;  Leib  v.  Stribling,  51 
Glass  V.  Pullen,  6  Bush,  346;  Wise  Md.  285;  Marr  v.  Lewis,  31  Ark. 
V.  Shepherd,  13  111.  41;  Marshall  v.  203,  25  Am.  Rep.  553;  McArthur 
Moore,  36  111.  321;  Hurd  v.  Eaton,  v.  Martin,  23  Minn.  75;  Gilliman  v. 
28  111.   122;    pvertson   v.   Booth,   19  McCormack,  85  Tenn.  597. 

Johns.     492;     Hayes     v.     Ward,     4  63  Id. ;  First  Nat.  Bank  v.  Fowler, 

Johns.   Ch.    132;    Dodds   v.    Snyder,       54  Wash.  65. 


§    195]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


575 


nor  where  it  will  work  injustice  to  other  partios.     Tlius  where 
a  firm  creditor  has  security  on  the  separate  property  of  one  of 


In  Worth  v.  Hill,  14  Wis.  559, 
tlie  mortgage  being  foreclosed 
covered  two  distinct  tracts  in  differ- 
ent towns.  Tlie  defendant  Buck, 
wlio  ^vas  the  appellant,  held  a  mort- 
gage next  to  tliis  in  point  of  time, 
covering  one  of  the  tracts  contained 
in  this  mortgage,  and  other  land 
not  covered  by  this,  in  the  same 
town.  Defendant  Mo  wry  held  a 
mortgage  next  to  Buck's  in  point  of 
time,  but  upon  tlie  land  in  the  other 
town  covered  by  the  mortgage,  and 
also  upon  another  tract.  Hence  the 
Mowry  mortgage  did  not  cover  any 
of  the  land  mortgaged  to  Buck,  but 
their  interests  conflicted  by  reason 
of  the  mortgage  which  was  being 
foreclosed,  and  which  was  prior  to 
both,  covering  a  part  of  the  land 
contained  in  each  of  them.  It  fur- 
ther appeared  that  there  was  a 
mortgage  prior  to  all  of  these,  cov- 
ering the  tract  in  the  Buck  mort- 
gage, and  the  parcel  in  the  Mowry 
mortgage  which  was  not  contained 
in  the  mortgage  being  foreclosed ; 
that  that  mortgage  had  been  fore- 
closed, and  that  part  which  was 
covered  by  the  Mowry  mortgage  ad- 
judged to  be  sold  before  the  part 
covered  by  Buck's.  It  was  further 
proved  that  the  other  tract  covered 
by  Buck's  mortgage  was  ample  se- 
curity for  the  amount  of  the  debt 
secured  by  that  mortgage.  Upon 
this  state  of  facts  it  had  been  de- 
creed below  that  the  portion  covered 
l)y  Buck's  mortgage  should  be  sold 
in  this  foreclosure  before  that  cov- 
ered by  Mowry's,  and  from  that  part 
of  the  decree  Buck  appealed. 

Referring  to  the  equitable  rule 
that  in  foreclosure  cases  where  the 
land  has  been  subsequently  conveyed 
by   the   mortgagor   it   sliall   be   sold 


in  the  inverse  order  of  alieiiatiim. 
Paine,  J.,  says:  "Tlie  justice  of 
tliis  rule  has  been  sometimes  (jues- 
tioncd,  l)ut  we  regard  it  as  nut  only 
well  settled,  Init  correct  U|K)n  princi- 
ple, and  have  repeatedly  enforced  it. 
Jiut  at  tiu!  same  time  we  tliink  it 
may  be  controlled  by  other  estab- 
lished e(juitable  ])rini'i[)l('s,  where 
the,  facts  render  tlicin  a|q)li<';tl)lc; 
and  such  we  tiiink  was  tlie  ease 
liere.  It  is  a  familiar  principle  tluit 
wliere  one  creditor  has  security  up- 
on two  funds,  and  anotlier  lias  se- 
curity upon  one  of  them  only,  the 
latter  may  compel  the  former  to 
resort  first  to  that  fund  wliicli  he 
cannot  reach.  And  although  this  is 
not  a  direct  proceeding  to  accom- 
plish that  object,  yet  it  is  substan- 
tially tliat,  inasmuch  as  Mowry  sets 
up  these  facts  to  rebut  the  equity 
Buck  would  otherwise  have  as 
against  him.  For  the  result,  if  the 
judgment  liad  been  otherwise,  would 
have  deprived  Mowry  of  his  secur- 
ity entirely.  Tlie  one  tract  covered 
by  his  mortgage  liaving  already 
been  adjudged  to  be  sold  first  for 
Buck's  benefit,  now,  if  the  other 
should  be  adjudged  to  be  sold  first, 
lie  would  have  nothing  left.  Where- 
as it  appears  bj'  the  testimony  that 
upon  the  decree  as  rendered  Mowry 
is  protected  and  Buck  left  with 
ample  security  for  his  debt.  Sup- 
pose A.  mortgages  a  tract  to  B., 
tlien  gives  a  second  mortgage  on 
a  part  of  it  to  C,  whieli  mortgage 
also  covers  other  tracts,  ami  tlien 
gives  a  mortgage  on  another  jiart 
to  D.  On  a  foreclosure  of  B.'s 
mortgage,  the  ordinarj-  rule,  baaed 
merely  on  the  order  of  alienation, 
would  be  to  sell  D.'s  part  first.  But 
siijipose    D.    could    show    tliat    the 


576 


SUTirKRT.AND    ON    PAAFAGES. 


r§  lo-""' 


its  meml)ers  such  creditor  is  not  for  that  reason  to  be  exclnded 
from  sharing  in  the  proceeds  of  the  company  assets  until  he  has 
exhausted  his  security,  for  that  would  be  a  detriment  to  such 
creditor  where  it  involved  delay,  and  unjust  to  the  creditors  of 
the  separate  estate  which  furnished  the  security.®*  Where  the 
rule  would  be  a]iplied  in  favor  of  a  creditor  having  a  right  to 
resort  to  but  one  fund  or  property,  it  will  be  equally  available  to 
one  claimino;  through  a  sale  under  his  lien.®^ 


other  tracts  covered  1\y  C.'s  mort- 
gage were  an  ample  security  for  his 
debt;  would  not  that  raise  an  equity 
sufficient  to  overcome  the  ordinary 
rule,  and  require  as  between  C.  and 
D.  that  C.'s  part  should  be  first 
sold?  I  think  so;  and  that  is  sub- 
stantially the  relation  which  these 
defendants  hold  to  each  other  in  the 
present  case.  I  can  see  no  reason 
why  the  principle  requiring  the 
creditor  having  two  funds  to  resort 
first  to  the  one  which  the  other  can- 
not reach  is  not  applicable  to  such 
a  case.  It  is  true  that  ordinarily 
the  adequacy  of  the  first  fund  might 
be  tested  by  an  actual  sale,  and  the 
creditor  who  was  compelled  first  to 
resort  to  that  might  still  be  in  a 
position  to  resort  to  the  other  to 
supply  any  deficiency ;  and  here  B. 
may  not  be  left  in  such  a  position. 
I  think  that  is  good  reason  why 
such  a  decree  as  the  one  made  in 
this  case  should  be  made  only  upon 
clear  proof  of  the  entire  adequacy 
of  the  remaining  security.  But  I 
am  not  prepared  to  say  that  courts 
should  not  act  upon  such  proof,  or 
that  a  party  so  situated  has  any 
absolute  right  to  have  the  adequacy 
of  his  remaining  security  tested  in 
all  cases  by  an  actual  sale.  It  is 
obvious  that  sucli  a  test  could  not 
be  had  in  a  case  like  this,  and  con- 
sequently, if  that  rule  was  adopted, 
it  would  lead  to  the  injustice  of  cut- 
ting off  the  last  mortgagee  entirely, 
though    it   might   not   be   necessary 


for  tlie  protection  of  the  second. 
Courts  are  constantly  adjudicating 
upon  the  most  important  rights  of 
parties  upon  the  theory  that  human 
testimony  can  establish  facts  with 
sufficient  certainty  to  justify  such 
adjudication,  and  I  think  the  ques- 
tion of  tlie  adequacy  or  inadequacy 
of  a  security  should  form  no  excep- 
tion." 

In  Miller  v.  Jacobs,  3  Watts.  477. 
it  was  held  that  one  lien  creditor 
.can  invoke  no  security  taken  by  an- 
other which  had  not  become  a  lien 
when  he  procured  his  own;  hence,  a 
subsequent  mortgagee,  having  taken 
bonds  but  Avithout  a  warrant  to  con- 
fess judgment,  has  no  equity  to  call 
on  a  prior  mortgagee  to  enter  up  a 
judgment  on  a  bond  which  accom- 
panied his  mortgage  in  order  to 
throw  him  on  another  fund;  nor 
can  the  subsequent  mortgagee  ob- 
ject to  the  vacation  of  judgments 
subsequently  confessed  on  those 
bonds,  though  purposely  withdrawn 
to  make  way  for  other  judgment 
creditors  whose  lien  funds  are  con- 
sequentty  posterior  in  date  to  his 
lien  on  the  mortgaged  premises. 

64  Bell  V.  Hapworth,  52  Hun,  616; 
Morrison  v.  Kurtz,  15  111.  193.  See 
Berry  v.  Powell,  IS  111.  08;  White 
V.  Dougherty,  Mart.  &  Yerg.  309, 
17  Am.  Dec.  S02;  Breedlove  v. 
Stump,  3  Yerg.  257. 

65  Marshall  v.  Moore,  36  111.  321. 
See  Dodds  v.  Snyder,  44  111.  53;  Mc- 
Cormick's  App.,  55   Pa.  252. 


§     19G]  LECiAT,    T.]Q^Il)ATIO^•R    AXD     I;  Kl  tl'CTIOMS.  f)?? 

§  196.  Same  when  the  funds  belong  to  two  debtors.  The 
rule,  however,  does  not  apply  wlien  one  of  the  creditors  lias  a 
lien  for  his  debt  upon  two  funds  belonging  to  two  separate 
debtors,  and  the  other  has  a  lien  npon  a  fund  belonging  to  one 
of  them,  so  as  to  compel  the  first  creditor  to  make  his  claim 
wholly  out  of  that  debtor  whom  the  other  cannot  reacli,  unless 
there  be  some  peculiar  relations  between  these  debtors  wbicli 
would  make  it  e([uital)le  that  the  debtor  having  bnt  imc  creditor 
should  pay  the  whole  denuind  against  him  and  his  co-debtor.*^ 
A  creditor  who  has  a  double  security,  or  u  right  to  go  n|)on  more 
than  one  fund  for  ])aynient,  may  go  on  all  or  either  one  ol'  them 
for  his  whole  debt.  His  interest  under  each  is  scx'ci'al  and  in- 
dependent of  the  other,  and  cannot  be  diminished  by  reference 
to  the  value  of  tlie-other.°'  A  creditor  who  has  several  securi- 
ties, neither  one  of  which  is  sufficient  for  the  payment  of  his 
debt,  has  a  right  to  look  to  each  one  of  them  for  its  payment  in 
the  same  manner  and  to  the  same  extent  that  he  could  do  if  he 
had  no  other.  It  is  only  when  it  may  happen  that  a  creditor - 
who  has  no  moi'e  securities  than  one  may  not  require  for  the 
payment  of  his  debt  the  entire  proceeds  of  all  his  securities  that 
any  marshaling  of  them  can  take  place  for  the  benefit  of  other 
creditors  who  are  only  subsequently  entitled  to  a  lien  on  a  part 
of  the  same  fund  or  property.^®  If,  for  example,  property  suffi- 
cient for  the  payment  of  fifty  cents  on  the  dollar  be  mortgaged 
to  two  or  more  creditors,  and  the  mortgagor  afterwards  mort- 
gages other  property  to  the  same  and  other  creditors  to  secni-e  the 
payment  of  the  same  debts,  and  also  the  debts  due  to  the  other 
creditors,  and  the  fund  arising  from  the  last  mortgage  is  also 
sufficient  to  pay  fifty  cents  on  the  dollar  of  all  the  debts  thei'cin 
named,  the  creditors  in  the  first  mortgage  have  a  right  to  their 
full  proportion  thereof  on  the  whole  amount  of  their  debts  with- 
out regard  to  what  has  been  or  may  be  receive<l  by  them  on  the 
first  mortgage.  The  two  securities  are  suflieient  for  the  pay- 
ment of  those  creditors  who  arc  entitled  to  the  benelit  <d'  both; 

66  Wise    V.    Shpplierd,    i;?    111.    41;  67C!wynnp    v.    Edwards,    2    Rush. 

Dorr  V.  Shaw,  4  Johns,  (li.   17,  20;  2Sn.     Soo   Kendall   v.  Now   England 

1    Story's    Eq.,    §    042;    Ebonhardt'a  C.  Co.,  1:!  dmu.  :!S:?. 

App.,  8  W.  &  S.  327.     See  Ex  parte  68  T,„<rj,ii  v.   Andersdii.  IS   I'..  Mon 

Kendall,  17  Ves.  520.  114. 
Suth.   Dam.  Vol.   I.— 37. 


578  SUTHERLAND    ON    DAMAGES.  [§    19G 

and  yet,  if  the  other  creditors  in  the  second  mortgage  have  a 
right  to  reduce  their  debts  by  applying  as  a  credit  thereon  the 
amount  of  their  dividend  under  the  first  mortgage,  and  to  re- 
strict them  to  a  pro  rata  of  the  proceeds  of  the  last  mortgage  on 
the  balance  of  their  debt,  when  thus  reduced,  one-fourth  part  of 
it  would  still  remain  unpaid,  although  either  security  taken 
separately  was  sufficient  for  the  payment  of  one-half  of  the 
debt.^^  Whenever,  then,  a  mortgage  or  assignment  is  executed  to 
secure  the  payment  of  certain  specified  debts  and  it  contains 
nothing  to  show  that  it  was  intended  only  to  secure  the  payment 
of  a  part  of  the  debt  of  some  of  the  creditors,  and  not  the  whole 
amount  thereof,  the  mortgagees  or  beneficiaries  under  the  as- 
signment have  each  a  right  to  a  full  ratable  share  of  the  fund 
on  the  whole  amount  of  their  respective  debts.  This  share  can- 
not be  diminished  by  the  existence  of  another  security,  where 
both  securities  are  necessary  for  the  payment  of  the  debt. 
Equity  refuses  to  interfere  or  to  marshal  the  securities  to  the 
prejudice  of  the  creditor  entitled  to  a  double  fund.  And  it 
makes  no  diiference  in  such  a  case  whether  the  benefit  of  one  of 
the  funds  has  been  realized  or  still  remains  as  a  mere  security 
for  the  payment  of  the  debt."''" 

69  Logan  V.   Anderson,  supra.  sold  by  the  vendors,  who  applied  the 

70  Id.;  Morris  v.  Olwine,  22  Pa.  proceeds  to  the  payment  of  the 
441;  Kittera's  Est.  17  id.  416;  Mil-  notes  given  upon  the  sale,  leaving 
ler's  App.,  35  id.  481;  Jervis  v.  a  balance  still  due,  they  were  en- 
Smith,  7  Abb.  Pr.  (N.  S.)  217;  titled  to  a  dividend  upon  the  whole 
Graeff's  App.,  79  Pa.  146;  Patten's  amount  of  their  claim  at  the  date 
App.,  45  Pa.  152,  84  Am.  Dec.  479;  of  the  assignment.  See  Midgeley  v. 
Hess  Est.,  69  Pa.  272;  Brough's  Slocomb,  2  Abb.  Pr.  (N.  S.)  275. 
Est.,  71  Pa.  460.  In    Bridendecker    v.    Lowell,    32 

In  Patten's  App.,  supra,  it  was  Barb.  9,  it  was  held  that  where  an 
held  that  the  detention  by  vendors  arrangement  was  made  between 
of  goods  sold,  on  the  insolvency  debtor  and  creditor,  by  which  the 
and  assignment  for  the  benefit  of  former  gives  a  new  security  upon 
creditors  by  the  vendees,  does  not  property  exceeding  in  value  the 
rescind  the  contract  of  sale;  and  the  amount  of  the  debt,  and  receives 
vendors  are  entitled  to  a  pro  rata  back  the  evidence  of  his  indebted- 
distribution  out  of  the  assigned  es-  ness,  there  being  at  the  time  a  gen- 
tate;  and  that  where  a  part  of  the  eral  fund  or  security  by  mortgage 
goods  had  been  delivered  and  the  upon  real  estate  embracing  all  the 
balance  which  had  been  detained  was  debts  of  the  debtor,  but  insufficient 


§    197]  LEGAI.    LIQUIDATIONS    AND    REDUCTIONS. 


579 


§  197.  Principles  on  which  priority  determined.  The  i>rnici- 
ple  is  believed  to  be  universal  tbat  a  prior  lien  gives  a  prior 
claim  which  is  entitled  to  prior  satisfaction  ont  of  the  subject 
which  it  binds  unless  the  lien  be  intrinsically  defective  or  be 
displaced  by  some  act  of  the  party  holding  it  which  should  post- 
pone him  in  a  court  of  law  or  equity  to  a  subsequent  claimant.''^ 
Where  surplus  moneys  arose  upon  the  foreclosure  of  several 
mortgages  and  were  thus  claimed:  by  judgment  creditors  hav- 
ing the  first  lien  upon  two  such  funds;  by  a  mortgage  creditor 
having  a  later  lien  on  only  one  such  fund,  and  by  other  judg- 
ment creditors  having  still  later  liens  upon  all,  the  prior 
judgment  was  ordered  paid  out  of  the  fund  not  subject  to  the 
mortgage,  but  if  it  were  not  sufficient,  any  deficiency  was  to  be 
paid  prior  to  the  mortgage  out  of  the  fund  on  which  the  mort- 
gage was  a  lien;  then  the  mortgage  was  to  be  paid  out  of  the 
surplus  on  which  it  was  a  Hen,  and  the  subsequent  creditors 


to  pay  the  whole,  the  elTcet  of  such 
an  arrangement  was  to  make  the 
specified  security  the  primary  fund 
for  the  payment  of  the  debt  specific- 
ally secured  by  it,  and  to  postpone 
the  right  of  that  creditor  to  partici- 
pate in  the  general  fund  until  the 
specific  fund  had  been  exliausted. 

71  Kansas  City  v.  Nai-th  American 
T.  Co.,  110  Mo.  App.  647;  Rankin 
V.  Scott,  12  Wheat.  177,  6  L.  ed.  592  ; 
Broom's  Max.  236;  9  Paige,  61, 
note;  Weaver  v.  Toogood,  1  Barb. 
238;  Embree  v.  Hanna,  5  Johns. 
101,  9  Am.  Dec.  274;  Muir  v. 
Schenck,  3  Dill,  228,  38  Am.  Dec. 
633;  Watson  v.  Le  Row,  6  Barb. 
481;  Lynch  v.  Utica  Ins.  Co.,  tS 
Wend.  236:  Poillon  v.  Martin,  1 
Sandf.  C'h.  .569;  Hcrry  v.  Mutual 
Ins.  Co.,  2  Jolins.  Ch.  603. 

It  is  held  in  Gilliam  v.  McCor- 
mack,  85  Tenn.  597,  that  marslial- 
ing  is  a  pure  equity  and  does  not 
rest  at  all  upon  contract.  The 
equity  to  marshal  assets  is  not  one 
which  fastens   itself  upon   tlie  situ- 


ation at  tiic  time  the  successive 
securities  arc  taken,  but  is  to  be  de- 
termined at  the  time  the  marshal- 
ing is  invoked.  Tlie  equity  does  not 
become  a  fixed  riglit  until  the  proper 
steps  are  taken  to  have  it  enforced; 
until  then  it  is  subject  to  displace- 
ment and  defeat  by  subsequently 
acquired  liens  upon  the  fimds.  The 
facts  were  that  the  owner  of  three 
lots  gave  six  mortgages  thereon  to 
difi'erent  persons  at  various  dates; 
the  first  mortgage  covered  the  en- 
tire property,  and  the  subsequent 
ones  parcels  thereof  less  than  tlie 
wliole.  All  tile  lots  were  sold,  and 
their  proceeds  were  insufficient  to 
pay  ail  tlie  mortgage  delits.  A  con- 
troversy arose  among  th^  junior 
mortgagees  as  to  the  application  of 
the  proceeds  of  the  sale  after  the 
senior  mortgages  were  discharged. 
It  was  lield  tliat  the  several  mort- 
gages siiould  be  paid  pro  rata  in 
the  order  of  their  priority  out  of 
the  amount  realized  from  the  parcel 
or  i)a reels  covered  l)y  each. 


580  SUTHERLAND    ON    DAMAGES.  [§    108 

were  entitled  to  payment  only  after  satisfaction  in  this  manner 
of  the  prior  judgment  and  mortgage  creditors.'^ 

Section  6. 
set-off  of  j  udgments. 

§  198.  Power  to  direct  set-off  inherent.  Courts  of  law  or 
equity  have  power  to  order  mutual  judgments  to  be  set  off 
against  each  other  on  motion  made  for  that  purpose.  Such 
power  is  not  derived  from  or  exercised  in  pursuance  of  the  stat- 
utes which  allow  parties  to  set  off  mutual  debts.  It  follows  the 
general  jurisdiction  of  a  court  over  its  suitors:  it  is  an  equitable 
part  of  such  jurisdiction  and  has  been  frequently  exercised.'^ 
Courts  proceed  upon  the  equity  of  the  statute  of  set-offs;  but  as 
their  power  consists  in  the  authority  they  have  over  their  suit- 
ors, rather  than  any  express  or  delegated  anthority,  their  action 
in  such  cases  has  been  termed  the  exertion  of  the  law  of  the 
court.  Suitors  may  ask  their  interference  in  effecting  such  set- 
off, not  ex  deb  it  0  justitke,  but  only  ex  gratia  curioe.''^ 

§  199.  When  it  will  or  will  not  be  granted.  One  judgment 
will  not  be  ordered  to  be  set  off  against  another,  on  motion,  un- 
less it  is  a  judgment  which  is  conclusive  on  the  party  against 
whom  it  is  rendered,  and  which  the  party  recovering  and  claim- 
ing the  right  to  offset  has  a  clear  right  to  enforce ;  it  must  have 

72  New  York  L.  Ins.  &  V.  Co.  v.  id.  :3!)7 ;  Mason  v.  Knowlson,  1 
V^inderbilt,  12  Abb.  Pr.  458.  Hill,  218;  Harris  v.  Palmer,  5  Barb. 

73  Ricli  V.  Hayes,  101  Me.  324,  ] 05;  Noble  v.  Howard,  2  Hay vv.  14; 
115  Am.  St.  321;  Chase  v.  Wood-  Holmes  v.  Eobinson,  4  Ohio,  90; 
ward,  61  N.  H.  79;  Hovey  v.  Mor-  Meadow  v.  Ilhyne,  11  Rich.  631; 
rill,  id.  9,  60  Am.  Eep.  315;  Brown  i^p.^j^,^,;^  ^  Benjamin,  17  Conn. 
V.  Hendrickson,  39  N.  J.  L.  239;  ^^^_  ^^^^^^^  ^.  gjg^j^^,^.^  j  ^ow.  296. 
Matson  v.  Oberne,  25  111.  App^  ^^^  Zogbaum  v.  Parker,  55  N.  Y. 
213;      Alexander     v.     Durkee,     112  ^ 

N.    Y.    655;     Mitchell    v.    Oldfield,  ^-  •  -.rn   at 

4    T     R.    123;    ^Yilliams    v.    Evans,  '*  ^e    Camp   v.    Thomson,    159    N. 

2  McCord  203;  Tolbert  v.  Harri-  V.  444,  70  Am.  St.  570;  Brown  v. 
son,  1  Bailey  599;  Herrick  v.  Hendrickson,  39  N.  J.  L.  239; 
Bean,   20   Me.   51;    Temple   v.  Scott,  Davidson    v.     Gcoghagan,     3     Bibb, 

3  Minn.  419;  Makepeace  v.  Coates,  233;  Makepeace  v.  Coates,  8  Mass. 
8  Mass.  451;  Greene  v.  Hatch,  451;  Simson  v.  Hart,  14  Johns.  63, 
12    id.    195;     Ames    v.    Bates,    119  757. 


199' 


i>f.(;ai,   t.iQrinATioxs   and  reductions. 


581 


been  reiulcrcd  l>v  ii  anwl  whicli  luid  jmi>(li('l  inii '^  mid  iiin>l  he 
final;  this  right  ciiniiot  he  asseilcd  jjciidiiin-  an  apix'al  fi'iuii  the 
jndgnnent.'^  An  apjx'al,  however,  only  suspends  tlie  right  to 
set-oif,  and  the  court  niav  stav  proceedings  on  the  other  jiidg- 
nient  for  the  protection  of  that  I'ighl  until  I  he  aj)|ieal  is 
determined.''  In  the  exercise  of  this  jnrisdiction  courts  will 
act  upon  the  equitable  as  well  as  legal  interests  and  relations  of 
the  parties.  Applications  for  such  set-off,  not  being  founded  on 
any  statute  or  governed  by  any  lixed  oi-  arbiti'ary  rule,  are  ad- 
dressed to  the  discretion  of  the  court,  ami  its  discretion  will  be 
so  exercised  as  to  do  equity  and  not  to  sanction  fraud'*  or 
oppression.'^    The  fact  that  a  plaiiilitf  against  whom  a  jud<:ment 


75  Harris  v.  Palmer,  5   Bar!).    105. 

76  Pierce  v.  Tattle,  51  How.  Pr. 
193;  Hardt  v.  Sclmlting,  24  Ruu, 
345;  De  Figaniero  v.  Young,  2  Rob- 
ert. 670;  Zerbe  v.  Missouri,  etc.  R. 
Co.,  80  Mo.  App.  414;  Spencer  v. 
Johnston,  58  Neb.  44;  De  Camp  v. 
Thomson,  359  N.  Y.  444,  70  Am. 
St.  570. 

If  a  writ  of  error  does  not  oper- 
ate as  a  supersedeas  an  intention 
to  obtain  the  review  of  a  judgment 
will  not  interfere  with  the  allow- 
ance of  a  set-off.  Sowles  v.  Witters, 
40  Fed.  413.  See  Haskins  v.  Jor- 
dan, 123  Cal.  157. 

77  Pierce  v.  Tuttlc,  supra;  Terry 
V.  Roberts,   15  How.  Pr.  ()5. 

In  Irvine  v.  Mj'ers,  0  Minn.  5t)'2, 
it  was  held  that  where  tlie  riglit  of 
set-off  was  suspended  by  appeal 
after  a  motion  made,  it  miglit  re- 
main undecided  until  the  final  de- 
termination   of   the    appeal. 

In  Blackljurn  v.  Heilly,  48  N.  J. 
L.  82,  it  is  held  that  after  the  af- 
firmance of  a  judgment  and  the  re- 
turn of  the  record  to  the  trial  court, 
the  latter  may  stay  the  execution 
of  such  judgment  for  the  purpose 
of  setting  it  off  against  a  counter 
judgment. 

78  Tolbert   v.   Harrison,   1    Bailey, 


509:     .Moador     v.     ixMiyne,     II     Ki-'h. 

(;:;i. 

79  \\  illiams  v.  Evans,  2  McCord, 
20.').  \\'.  had  obtained  judgment 
against  E.  for  $188;  subsequently 
K.  obtained  a  judgment  in  trover 
against  W'.  for  $240.  W.,  instead 
of  moving  to  have  his  judgment  set 
off  against  the  larger  one  which  had 
been  recovered  against  him,  issued 
a  ca.  sa.  against  E.  and  tlien  as- 
signed Ills  judgment  to  a  third  jter- 
son  for  value.  K.  was  imprisoned 
oil  the  ca.  sa.,  and  so  remained  lui- 
til  lie  died.  At  the  next  term.  \V., 
who  seems  to  have  repossessed  him- 
self of  the  judgment  recovered  by 
liiiii.  iiinMil  to  li;ivc  it  set  off 
ngiiinst  fhat  ()l)(aiiHMl  by  K.  On  a 
motion  to  rescind  an  order  allowing 
such  set-oir,  .\ott.  J.,  said:  "Tlicre 
is  lU)  doubt  liiit  that  tin'  miut  has 
the  power  to  (uder  nuitnal  judg- 
ments to  be  set  off  against  each 
other.  This  is  a  common-law  power, 
and  is  not  derived  from  the  act  au- 
tliorizing  parties  to  set  off  mutual 
debts.  .  If    it   constitute    a 

part  of  the  equitable  jurisdiction 
of  the  court,  it  ouglit  to  l)e  ao  exor- 
cised as  to  do  equity  and  not  to 
sanction  fraud;  and  a  person  who 
wishes    to    have    the    benefit    of    it 


582 


SUTHERLAND    ON    DAMAGES. 


[§    100 


for  costs  lias  beeu  rendered  has  begun  another  action  against  the 
defendant  for  a  larger  amount  will  not  prevent  said  judgment 
being  offset  against  a  judgment  in  favor  of  the  defendant,  since 
the  latter  judgment  would  be  a  proper  set-off  or  counter  claim 
against  such  demand  as  the  plaintiff  holds  against  the  defend- 
ant.*" The  discretion  of  a  court  in  acting  upon  a  motion  to  set 
oft'  judgments  will  not  be  reviewed  if  the  motion  is  denied.*^ 
In  exercising  their  power,  courts  will  consider  the  rights  of 


ought  to  avail  himself  of  the  ear- 
liest opportunity  to  make  his  appli- 
cation, and  not  to  delay  until  the 
interests  of  third  persons  have  be- 
come involved.  If  the  party  in  this 
case  had  made  his  application  at 
the  court  when  his  judgment  was 
obtained,  it  ought  to  have  been 
granted.  He  had  three  methods  of 
proceeding:  one,  that  which  he  is 
now  endeavoring  to  pursue;  another 
by  ft.  fa.  against  the  goods  of  the 
defendants;  and  the  third  bj'  tak- 
ing his  body  in  execution.  He  chose 
the  latter,  and  after  having  made 
his  election  (and  particularly  under 
the  circumstances  of  this  case),  he 
ought  to  be  bound  by  it;  at  least  ho 
can  have  no  high  claim  to  the  as- 
sistance of  the  court  to  relieve  him 
from  the  difficulty  of  his  own  vol- 
untary creation.  It  is  true  a  judg- 
ment is  not  a  negotiable  instrument; 
nevertlieless,  an  assignment  conveys 
an  equitable  interest  to  the  as- 
signee, such  as  a  court  of  law  will 
notice  and  respect  in  all  cases  of 
appeal  to  its  discretion.  Newman 
V.  Crocker;  1  Bay,  246.  A  bond  is 
not  negotiable,  and  yet  this  court 
would  so  far  respect  the  assignee  of 
one  as  not  to  permit  a  judgment 
recovered  upon  it  to  be  set  off 
against  one  recovered  by  the  obligee. 
The  plaintiff,  by  taking  the  body  of 
the  defendant,  had  voluntarily  re- 
linquished every  other  claim  upon 
him;    and  the  claim  which  he  now 


has  upon  his  property  is  revived 
only  by  the  accidental  circumstance 
of  his  death.  Suppose  the  assignee 
of  this  judgment  had  enforced  an 
execution  against  W.  in  the  life- 
time of  E.  and  during  the  time  he 
had  his  body  in  execution,  could 
VV.  have  required  that  money,  while 
in  the  hands  of  the  sheriff,  to  be 
paid  over  to  him?  Certainly  not; 
because,  having  taken  the  body  in 
execution,  he  must  have  been  con- 
tented with  it;  he  could  not  have 
double  satisfaction.  A  release  of  E. 
from  custody  would  have  been  a  re- 
lease of  the  debt.  He  had  a  mild 
and  easy  method  of  enforcing  the 
payment  of  his  debt,  if  he  had 
chosen  to  make  use  of  it.  Instead 
of  which  he  resorted  to  the  most 
rigorous  and  iinfeeling  known  to 
the  law;  like  another  Shylock,  he 
would  have  nothing  short  of  his 
flesh ;  and  having  no  longer  the 
means  of  gratifying  his  vengeance, 
he  now  comes  and  asks  this  court 
to  take  from  a  humane  and  merciful 
creditor  a  vested  right,  to  satisfy  a 
debt  which  he  had  it  in  his  power 
to  receive,  and  which  he  voluntarily 
relinqiiished  to  gratify  a  vindictive 
passion.  The  motion  must  be  grant- 
ed." See  Cooper  v.  Bigalow,  1  Cow. 
206. 

SOWelsher  v.  Libby,  107  Wis.  47. 

81  Chipman  v.  Fowle,  130  Mass. 
352. 


§    199]  LEGAL    LIQUIDATIONS    AND    RF.DITCTIONS.  583 

persons  wlio  nro  lutt  parties;  to  tlio  ad  ion. ^'^  If  a  party  \\]ut  is 
entitled  to  a  set-oft'  has  a  sjjecial  fund  which  is  primarily  ap- 
plicable to  the  satisfaction  of  his  jndgnnent  or  decree  he  will  not 
be  permitted  to  avail  himself  of  his  right  against  the  holder  of 
an  opposing  judgment  or  decree  nntil  such  riiml  is  »'xhaiisted, 
and  then  only  for  any  balance  of  his  (lemaiid  which  is  unsatis- 
fied.*^ A  set-oft'  of  jndgnients  will  not  ho  allowed  if  it  will 
result  in  depriving  a  debtor  of  property  wliicli  is  e.\('iii|it  from 
execution.**  Were  it  otherwise  A.  might  get  judgment  against 
B.,  seize  and  sell  his  exempt  horse  and  obtain  partial  satisfaction 
of  the  judgment  from  the  ])roceeds  of  such  sale.  If  !>.  should 
then  recover  a  judgment  for  damages  against  A.  the  latter  might 
set-oft'  the  unsatisfied  portion  of  his  judgment  against  it.  Thus 
B.  wHiuld  lose  his  horse,  and  A.,  by  a  violation  of  the  law,  would 
collect  a  portion  of  his  judgment  against  an  insohent  dditor. 
B.'s  judgnnent  ought  to  take  the  place  of  his  horse.  But  this 
exemption  from  liability  to  set-off  is  not  to  be  extended  to  judg- 
ments in  favor  of  the  owner  of  exempt  property  for  damages  for 
its  wrongful  taking  in  attachment  proceedings,  the  property 
being  in  his  possession.*^  A  court  of  equity  may  set  off  judg- 
ments when  courts  of  law  cannot  because  they  are  not  between 
the  same  parties.  But  this  will  not  be  done  unless  the  moving 
party  shows  equitable  ground  for  it;  he  must  make  it  ajipear 
that  his  rights  are  superior  to  any  equitable  right  in  favor  of 
the  other  party.*^ 

82Meador  v.  Ehyne,  11  Rich.  631;  Johnson  v.  Hall,  84  Mo.  210.  Con- 
Simmons  V.  Eeid,  ,31  S.  C.  389,  17  tra,  Temple  v.  Scott,  3  Minn.  4U>, 
Am.    St.    36.  ruled  hy  a  divided  court,  and  on  the 

The  lien  of  a  third  party  on  one  tlieory  that  exemption  statutes  are 
of  the  judgments,  arising  subsequent  to  be  strictly  construed ;  a  rule  op- 
to  both  of  them,  does  not  bar  their  posed  to  the  great  weight  of  author- 
set-off.  Park  V.  Hutchinson,  80  Ark.  ity.  Sutherland's  Stat.  Con-st.,  §§ 
]83.  420-422.      Se.-    :\lalIory    v.    Mort.tn. 

SSNuzum    V.    Morris,    25    W.    Va.  21     Barli.    424:     L'aldwcli    v.    Ryan, 

559.    See  Payne  V.  Webb,  29  id.  (527.  210    :\Io.    17.    16    L.R.A.(N.S.)    494. 

84  Rutner  V.  Bowser,  104  Ind.  255;  85  Johnson    v.    Hall.    84    Mo.    210. 

Puett  V.  Beard,  86  Ind.  172,  44  Am.  86  Howe  Mach.  Co.  v.  iiic]<ox.  106 

Rep.    280;    Junker    v.    Hustes,    113  111.  461. 

Ind.   524;    Beckman  v.  Manlove,   18  The  Rhode  Island  statute  govern- 

Cal.    388;    Duff   v.    Wells,    7    Heisk.  ing  the   right   to   set  off  judgments 

17;  CoUett  v.  Jones,  7  B.  Men.  586;  and  executions  applies  only  to  cases 


584 


suTiri<:ELA]sri)  on  damages. 


[§  200 


§  200.  Interest  of  the  real  parties  considered.  The  parties 
beneficially  interested  may  assert  their  right,  and  a  set-off  be- 
tween the  nominal  parties  will  be  refused  where  it  would  be 
prejudicial  to  those  having  equitable  interests.*'''  Thus,  a  court 
will  not  order  a  judgment  against  an  executor  in  his  own  right 
to  be  set  off  against  a  judgment  in  his  favor  on  a  promissory 
note  taken  from  goods  of  his  testator,  sold  by  him,  if  it  appear 
that  the  creditors  or  legatees  of  the  testator  will  be  thereby  prej- 
udiced.®*    A  judgment  debtor  to  the  estate  of  a  decedent  may 


in  which  the  parties  are  reversed 
and  sue  and  are  sued  in  the  same 
right ;  tlie  suits  must  also  be  pend- 
ing at  the  same  time.  Hopkins  v. 
Drowne,  21  R.  I.  80. 

87  Daniel  v.  Bush,  80  Ga.  218. 

88  Tolbert  v.  Harrison,  1  Bailey, 
590.  In  this  case  the  court  say: 
"The  note  given  to  the  executor  for 
a  contract  made  with  him  must  be 
treated  and  considered  as  his  ovi'n. 
In  a  legal  point  of  view  it  was  the 
note  of  Sterling  Harrison  to  Jos. 
S.  Tolbert.  It  is,  however,  unques- 
tionable that  in  fact  it  was  a  part 
of  the  assets  of  the  estate  of  his 
testator;  and  the  e.xecutor  might 
and  ought  to  have  treated  it  as 
such.  He,  on  the  present  occasion, 
claims  that  it  should  be  considered 
as  the  assets  of  the  estate.  This 
is  the  equity  of  the  case;  and  the 
court  of  equity,  in  the  exercise  of 
the  jurisdiction  which  legitimately 
belongs  to  it  over  trustees,  will  fol- 
low a  note  of  hand  as  the  property 
of  an  estate  if  really  taken  for  as- 
sets of  the  estate  sold  by  the  ad- 
ministrator, though  the  note  be 
taken  in  the  private  name  of  the  ad- 
ministrator. Glass  V.  Baxter,  4 
Desaus.  153.  The  question  is 
whether  this  court  is  bound  by  legal 
rules  to  set  off  judgments  in  all 
cases  where  they  are  in  the  same 
right.     It  is  clear  that  it  is  not." 

In  Ames  v.  Bates,  119  Mass.  397, 


W.  purcliased  of  A.  a  claim  against 
B.  pending  an  action  by  A.  upon  the 
claim.  B.  had  previously  purchased 
a  claim  against  A.  and  had  given 
notice  thereof  to  A.  Suit  was 
brought  thereon  by  B.  in  which  W. 
appeared  as  adverse  claimant  of 
funds  in  the  hands  of  B.  summoned 
as  trustee.  At  the  time  of  his 
purchase  of  the  first  claim  'W.  had 
no  knowledge  of  the  claim  against 
A.  Held,  that  judgment  for  the 
plaintiff  in  the  second  action  could 
not  be  set  olT  against  judgment  for 
the  plaintiff  in  the  first  action.  The 
court  say:  "While  there  is  no  ex- 
press statute  authority  for  setting 
off  judgments  where  the  creditor  in 
one  action  is  the  debtor  in  an- 
other, except  in  a  limited  number 
of  cases  (Gen.  Stats.,  ch.  126,  §§  2, 
3,  5),  yet  this  power  has  been  fre- 
quently exercised  by  courts  of  law, 
and  rests  upon  their  jurisdiction 
over  suitors  in  them  and  their  gen- 
eral superintendence  of  proceedings 
before  them.  Makepeace  v.  Coates, 
8  Mass.  451;  Greene  v.  Hatch,  12 
Mass.  195.  Such  a  power  is  only 
to  be  exercised  upon  careful  con- 
sideration of  all  the  circumstances 
of  the  transactions  out  of  which 
the  judgments  arise,  and  in  order 
to  protect  the  just  rights  of  parties. 
In  the  present  case  the  nominal  par- 
ties to  the  judgments  are  not  the 
same,  nor  is  the  equitable  owner  of 


§    200]  LEGAL    LIQUIDATIONS    AND    ItEDUCTlON-S. 


581 


set  oiV  against  such  ju<lg-ineiiL  claims  proved  against  the  estate 
and  which  existed  in  the  debtor's  favor  prior  to  the  death  of  the 
decedent,  but  not  chiinis  assigned  to  hiiii  after  liis  (h'atli.  As  to 
these  last  it  was  said  the  rights  of  the  administrators  and  (he 
creditors  had  become  iixed  by  tlie  decedent's  death ;  the  claim 
against  the  assignee  had  become  assets  of  the  estate  in  which  its 
creditors  and  the  administrators  had  an  interest.'^  A  juilumout 
against  a  decedent  may  not  be  set  otf  against  one  with  which  he 
was  not  connected  and  which  was  bought  by  the  administrator 
Avith  the  funds  of  the  estate.^"  Set-oif  will  not  be  allowed  in 
favor  of  the  nominal  judgment  creditor  where  it  appears  that 
before  the  judgment  was  obtained  the  cause  of  action  had  been 
assigned  to  a  third  person.^^    But  if  the  right  exists  at  the  time 


the  judgment  recovered  in  the  name 
of  Ames  the  defendant  in  tlie  suit 
of  which  Bates  is  the  equitable  own- 
er. But  even  if  Ames  had  con- 
tinued to  be  the  owner  of  the  judg- 
ment recovered  in  his  name,  it 
miglit  well  be  questioned  whetlier 
Bates  should  be  permitted  to  set  off 
against  it  the  judgment  recovered 
by  him  in  the  name  of  Freeman  and 
another,  when  he  could  not  have  set 
off  the  claim  upon  which  the  judg- 
ment was  founded.  The  reason  why 
a  party  is  not  permitted  by  the  stat- 
ute to  set  off  such  claims  may  fair- 
ly be  presumed  to  be,  that  it  is 
not  just  that  one  should  be  en- 
couraged, instead  of  paying  his  own 
debt,  to  seek  out  claims  against  his 
creditor  in  order  thus  to  change  the 
position  of  parties  pendente  lite; 
and  this  reason  is  equally  applicable 
to  judgments  which  may  afterwards 
be  obtained  upon  such  claims.  How- 
ever this  might  be  as  to  Ames  him- 
self, it  is  clear  that  as  to  the  as- 
signee of  Ames,  Bates  should  not  be 
allowed  to  effect  this  change.  When 
the  equitable  rights  of  third  par- 
ties would  be  affected  by  an  offset 
of    this   character    it    is   not   to    be 


made  to  the  injury  of  intervening 
rights  lionestly  acquired,  (ireeno  v. 
Hatch,  ubi  supra;  Zoghainu  v.  Park- 
er, 55  N.  Y.  120;  Gay  v.  Gay,  10 
Paige,  369;  Ramsey's  App.,  2  Watts, 
228." 

In  Carter  v.  Compton,  70  liul.  ."{7, 
T.  obtained  judgments  against  the 
estate  of  8.  on  a  note.  The  execu- 
tors of  S.  held  a  note  of  a  later  date 
against  T.,  which  was  executed  to 
them  in  their  representative  capac- 
ity. Judgment  upon  it  was  set  off 
against  the  first  mentioned  judg- 
ment. 

89  Wikel  v.  Garrison,  82  Iowa, 
453.  See  Martin  County  Nat.  Bank 
v.  Bird,  92  Minn.  110. 

90  Rich  V.  Hayes,  101  Me.  324, 
115  Am.  St.  321. 

91  Swift  V.  Prouty,  64  N.  Y.  545; 
Perry  v.  Chester,  53  N.  Y.  240; 
Mackey  v.  Mackey,  43  Barb.  58; 
Turner  v.  Satterlee,  7  Cow.  480; 
Nash    V.    Hamilton,   3   Abb.   Pr.   35. 

It  is  held  in  Williams  v.  Taylor, 
69  Ind.  48,  that  if  at  the  time  a 
judgment  is  pleaded  in  set-off  the 
equitable  title  to  it  is  in  one  per- 
son and  the  legal  title  in  another, 
the  latter  will  prevail. 


58G 


SUTHEKLAND    ON    DAMAGES. 


I§   200 


of  the  assignment  of  a  judgment,  the  assignee  will  stand  only 
in  the  shoes  of  the  assignor,^^  The  assignee  of  a  judgment  is 
not  affected  by  equities  which  arose  between  the  parties  to  it 
subsequent  to  the  assignment.^^  ISTor  is  the  assignee  of  all 
rights  and  demands  under  a  contract  charged  with  notice  of  such 
of  its  stipulations  as  are  wholly  distinct  from  that  portion  of  it 
which  he  is  concerned  with ;  as  where  an  instrument  provides 
for  closing  up  an  existing,  and  also  for  carrying  on  a  new,  busi- 
ness. The  subject-matters  are  so  disassociated  that  they  are 
several  contracts.  Hence  the  assignee  of  rights  under  the  clause 
relating  to  prosecuting  a  new  business  is.  not  charged  with 
knowledge  of  the  existence  of  a  judgment  against  his  assignor 
on  account  of  a  breach  of  the  other  provision,  and  such  judg- 
ment cannot  be  set  off  against  one  subsequently  rendered  in  his 
favor. ^^  As  between  two  persons  who  hold  judgments  by  assign- 
ments, the  one  prior  in  time  has  the  right  to  be  paid  first  by  the 
judgment  he  holds,  and  such  judgment  is  not  subject  to  set-oft" 


92  Skinker  v.  Smith,  48  Mo.  App. 
9];  Irvine  v.  Myers,  6  Minn.  502; 
Jaeger  v.  Koenig,  32  N.  Y.  Misc. 
244;  Lammers  v.  Goodeman,  G9 
Ind.  76;  McBride  v.  Fallon,  65  Cal. 
301;  Peirce  v.  Bent,  69  Me.  381; 
Wells  V.  Clarkson,  5  Mont.  336; 
Brown  v.  Hendrickson,  39  N.  J.  L. 
239;  Chamberlin  v.  Day,  3  Cow. 
353;  Ferguson  v.  Bassett,  4  How. 
Pr.  168;  Noxon  v.  Gregory,  5  id. 
339;  Cooper  v.  Bigalow,  1  Cow.  56, 
206;  Turner  v.  Crawford,  14  Kan. 
499.  See  Duncan  v.  Bloomstock,  2 
McCord,  318;  Ramsey's  Appeal,  2 
Watts,  228. 

"Cases  often  occur  in  which  the 
set-off  of  one  judgment  against  an- 
other is  allowed  regardless  of  a 
prior  assignment  of  one  to  a  third 
person.  Such  cases  are,  where  the 
assignee  has  taken  the  judgment 
charged  with  notice  of  the  right  of 
set-off  as  an  existing  defense  (Rowe 
V.  Langley,  49  N.  H.  395)  ;  where, 
through    insolvency   of  the   assignor 


at  the  time  of  tlie  assignment,  the 
party  claiming  the  right  of  set-off 
had  no  other  means  of  collecting 
his  debt  (Gay  v.  Gay,  10  Paige, 
369,  375)  ;  and  where,  in  anticipa- 
tion of  an  application  to  make  the 
set-off,  the  assignment  was  made 
for  the  purpose  of  defeating  the 
right.  Duncan  v.  Bloomstock,  2 
McCord,  318.  In  all  cases  where 
the  assignment  is  without  considera- 
tion, not  in  good  faith,  or  fraudu- 
lently made  to  defeat  the  applica- 
tion, the  court  will  direct  the  set- 
off to  be  made.  Cross  v.  Brown,  51 
N.  H.  486;  Hurst  v.  Sheets,  14 
Iowa,  322;  Russell  v.  Conway,  11 
Cal.  93;  Morris  v.  Hollis,  2  Harr. 
4 ;  Duncan  v.  Bloomstock,  supra" 
Hovey  v.  Morrill,  61  N.  H.  9,  60 
Am.  Rep.  315. 

93  Wyvell   V.   Barwise,    43    Minn. 
171. 

94  Howe  Mach.  Co.  v.  Hickox,  106 
111.  461. 


§    201]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS.  587 

by  the  assignor  of  it  who  siibseqiientlj  purchased  an  assigmnont 
of  a  judgment  against  the  holder.^*  The  assignee  of  a  judgment 
which  was  bought  without  notice  of  any  offsets  thereto  cannot 
be  denied  the  right  to  enforce  it  by  injunction  proceedings  bo- 
cause  the  defendant  seeks  to  offset  against  it  a  judgment  recently 
rendered  against  the  plaintiff  upon  deuuxnds  bought  by  him  be- 
fore the  transfer  of  the  judgment  for  the  purpose  of  being  used 
in  offset,  notwithstanding  the  plaintiff  is  insolvent.^^  The  valid 
assigimient  of  a  judgment  does  not  affect  the  judgment  debtor's 
right  to  thereafter  have  a  judgment  in  his  favor  against  the 
assignor  rendered  in  another  action,  before  the  assignment  was 
made,  set  off  against  the  judgment  assigned.^' 

§  201.  Set-off  not  granted  before  judgment.  The  right  does 
not  attach  on  the  recovery  of  a  verdict  merely,  and  if  that  be 
assigned  before  judgment  thereon  is  rendered  it  is  not  subjex't 
to  a  set-off  of  a  judgment  against  the  assignor.^^  7 hit  this  rule 
is  not  to  be  a])plied  with  technical  strictness.  In  a  late  case  it 
was  said :  The  defendant  in  this  action  has  recovered  a  verdict 
against  this  plaintiff  in  a  suit  growing  out  of  the  same  trans- 
action. The  case  came  to  the  law  court  upon  a  motion  for  a 
new  trial,  which  has  been  overruled,  and  judgment  will  be 
ordered  upon  the  verdict — the  announcement  of  the  decision 
being  made  simultaneously  with  this.  The  counsel  for  the 
plaintiff  in  these  cases  has  moved  that  the  judgments,  when  re- 
covered, both  amounting  to  a  less  sum  than  the  judgment  that 
will  be  recovered  by  this  defendant,  be  set  off  against  the  judg- 
ment in  favor  of  this  defendant,  pro  ianfo  This  should  be 
done,  but  not  so  as  to  affect  the  attorney's  lien  upon  the  taxjiblc 
costs  in  each  case.^^ 

95  McAdams  v.  Randolph,  42  N.  98  Graves  v.  Woodbury,  4  Hill, 
J.  L.  332;  Gauelie  v.  Milbrath,  105  55!),  40  Am.  Dec.  290;  Bag<?  v.  Jcf- 
Wis.  355;  Wright  v.  Wright,  70  N.  fcrson  ('.  P.,  10  Wend.  G15;  P.-dpI.' 
Y.  96;  Terney  v.  Wilson,  45  N.  J.  v.  Judges,  etc.,  6  Cow.  598;  Gar- 
L.  282.  rick   v.   Jones,   2   Dowl.   P.   C.   157; 

96  Button  V.  Mason,  21  Tex.  Civ.  Wood  v.  Merritt,  45  How.  Pr.  471; 
App.  389.  See  2  Freeman  on  Judg-  Spencer  v.  Johnston,  58  Neli.  44. 
ments,  §  427;  Lundgreen  v.  Strat-  See  McAdams  v.  Randolph,  42  N.  J. 
ton,  79  Wis.  227.  L.  332;  Patterson  v.  Ward,  8  N.  D. 

97  Benson   v.   Haywood,    SO    Iowa,  87. 

107,  23  L.R.A.  .335.  99  Plowe  v.  Klein,  S9  Me.  37(;. 


588 


SUTHERLAND    ON    DAMAGES. 


[§  202 


§  202.  Assignee  must  make  an  absolute  purchase.  The 
assignee  of  a  judgment,  to  be  entitled  to  assert  this  right  of  set- 
off, must  acquire  the  judgment  absolutely.^  If  the  purchase  is 
made  on  condition  that  the  motion  for  set-off  is  successful,  and 
otherwise  to  be  void,  the  ownership  is  not  acquired  with  suffi- 
cient absoluteness  to  enable  the  assignee  to  use  it  as  a  set-off.^ 
An  assignment  upon  condition  of  a  rescission  of  the  transfer  in 
case  the  assignee  cannot  avoid  a  set-oft"  is  not  sufficiently  ab- 
solute.^ Nor  will  an  assignment  of  a  judgment  to  be  collected 
for  the  assignor,  less  compensation  for  collecting,  confer  the 
requisite  ownership.^  A  party  seeking  to  set  off  a  judgment  in 
his  favor  against  one  recovered  against  him  should  be  the  owner 
of  the  judgment  in  his  own  right.^  The  mutual  judgments 
should  be  in  the  same  right. ^  It  is  immaterial  in  whose  names 
they  were  respectively  recovered;  the  right  of  set-off  exists  be- 
tween the  several  beneficial  owners  and  is  confined  to  them.  It 
is  no  objection  that  the  mutual  judgments  are  not  nominally  due 
to  and  from  the  same  number  of  persons ;  '  if  the  equitable 


1  Jones  V.  Chalfant,  55  Cal.  505. 

2  Butler  V.  Niles,  26  How.  Pr.  (Jl, 
35  id.  329. 

3  Gilman  v.  Van  Slyck,  7  Coav. 
469. 

4  Porter  v.  Davis,  2  How.  Pr.  30. 
It  was  held  in  Butler  v.  Niles, 
26  How.  Pr.  61,  35  Id.  329, 
that  even  if  a  plaintiff,  in  an 
action  to  procure  a  set-off  of  a  judg- 
ment, be  entitled  to  set  off  the  judg- 
ment assigned  to  him  against  one 
recovered  against  himself,  he  can- 
not make  use  of  sucli  assigned  judg- 
ment to  defeat  the  incident  claims 
for  costs  growing  out  of  proceed- 
ings instituted  before  the  assign- 
ment, if  properly  commenced.  Such 
proceedings  may  have  been  legiti- 
mate and  necessary  consequences  of 
the  judgment  when  taken ;  and  he 
has  no  right  to  take  away  the 
foundation  of  such  proceeding,  if 
still  pending,  by  satisfying  the  judg- 
ment  with   those   held   l)y   him.      It 


is  not  equivalent  to  payment  and 
acceptance  in  satisfaction  pendente 
lite. 

5  Mason  v.  Knowlson,  1  Hill,  218. 

6  Holmes  v.  Robinson,  4  Ohio,  90. 

Although  where  one  of  the  par- 
ties in  two  cross-actions  has  as- 
signed his  interest  to  a  third  party 
there  may  be  no  right  to  set  off  the 
judgments,  yet,  where  the  assignee, 
being  the  real  plaintiff  in  one 
action,  is  also  the  real  defendant  in 
the  other,  there  is  such  right. 
Standeven  v.  Murgatroyd,  27  L.  J. 
(Ex.)  425. 

7Id;.Simson  v.  Hart,  14  Johns. 
63,  75;  Pierce  v.  Bent,  69  Me.  381, 
holding  that  a  judgment  in  favor  of 
a  principal  alone  may  be  applied  in 
satisfaction  of  one  against  him  and 
his  sureties. 

In  Brown  v.  Hendrickson,  39  N. 
J.  L.  239,  it  is  said  that  in  testing 
the  right  to  a  set-off  it  is  not  neces- 
sary that  the  judgments  should  be 


203] 


LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


189 


claims  of  many  become  vested  in  one,  tlioy  may  l)e  set  off  against 
sejiarate  demands,  and  vice  rersa.^ 

§  203.  Nature  of  action  immaterial;  foreign  judgments.  Xor 
is  it  material  what  was  the  original  oanse  of  action,  whether  in 
tort  or  contract;  when  a  iinal  jndgment  is  obtained  the  original 
cause  is  merged,  the  judgment  becomes  teclmically  a  contract  of 
record,  and  on  motion  it  may  bo  made  to  iinitmilly  ('(niipensate 
and  satisfy  another.^  Xor  is  it  necessary  that  both  judgments 
should  be  recovered  in  the  same  court.^°  The  motion  should  be 
made  in  the  court  where  the  judgment  against  tlie  moving  j)arty 
was  obtained. ^^  And  the  moving  papers  shouhl  Ix'  (Mitith'd  in 
all  the  causes,  whether  in  the;  same  c(Mirt  or  not.^^    In  some  i-'tates 


in  the  same  right;  it  is  enough  if 
the  judgment  prayed  to  be  set  ofl 
may  be  enforced  at  law  against  tlu- 
party  recovering  the  judgment  to  be 
satisfied  by  tlie  set-oflf,  provided  it 
is  not  in  a  representative  capacity. 
To  the  same  effect,  Stcinker  v. 
Smith,  48  Mo.  App.  91. 

Under  the  Missouri  statute  a 
judgment  in  favor  of  tlie  attacli- 
nient  plaintiff  on  the  cause  of  ac- 
tion counted  on  in  the  attachment 
suit  may  be  set  oflF  against  the  dam- 
ages recovered  l)y  tlie  attachment 
defendant  for  the  improper  attacli- 
ment,  although  such  judgment  is 
against  the  relator  and  another  who 
was  not  a  party  in  tlie  attachment 
proceeding,  since  tlie  judgment 
plaintifl'  lias  a  right  to  receive  satis- 
faction of  his  judgment  from  one  of 
liis  two  judgment  debtors.  State  v. 
Hudson,   86  Mo.   App.   .501. 

8  Id. ;    Butler's  Nisi  Prius,  33fi. 

9  Louisville  &  N.  R.  Co.  v.  Per- 
Icins,  1  Ala.  App.  376;  Puett  v. 
Beard,  86  Ind.  172,  44  Am.  Rep. 
280;  Langston  v.  Roby,  68  Ga.  400; 
Sowles  V.  Witters,  40  Fed.  413,  liold- 
ing  that  a  decree  in  equity  may  be 
set  off  against  a  judgment  at  law; 
Howell  V.  Shands,  3;")  (Ja.  06;  King 
V.  Hoare,  13  M.  &  W.  494,  r)04. 


10  How  V.  Klein,  80  Me.  376; 
Skinker  v.  Smith,  48  Mo.  App.  91 ; 
Aldrich  v.  Blatchford,  175  Mass. 
396,  78  Am.  St.  503;  Robinson  v. 
Kunkleman,  117  Mich.  193;  Taylor 
V.  Williams,  14  Wis.  155;  Kindiall 
V.  Munger,  2  Hill,  364;  Barker  v. 
Braham,  2  W.  Black.  860;  Hall 
V.  Ody,  2  B.  &  P.  20;  Bridges  v. 
Smytli,  8  Bing.  29;  Bristowe  v. 
Xeedliam,  7  M.  &  G.  648;  Coxe 
v.  State  Bank,  8  N.  J.  L.  472;  Noble 
V.  Howard,  2  Hayw.  14;  Ewen  v. 
Terry,  8  Cow.  126;  Ross  v.  Hicks, 
11  Barb.  481;  Irvine  v.  Myers,  6 
Minn.  562.  Contra,  Tenant  v.  Mar- 
maduke,  5  B.  Mon.  76. 

In  Schautz  v.  Kearney,  47  N.  J. 
L.  56,  a  decree  in  admiralty  ren- 
dered by  a  federal  court  was  set  off 
against  a  judgment  recovered  in  a 
state  court. 

11  Brookfield  v.  Hughson,  44  N. 
J.  L.  285;  Taylor  v.  Williams.  14 
Wis.  155;  Dunkin  v.  Vandenbergh, 
1  Paige,  622;  Cooke  v.  Smith,  7 
Hill,  180;  Ross  v.  Hicks,  11  Barb. 
4S1;   Hnssell  v.  Conway,  11   Cal.  93. 

iSAlcott  v.  Davison,  2  How.  Pr. 
44.  In  Nortii  Carolina  tiie  practice 
has  been  to  set  off  judgment  by 
scire  facias.  Noble  v,  Howard,  2 
Hayw.   14. 


590  SUTIIEKLAND    ON    DAMAGES.  [§    203 

the  motion  may  be  made  in  the  court  in  which  one  or  both  of 
the  actions  are  pending.^^  If  the  judgments  are  in  different 
courts  all  difficulty  in  accomplishing  the  practical  result  is  ob- 
viated, if  the  party  desiring  the  set-off  makes  his  application  in 
the  court  where  the  judgment  exists  against  him,  for  the  court 
can  then  make  its  action  in  satisfying,  either  in  whole  or  in  part, 
its  own  judgiuent  conditioned  upon  such  apjilicant  making 
reciprocal  satisfaction  of  the  judgment  in  liis  favor  standing  in 
another  court.  ^* 

Equity  will  afford  relief  to  a  party  against  whom  it  is  sought 
to  enforce  a  foreign  judgment  in  favor  of  a  nonresident  upon 
whom  process  cannot  be  served  in  an  independent  action  in  the 
jurisdiction  in  which  the  dependent  action  on  the  judgment  is 
pending  by  allowing  the  debtor  to  set  oft"  claims  for  unliquidated 
damages  arising  out  of  dealings  between  the  parties.^^  Under 
some  statutes  a  demand  upon  a  simple  contract  may  be  set  off 
against  a  foreign  or  domestic  judgment;  the  statute  of  the  forum 
governing  as  to  the  character  of  the  set-ott".'^^ 

§  204.  Liens  of  attorneys.  In  England  for  a  long  time 
there  were  two  conflicting  rules  as  to  the  right  of  a  judgment 
debtor  to  set  off  a  judgment  in  disregard  of  the  lien  of  his  at- 
torney. Such  right  was  denied  by  the  couTt  of  king's  bench  if 
the  exercise  of  it  affected  the  attorney's  lien  for  costs.^"^  The 
common  pleas  courts  held  that  the  equitable  rights  of  the  parties 
were  superior  to  the  attorney's  lien.^*  In  1853  the  rules  adopted 
made  the  practice  in  the  king's  bench  applicable  to  all  the  courts, 
while  the  judicature  act  of  1873  adopted  the  other  rule.  The  rule 
of  the  common  pleas  has  been  adopted  in  many  jurisdictions 
in    this    country,^^    while    others    follow    that    of    the    king''s 

ispeirce  v.  Bent,  69  Me.  381.  Conn.  110;   Turner  v.  Crawford,  14 

HWelsher  v.  Libby,  107  Wis.  47.  Kan.    499;     Sanders    v.    Gillett,    8 

ispiattner   I.   Co.  v.   Bradley,   40  Daly,     183;     Nicoll    v.     Nicoll,     16 

Colo.   95,   and   cases   cited;    Hubley  Wend.   446;    Roberts   v.    Carter,   24 

Mfg.  &  S.  Co.  V.  Ives,  81  Conn.  244,  How.  Pr.  44;  Brooks  v.  Hanford,  15 

129  Am.  St.  209.  Abb.   Pr.   342;    Hayden    v.    McDer- 

16Leathe  v.  Thomas,  288  111.  246.  mott,  9  id.  14;   People  v.  New  York 

17  Mitchell  V.  Oldfield,  4  T.  R.  123.  C.   P.   C,   1 3   Wend.  649 ;    Hovey  v. 

iSSchoole  V.   Noble,    1   H.   Black.  Rubber  T.   P.  Co.,  14  Abb.  Pr.    (N. 

23.  S.)    66;   Watson  v.  Smith,  63  Iowa, 

19  Benjamin      v.      Benjamin,      17  228 ;    Mosely  v.    Norman,    74    Ala. 


§    204]  LEGAL    LIQUIDATIONS    AND    REDUCTIONS. 


591 


bench.^"  But  where  the  equitable  power  of  a  court  is  invoked  by 
motion  the  statute  of  set-off  is  not  the  obligatory  guide,  and  the 
court,  proceeding  upon  its  own  discretion,  will  snstain  tlio  attor- 
ney's lien  and  give  it  preference.^^  An  attorney  has  a  lion  for  his 
costs  upon  money  recovered  by  his  client  or  awarded  him  in  a 
cause  in  which  the  attorney  was  employed,  in  case  the  money 
has  come  into  his  hands,  or  he  may  stop,  it  m  transilu  by  giving 
notice  to  the  opposite  party  not  to  pay  it  until  his  claim  for  costs 
is  satisfied,  and  then  moving  the  court  to  have  the  amount  there- 
of paid  to  him  in  the  first  instance.  And,  if  notwithstanding 
such  notice,  the  other  party  pay  the  money  to  the  client,  he  is 
still  liable  to  the  attorney  for  the  amount  of  his  lien;  and  the 
latter  in  such  case  will  not  be  prejudiced  by  any  collusive  re- 
lease given  by  his  client.  But  unless  such  notice  is  given  the 
client  may  compromise  with  the  opposite  party,  and  give  him  a 
release  without  the  intervention  of  his  attorney ;  and  he  in  that 
event  can   afterwards  look  to   his  client  only  for   payment.^^ 


422;  Wright  v.  Treadwell,  43  Md. 
212;  Fairbanks  v.  Devereux,  58  Vt. 
359,  3  Atl.  Rep.  500;  Boswortli  v. 
Tallman,  66  Wis.  533. 

In.  New  York,  since  the  enactment 
of  1879,  no  set-off  is  allowed  as 
against  the  lien  of  an  attorney. 
Ennis  v.  Curry,  22  Hun,  584;  Nay- 
lor  V.  Lane,  66  How.  Pr.  400,  18  J. 
&  S.  97. 

20  Howe  V.  Klein,  89  Me.  376; 
Currier  v.  Boston  &  M.  R.  Co.,  37 
N.  H.  223;  Stratton  v.  Hussey,  62 
Me.  286;  Puctt  v.  Beard,  86  Ind. 
172,  44  Am.  Rep.  280;  Dunklee  v. 
Locke,  13  Mass.  525;  Boyer  v. 
Clark,  3  Neb.  161;  Robertson  v. 
Sliutt,  9  Bush,  659;  Carter  v.  Davis, 
8  Fla.  183;  Caudle  v.  Rice,  78  Ga. 
81.  See  Langston  v.  Roby,  68  id. 
406. 

21  Simmons  v.  Reid,  31  S.  C.  389, 
17  Am.  St.  36;  Diehl  v.  Friester,  37 
Ohio  St.  473;  Ward  v.  Wordsworth, 
1  E.  D.  Smith,  598;  Haight  v.  Hol- 
comb,  16  How.  Pr.  163;  Pcckham  v. 


Barcalow,  Lalor's  Supp.  122;  Smith 
V.  Lowden,  1  Sandf.  696;  Gihon  v. 
Fryatt,  2  id.  638;  Sweet  v.  Bartlctt, 
4  id.  661;  Roberts  v.  Carter,  17 
How.  Pr.  341,  24  id.  44;  Martin  v. 
Kanouse,  17  id.  146;  De  Figanierc 
V.  Young,  2  Robert.  670;  Hovey  v. 
Rubber  T.  P.  Co.  14  Abb.  Pr.  (N. 
S.)   66;  Bishop  v.  Garcia,  id.  69. 

22  Graham  Pr.  61 ;  Ex  parte  Kylo, 
]  Cal.  332;  Mansfield  v.  Borland,  2 
Cal.  507 ;  Russell  v.  Conway,  1 1 
Cal.  93;  Wilkins  v.  Batterman,  4 
Barb.  47;  Ten  Broeck  v.  Dc  Witt, 
]0  Wend.  617;  Bradt  v.  Koon,  4 
Cow.  416;  Martin  v.  Hawks,  15 
Johns.  405;  Chapman  v.  Haw,  1 
Taunt.  341  ;  Omerod  v.  Tate,  1  East, 
464;  Turwin  v.  Gibson,  3  Atk.  720; 
Read  v.  Dupper,  6  T.  R.  361;  Wil- 
kins V.  Carmichael,  1  Doug.  101  ; 
Schoolc  V.  Noble,  ]  H.  Black.  23; 
Ackerraan  v.  Ackerman,  14  Abb.  Pr. 
229;  Bishop  v.  Garcia,  14  Abb.  Pr. 
(N.  S.)  69. 


,92  SUTIIEELAND    ON    DAM A(iK.-:.  [§    204 


I 

I 


This  lien  has  sometimes  been  supposed  to  be  confined  to  some 
fixed  and  certain  amount  allowed  to  an  attorney  by  statute,  and 
that  it  does  not  extend  to  a  quantum,  meruit  claim  for  his  serv- 
ices.^^     A  distinction  has  been  made  as  to  the  right  of  set-off  ^ 

when  the  judgments  are  in  the  same  action,  or  in  actions  growing 
out  of  the  same  subject-uuitter,  and  where  the  judgments  are  in 
actions  having  no  connection  with  each  other.  In  the  former 
class  of  cases  the  right  is  generally  deemed  superior  to  the  claim 
of  the  attorney  in  either  action  for  Jiis  services  and  disburse- 
ments ;  ^*  in  the  latter  the  equitable  right  of  the  attorney  who 
has  rendered  services  and  incurred  expenses  in  obtaining  one  of 
such  judgments,  to  be  paid  out  of  it,  is  deemed  superior  to  the 
right  of  the  judgment  debtor  to  have  that  judgment  paid  by 
applying  upon  it  the  judgment  owned  by  him  against  his  judg- 
ment creditor,  the  assignment  being  made  bona  fide  before  the 
right  of  set-off  attaches.^^ 

23  Ex    parte   Kyle,     1     Cal.     332;  pensation,  and  leaving  tlic  measure 

Davenport    v.    Ludlow ,    4    How.    Pr.  thereof  to  the  contraet  of  the   par- 

337;   Benedict  v.  Harlow,  5  id.  347.  ties,   has   not   affected   the    right   of 

But  a  more  reasonable  view,  in  the  ^.j^^  attorney  to  his  lien, 

writer's  judgment,  is  to  be  found  in  24  Yorton    v.    Milwaukee,    etc.    R. 

the   able   opinion    of    Daly,    J.,    in  ^.^^  g2  Wis.  367. 

Ward     V.     Wordsworth,     1     E.     D.  ^^  ^^^^^^^   ^    Milbrath,    105-  Wis, 

Smith,  598,  where  it  is  held  that  the  „^^       t,      •       •               tj      •       ;.,      i7 

'       ,'      ,           ,       r     11     4.  4.   *  355;     Benjamm     v.     Benjamin,     17 

abolition  by  the  code  of  all  statutes  ,i^      t^-,,            tt  ■     +„..     -jv 

,,      ^          .     ,,                      1  Conn.    HO;    Diehl     v.     Friester,    .57 
regulating  the  fees  of  attorneys,  and 

of  all  rules  or  provisions  of  law  Ohio  St.  473;  Wells  v.  IMsam,  40 
preventing  an  attorney  from  agree-  Mich.  21S;  Kinney  v.  Bobison,  52 
ing   with    Ills   client     for     his     com-        Mich.  38!). 


§  205]         pECU.xiAUY  i{j;i'Ki:sE.\TATivJi:  Ob-  vaj.uk.  59:5 

(lUxVi'TEli  VI. 

PECUNIAUV   KKPlv-ESlONTATIVK   OK    \  ALUK. 

SKCTIOiN    ]. 
MONEY. 

§  205.  Charactt'iistics   of    inuncx . 

206.  Payment  to  be  maik'  in   nionry  nl"  <-tiuiitry  ol    |ifrt'(irni;iiict'. 

207.  Payment  in  cnneney. 

208.  Effect  of  changes  in  the  value  of  money. 

209.  Value  of  money  at  time  of  contracting. 

210.  The  legal  tender   act. 

211.  Effect  of  fluctuations  in  currency. 

Section  2. 


PAR    AND    KATE   OE    EXCIIANCiE. 


212.  Par  of  exchange. 

213.  Rate  of  exchange. 


Sectiuw  1. 


MONEY. 


§  205.  Characteristics  of  money.  All  civilized  nations  have 
some  method  or  system  of  ])ecnuiiary  i-emimcration,  hased  upon 
an  arbitrary  unit  of  value  sanctioned  by  law.  \\y  it  accounts 
are  kept,  the  amounts  of  debts  and  judi;Tnents  expressed,  and 
wealth  computed.  They  have,  also,  ^old  and  silver  coins,  eitiier 
representing;'  that  nnit  or  some  multiple  of  it,  or  other  value 
estimated  with  reference  to  it.  These  are  ..f  intrinsic  vahie, 
and  being  made  and  issued  by  the  sovereign  power  are  accej)!.- 
able  to  everybody  and  therefore  have  universal  cnrrency  as  a 
convenient  and  necessary  medium  of  exchange  aiul  jiayincni. 
They  are  money  in  the  strict  sense.  All  pecuniary  t.bligations 
are  measured  by  and  expressed  in  the  value  they  represent, 
and  are  solvable  by  them.  Nor  can  such  obligations  be  other- 
wise liquidated  or  paid,  except  by  agreement,  unless  the  state 
which  has  the  power  to  coin  money  prescribes  some  other  form 
of  legal  money.-  The  precious  metals,  being  valued  according 
Suth.  Dam.  Vol.  I.— 38. 


594  SUTHERLAND    ON    DAMAGES.  [§    205 

to  a  uniform  and  fixed  standard,  are  the  only  proper  measure  of 
value.  Their  value  is  determined  by  weight  and  purity,  and  the 
impress  on  the  coins  is  a  certificate  so  generally  relied  upon  that 
the  pieces  readily  pass  for  their  nominal  value  by  count. 

Money  is  cosmopolitan.  A  contract  which  is  a  money  con- 
tract where  it  is  entered  into  and  to  be  performed  is  a  money 
contract  everywhere.  To  this  extent  the  money  of  one  nation 
is  treated  as  money  by  another,  as  distinguished  from  a  mere 
chattel  or  a  commodity.  Thus,  money  lent  in  India  in  pagodas, 
and  sued  for  in  England  as  money  lent,  was  held  recoverable 
in  that  form.  It  was  contended  that  the  averment  that  the 
defendant  was  indebted  for  "lawful  money  of  Great  Britain" 
was  not  supported;  but  Gibbs,  J,,  said  "the  doctrine  contended 
for  has  been  exploded  these  thirty  years.''  ^  The  real  meaning 
of  such  a  count  was  afterwards  explained  to  be  that  the  defend- 
ant is  indebted  for  money  of  such  a  value  or  amount  in  English 
moiiey.^  So  a  contract  made  and  to  be  performed  in  the  same 
country,  for  the  payment  of  what  is  money  at  the  time  of  con- 
tracting, will  be  held,  a  money  contract  after  that  currency  has 
been  abolished  and  another  entirely  different  has  been  substi- 
tuted. 

§  206.  Payment  to  be  made  in  money  of  country  of  per- 
formance. Contracts  for  the  payment  of  money  are  deemed 
payable  in  the  legal  money  of  the  country  where  payment  is  to 
be  made,  unless  a  contrary  intention  appears ;  that  is,  a  contract 
for  the  payment  within  the  United  States  of  dollars  is  presump- 
tively payable  in  dollars  of  our  decimal  currency.  If  a  contract 
be  made  here,  and  even  not  within  the  law  merchant,  and  be- 
tween citizens  of  the  United  States,  and  to  be  performed  here, 
for  the  payment  of  a  sum  stated  in  the  denominations  of  a 
foreign  currency  it  is  undoubtedly  to  be  treated  as  a  money 
contract,  the  same  as  if  made  and  to  be  performed  in  the  country 
where  such  currency  is  the  legal  money.'  Debts  have  no  situs; 
they  are  payable  everywhere;  and  in  every  country  where  pay- 

1  Harrington  v.  Macmorris,  5  Colglazure,  Sneed,  2 ;  Sheehan  v. 
Taunt.  228.  Dalrymple,   19  Mich.  239. 

2  Ehrenspcrger  v.  Anderson,  3  3  See  Milligan  v.  Marshall,  38 
Ex.  148.  But  see  McLachlan  v.  Pa.  Super.  60;  Mervine  v.  Sailor, 
Evans,   1   Y.   &   J.   380;    Pollock  v.  52  Pa.  18;   Christ  Church  Hospital 


§  207]     PECUNIARY  REPRESENTATIVE  OF  VALUE.         595 

ment  may  he  either  tendered  or  demanded,  they  are  strictly  pay- 
able in  the  legal  currency  or  money  of  that  country,  and  in  no 
other  currency  unless  strictly  at  maturity.  A  sterling  debt  con- 
tracted or  incurred  in  England,  a  debt  payable  in  francs  in- 
curred in  France,  or  a  contraet  payable  in  pistoles  entered  into 
in  Spain,  when  sought  to  be  enforced  or  paid  in  the  United 
States,  is  a  contract  for  an  equivalent  amount  payable  only  in 
the  lawful  money  of  the  United  States.  The  very  currency  in 
which  the  contraet  by  its  terms  was  payable,  if  tendered  in  this 
country  after  maturity,  would  be  no  legal  otfer  of  payment;  it 
would  not  be  a  tender  which  would  stop  interest.  Contracts 
made  abroad,  or  payable  in  foreign  currency,  are  treated  as 
money  contracts;  but  the  money  specified  therein,  if  not  ten- 
dered when  due,  is  no  longer  the  money  in  which  the  damages 
due  would  be  computed,  except  within  the  jurisdiction  where 
such  money  is  the  lawful  currency. 

§  207.  Payment  in  currency.  Bank  bills  and  other  paper 
currency  circulate  as  money.  It  is  not  strictly  such,  for  no  debt- 
or has  a  legal  right  to  discharge  a  money  obligation  with  such 
currency  unless  it  is  made  legal  tender  by  law ;  the  creditor  may 
refuse  to  receive  it;  but  when  it  is  paid  and  received,  it  is  paid 
and  received  as  money.  The  receipt  of  bank  bills,  dollar  for 
dollar,  upon  a  debt,  is  not  conditional  payment,  depending  on 
diligence  of  the  payee  in  presenting  the  bills  to  the  bank  and 
obtaining  legal-tender  funds,  nor  is  it  accord  and  satisfaction.* 

V.    Fueclisel,   54    id.    71;    Mather   v.  ITarley  v.  Thornton,  2  Hill   (S.  C), 

Kinike,  51  id.  425;  Sears  v.  Dewing,  509n.     See  Keating   v.    People,    HiO 

14  Allen,  4]  3.  111.   480,  480. 

4  Solomon  v.  Bank,  13  East,  135;  In   Maynard   v.   Newman,   1   Nev. 

Pickard   v.    Bankes,   id.   20;    Corbit  271,  Beatty,  J.,  said:  "Money  means 

V.  Bank,  2  Ilarr.  235,  30  Am.  Dec.  anything  which   passes    current    as 

635;   Ware  v.   Street,  2  Head,  609;  the    common    medium    of    excliange 

Magee   v.    Carmack,     13     111.     289;  and  measure  of  value  for  other  arti- 

Lightbody     v.     Ontario     Bank,     11  cles,   whether    it    be    the    bills     of 

Wend.    1;    Ontario   Bank   v.   Light-  private  or  incorporated  banks,  gov- 

body,    13    id.    301;    Wainwright    v.  ernment    bills    of    credit,    treasury 

Webster,   11   Vt.   576,   34   Am.   Dec.  notes    or    pieces    of    coined    metal. 

707;   Fogg  v.  Sawyer,  9  N.  H.  365;  Money  is  anything    which    by    law, 

Frontier  Bank  v.  Morse,  22  Me.  88,  usage   or   common    consent   becomes 

38  Am.  Dec.  284;  Westfall  v.  Braloy,  a   general    medium     by     which     the 

10  Oliio  St.  188,  75   Am.  Dec.  509;  value  of  other  commodities  is  meas- 


596 


S[JTIIEKLAA'I»    (-)iM    J) AM  AGES. 


[§  207 


A  contract  payable  in  currency  or  in  funds,  qualified  by  any 
term  which  imports  money,  is  a  money  contract.  A  check  for 
"current  funds"  calls  for  current  money — par  funds,  money 
circulating  without  discount.^    This  term,  as  well  as  ''currency," 


ured  and  denominated.  Paper  money 
is  distinguishable  from  other  nego- 
tiable paper,  such  as  notes,  bills  of 
exchange,  etc.,  because  it  is  always, 
after  once  put  in  circulation,  pay- 
able to  bearer,  not  to  order;  because 
it  is  made  to  repesent  convenient 
amounts  for  the  ordinary  transac- 
tion of  business,  is  printed  and  writ- 
ten on  paper  not  easily  worn  out, 
and  therefore  capable  of  being 
passed  from  hand  to  hand  for  a 
long  time  without  destruction.  By 
general  consent  it  is  used  and  treat- 
ed as  money  and  not  as  negotiable 
paper.  If  one  indorses  his  name  on 
such  a  note  he  does  not  thereby  be- 
come responsible  for  the  insolvency 
of  the  bank,  but  merely  guarantees 
that  the  note  is  not  a  coxmterfeit. 
Neither  the  courts  of  law,  nor  the 
community,  treat  such  paper  as 
negotiable  securities,  but  as  money, 
something  which  is  tised  as  a  gen- 
eral representative  and  measure  of 
values."  Woodruff  v.  Mississippi, 
OG   Miss.   298. 

A  genuine  silver  coin  Avorn  smooth 
by  use,  not  appreciably  diminished 
in  weight  and  identifiable,  is  a  legal 
tender.  Jersey  City  &  B.  R.  Co.  v. 
Morgan,  52  N.  J.  L.  60,  8  Am.  Neg. 
Cas.  510.  See  United  States  v. 
Lissner,    12   Fed.   840. 

A  genuine  silver  coin  of  the  Unit- 
ed States,  distinguishable  as  such, 
though  somewhat  rare  and  differing 
in  appearance  from  other  coins  of 
that  government  of  like  denomina- 
tion and  of  later  dates,  is  a  legal 
tender.  Atlanta  Con.  St.  R.  Co.  v. 
Keeny,  99  Ga.  266,  8  Am.  Neg.  Cas. 
148,  3.3  L.R.A.  824. 


A  statute  requiring  an  officer  to 
pay  out  the  same  moneys  received 
and  held  by  him  by  virtue  of  his 
office  does  not  include  only  coin  and 
currencj'  in  circulation  as  money. 
Money,  it  was  said,  is  a  generic 
term,  and  may  mean  not  only  legal 
tender  coin  and  currency,  but  also 
any  other  circulating  medium  or 
any  instrument  or  token  in  general 
use  in  the  commercial  world  as  the 
representatives  of  value.  It  in- 
cludes whatever  is  lawfully  and 
actually  current  in  commercial 
transactions  as  the  equivalent  of 
legal  tender  coin  and  currency. 
Certificates  of  deposit  or  other 
vouchers  for  money  deposited  in 
solvent  banks  payable  on  demand 
are  a  most  convenient  medium  of 
exchange  and  are  extensively  used 
in  commercial  and  financial  transac- 
tions to  represent  the  money  thus 
deposited.  State  v.  McFetridge,  84 
Wis.  473,  20  L.R.A.  223;  State  v. 
Hill,   47   Neb.   450,   537. 

5  Klauber  v.  Biggerstaff,  47  Wis. 
551,  32  Am.  Rep.  773;  Marc  v.  Kup- 
fer,  34  111.  286.  Contra,  Huse  v. 
Hamblin,  29  Iowa,  501,  4  x\m  Rep. 
Am.  Rep.  244. 

That  term  was  held  to  have  a 
specific,  legal  and  well  known  mean- 
ing which  cannot  be  contradicted  or 
explained  by  parol.  See  Moore  v. 
Morris,  20  111.  255. 

In  Phoenix  Ins.  Co.  v.  Allen,  11 
Mich.  501,  83  Am.  Dec.  756,  it  was 
held  that  a  note  payable  in  "cur- 
rent funds,"  in  the  absence  of  all 
evidence  shoWing  that  anything  else 
is  current  at  the  place  of  payment, 
must    be   regarded    as   payable   only 


§    208]  PECUJSIABY    RKPRESEXTATIVE    OF    VALUE.  597 

excludes  depreciated  paper  money. ^  A  note,  payal)l(>  in  '•cnr- 
rent  Florida  money"  is  payable  in  good  fnnds.'  '*('aiuul;i 
currency"  is  equivalent  to  lawful  money  of  Canada.^ 

§  208.  Effect  of  changes  in  the  value  of  money.  The  amount 
due  by  contract  is  sometimes  subject  to  question  by  reason  of 
fluctuations  in  the  value  of  the  money  in  which  the  contract  was 
made  payable.  These  fluctuations  may  be  caused  by  tlie  state 
debasing  the  coins  wliicli  represented  that  iikhicv,  oi'  l)y  arliilra- 
ry  changes  in  the  value  of  existing  denominations  of  the  legal 
currency;  and  so  the  value  of  paper  money  will  rise  and  fall 
with  the  fluctuations  in  the  credit  of  its  maker.  Suppose  a  con- 
tract for  the  ])ayment  of  $100  made  while  llie  present  dcciiiuil 
system  is  in  force;  and  while  that  contract  is  pending  cDiigrcss 
revises  that  system  and  retains  a  dollar  as  a  unit  of  value  repre- 
senting only  fifty  cents.  Uninfluenced  by  any  provision  that 
the  new  dollar  shall  be  a  legal  tender  for  all  debts  at  their 
nominal  value,  would  a  hundred  of  these  dollars  discharge  the 
principal  of  the  debt  under  the  supposed  contract  ?  The  in- 
justice of  holding  the  aflirmative  is  apparent.  The  new  dollars 
would  not  be  those  of  the  contract ;  by  paying  a  hundred  of  them 
the  promisor  does  not  pay  the  value  which  he  undertook  to  pay, 
and  which  was  expressed  by  the  contract.  He,  of  course,  would 
be  entitled  to  pay  in  the  money  which  was  lawful  and  cui'i'ent 
when  the  contract  required  payment  to  be  made;  but  as  the 
word  "dollar"  is  but  a  representative  of  value,  that  value  should 
be  ascertained  by  the  legal  sense  of  the  term  when  the  contract 
was  made.     Though  the  parties  contracted  with  a  knowledge  of 

the  power  of  congress  to  make  the  subsequent  changes,  it  does 

I 

in    such    funds    as    are    current    by  tinction  between  a  note  for  so  many 

law.  dollars   in   currency  and   one  for  so 

"Current     money"     means     "cur-  ,„jj„^.  dollars  "payable  in  currency." 

rency  of  the  country,"   whatever   is  jfnipr    v.    McKinney,     ii     Lea,     !•:?; 

intended  to  and  does  actually  cir-  Commissioners  v.  '  McCormick,  4 
eulate  as  money;    every    species    of 

coin    or   currency;    the    specification  .      ,.  ,,   ,r     o     r.    t         ^ 

^    ,   „          .                  ^-           ..,    X,  6Sprin<rfield   ^L   &    F.   Ins.  Co.   v. 

of  dollars  in  connection  with  tliose  ■       "^ 

,       .                        +1  „  Tincher,    .'50    111.    :i!M1 :     Webster    v. 

words  serves    only    to    measure  tlie  ' 

quantity  of  the  notes   or  currency,       Pierce,  So  111.  1.i8. 

not  their  value,  which  may  be  ascer-  7  Williams  v.  Moseley,  2  Fla.  'MH. 

tained   by   proof.     There   is  no   dia-  8  Black  v.  Ward,  27  Mich.  191. 


598 


SUTHERLAND    ON    DAMAGES. 


[§   208 


not  follow  that  they  impliedly  agi-eed  that  the  value  stipulated 
to  be  paid,  as  fitly  expressed  in  the  contract,  should  be  modified 
by  an  arbitrary  change  in  the  meaning  of  the  terms  which  had 
been  employed  to  express  their  intention.  This  view  is  so  ob- 
viously just  that  it  is  a  matter  of  surprise  it  should  ever  have 
been  questioned.^ 


9  See  2  Daniel  on  Neg.  Tnst.,  § 
1214;  Story's  Confl.  Laws,  §§  313, 
313a. 

The  case  of  Mixed  Moneys,  Davis, 
28,  rests  on  a  contrary  view.  A 
bond  was  given  for  "flOO  sterling 
current  and  lawful  money  of  Eng- 
land," to  be  paid  in  Dublin,  Ire- 
land. Between  the  time  of  making 
the  bond  and  its  becoming  due, 
Queen  Elizabeth  recalled  the  exist- 
ing currency  in  Ireland  and  issued  a 
new  debased  coinage  called  mixed 
money,  declaring  it  to  be  lawful 
currency  in  Ireland.  Of  this  de- 
based coin  a  tender  was  made  in 
Dublin,  and  it  was  held  good.  In 
a  note  to  §  313a  of  Story's  Confl. 
Laws,  it  is  said:  "The  court  do  not 
seem  to  have  considered  that  the 
true  value  of  the  English  current 
money  might,  if  tliat  was  required 
by  the  bond,  have  been  paid  in 
Irish  currency,  though  debased,  by 
adding  so  much  more  as  would 
bring  it  to  the  par.  And  it  is  ex- 
tremely difficult  to  conceive  how  a 
payment  of  current  lawful  money  of 
England  could  be  interpreted  to 
mean  current  or  lawful  money  of 
Ireland,  when  the  currency  of  each 
kingdom  was  different,  and  the 
royal  proclamation  made  a  distinc- 
tion between  them,  the  mixed  money 
being  declared  the  lawful  currency 
of  Ireland  only.  Perhaps  the  de- 
sire to  yield  to  the  royal  prerogative 
of  the  queen  a  submissive  obedience 
as  to  all  payments  in  Ireland  may 
account  for  a  decision  so  little  corn- 
sonant  with  the  principles  of  law  in 


modern  times.  Sir  William  Grant, 
quoting  Vinnius,  in  Pilkington  v. 
Commissioner  for  Claims,  2  Knapp, 
18  to  21,  affirms  the  better  doc- 
trine. 'Tie  (Vinnius)  takes  the  dis- 
tinction, that  if,  between  the  time  of 
contracting  the  debt  and  the  time 
of  its  payment,  the  currency  of  the 
country  is  depreciated  by  the  state, 
that  is  to  say,  lowered  in  its  in- 
trinsic goodness,  as  if  there  were  a 
greater  proportion  of  alloy  put  into 
a  guinea  or  a  sliilling,  the  debtor 
should  not  liberate  himself  by  pay- 
ing tlie  nominal  amount  of  his  debt 
in  the  debased  money;  that  is,  he 
may  pay  in  the  debased  money, 
being  the  current  coin,  but  he  must 
pay  so  much  more  as  will  make  it 
equal  to  the  sum  he  borrowed.'  But 
lie  says  (and  this  seems  contradic- 
tory of  the  foregoing),  if  the  nomi- 
nal value  of  the  currency,  leaving 
it  unadulterated,  were  to  be  in- 
creased, as  if  they  were  to  make 
the  guinea  pass  for  30s.,  the  debtor 
may  liberate  himself  from  a  debt  of 
£1  10s.  by  paying  a  guinea,  although 
he  borrowed  tlie  guinea  when  it  was 
but  21s."  And  the  case  of  Reynolds 
v.  Lyne's  Ex'r,  3  Bibb,  340,  is  in 
accord  witli  that  principle.  A  con- 
tract was  made  when  a  dollar  was 
5s.  9d.  for  the  payment  of  a  sum 
at  a  future  day  on  the  performance 
of  a  concurrent  act  of  the  payee. 
Before  the  money  became  payable, 
the  state  where  the  contract  was 
made  enhanced  the  value  of  tlie  dol- 
lar to  6s.  Subsequently  payments 
were    made    and    a    dispute    arose 


§   200] 


I'KCUNIAKY    REPRESENTATIVE    OF    VAEUE. 


199 


§  209.  Value  of  money  at  time  of  contracting.  WIkmi  a 
bill  is  (li'awn  in  one  country  payable  in  and  in  tin;  coin  ot"  an- 
other, the  value  of  which,  intermediate  the  drawiiii;-  and  \n\y- 
ment,  is  reduced  by  the  -govern nient,  it  has  l)een  held  that 
payment  should  be  nuide  according-  to  tlie  value  of  ihe  money  at 
the  time  the  bill  was  drawn. ■'^  The  common  law  cannot  be 
deemed  settled  on  this  ])oint;  nor  are  the  writers  on  the  civil 
law  in  accord  upon  it.  The  opposite  view  is  apparently  based 
on  the  assumption  that  in  money  we  do  not  regard  the  coins 
which  constitute  it,  but  only  the  value  which  the  sovereignty 
has  been  pleased  that  they  shall  siguify.^^  But  coins  have,  in 
the  world's  exchanges,  an  intrinsic  value  which  no  sovereignty 
can  affect  by  arbitrary  regulation.  And  if  by  a  regulation  con- 
currently adopted  by  all  nations  the  coins  of  each  were  uniformK- 


wlietluT  tlie  money  paid  should  bo 
estimated  at  the  rate  of  currency 
wlien  the  money  was  paid,  or  wlien 
the  contract  was  made.  Finally, 
the  obligation  in  question  was  given 
for  a  balance  of  the  original  debt 
remaining  by  estimating  the  pay- 
ment according  to  the  value  of  a 
dollar  at  the  date  of  the  contract, 
viz,  5s.  Qd.,  for  which  judgment  at 
law  had  been  rendered.  The  ques- 
tion arose  on  a  bill  in  equity  for 
relief  on  the  ground  of  mistake 
against  that  obligation  and  the 
judgment  founded  upon  it.  Judge 
Owsley  said:  "When  the  original 
obligation  .  .  .  was  made  the 
legislature  of  Virginia  had  the 
power  to  regulate  the  currency  of 
their  coin  within  the  limits  of  tliat 
state;  and  as  the  contract  .  .  . 
was  made  within  the  limits  of  that 
state,  the  promise  ...  to  pay 
in  current  money  of  Virginia  must 
have  been  agreed  on  with  a  knowl- 
edge of  the  state  sovereignty,  and 
subject  to  its  control  in  regulating 
the  currency.  We  are  of  the  opin- 
ion, therefore,  that  the  original  ob- 
ligation    .     .     .     might    have    been 


satisfied  by  payment  in  current 
money  at  its  value  wlien  I^yne  be- 
came entitled  to  demand  payment;" 
and  that  relief  was  granted  against 
the  judgment. 

10  Du  Costa  V.  Cole,  Skin.  272; 
Chitty  on  Bills,  *399.  See  Anony- 
mous,  1  Hayw.    (by  15att.)    354. 

A  will  speaks  from  the  time  of 
the  testator's  death,  and  a  legacy  of 
a  certain  number  of  dollars  is  pay- 
able in  such  dollars  as  were  tlien 
standard.  Graveley  v.  Graveley,  2.1 
S.  C.  1,  60  Am.  Rep.  478. 

If  at  the  time  a  contract  whicli 
provides  for  its  discharge  in  law- 
ful silver  money  is  made  silver 
coins  of  all  denominations  are  legal 
tender,  the  fact  that  suhseijucntly 
such  coins  are  a  legal  tender  for 
only  a  small  projiortion  of  the 
amount  due  does  not  ])rovent  tlie 
payment  of  the  ol)ligation  in  the 
manner  stipulated.  Parish  v.  Koh- 
ler,  11   Phila.  346. 

Damages  are  assessable  in  the 
same  kind  of  money  as  tiie  contract 
calls  for.  Martin  v.  Evans,  14 
Pliila.  122. 

11  See  Story  Confl.  Laws,  §  3136. 


000  8UTliElJLAND    OiV    DAMAGES.  [§    200 

either  debased  or  ciihanecd  in  value  without  a  eorrespouding 
change  of  their  intrinsic  vahie,  the  change  wouh:l  l)c  iuiuiediate- 
]j  followed  by  an  equal  advance  or  decline  in  the  price  of 
property.  If  the  change  were  made  in  the  value  of  the  coins  of 
one  country  only  it  would  be  at  once  succeeded  by  a  fluctuation 
in  prices  of  property  measured  by  it,  showing  that  their  purchas- 
ing power  had  undergone  no  essential  modification ;  and  the 
same  conclusion  would  result  from  a  comparison  of  the  value  of 
such  coins  with  the  coined  money  of  other  nations.  When  a 
contract  is  made  for  the  payment  at  a  future  day  of  a  given 
amount  of  money  in  specified  legal  denominations,  having  at 
the  date  of  the  contract  a  fixed  legal  value,  are  not  the  intention 
and  legal  obligation  of  the  parties  to  be  ascertained  by  the  import 
at  that  time  of  the  terms  used  ?  Undoubtedly  a  debt  created  by 
contract  which  can  be  paid  with  money  can  be  satisfied  by  what- 
ever medium  of  payment  is  legal  tender  at  the  time  it  is  due 
and  payable, ^^  if  paid  then ;  and  it  may  be  added,  that  tyt  all 
times  afterwards  it  will  be  solvalde  in  any  money  which  for  the 
time  being  is  legal  tender  at  the  place  where  payment  may  be 
demanded  or  tendered,  whether  it  l)e  the  place  of  contract  or 
elsewhere.^^ 

The  legal  currency  which  may  be  applicable  at  the  place  of 
contract  when  the  debt  becomes  due  and  is  actually  demanded, 
or  sought  by  tender  to  l)e  paid,  may  be  as  unlike  that  mentioned 
in  the  contract  as  though  the  demand  of  payment  or  tender  were 
made  in  another  coiuitry.  Upon  general  principles  and  legal 
analogies  the  value  should  be  ascertained  by  the  legal  reading 
of  the  contract  at  the  time  it  was  made,  and  this  is  payable  in 
any  currency  which  is  legal  tender  when  payment  is  actually 
made.^*  If  when  and  where  payment  is  made  the  currency  con- 
sists of  coins  of  the  same  or  a  different  name,  and  represent 

12  Higgins  V.  Bear  River  &  A.  W.  tlie     mediura     in     which     payments 

&   M.   Co.,   27    Cal.    153;    Wilson   v.  may    be   made."      San    Juan    v.    St. 

Morgan,   4   Robert.   58.  John's    G.    Co.,    195    U.    S.    510,   49 

"The  general  rule,  under  both  the 
common  and  the  civil  law,  is  that 
in   the  absence   of   a    stipulation    to 

the  contrary  the  character  of  money  Wash.   (Va.)   26. 

which   is  current  at  the  time  fixed  ^*  FJionson  v.  Rodes,  7  Wall.  229, 

for    performance    of    a    contract    is  2  9  L.  ed.  143. 


L.  cd.  299,  25  Sup.  Ct.  ]08. 

13  Downman       v.       Downman,       1 


§  210]     PECrNIARY  KKPRESEXTATIVE  OF  VALUE.         001 

different  values  from  those  named  in  the  contract,  or  the  same 
values,  but  have  been  either  debased  or  the  contrary,  the  ])ar 
should  be  ascertained  of  the  money  of  the  contract,  and  that  par 
should  be  the  measure  of  the  amount  due.  This  (juestion  may 
be  precluded  by  the  new  currency,  or  that  wliich  is  oifered  in 
payment  being  made  a  lawful  tender  for  the  particular  debt  at 
the  nominal  vah;e  of  such  currency.  Under  siicji  logishitioii, 
these  general  views  have  but  a  subordinate  iullucuci^;  the  ])i'ac- 
tical  ([uestitni  then  l)eiug  what  is  the  effect  of  the  statute. 

§  210.  The  legal  tender  act.  Under  the  legal  tender  law 
of  1862  the  value  of  the  dollar  was  not  changed,  but  a  new  legal 
representative  of  it  was  introduced  as  a  medium  of  |)ayiii(Mit. 
Paper  money  in  the  form  of  the  government's  promise  Id  |)ay 
was  issued  and  declared  to  be  legal  tender  for  all  debts,  public 
and  private,  with  certain  exceptions  of  the  former.  'Vlio  coin- 
age, which  had  previously  been  the  exclusive  legal  tender,  was, 
however,  still  retained  as  money.  During  the  first  years  after 
the  issue  of  this  paper  currency,  owing  to  the  situation  of  the 
country,  and  doubtless  to  the  circumstance  that  no  time  was 
fixed  for  its  redemption  in  specie,  it  became  de))reciated ;  that 
is,  gold  and  silver  money  was  largely  at  a  premium.  As  green- 
backs' were  a  legal  tender  for  all  del)ts  payable  in  money  gen- 
erally they  became,  of  course,  the  ordinary  currency,  and  were 
thereby  made  the  legal,  as  they  were  the  nominal,  equivalent, 
dollar  for  dollar,  for  the  payment  not  (ml}-  of  all  subsequent  but 
also  all  antecedent  debts.^^  The  dilTerence  in  mai-kct  \alne 
could  not  be  recognized  when  the  paper  dollar  was  oll'ci'cd  in 
payment  of  any  debts  to  which  it  was  applicable  by  law.  The 
court  said:  "A  court  cannot  say  jiulicially  that  one  kind  of 
money  made  a  legal  tender  is  of  greater  or  less  value  than  an- 
other; nor  can  evidence  be  received  to  prove  a  difference." 

15  Legal  Tender  Cases,     32    Wall.  ton,   27    id.   420;    Melnliill   v.   Od.dl, 

4.57,  20  L.  ed.  287;  Dooley  v.  Smitli,  02    111.   109;    Blacl<   v.   Lusk,   GO   id. 

13  Wall.  604,  20  L.  ed.  r)47 ;   Kn^Un-  70;   IMorrow  v.  Rainey,  r^8   id.  357; 

V.   Waller'    14   Wall.   207,   20   L.   ed.  Clianil)lin    v.    P.lair.    id.    38;');    Long- 

891;    Bowen  v.   Claik,  40  Ind.  40.");  wortli  v.  IMiteliell,  20  Oliio  St.  334; 

Reynolds  v.  Bank,  etc.,  18  id.  407;  Bolloc  v.  Davis,  38  Cal.  243. 
Thayer  v.  Hedges,  23  id.  141  ;  Brown  16  ("arpentier  v.  .\therton,  2.')  Cal. 

V.  Welch,  26  id.  110:    Bank  v.  Bur-  r)04 ;    IJeese  v.   Stearns,   29    id.  273; 


602 


SUTHERLAND    ON    DAMAGES. 


[§  210 


The  legal  equivalence  in  value  of  coined  money  and  greenbacks 
is  more  absolutely  asserted  by  the  early  than  Ijy  the  later  deci- 
sions." In  an  action  for  specific  performance  the  plaiutiif  had 
a  verdict ;  and  in  September  1800,  deposited  the  purchase-money 
in  court,  in  gold  to  be  taken  out  by  the  defendant  on  filing  his 
deed.  The  prothonotary  deposited  the  money  with  reliable 
bankers  to  his  own  credit.  They  employed  the  money  as  they 
did  other  deposits,  without  profit  as  coin;  it  was  always  subject 
to  the  prothonotary's  draft.  The  defendant  filed  his  deed  after 
the  passage  of  the  legal-tender  law,  and  the  prothonotary  offered 


Spencer  v.  Prindle,  28  id.  276;  Toett 
V.  Stearnes,  31   id.  7S. 

17  In  Buchegger  v.  Sliultz,  13 
Mich.  420  (1805),  it  was  held  that 
the  act  of  congress  making  treasury 
notes  a  legal  tender  in  payment  of 
private  debts  was  not  designed  to 
confer  a  personal  privilege  upon 
debtors,  but  was  based  upon  princi- 
ples of  state  policy,  and  an  agree- 
ment between  parties  waiving  its 
provisions,  and  requiring  a  debt  to 
be  paid  in  gold,  is  illegal,  and  can- 
not be  sustained.  See  Linn  v. 
Minor,  4  Nev.  4G2   (1868). 

In  Kimpton  v.  Bronson,  45  Barb. 
618,  Daniels,  J.,  said:  "The  law  has 
impressed  them  (treasury  notes) 
with  a  legal  value  precisely  equal 
to  that  of  gold  and  silver  of  the 
same  denominations  for  the  purpose 
of  paying  individual  debts  with 
them,  and  it  cannot  permit  a  dis- 
crimination against  them  in  favor 
of  gold  and  silver,  without  allowing 
its  authority  to  be  substantially  an- 
nulled. However  the  fact  may  be 
as  to  their  value  as  a  mere  com- 
modity, for  the  purpose  of  paying 
individual  debts  a  treasury  note  is 
as  completely  a  legal  dollar  as  a 
piece  of  metal  of  a  certain  weight 
and  quality,  impressed  as  the  law 
directs,  is  a  legal  dollar.  The  one 
is   no   more   so  than   the   other   for 


tliose  purposes  that  the  laws  have 
declared  them  to  be  of  eijual  value. 
Where  these  laws  are  supreme,  tliat 
value  must  be  observed  and  secured 
by  courts  of  justice.  If  the  obliga- 
tion in  this  case  had  been  such  as 
required  the  delivery  of  one  thous- 
and eiglit  hvmdrcd  gold  dollars,  and 
not  as  it  was,  one  thousand  eight 
hundred  dollars  in  gold  or  silver 
coin,  its  construction  must  have 
been  different.  Further,  it  would 
have  been  in  no  sense  a  debt  within 
the  contemplation  of  these  statutes, 
and  could  not  be  affected  by  their 
provisions  declaring  treasury  notes 
a  lawful  tender  for  the  payment  of 
debts."  Such  was  the  general  cur- 
rent of  decisions ;  namely,  that  all 
debts,  whether  payable  in  terms  in 
gold  and  silver  as  money,  or  in  dol- 
lars generally,  were  solvable  in 
greenbacks.  Shollenberger  v.  Brin- 
ton,  52  Pa.  1 ;  Appel  v.  Woltmann, 
38  Mo.  194;  Riddlesbarger  v.  Mc- 
Daniel,  id.  138;  Wilson  v.  Morgan, 
4  Robert.  58,  I  Abb.  Pr.  (N.  S.) 
174,  30  How.  Pr.  386;  Murray  v. 
Gale,  5  Abb.  Pr.  (N.  S.)  236,  52 
Barb.  427;  Whetstone  v.  Colley,  36 
111.  328;  Humphrey  v.  Clement,  44 
111.  299;  Galliano  v.  Pierre,  18  La. 
Ann.  10,  89  Am.  Dec.  643;  Munter 
V.  Rogers,  50  Ala.  283. 


§  210]         rp:cuNiARY  imopkkskntative  of  value.  603 

to  pay  liiiii  tlic  itmiicy  in  coui't  in  loj^al  lender,  \\lii<-li  lie  refused 
and  brought  trover  for  the  gokl ;  held,  that  he  coiikl  not  re- 
cover.^' 

The  earlier  eases  proceeded  on  the  eonstrnetiim  thai  ^Uill 
debts''  in  the  legal  len(h'r  law  of  18(!2  imduded  all  jjocnniary 
liahilitics,  whetlier  origiuating  in  contracts  expressly  to  ])a_v  in 
gold  and  silver,  or  in  'Mollars"  generally.  Ihit  the  snbjcct  re- 
ceived a  different  treatment  when  it  came  to  be  considered  in 
the  national  snprcnie  court.  That  court  said  congress  must 
have  had  in  contemplation  debts  originating  in  contract,  or  de- 
nuinds  carried  into  judgment,  and  only  debts  of  this  character. 
And  the  term  did  not  include  taxes  levied  under  state  laws;  ^^ 
nor  obligations  payable  expressly  in  coined  money.  Referring 
to  a  tender  of  United  States  notes  in  18G5  on  a  debt  contracted 
in  1851,  payable  by  the  language  of  the  contract  in  gold  and 
silver  coin,  Chase,  C.  J.,  said  there  were  two  descriptions  of 
money  in  use  at  the  time  the  tender  was  made,  both  authorized 
by  law,  and  both  made  legal  tender  in  payments.  The  statnte 
denomination  of  both  descriptions  was  dollars;  luit  they  were 
essentially  unlike  in  nature.  The  coined  dollar  was  a  piece  of 
gold  or  silver  of  a  prescribed  degree  of  purity,  weighing  a  pre- 
scribed number  of  grains.  The  note  dollar  was  a  promise  to  pay 
a  coined  dollar;  but  it  was  not  a  promise  to  pay  on  detnand,  nor 
at  any  fixed  time,  nor  was  it  in  fact  convertible  into  a  coined 
dollar.  It  was  impossible,  in  the  nature  of  things,  that  these 
two  dollars  should  be  actual  equivalents  of  each  other,  nor  was 
there  anything  in  the  currency  acts  pnrporting  to  make  them 
such.^"     Except  for  the  payment  of  debts,  in  the  sense  of  the 

18  Aurentz  v.  Poitor,  .^(i  Pa.   115.  placf  of  shipniciit  hcinj,'  in  Canada, 

19  Lane  County  v.  nrej^on,  7  Wall.  tlic  value  in  dollars  was  stated  in 
71,  ]r)  L.  ed.  101.  the  eurrency  of  Canada,  wliich  was 

20  Bronson  v.  Rodes,  7  Wall.  '2'it),  e((uivalent  to  the  pold  currency  of 
19  L.  cd.  141  ;  Le,i;al  Tender  Cases,  the  United  States,  but  being  stated 
12  Wall.  457,  20  L.  ed.  287.  in  dollars,  the  district  court  refused 

In  The  Vaughan  and  Tclegraj^h,  to  recognize  any  difference  between 
14  Wall.  258,  20  L.  ed.  807,  which  the  value  of  a  dollar  of  that  cur- 
was  a  collision  case,  there  was  a  rency  i\m\  tlie  dollar  of  the  currency 
right  to  recover  for  the  loss  of  prop-  in  which  the  judgment  of  the  court 
erty  according  to  its  value  at  the  would  l)e  payable;  in  other  words, 
time  and  place    of    shipment.      The  would  allow  nothing  to  be  added  to 


604 


SUTHERLAND    ON    DAMAGES. 


[§   210 


legal  tender  law,  there  was  no  conclusive  presumption  that  the 
two  currencies  were  of  equal  value.     Parties  may  h\  their  con- 


the  amount  stated  in  the  dollars  of 
Canada  currency,  to  give  the  equiv- 
alent wlien  paid  in  legal  tender 
notes — holding  that  the  loss  in  this 
way  was  an  incident  of  the  suit  in 
the  forum  where  it  was  brought, 
and  was  unavoidable.  In  the  cir- 
cuit court  the  same  rule  of  damages 
was  applied,  but  the  decree  gave  the 
value  of  the  Canada  currency  in 
legal  tender  notes.  "These  notes," 
said  Swayne,  J.,  "have  since  large- 
ly appreciated,  so  that  while  the 
libelants  would,  under  the  decree  of 
the  district  court,  if  it  had  been 
paid  when  rendered,  have  received 
much  less  than  the  estimated  value 
of  the  barley,  they  will  now,  if  the 
circuit  court  be  alHrmed,  receive 
much  more.  .  .  .  Upon  the  rule 
of  damages  applied  by  both  courts 
as  respects  the  kind  of  currency  in 
which  the  value  of  the  barley  was 
estimated,  the  libelants  were  en- 
titled, on  the  plainest  principles  of 
justice,  to  be  paid  in  specie  or  its 
equivalent.  The  hardship  arising 
from  the  decree  before  vis  is  due  en- 
tirely to  the  delay  in  its  payment 
which  has  since  occurred,  and  the 
change  which  time  and  circum- 
stances have  wrought  in  the  value 
of  the  legal  tender  currency.  The 
decree  was  right  when  rendered,  and 
being  so,  cannot  now  be  disturbed." 
A  minority  of  the  court  dissented, 
on  the  ground  that  the  original 
decree  should  have  been  rendered 
for  the  Canada  value  in  gold  to 
avoid  the  loss  incident  to  the  fluctu- 
ations in  the  value  of  greenbacks. 
See  Edmondson  v.  Hyde,  2  Sawyer, 
205;  Kellogg  V.  Sweeney,  46  N.  Y. 
2n],  7  Am.  Rep.  333. 

In  Simpkins  v.  Low,  54  N.  Y.  179, 
it   was   held   that   the   legal   tender 


acts  of  congress  relate  to  the  effect 
of  the  notes  issued  thereunder  as  a 
tender  in  the  payment  of  debts  aris- 
ing on  contract;  they  do  not  forljid 
the  recognition  in  other  relations  of 
the  difference  between  coin  and  cur- 
renc3\  The  action  was  brought  for 
the  conversion  of  certain  bonds  is- 
sued by  a  California  company,  and 
though  not  in  terms  payable  in  gold, 
still  as  they  were  by  the  custom  of 
business  treated  as  such,  recovery 
\\as   permitted   on   a  gold   basis. 

In  Luling  v.  Atlantic  Mut.  Ins. 
Co.,  30  How.  Pr.  60,  it  was  held 
that  where  there  is  a  specific  agree- 
ment made  between  any  policy- 
holders of  a  mutual  insurance  com- 
pany and  the  companij  that  the 
premiums  of  the  former  shall  be 
paid  in  gold  and  the  losses  shall  be 
paid  by  the  latter  in  gold,  the  com- 
pany on  declaring  its  dividends  are 
bound  to  allow  such  policy-holders 
a  certificate  of  their  share  of  the 
profits  in  accordance  with  a  gold 
standard  as  compared  with  cur- 
rency. A  notice  issued  by  the  com- 
pany to  the  eflect  that  the  dealers 
making  insurances  payable  in  gold 
were  to  participate  with  others  in 
the  earnings,  and  that  these  would 
be  computed  and  made  payable  in 
currency,  and  the  delivery  by  the 
company  and  acceptance  of  the  cer- 
tificates of  such  earnings  by  such 
policy-holders  under  said  notice  does 
not  aff'ect  the  legal  bearing  of  the 
contract,  nor  make  the  certificates 
a  bar  to  an  action  by  the  policy- 
holders against  the  company  to  cor- 
rect the  account  upon  which  these 
were  based  and  for  a  proper  read- 
justment. The  certificates  were 
good  to  the  extent  wliich  they  pro- 
vided for  only.     Baltimore  &  0.  R. 


§  2101 


PECUNIARY    REJ'KKSENTATIVK    OK    VALUK. 


r,(); 


tracts  recognize  not  only  the  actual.  Imt  aiiv  esliinatcil,  diU'er- 


(o.  V.  State,  36  Md.  5H);  Bank  uf 
Prince  Edward  Island  v.  Tunibull, 
35  How.  Pr.  8;  Lane  v.  Chickauf., 
28  Cal.  288;  Vilhac  v.  Bivcn,  id. 
410;   Rankin  v.  Deniott,  61  Pa.  263. 

A  debt  payable  "in  gold  or  its 
equivalent  in  lawful  money  of  tlie 
U.  S."  requires  jiayincnt  to  be  made 
at  the  commercial  value  of  gold 
when  due.  Baker's  App.  .')0  Pa.  3i;j. 
The  defendants  in  1S6()  bouglit 
goods  from  plaintiffs,  "Liverpool 
tests,  monthly  sliipments  from 
Liverpool  to  Philadelphia,  . 
at  three  and  one-fourth  cents  per 
pound,  cash,  gold  coin,  on  vessel  at 
Philadelphia;"  held  to  be  payable  in 
gold  or  its  equivalent.  Parties 
could  take  themselves  out  of  tlie 
operation  of  the  legal  tender  law 
after  its  passage  by  contracting  for 
payment  in  coin  alone.  Frank  v. 
Colhoun,  59  Pa.  38 J.  See  Governor, 
Opinion  in  Response  to,  4!)  Mo.  21 6; 
The  Emily  B.  Souder,  8  Blatchf. 
337. 

In  Glass  v.  Abbott,  6  Bush,  622, 
it  was  held  that  the  difference  in 
value  between  gold  and  greenbacks 
is  sufficient  to  make  usury,  where 
there  would  be  none  if  no  such  dif- 
ference existed.  But  see  Reinback 
V.  Crabtree,  77   111.   182. 

INIoney  had  and  received  main- 
tainable for  proceeds  of  a  gold  bond 
sold,  and  recovery  may  be  had  of 
such  proceeds  at  its  value  in  paper 
money.  Hancock  v.  Franklin  Ins. 
Co.,  114  Mass.  155. 

In  Carpenter  v.  Athcrton,  28 
How.  Pr.  303,  a  California  contract 
payable  in  gold  was  in  question;  be- 
ing such  as  under  the  statutes  of 
that  state,  called  the  specific  con- 
tract act,  would  be  there  enforced 
by  requiring  payment  in  gold,  it 
was   held  proper  to  decree   in   New 


^'(irk  tiiat  it  be  spi'i-ilically  per- 
foniicd,  and  a  (eiidcr  of  greeidiacks 
was  lu'Ul  no  defense.  This  remedy 
was  afforded  while  the  courts  of  the 
latter  state  held  tliat  legal  tender 
notes  were  applical)le  to  debts  pay- 
able expressly  in  coined  money.  But 
in  Massachusetts  the  courts  held 
that  tlie  benefits  of  the  California 
specific  contract  act  could  not  be  al- 
lowed. Tufts  V.  I'lyinoutli  G.  M. 
Co.,   14  Allen,  407. 

In  Cooke  v.  Davis,  .^3  X.  Y.  318, 
it  was  held  tluit  a  contract  to  de- 
liver or  receive  either  of  the  two 
recognized  kinds  of  currency  at  a 
price  expressed  in  dollars  and  frac- 
tions of  a  dollar,  or  at  a  specified 
percentage,  is  to  be  construed  as 
meaning  that  the  price  is  payable 
in  the  other  currency.  The  defend- 
ant contracted  to  deliver  to  the 
plaintiff's  assignor  ''$10,000  current 
funds  of  tlic  United  States"  at 
fifteen  cents  on  the  dollar  ten 
months  after  date.  It  was  held 
that  the  contract  Avas  to  deliver 
$10,000  legal  tender  notes  for  $1,- 
500  in  coin;  that  it  was  valid,  and 
for  a  breach  tliereof  the  defendant 
was  lial)le.  The  contract  was  so 
construed,  because  otherwise  it 
would  be  meaningless.  The  court 
below  construed  the  promise  of 
fifteen  per  cent,  as  payable  also  in 
legal  tender,  and  nonsuited  the 
plaintiff  on  the  ground  that  the  con- 
tract was  void  for  want  of  con- 
sideration. See  Smith  v.  ^yicKenney, 
22  Chio  St.  200;  also  Caldwell  v. 
Craig,  22  Gratt.  340;  Tnrpin  v. 
Sledd's  Ex'r,  23  id.  238. 

The  subject  of  the  comparative 
value  of  treasury  notes  and  coin  is 
discussed  in  a  practical  way  by 
Beatty,  C.  J.,  in  State  v.  Knitt- 
sehnett,    4    Nev.    178     (1868).      See 


606  SUTHERLAND    ON    DAMAGES.  [§    210 

dice,  incur  obligations  on  the  basis  of  it  as  a  consideration ;  ^^ 
obtain  damages  for  torts  in  respect  to  it,  or  recover  for  the  loss 
of  it  as  an  element  of  damage ;  ^^  and  by  that  standard  where 
there  have  been  dealings  on  a  gold  basis  resulting  in  an  indebt- 
edness,^^ or  an  indebtedness  payable  in  a  foreign  coin  currency.^* 
And  to  insure  the  full  benefit  of  the  gold  value  of  the  debt  or 
liability,  judgment  in  coined  money  is  authorized  and  required 
to  be  rendered. '^^ 

§  211.  Effect  of  fluctuations  in  currency.  Where  there  are 
fluctuations  in  the  value  of  the  money  of  account,  or  of  the 
currency  in  which  the  commercial  business  of  a  country  is 
transacted,  allowances  have  sometimes  been  made.  These 
fluctuations  have  been  very  great,  and  are  always  liable  to  occur 
when  the  currency  is  paper.  A  promisor  has  a  right  to  pay  in 
the  currency  of  the  contract  at  par,  although  depreciated,  if 
he  pays  when  it  is  due;  but  if  he  does  not,  and  that  currency 
is  money,  is  the  subsequent  depreciation  an  item  of  legal  dam- 
ages to  the  creditor;  or  if  it  subsequently  appreciates,  is  the 
increase  of  value  an  item  for  which  allowance  can  be  made 

Fabbri  v.  Kalbfleisch,  52  N.  Y.  28;  Dalryniple,  19  Mich.  239;  Colton  v. 
Kupfer  V.  Bank,  34  111.  328,  85  Am.  Dunham,   2   Paige,    267;     Black    v. 
Dec.  309;   Trebilcock  v.  Wilson,   12  Ward,  27  Mich.  191;  Oliver  v.  Shoe- 
Wall.    687,    20    L.    ed.    460;    People  maker,  35  Mich.  464. 
V.  Cook,  44  Cal.  638.  25  Bronson  v.  Rodcs,  7  Wall.  229, 

21  Cooke  V.  Davis,  53  N.  Y.  318;  19  L.  ed.  141;  The  Emily  B.  Sender, 

Smith   V.   McKinney,    22    Ohio    St.  17  Wall.  666,  21  L.  ed.  683;  Trebil- 

200;    Luling   v.   Atlantic   Mut.   Ins.  cock  v.  Wilson,  12  Wall.  687,  20  L. 

Co.,  30  How.  Pr.  69.  ed.  460;   Dewing  v.  Sears,  11  Wall. 

22Simpkins  v.  Low,  54  N.  Y.  179;  379^  20  L.  ed.  189;  Quinn  v.  Lloyd, 

Kellogg   V.    Sweeney,   46   id.   291,   7  i    Sweeney   253;    Currier   v.    Davis, 

Am.    Rep.    333;    The    Vaughan    and  ;^ii  j^j^g^   430 .  Independent  Ins  Co. 

Telegraph,  14  Wall.   258,  20  L.  ed.  ^   Tliomas,  104  id.  192 ;  Chilholm  v. 

807;  Fabbri  v.  Kalbfleisch,  52  N.  Y.  j^,.,i^^g^^,,^  43  ^la.  610;   Kellogg  v. 


Sweeney,  supra;  Phillips  v.  Dugan, 
21  Ohio  St.  466,  8  Am.  Rep.  66; 
Chesapeake  Bank  v.  Swain,  29  Md. 
483;    Atkinson     v.     Clark,     69     Ga. 


28. 

23  Hancock  v.  Franklin  Ins.  Co., 
114  Mass.  155.  But  see  Wright  v. 
Jacobs,  61  Mo.  19. 

24  Christ  Church  Hospital  v. 
Fuechsel,  54  Pa.  71;  Mather  v.  460.  See  Gist  v.  Alexander,  15 
Kinike,  51  id.  425;  The  Emily  B.  Rich.  50;  Townsend  v.  Jennison, 
Souder,  8  Blatchf.  337,  17  Wall.  44  Vt.  315;  Grund  v.  Pendergast,  58 
666,    21    L.     ed.     683;     Sheehan    v.       Barb.  216. 


§  211]     PECUNIARY  REPRESENTATIVE  OF  VALUE.         607 

against  him?  In  an  oarlj  case  in  N^orth  Carolina  the  court 
say:  "Where  the  currency  in  which  the  judgment  is  to  he 
given  is  equal,  sum  for  sum  to  the  money  mentioned  in  the 
bond,  the  jury  assess  damages  usually  for  the  detention  to  the 
amount  of  the  interest  aerued,  but  they  are  not  obliged  to  assess 
damages  to  that  amount  only.  Tf  upon  inquiry,  for  instance, 
they  find  that  one  pound  of  the  present  currency  of  this  country 
is  not  equal  to  one  pound  of  the  money  payable  by  the  obliga- 
tion, whether  this  inequality  be  occasioned  by  depreciation  or 
any  other  cause,  and  though  the  money  mentioned  in  the  obli- 
gation be  not  foreign  money,  they  may,  in  the  assessment  of 
damages,  increase  them  beyond  the  amount  of  the  interest  so  as 
to  make  the  damages  and  principal  equal  in  value  to  the  prin- 
cipal and  interest  mentioned  in  the  bond."  ^^  But  whatever 
may  be  the  rule  in  respect  to  a  mere  conventional  money,  a  debt 
or  liability  payable  in  a  legal  tender  currency  may  always  be 
discharged  in  that  currency  at  par,  and  no  allowance  is  made 
for  fluctuations  in  its  value.^' 

More  than  once  in  the  history  of  this  country  there  has  been 
a  conventional  and  fluctuating  paper  cuiTency  in  general  use  as 
a  substitute  for  and  purporting  to  represent  the  denominations 
of  an  otherwise  ideal  legal  money.  During  the  prevalence  of 
such  currency  values  have  been  estimated  and  dealt  with  as 
though  this  depreciated  money  were  their  legal  standard  and 
measure.  Questions  of  amount  have  arisen  out  of  such  trans- 
actions after  this  vicious  currency  had  passed  away,  and  sums 
agreed  to  be  paid  while  it  was  the  general  medium  of  exchange, 

26  Anonymous,      1      Hayw.       (by  and  one  dollar  now  being  equal  to 

13att.)    354.     In  a  note  to  this  case  ten     shillings.       See     Taliaferro     v, 

it  is  stated  that  there  were  at  the  Minor,    1    Call,   450;    Massachusetts 

same  term  several  cases  of  assump-  Hospital  v.   Provincial   Ins.   Co.,  25 

sit    for    currency    more    depreciated  jj      ,,        q    ^    „,„ 

at  the  time  of  the  contract  than  it  ,^       ,   ,, 

^     ^,      ,.  27  See      Faw      v.      Marsteller,      2 

IS  now,  and  according  to  the  direc- 

^.  '     ,  ,     ,,         ,    ■   x-ff   .  Cranch,    10,   29,   2   L.   ed.    10],    197; 

tion    of   the   court   the   plamtin    re-  '  ' 

covered  only  the  real  value  in  the  I^ownman  v.  Downman,  1  Wash, 
present  currency,  the  sum  demanded  (Va.)  26;  Higgins  v.  Bear  River  & 
being  reduced  one- sixth, —twelve  A.  W.  &  M.  Co.,  27  Cal.  153;  Metro- 
shillings  having  been  equal  to  one  j)olitan  Bank  v.  Van  Dyck,  27  N. 
dollar  when  the  contract  was  made,  Y.  400. 


608 


SUTTIEKLAND    ON    DAMACfES. 


[§    211 


and  magnified  in  consequence  of  its  depreciation,  have  been 
demanded  when  payment  conld  be  exacted  in  the  pure,  legal 
currency.  Scaling  laws  have  then  been  enacted  as  the  only  re- 
lief against  the  injustice  and  inequality  of  interpreting  the 
inflated  language  of  value  whicli  a  depreciated  currency  had 
popularized  by  the  actual  legal  standard  subsequently  brought 
into  practical  use.  This  mode  of  relief  was  resorted  to  in  the 
late  insurgent  states  after  the  rebellion  where  the  notes  of  the 
confederacy  liad  necessarily  been  the  only  circulating  medium ; 
and  until  the  subject  was  considered  in  the  supreme  court  of 
the  United  States  scaling  acts  were,  by  the  decisions  of  several 
of  the  state  courts,  regarded  as  essential  to  protect  debtors  from 
the  enforcement  of  contracts  made  with  reference  to  the  depre- 
ciated currency  from  liability  to  pay  an  equal  sum  in  the  lawful 
currency  of  the  United  States.^^ 


28  Tn  Omoliundro  v.  Crump,  18 
Gratt.  703,  Jaynes,  J.,  said,  in  re- 
spect to  notes  made  in  Virginia  in 
November,  1861,  payable  in  one, 
two  and  tbree  years:  "Tlie  act  of 
Marcb  3,  1866,  provides  tbat  in  any 
action  founded  on  any  contract,  ex- 
press or  implied,  made  and  entered 
into  between  tbe  1st  day  of  Janu- 
ary, 1862,  and  the  lOtb  day  of 
April,  1865,  it  shall  l)e  lawful  for 
either  party  to  show  by  parol  or 
other  relevant  evidence  what  was 
the  true  understanding  and  agree- 
ment of  the  parties,  either  expressed 
or  to  be  implied,  as  to  the  kind  of 
currency  in  which  it  was  to  be  ful- 
filled or  performed,  or  in  reference 
to  which  as  a  standard  of  value  it 
was  made  and  entered  into.  This 
case  does  not  come  within  the  pro- 
visions of  that  act,  because  the  note 
was  made  before  the  1st  day  of  Jan- 
uary, 1862.  Tt  is  doubtful,  to  say 
the  least,  whether  parol  evidence 
of  the  actual  imderstanding  and 
agreement  of  the  parties  as  to  the 
kind  of  currency  in  which  a  con- 
tract is  to  be  fulfilled,  which  is  ex- 


pressed to  be  payable  in  'dollars' 
generally,  would  be  admissible,  in- 
dependently of  the  provisions  of 
that  act.  Tlie  word  'dollars'  has  a 
definite  signification  fixed  by  law, 
and  it  is  laid  down  that  'when  the 
words  have  a  known  legal  meaning, 
such  for  example  as  measures  of 
(piantitv  fixed  by  statute,  parol  evi- 
dence that  the  parties  intended  to 
use  them  in  a  sense  different  from 
their  meaning,  though  it  was  still 
the  customary  and  popular  meaning, 
is  not  admissible.'  1  Greenleaf  Ev., 
§  280.  See  also  Smith  v.  Walker,  1 
Call,  24;  Commonwealth  v.  Beau- 
marchais,  3  Call,  107.  We  need  not 
decide  whether  such  evidence  could 
have  been  received  in  this  case,  be- 
cause it  is  expressly  stated  in  the 
facts  agreed  that  there  was  no 
actual  agreement. 

"It  is  contended,  however,  that 
tlie  law  will  imply  an  agreement 
under  the  circumstances  of  this  case 
to  accept  confederate  money  in  pay- 
ment of  the  note  on  which  the  ac- 
tion is  founded.  The  argument  is 
that  the   note,    having    been^  made 


§  211]     PECUNIARY  REPRESENTATIVE  OF  VALUE.         GOO 

In  1868  a  case  from  Alabama  brought  this  subject  before  the 
federal  court  of  last  resort.  The  question  was,  ''Whether  evi- 
dence can  be  received  to  prove  that  a  promise,  made  in  one  of 
the  insurgent  states,  and  expressed  to  be  for  the  payment  of 
dollars,  without  qualifying  words,  was  in  fact  made  for  the  pay- 
ment of  any  other  than  lawful  dollars  of  the  United  States?" 
"It  is  quite  clear,"  said  Chase,  C.  J.,  delivering  the  opinion  of 
the  court,  "that  a  contract  to  pay  dollars,  made  between  citizens 
of  any  state  of  the  Union,  while  maintaining  its  constitutional 
relations  with  the  national  government,  is  a  contract  to  pay  hiw- 
ful  money  of  the  United  States,  and  cannot  be  modified  or  ex- 
plained by  parol  evidence.  But  it  is  equally  clear,  if  in  any 
other  country,  coins  or  notes  denominated  dollars  should  be  au- 
thorized of  diiferent  value  from  the  coins  or  notes  which  are 
current  here  under  that  name,  that,  in  a  suit  upon  a  contract  to 
pay  dollars,  made  in  that  country,  evidence  would  be  admitted 
to  prove  what  kind  of  dollars  were  intended ;  and,  if  it  should 
turn  out  that  foreign  dollars  were  meant,  to  prove  their  equiva- 
lent value  in  lawful  money  of  the  United  States.    Such  evidence 

after  the  establishment  of  the  con-  Confl.,  §  242,  presumes,  in  the 
federate  states,  must  be  considered  absence  of  evidence  to  the  contrary, 
as  made  witli  reference  to  the  that  every  contract  ia  made  with 
actual  currency  of  those  states;  reference  to  the  lawful  currency  of 
and  that  as  confederate  notes  were  the  country  in  which  it  is  entered 
the  actual  currency  in  those  states  into.  It  does  not  presume  it  to  be 
at  the  time  the  note  became  payable  made  with  reference  to  any  substi- 
it  was  payable  in  that  currency.  It  tute  for  any  currency  which  may 
must  be  remembered,  however,  that  happen  to  circulate.  A  contract 
confederate  notes  were  never  made  a  made  in  Richmond  before  the  war 
legal  tender.  They  were  never  the  for  t]ie  pavment  of  so  many  dollars 
lawful  money  of  the  country,  but  would  not  have  been  deemed  pay- 
only  a  substitute  for  money  like  able  in  bank  notes,  tliough  bank 
bank  notes.  Gold  and  silver  were  notes  were  then  the  common  and 
the  lawful  money  of  the  confederate  practically  the  exclusive  currency, 
states  at  the  time  this  note  was  And  so  in  this  case,  if  we  apply  to 
made,  and  also  at  the  time  it  became  the  confederate  states  the  princi- 
payable  according  to  the  provisions  pie  relied  on,  the  note  must  be 
of  the  act  of  congress  of  the  deemed  payable  in  specie,  whicli 
United  States,  expressly  adopted  by  was  the  lawful  money  of  the  con- 
the  congress  of  the  confederate  federate  states  at  the  time  it  be- 
states.  The  principle  of  public  law  came  payable."  Boulware  v.  New- 
relied  on  by  the  counsel  for  the  ap-  ton,  18  Graft.  70S;  Hanslirongli  v. 
pellant,  and  quoted  from  Story,  Utz,  75  Va.  959. 
Suth.  Dam.  Vol.  I.— 39. 


010  SUTUEELAND    ON    DAMAGES.  [§    211 

does  not  alter  or  modify  the  contract.  It  simply  explains  an 
ambiguity,  which,  under  the  general  rules  of  evidence,  may  be 
removed  by  parol  evidence.  \Ye  have  already  seen  that  the  peo- 
ple in  the  insurgent  states,  under  the  confederate  government, 
were,  in  legal  contemplation,  substantially  in  the  same  condition 
as  inhabitants  of  districts  of  a  country  occupied  and  controlled 
by  an  invading  belligerent.  The  rules  which  would  apply  in 
the  former  case  would  apply  in  the  latter ;  and  as,  in  the  former 
case,  the  people  would  be  regarded  as  subjects  of  a  foreign 
power,  and  contracts  among  them  be  interpreted  and  enforced 
with  reference  to  the  conditions  imposed  by  the  conqueror,  so  in 
the  latter  case,  the  inhabitants  must  be  regarded  as  under  the 
authority  of  the  insurgent  belligerent  power  actually  established 
as  the  government  of  the  country,  and  contracts  made  with  them 
must  be  interpreted  and  enforced  with  reference  to  the  condition 
of  things  created  by  the  acts  of  the  governing  power.  It  is  said, 
indeed,  that  under  the  insurgent  government  the  word  'dollar' 
had  the  sauie  meaning  as  under  the  government  of  the  United 
States;  that  the  confederate  notes  were  never  made  a  legal 
tender ;  and,  therefore,  that  no  evidence  can  be  received  to  show 
any  other  meaning  of  the  word  when  used  in  a  contract.  But, 
it  must  be  remembered  that  the  whole  condition  of  things  in  the 
insurgent  states  was  matter  of  fact  rather  than  matter  of  law, 
and  as  matter  of  fact,  tliGse  notes,  payable  at  a  future  and  con- 
tingent day,  which  has  not  arrived  and  can  never  arrive,  were 
forced  into  circulation  as  dollars,  if  not  directly  by  the  legisla- 
tion, yet  indirectly  and  quite  as  effectually  by  the  acts  of  the 
insurgent  government.  Considered  in  themselves,  and  in  the 
light  of  subsequent  events,  these  notes  had  no  real  value,  but 
they  were  made  current  as  dollars  by  irresistible  force.  They 
were  the  only  measure  of  value  which  the  people  had,  and  their 
use  was  a  matter  of  almost  al)solute  necessity.  And  this  gave 
them  a  sort  of  value,  insignificant  and  precarious  enough,  it  is 
true,  but  always  having  a  sutiiciently  definite  relation  to  gold 
and  silver,  the  universal  measures  of  value,  so  that  it  was 
always  easy  to  ascertain  how  much  gold  and  silver  was  tlie 
real  equivalent  of  a  sum  expressed  in  this  currency.  In  the 
light  of  these  facts,  it  seems  hardly  less  than  absurd  to  say  that 


211 


TECUNIARY    KK  I'lv'KSENTA  Tl  VE    OF    VALUK. 


611 


tliese  dollars  iiiiist  be  roi;'ai'(lo(l  as  idcniii-al  in  kind  and  valne 
with  the  dollars  \y\\\r]\  conslitnte  the  monev  of  Iho  I'nited 
States.  Wo  eaimot  shut  our  eyes  (o  the  fact  that  they  were 
essentially  different  in  both  respects;  and  it  seems  t<.  us  that  uo 
rule  of  evidence  properly  understood  reipiii-es  us  to  refuse, 
under  the  circuuistauccs,  to  admit  proof  of  the  sense  in  which 
the  word  'dollar'  is  nsed  in  the  contract  before  us."^^ 

The  presumption  from  the  promise  lo  pay  dolhirs  was  that 
dollars  of  lawful  uioney  were  nieant.^"  I5nl  this  |iivsuni])tiou 
was  reversed  by  the  provisions  of  the  scaliuii;  hiws  enacted  in 
some  states.  Payments  actually  received  by  the  creditor  in 
confederate  notes  were  held  valid. ^^  Thit  it  was  held  in  some 
of  the  southern  states  that  payments  received  by  an  a,i;-ent  or 
trnstee  in  snch  currency  would  not  have  effect  as  such.^^  In 
Tennessee,  North  Carolina  and  (Jeorgia,  however,  it  was  held 
that  a  sheriff"  might  receive,  in  the  absence  of  instructions  to 
the  contrarj^,  whatever  kind  of  money  is  passing  currently  in 
the  payment  of  debts  of  the  same  character  as  that  which  he  has 


29  Thorington  v.  Smitli,  8  Wall.  ], 
19  L.  ed.  361.  See  Hanauer  v. 
Woodriiflf,  15  Wall.  448,  21  L.  vd. 
227;  Confederate  Note  Case,  1!) 
Wall.  548,  22  L.  ed.  196;  Gavinzel 
V.  Crump,  22  Wall.  308,  22  L.  ed. 
783;  Effinger  v.  .Kenney,  115  U.  S. 
566,  29  L.  ed.  495,  9  Sup.  Ct.  170, 
and  cases  cited;  Bailey  v.  Stroud, 
26  W.  Va.  614;  Chalmers  v.  Jones, 
23  S.  C.  463. 

If  payment  is  made  in  a  depreci- 
ated currency  which  is  not  legal 
tender  a  promise  to  make  good  the 
depreciation  is  founded  on  a  valua- 
ble consideration ;  l)ut  it  is  other- 
wise wliere  payment  is  made  in  what 
the  law  designates  as  money.  Mc- 
Elderry  v.  Jones,  67  Ala.  203. 

30  Id. ;  Wilcoxen  v.  Reynolds,  46 
Ala.  529;  Taunton  v.  Mclnnish,  id. 
619;  Neeley  v.  McFaddon,  2  S.  C. 
169;  W^illiamson  v.  Smith,  1  Cold. 
1,  78  Am.  Dec.  478. 

31  Ponder  v.  Scott,  44  Ala.  241. 


32  Scruggs  V.  Luster,  1  lleisk.  150; 
Whitley  v.  Moseley,  46  Ala.  480. 
See  Williams  v.  Campbell,  46  Miss. 
57;  Powell  v.  Knighton,  43  Ala. 
626;  Fretz  v.  Stover,  22  Wall.  198, 
22  L.  ed.  769;  also  Robinson  v.  In- 
ternational L.  Assur.  Soc,  etc.  42 
N.  Y.  54,  1  Am.  Rep.  490;  Bank  v. 
McVeigh,  20  Gratt.  457;  Alley  v. 
Rogers,  19  id.  366. 

Executors  or  administrators  and 
other  trustees  who  were  clothed 
with  the  legal  title  to  claims  due 
the  estates  they  represented  dis- 
charged debtors  thereto  by  receiving 
payment  in  confederate  currency  in 
the  absence  of  fraud  or  collusion. 
Trustees  of  Howard  College  v.  Tur- 
ner, 71  Ala.  429,  and  cases  cited; 
Hyatt  v.  McBurney,  18  S.  C.  199. 
But  it  was  not  so  in  the  case  of 
one  whose  authority  was  special,  as 
an  agent  or  attorney.  Ferguson  v. 
Morris,  67  Ala.  389.     See  next  note. 


612 


SUTHERLAND    ON    DAMAGES, 


[§  211 


to  collect,  subject  to  the  limitation  that  be  would  not  be  war- 
ranted in  receiving  any  currency  so  depreciated  as  to  amount 
to  notice  that  the  creditor  would  not  accept  it.^' 

Section  2. 

PAR  AND  RATE  OF  ElXCIIANGE. 

§  212.  Par  of  exchange.      There  is  no  common  or  interna- 
tional unit  of  value ;  hence  the  business  and  commerce  of  the 


33Atkin  V.  Mooncy,  Phil.  (N.  C. 
L.)  32;  Emerson  v.  Mallott,  Phil. 
Eq.  236;  Turner  v.  Collier,  4  Heisk. 
89;  Boyd  v.  Sales,  39  Ga.  74;  King 
V.  King,  37  id.  205;  Campbell  v. 
Miller,  38  id.  304,  95  Am.  Dec.  389; 
Hutchins  v.  Hullman,  34  Ga.  346; 
Neely  v.  Woodward,  7  Heisk.  495. 
See  Van  Vacter  v.  Brewster,  1  Sm. 
&  M.  490. 

"No  court  since  the  war  has  held, 
so  far  as  we  know,  that  confederate 
treasury  notes  were  issued  by  law- 
ful authority;  but  money  has  been 
recognized  generally  by  the  courts 
as  a  generic  term,  covering  anything 
that  by  common  consent  is  made  to 
represent  property  and  pass  as  such 
in  current  business  transactions, 
and  that  when  a  judgment  or  debt 
has  been  paid  in  confederate  money 
and  accepted,  the  transaction  can- 
not be  opened.  Several  decisions  go 
to  the  extent  that  if  at  the  time 
and  place  of  payment  confederate 
money  was  generally  received  in 
business  transactions  and  was  in 
fact  the  current  money  of  the  coun- 
try, the  agent's  authority  to  re- 
ceive such  money,  in  the  absence  of 
directions  to  the  contrary,  may  be 
presumed.  This  rule  has  been  ap- 
plied not  only  when  the  creditor 
and  debtor  were  within  the  same 
state,  but  when  tlie  creditor  resided 
in  a  state  not  a  member  of  the  con- 
federacy, and  the  debtor  was  within 


the  confederate  lines.  King  v.  King, 
37  Ga.  205;  Westbrook  v.  Davis,  48 
Ga.  47]  ;  Rodgers  v.  Bass,  46  Tex. 
505;  Burford  v.  Memphis  B.  Co.,  9 
Heisk.  691;  Pidgeon  v.  Williams, 
21  Gratt.  251;  Hale  v.  Wall,  22 
Gratt.  224 ;  Robinson  v.  Interna- 
tional L.  Assur.  Soc,  42  N.  Y.  54, 
1  Am.  Rep.  490;  Glasgow  v.  Lipse, 
117  U.  S.  327,  29  L.  ed.  901, 
6  Sup.  Ct.  757;  Martin  v.  United 
States,  2  T.  B.  Mon.  89,  15  Am. 
Dec.  129.  Other  decisions  hold 
that  the  rule  should  not  be  applied 
where  the  creditor  was  within  the 
federal  lines,  with  communication 
between  him  and  his  agent  in  the 
confederacy  destroyed.  In  such  a 
case  no  implied  authority  to  receive 
confederate  money  existed,  and  pay- 
ment to  the  agent  or  attorney  did 
not  discharge  the  debt.  Harper  v. 
Harvey,  4  W.  Va.  539;  Alley  v. 
Rogers,  19  Gratt.  366;  Waterhouse 
V.  Citizens'  Bank,  25  La.  Ann.  77 ; 
Fretz  V.  Stover,  22  Wall.  198,  22 
L.  ed.  769."  Hendry  v.  Benlisa,  37 
Fla.  609,  34  L.R.A.  283.  The 
last  case  holds  tliat  if  at  the 
time  and  place  of  payment  in  con- 
federate money  it  was  generally  re- 
ceived in  business  transactions,  and 
was  the  current  money  of  the  coun- 
try, an  agent's  authority  to  receive 
it,  in  the  absence  of  directions  to 
the  contrary  from  a  resident  princi- 
pal, will  be  presumed. 


§  212] 


PKCUNIAKY    REPRESENTATIVE    OF    VAI.TE. 


Gl;} 


world  are  conducted  in  iiiiiiiy  kinds  of  moncv.  It  dflcn  licconio.s 
necessary',  therefore,  to  enforce  tlic  collection  of  dclits  incui-rcd 
or  contracted  in  one  currency  by  resort  to  courts  wiiosc  jndi;- 
ments  are  rendered  in  another;  and  the  gold  and  silver  coins  (tf 
one  country  often  circulate  as  money  in  other  connlri(!s  iind  iir(! 
current  at  their  value,  which  is  cap;d)le  of  c(iniv;ilciit  c\i)rcssion 
in  the  local  currency.  Whatever  the  coin;ige,  ii  like  anionnt  of 
these  precious  metals  will,  in  all  forms  of  coined  money,  he  of 
like  intrinsic  value,  dependini;-  foi-  its  c<iu;ility  on  wcialit  ;md 
fineness.  An  amount  stated  in  one  currency  which  is  :in  ('(piiva- 
lent  for  the  same  value  expressed  in  another  is  the  [lai'  <>f  ex- 
change; it  is  a  literal  translation  of  the  language  of  value  in 
one  country  or  currency  into  that  ol'  e(|ual  xaluc  in  another. 
The  true  par  of  exchange  between  two  countries  is  the  equiva- 
lent of  a  certain  amount  of  the  currency  of  one  in  the  currency 
of  the  other,  supposing  the  currency  of  both  to  be  at  the  precise 
weight  and  purity  fixed  by  their  respective  mints ;^*  or  in  other 
words,  it  is  the  amount  which  the  standard  coin  of  cMtliev  ''oun- 
try  would  produce  when  coined  at  the  mint  of  the  othei'.^^ 


34  McCulloch's  Com.  Die,  tit.  Par 
of  Exchange. 

35  Common wealtli  v.  IJaupt,  10  Al- 
len, 38.  In  Daniel  on  Neg.  Inst, 
the  par  of  exchange  is  thus  ex- 
plained, vol.  2,  §§  1442,  1443;  "By 
the  par  of  exchange  is  meant  tlic 
precise  equality  of  any  given  sum  of 
money  in  tlie  coin  or  currency  of 
one  country  and  the  lii<e  sum  in  tlu; 
coin  or  currency  of  another  country 
into  which  it  is  to  be  exchanged, 
regard  being  had  to  the  fineness 
and  weight  of  the  coins  as  fixed  I)y 
the  mint  standard  of  the  respective 
countries.  Cunningham  on  Bills, 
417:  Story  on  Bills,  §  30.  Marius 
says:  'Pair,''  as  the  French  call  it, 
'is  to  equalize,  match  or  make  even 
the  money  of  exchange  from  one 
place  with  that  of  another  place; 
when  I  take  up  so  much  money  for 
exchange  in  one  place  to  pay  the 
just  value  thereof  in   another  kind 


of  money  in  aiiotlici'  place,  witlmut 
luning  respect  to  the  cmicTit  of  ex- 
change for  the  same,  hut  only  to 
what  tlie  moneys  are  worth.' 
Marias  on  Bills,  4.  It  is  necessary 
to  this  pur|)ose  to  ascertain  the  in- 
trinsic values  of  the  different  coins; 
and  then  it  is  a  matter  of  arithmeti- 
cal computation  to  arri\e  at  the 
amount  of  oiu'  which  will  l)c  the 
exact  equivalent  of  a  certain  amnnnt 
of  the  other,  into  which  it  is  t"  he 
exchanged.  When  this  has  heeii  ac-- 
comi)lislied,  and  the  exact  c(|ni\a- 
lent  of  a  certain  amount  in  one 
cui'i'eiicy  has  l)eeii  asceii a i ned  in  an 
other,  should  it  i)e  desireil  to 
tiansmit  such  amoinit  from  one 
country  to  another,  the  rate  of  ex- 
change between  the  countries  will 
he  added  to  or  subtracted  from  such 
amount,  accordingly  as  the  course 
of  exchange  is  in  favor  of  the  one 
country   or   the   other.      So  the   par 


614 


SUTIIEKLAND    ON    DAMAGES. 


[§  212 


The  par  of  exchange  is  the  measure  (if  damages  only  when 
the  sum  for  which  it  is  substituted  as  an  equivalent  would  be 
such  if  judgment  could  be  taken  in  the  same  currency  as  that  in 
which  the  debt  exists.  It  is  the  measure  where  there  is  no 
question  of  the  rate  of  exchange,  and  the  only  inquiry  is  what 
is  the  equivalent  amount  in  our  currency  to  that  found  due  in 
a  foreign  currency. 

The  nominal  par  based  on  the  equality  in  value  of  gold  or 
silver,  whether  in  foreign  or  domestic  coins,  by  the  universal 
standard,  may  not  be  the  real  par  if  the  money  of  the  former 
be  not  gold  and  silver  of  the  standard  value,  or  if  it  Be  some 
depreciated  substitute.      Then  it  may  be  a  question   whether 


of  exchange  is  the  equivalency  of 
amounts  in  different  currencies, 
while  the  rate  of  exchange  is  the 
difference  between  the  amounts  at 
different  places.  Gilbert  remarks  on 
this  subject,  in  his  Treatise  on 
Banking:  'The  real  par  of  cxcliange 
between  two  countries  is  that  by 
which  an  ounce  of  gold  in  one  coun- 
try can  be  replaced  by  an  ounce  of 
gold  of  equal  fineness  in  the  other 
country.  In  England  gold  is  the 
legal  tender,  and  its  price  is  fixed 
at  £3  17s.  lOid.  per  ounce.  In 
France,  silver  is  the  currency,  and 
gold,  like  other  commodities,  fluctu- 
ates in  price  according  to  supply 
and  demand.  Usually  it  bears  a 
premium  or  agio.'  In  the  above 
quotation  the  premium  is  stated  to 
be  7  per  miUe;  that  is,  it  would  re- 
quire 1,007  francs  in  silver  to  pur- 
chase, 1,000  francs  in  gold.  At  this 
price  the  natural  excliange,  or  tliat 
at  which  an  ounce  of  gold  in  Eng- 
land would  purchase  an  ounce  of 
gold  in  France,  is  25.31J.  But  the 
commercial  exchange — that  is,  the 
price  at  which  bills  on  London 
would  sell  on  the  Paris  exchange — 
is  25  francs,  25  cents,  showing  that 
gold  is  0.30  per  cent,  dearer  in  Paris 
than  in  London.     Tables  have  been 


constructed  to  sliow  the  results  of 
each  fluctuation  in  the  premium  of 
gold  in  Paris  and  Amsterdam  (Gil- 
bert on  Banking,  424).  And  in 
Cunningham  on  Bills  it  is  said:  By 
the  par  of  cxcliange  is  meant  the 
precise  equality  between  any  sum  or 
quantity  of  English  money,  and  the 
money  of  a  foreign  country  into 
which  it  is  to  be  exchanged,  re- 
gard being  had  to  the  fineness  as 
well  as  to  the  weight  of  each. 
When  Sir  Isaac  Newton  had  the 
inspection  of  the  English  mint  he 
made,  by  order  of  council,  assays 
of  a  great  number  of  foreign  coins 
to  know  their  intrinsic  values  and 
to  calculate  thereby  the  par  of  ex- 
change between  England  and  other 
countries,  of  which  a  table  is  given 
by  Dr.  Arbuthnot.  And  he  says  you 
may  thereby  judge  the  balance  of 
trade,  as  well  as  the  distemper  of  a 
patient  by  the  pulse.  And  this,  it 
seems,  induced  Mons.  Dutot,  in  a 
late  book,  entitled.  Reflections  Poli- 
tique sur  Ics  Finances,  to  follow 
the  same  path  in  calculating  the 
par  of  exchange,  and  to  say  that 
the  balance  of  trade  may  be  there- 
by as  well  judged  of  as  the  weather 
by  a  barometer."  Gilbert  on  Bank- 
ing, 417. 


§  213]     PECDNIAKY  REPRESENTATIVE  OF  VALl'E.         C15 

the  creditor  is  entitled  to  judgment  for  an  otjuivalent  accord- 
ing to  the  real  par,  or  whether  lie  must  accept  as  an  oiiuiva- 
lent  the  nominal  par.  Judge  Story  says,  ''if  a  note  were  made 
in  England  for  £100  sterling,  payahle  in  Boston,  if  a  suit  were 
brought  in  Massachusetts,  the  party  would  be  entitled  to  re- 
cover .  .  .  the  established  ])ar  of  exchange  by  our  laws. 
But  if  our  currency  had  beccjuic  depreciated  by  a  debasement  of 
our  coinage,  then  the  dei)rccia(i()n  ought  to  be  allowed  for,  so 
as  to  bring  the  sum  to  the  real  par,  instead  (jf  tlu;  nominal 
par,"^^  And  for  the  same  reason,  if  the  money  in  which  the 
debt  was  incurred  werq  depreciated,  an  allowance  by  way  of 
deduction  should  be  made  in  ascertaining  the  equivalent  in  a 
currency  of  gold  and  silver  of  standard  value.  There  being  no 
statute  fixing  for  general  purposes  a  legal  par  of  exchange,  the 
rule  which  is  established  by  the  best  authorities  is  that  in  ren- 
dering judgment  in  a  different  currency  it  should  be  given  for 
such  sum  as  approximates  most  nearly  to  tlu;  value  of  the 
amount  contracted  for.^'^ 

§  213.  Rate  of  exchange.  Where  the  debt  is  not  only  pay- 
able in  the  currency  of  a  foreign  country,  but  is  expressly  or 
by  implication  also  payable  there,  and  not  having  been  paid 
is  sued  in  this  country,  the  creditor  is  entitled  to  the  money 
of  the  forum  to  a  sum  equal  to  the  value  of  the  debt  at  the 
place  where  it  should  have  been  paid.  Where  the  creditor  sues 
the  law  ought  to  give  him  just  as  much  as  he  would  have  had 
if  the  contract  had  been  performed,  just  what  he  must  pay  to 
remit  the  amount  of  the  debt  to  the  country  where  it  was  pay- 
able. Hence  he  is  entitled  to  recover  according  to  the  rate  of 
exchange  between  the  two  countries  at  the  time  of  the  trial.^' 

36  story's  Confl.  Laws,  §  310.  Vaii^lian    and    Tolograpli,    14    Wall. 

37Beiiners  v.  Clemens,  58  Pa.  24;  258,   20   L.   ed.   807;    Story's   Confl. 

Robinson  v.  PTall,  28  How.  Pr.  342;  Laws,  §§  310,  311;   Scott  v.  Bevan, 

Pollock    V.    Colglazure,     Sneed,    2 ;  2  B.  &  Ad.  78. 

Comstock  V.   Smith,  20   Mich.   338;  38Marl)urg  v.  INfarhiirg,  20  IMd.  8, 

Reiser    v.    Parker,    1    Lowell,    2G2;  90   Am.   Dec.   84;    Watson   v.   Hrew- 

Hawes   v.   Woolcock,   2G   Wis.   620;  ster,  1  Pa.  381;  Hawes  v.  Woolcock, 

Jelison  v.  Lee,  3  Woodb.  &  M.  368;  26  Wis.  620:    Allsliouse  v.  Ramsey, 

Cary    v.    Courtenay,  103  Mass.  316,  6   Wliart.    331.    37    Am.   Dec.   417; 

4  Am.  Rep.  559;  Swanson  v.  Cooke,  .lelison  v.  Lee,  3  Woodb.  &  M.  368; 

30  How.  Pr.  385,  45  I'.arb.  574;  The  Xickerson     v.     Soesman,     98     Mass. 


616 


SirriLERLAND    ON"    DAMAGES. 


[§  213 


364;  Capron  v.  Adams,  28  Md.  529 
Gushing    v.    Wells,    98    Mass.    550 
Smith  V.  Sliaw,  2  Wash.  C.  C.  167 
Stringer  v.  Coombs,  62  Me.  160,  16 
Am.   Rep.  414;    Grant  v.  Healey,  3 
Sumn.  523;   Benners  v.  Glemens,  58 
Pa.    24;    Woodhull     v.     Wagner,    1 
Bald.  296;  Wood  v.  Watson,  53  Me. 
300 ;  Delegal  v.  Naylor,  7  Bing.  460 ; 
Cash  V.  Kennion,  11  Ves.  314;   Lee 
V.  Wilcocks,  5  S.  &  R.  48;    Scott  v. 
Bevan,    2    B.    &    Ad.    78,    and   note; 
Ekins  V.  East  India  Co.,  1  P.  Wms. 
395 ;    Lanusse  v.   Barker,   3   Wheat. 
101,  4  L.  ed.  343. 

The  opinion  in  Grant  v.  Healey, 
supra,  places  the  law  on  this  sub- 
ject in  a  clear  light,  and  answers 
with  great  force  the  contrary  de- 
cisions in  Massaehu.setts  and  New 
York  which  are  cited  in  the  discus- 
sion. "1  take  the  general  doctrine 
to  be  clear,"  said  the  learned  judge, 
"that  "whenever  a  debt  is  made  pay- 
able in  one  country,  and  is  after- 
wards sued  for  in  another  country, 
the  creditor  is  entitled  to  receive  the 
full  sum  necessary  to  replace  the 
money  in  the  country  where  it 
ought  to  have  been  paid,  with  in- 
terest for  the  delay;  for  then  and 
then  only  is  he  fully  indemnified 
for  the  violation  of  the  contract. 
In  every  such  case  the  plaintiff  is 
therefore  entitled  to  have  the  debt 
due  to  him  first  ascertained  at  the 
par  of  exchange  between  the  two 
countries,  and  then  to  have  the  rate 
of  exchange  between  these  countries 
added  to  or  subtracted  from  the 
amount,  as  the  case  may  require,  in 
order  to  replace  the  money  in  the 
country  where  it  ought  to  be  paid. 
It  seems  to  me  that  this  doctrine 
is  founded  on  the  true  principles 
of  reciprocal  justice.  The  ques- 
tion, therefore,  in  all  cases  of  this 
sort,  where  there  is  not  a  known 
and  settled  commercial  usage  to 
govern   them,   seems    to    me    to    be 


rather  a  question  of  fact  than  of 
law.  In  cases  of  accounts  and  of 
advances,  the  object  is  to  ascertain 
where,  according  to  the  intention  of 
the  parties,  the  balance  is  to  be 
repaid — in  the  country  of  the  cred- 
itor or  of  the  debtor.  In  Lanusse 
V.  Baker,  3  Wheat.  101,  147,  4  L. 
ed.  343,  356,  the  supreme  court  of 
tiie  United  States  seem  to  have 
thought  that  where  money  is  ad- 
vanced for  a  person  in  another 
state,  the  implied  undertaking  is  to 
replace  it  in  the  country  where  it 
is  advanced,  unless  that  conclusion 
is  repelled  by  the  agreement  of  the 
parties  or  by  other  controlling  cir- 
cumstances. ...  In  relation  to 
mere  balances  of  account  between 
a  foreign  factor  and  a  home 
merchant,  there  may  be  more  diffi- 
culty in  ascertaining  where  the  bal- 
ance is  reimbursable,  whether  where 
the  creditor  resides  or  where  the 
debtor  i-esides.  Perhaps  it  will  be 
found,  in  the  absence  of  all  control- 
ling circumstances,  the  truest  rule 
and  the  easiest  in  its  application  is 
that  advances  ought  to  be  deemed 
reimbursable  at  the  place  where 
they  are  made,  and  sales  of  goods 
accounted  for  at  the  place  where 
they  are  made  or  authorized  to  be 
made.  .  .  .  (Consequa  v.  Fan- 
ning, 3  Johns.  Ch.  587,  610,  17 
Johns.  511,  8  Ain.  Dec.  442.)  .  .  . 
I  am  aware  that  a  different  rule,  in 
respect  to  balances  of  account  and 
debts  due  and  payable  in  a  foreign 
coimtry,  was  laid  down  in  Martin 
V.  Franklin,  4  Johns.  125,  and  Sco- 
field  V.  Day,  20  Johns.  102,  and 
that  it  has  been  followed  by  the  su- 
preme court  of  Massachusetts  in 
Adams  v.  Cordis,  8  Pick.  260.  It 
is  with  unaffected  diffidence  that  I 
venture  to  express  a  doubt  as  to  the 
correctness  of  the  decisions  of  tliese 
learned  courts  upon  this  point.  It 
appears   to   me   that   the   reasoning 


§    213]  PKCUWIAKV    ItEPKESENTATlVE    Ol-'    VAI.IK. 


617 


in   the  4  Johns.   325,   \v]iich  consti- 
tutes the  basis    of    the    other  deci- 
sions,   is    far    from    being    satisfac- 
tory.    It  states  very  properly  tliat 
the  court  have  notliing  to  do  witli 
inquiries  into  the  disposition  which 
tlie  creditor  may  make  of  his  debt 
after   the   nionc^y     has     reached     liis 
hands;    and    the    court   are    not    to 
award    damages    upon    such    uncer- 
tain calculations    as    to    the  future 
disposition  of  it.     But  that  is  not, 
it    is    respectfully    submitted,    tlie 
point  in  controversy.     The  question 
is  whether,  if  a  man  lias  undertaken 
to  pay  a  debt  in  one  country,  and 
the   creditor    is    compelled    to    sue 
him  for  it  in  another  country,  where 
the  money  is  of  less  value,  the  loss 
is  to  be  borne  by  the  creditor,  Avlio 
is    in    no    fault,    or    by    the    debtor, 
who  by  the  breach   of  his   contract 
has  occasioned  the  loss.     The  loss  of 
which  we  here  speak  is  not  a  future 
contingent   loss.      It   is  positive,   di- 
rect,  immediate.     The  very  rate  of 
exchange  shows  that  tlie  very   sum 
of   money   paid    in    one    country    is 
not  an  indemnity  or  equivalent  for 
it  when  paid  in  another  country,  to 
which  by  the  default  of  the  debtor 
the    creditor     is     bound     to     resort. 
Suppose  a  man   undertakes   to   pay 
another  $10,000   in   China  and  vio- 
lates  his   contract,    and   then   he    is 
sued  therefor   in   Boston,   when   the 
money  if  duly  paid  in  Cliina  would 
be  worth  at  the  verj'  moment  twen- 
ty per  cent,  more  than  it  is  in  Bos- 
ton; what  compensation  is  it  to  tlie 
creditor  to  pay  him  the  $10,000  at 
par    in    Boston?      Indeed    I    do    not 
perceive    any    just    foundation    for 
the  rule  that  interest  is  payable  ac- 
cording to  the  law  of  the  place  where 
the  contract  is  to  be  performed,  ex- 
cept it  be  the  very  same  on  which 


a  like  claim  iiiny  be  made  as  to  the 
principal,    viz..   (liat   the  debtor   un- 
dertakes to  pay  there,  and  therefore 
is  bound  to  put  the  creditor  in   IIk; 
same  situation  as  if  he  had  punctu- 
ally    complied     with     his     contraet 
there.     It  is  suggested  that  the  caai; 
of  bills  of  exchange  stands  upon  a 
distinct  ground,  that  of  usage,  and 
is    an    exception    from    the    general 
doctrine.      I    lliink    otherwise.      Tlie 
,   usage   has   done  nothing  more  than 
ascertain    what    should    be   the    rate 
of   damages    for   a    violation    of   the 
contract  generally,  a  matter  of  con- 
venience   and    daily    occurrence    in 
business,    rather    than    to    have    a 
fluctuating  standard   dependent  up- 
on   the    daily    rates    of    exchange; 
exactly  for  the  same  reason  that  the 
rule  of  deducting  one-third  new  for 
old  is  applied  to  cases  of  repairs  of 
ships,     and     the     deduction    of   niie- 
tliird   from  the  gross  freight  is  ap- 
plied in  cases  of  general  average.    It 
cuts  off  all  minute  calculations  and 
inquiries     into     evidence.       But     in 
cases  of  bills  of  exchange  drawn  be- 
tween countries  where  no  sucli  fixed 
rate  of  damages  exists,  the  doctrine 
of  damages  applied  to  the  contraet 
is  precisely  that  wiiieli   is  sought  to 
be  applied  to  tlie  case  of  a  common 
debt    due    and    payalile    in    another 
country;   that  is  to  say,  to  pay  the 
creditor   the   exact    sum     which     lie 
ought  to  have  received  in  that  coun- 
try.    That  is  sufliciently  clear  from 
the  case  of  Mellish   v.  Simeon,  2  H. 
Black.  378,  and  the  whole  theory  of 
re-exchange."     See  Lodge  v.  Spoon - 
er,  8  Gray,  160;   Hussey  v.  Farlow, 
0   Allen,   26.'?;    Bush   v.    Baldrey,    11 
id.  367 ;   Weed  v.  Miller,  1  McLean, 
423;    r.rutacup    v.    Woulluise.    2    id. 
581. 


618  SUTIIEKLAND    ON    DAMAGES. 


CHAPTER  VII. 

CONVENTIONAL  LIQUIDATIONS  AND  DISCHARGES. 
Section  1. 


§  214-216.  What  is;  modes  of  making. 

217.  What  is  not  payment. 

218.  Effect  of  payment. 

219.  Payment  before  debt  due. 

220.  Payment  by  devise  or  legacy. 

221.  Payment  by  gift  inter  vivos. 

222.  Retaining  money  by  executor,  etc. 

223.  224.  Payment  in  counterfeit  money,  bills  of  broken  banks  or  forgeu 

notes  and  checks. 

225-227.  Payment  by  note,  bill  or  check. 

228,  229.  Collaterals  collected  or  lost  by  negligence  of  creditor  are  pay- 
ments. 

230.  Who  may  make  payments. 

231.  To  whom  payment  may  be  made. 

232.  Pleading  payment. 

233.  Evidence  of  payment. 

Section  2. 

application  of  payments. 

234.  General  rule. 

235.  236.  By  debtor. 

237.  iSame  subject;  evidence. 
238-240.  By  creditor. 

241.  Appropriation  by  the  court. 

242.  When  payments  applied  p?-o  rata. 

243.  General  payment  applied  to  oldest  debt. 

244.  General  payment  applied  to  a  debt  bearing  interest,  and  first  to  in- 

terest. 

245.  General  paymexits  applied  to  the  del)t  least  secured;   comments  on 

conflicting  views  of  the  general  subject. 

Section  3. 

ACCORD   and   SATISFACTION. 

246.  Definition. 

247.  Consideration. 


CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.  GIO 

248.  Payment  of  part  of  a  debt  will  not  support  agreement  to  discharge 

the  whole. 
248a.  Same  subject. 

249.  Any  other  act  or  promise  wliiuh  is  a  iiuw  consideration  will  suffice. 

250.  Composition  witli  creditors. 

251.  Compromise  of  disputed  claim. 

252.  Agreement  must  be  executed. 

252a.  Rescission  or  exoneration  before  I)reacli. 

Section  4. 

RELKASR. 

253.  Definition. 

254.  Diflfers  from  accord  and  satisfaction. 

255.  Extrinsic  evidence  and  construction. 

256.  Who  may  execute. 

257.  Effect  when  executed  by  or  to  one  of  several  claiming  or  liable. 

258.  What  will  operate  as  a  release. 

259.  Covenant  not  to  sue. 

Section  5. 


260.  Right  to  make. 

261.  On  what  demands  it  may  be  made. 

262.  When  it  may  be  made. 

263.  In  what  money. 

264.  By  whom. 

265.  To  whom. 

266.  267.  It  must  be  sufficient  in  amount. 

268.  How  made. 

269.  Where  to  be  made. 

270.  Must  be  unconditional. 

271.  Effect  of  accepting. 

272.  Must  be  kept  good. 

273.  Waiver  and  omission  of  tender  on  sufficient  excuse. 

274.  Tender  must  be  pleaded  and  money  paid  into  court. 

275.  EfTect  of  plea  of  tender. 

276.  EflVct  of  tender  wlien  money  paid  into  court. 

277.  Effect  of  tender  on  collateral  securities. 

278.  Paying  money  into  court. 

Section  6. 

stipulated  damacies. 

279.  Contracts  to  liquidate  damages  valid. 

280.  Damages  can  be  liquidated  only  hy  a  valid  eonlract. 
381.  Modes  of  li(|uidating  damages;    conipuf  ;if  Idh   of  time. 


620  SUTHERLAND    ON    DAMAGES.  [§    214 

282.  Alternative   contracts. 

283.  Liquidated  damages  contradistinguished  from  penalty. 

284.  The  evidence  and  effect  of  intention  to  liquidate. 

285.  Stipulated  sum  where  damages  otherwise  certain  or  uncertain. 

286.  287.  Contracts  for  the  payment  of  money. 

288.  Large  sum  to  secure  pajinent  of  a  smaller. 

289.  Stipulation  where  damages  certain  and  easily  proved. 
290-292.  Stipulations  when  damages  uncertain. 

293.  Same  subject;   illustrations. 

294,  295.  Stipulation   for  payment  of  a   fixed  sum   for   partial   or  total 

breach. 

296.  Effect  of  part  performance  accepted  where  damages  liquidated. 

297.  Liquidated  damages  are  in  lieu  of  performance. 

298.  Effect  of  stipulation  upon  right  of  action. 

299.  Waiver  of  right  to  stipulated  damages. 

Section  1. 


PAYMENT. 

§  214.  What  is;  modes  of  making.  Payment  is  the  actual 
performance  of  an  agreement  or  duty  to  pay  money. ^  It  is  dis- 
tinguishable from  accord  and  satisfaction,  and  from  release; 
it  is  strict  performance  in  respect  to  a  debt,  according  to  the 
literal  and  substantial  import  of  the  contract  by  virtue  of  which 
it  was  incurred ;  accord  and  satisfaction  is  the  adoption,  by 
mutual  consent  and  tlie  doing,  of  some  other  act  as  a  substitute; 

1  City   Sav.   Bank   v.    Stevens,   59  thereafter  is  too  late.     Leeds  &  H. 

N.  Y.  Super.  Ct.  549.  Theater  v.  Broadbent,   [1898]   1   Ch. 

"Payment     is    the     discharge     in  343. 

money   or    its   equivalent   of   an   ob-  "Originally  payment  was  the  per- 

ligation  or  debt  owing  by  one  person  formance  of  a  promise  to  pay  money 

to  another."     Morris  v.  Reyman,  55  at  the  time  -and  in  the  manner  re- 

Ind.^  App.  112.  quired  by  the  terms  of  the  contract; 

Payment    on    Sunday    discharges  but  it  has  been  extended  to  include 

the  debt.     .Tameson  v.  Carpenter,  68  the   delivery   of   money   in   satisfac- 

N.  H.  62.  tion  of  a  debt  after  a  default  has 

Under  an  agreement  to  pay  bills  been  made  in  payment  according  to 

daily   for   goods   delivered   the   pur-  the  terms  of  the  contract."    Ulsch  v. 

chaser  has  the  whole  of  the  day  in  MuUer,   143  Mass.   379. 

which    bills    are    presented    to    pay  A    cross-demand    is   not   payment 

them.      Anglo-Am.   P.    Co.   v.   Pren-  and  cannot  be  treated  as  such  unless 

tiss,  157  111.  506.  by   agreement  of  the  parties.     Mc- 

Punctual     payment     means     pay-  Curdy   v,   Middleton,   82   Ala.    131; 

ment   on   the   day   fixed ;    nine   days  Wharton   v.  King,   69   Ala.   365. 


§    214  J     CQNVENTIONAJ.    LIQUIDATIONS    AND    DISCARQES.  621 

release  is  a  renunciation  of  the  contract  or  liability,  whereby 
performance  is  waived.  But  accord  and  satisfaction  is  a  pay- 
ment sub  modo;  and  a  release,  as  it  must  be  founded  on  an 
actual  consideration,  shown  or  implied,  is  to  the  extent  of  such 
consideration  a  payment  or  satisfaction.^ 

Payment  includes  the  transfer  by  the  debtor  to  the  creditor 
and  the  receipt  by  the  latter  of  money  or  something  else  of 
value  accepted  by  him  as  representing  money.'  Ordinarily 
the  debtor  must  seek  the  creditor  to  pay  him.*  Ihit  if  a  lease 
is  silent  as  to  the  place  where  rent  is  to  be  paid  the  landlord 
must  make  a  demand  of  payment  on  the  land  before  he  can 
declare  a  forfeiture,  notwithstanding  the  tenant  has  thereto- 
fore sought  him  for  the  purpose  of  making  payment.^  If  there 
is  no  agreement  on  the  subject  payment  must  be  made  wliere 
the  creditor  resides,  or  may  be  found,  or  to  his  agent. ^  IJiit 
if  the  place  of  payment  is  designated  and  the  presence  of  the 
payee  is  necessary,  he  must  attend ;  and  if  either  of  two 
places  is  agreed  upon  he  must  select,  and  there  is  no  default 
until  he  has  done  so.'  If  the  creditor  refuses  to  receive  pay- 
ment at  the  place  appointed  by  him  and  does  not  inform  his 
debtor  of  a  purpose  to  require  it  to  be  made  elsewhere,  he 
waives  the  right  to  payment  at  another  than  the  designated 
place  and  cannot  reap  any  benefit  from  his  act.*  The  duty 
of  the  debtor  to  seek  his  creditor  does  not  require  that  he  should 
do  so  beyond  the  limits  of  the  state  or  country  in  which  the  debt 
was  contracted,  and  by  implication  or  express  agreement  was 

2  See   Bottomley  v.   Niittall,  5   C.  6  Rea   v.    Eagle    T.    Co.,    201    Pa. 
B.    (N.  S.)    122,   134,   135.  273. 

3  Fremont  County  v.  Fremont  Co.  «  State  v.  District  Court,  41  ^lont. 
Bank     145   Towa    8  ^^ ;  Bardsley  v.  Wasliington  M.  Co., 

4Magruder    v.'    Cumberland    Tel.  "'^    Wash.   553.   132   Am.   St.    1133; 

&   T.   Co.,   92   Miss.   71fi,   IG   L.R.A.  ^^n'-^^^alt   v.   Este    40   Kan    418; 

n..  o>      \.r.      ..r  ,..,,,  Bakor  V.  TIo  t,  56  WIs.  1 00 ;  NortH- 

N.S.       500;     Weyand    v.    Randall,  ^  ^     ^  ,,      ,       „,    ,t- 

•'  western    I.    Co.   v.   Meade,   21    uia. 

131   App.  Div.    (N.  Y.)    167;    Scott  ^g^ 

V.    Grant,    37    Tex.    Civ.    App.    10!);  7  Thorn  v.  City  Rice  Mills,  40  Ch. 

Berley  v.  Columbia,  etc.  R.  Co.,  82  dj^    357       gee   Rutherford   v.    Pru- 

S.  C.  232;  Cranley  v.  Hillary.  2  M.  dontial  Ins.  Co.,  34  Ind.  App.  531. 
&    S.    120;     Soward    v.    Palmer,    2  8  Union  Mut.  L.  Ins.  Co.  v.  Union 

Moore,   276;    Galloway  v.   Standard  Mills  P.  Co.,  37  Fed.  286,  3  L.R.A. 

F.  Ins.  Co.,  45  W.  Va.  237.  90. 


622 


SUTHERLAND    ON    DAMAGES. 


[§   214 


to  be  paid.^  But  as  nothing  but  actual  payment  will  discharge 
the  debt,  this  duty  of  seeking  the  creditor  will  more  properly  be 
considered  in  connection  with  the  subject  of  tender.^"  It  may, 
however,  be  added  here  that  if  the  debtor  is  a  municipality, 
county,  state  or  government  the  obligation  is  not  dischargeable 
at  any  other  place  than  its  treasury  ^^  unless  some  other -place  be 
designated.  A  county  which  issued  bonds  containing  a  reserva- 
tion of  the  right  to  pay  them  after  a  certain  date,  prior  to  their 
maturity,  was  not  bound  to  seek  the  holders  of  them  and  give 
notice  of  its  election  to  pay  them  after  a  date  duly  fixed  by  the 
authorities.  Its  duty  was  discharged  by  giving  ample  notice 
through  newspapers  of  the  exercise  of  its  option  that  the  bonds 
would  be  paid  at  the  place  named  therein.  By  placing  the 
funds  there  the  debtor  discharged  its  duty  to  the  bondholders 
nnd  was  not  liable  to  them  for  interest  thereafter. ■^^ 

If  a  debtor  is  directed  by  his  creditor  to  remit  money  by 
mail,  or  if  that  be  the  usual  mode  of  remitting  it,  and  the  re- 
iiiitt:ince  1)6  lost,  the  creditor  must  sustain  the  loss."     In  such 


9  Weyand  v.  Park  Terrace  Co.,  202 
N.  Y.  231,  36  L.R.A.(N.S.)  308; 
King  V.  Finch,  60  Ind.  423;  Littell 
V.  Nicholas,  Hardin  66;  Galloway 
V.  Standard  F  Ins.  Co.,  45  W.  Va. 
237. 

10 §§  260-270. 

liPekin  v.  Reynolds,  31  111.  529, 
S3  Am.  Dec.  244;  Boyle's  Limacy, 
20  Pa.  Super.  Ct.  1  ;^People  v.  Taze- 
well County,  22  111.  147;  Johnson 
V.  Stark  County,  24  id.  75;  South 
Park  Com'rs  v.  Dunlevy,  91  id.  4j9; 
Friend  v.  Pittsburgh,  131  Pa.  305,  6 
L.R.A.  636,  17  Am.  St.  811  ;  Sibley 
V.  Pine  County,  31  Minn.  201  ; 
Monteith  v.  Parker,  36  Ore.  170; 
Williamson  County  v.  Farson,  101 
111.  App.  328,  aff'd  199  111.  71. 

12  Stewart  v.  Henry  County,  66 
Fed.  127;  Ward  v.  Smith,  7  Wall. 
450,  19  L.  od.  209.  See  Williamson 
County  V.  Farson,  supra. 

13  Colvin  V.  United  States  Mut. 
Accident      Ass'n,      66      Hun      543; 


Primeau  v.  National  L.  Ass'n,  77 
Hun  418;  McCluskey  v.  Same,  77 
Hun  566,  affirmed  without  opinion 
149  N.  Y.  616;  Guilfoyle  v.  Na- 
tional L.  Ass'n,  36  App.  Div.  (N. 
Y.)  343;  Jung  v.  Second  Ward  Sav. 
Bank,  55  Wis.  364,  42  Am.  Rep. 
719;  Warwicke  v.  Noakes,  Peake, 
67.  See  Parker  v.  Gordon,  7  East 
385.  Compare  State  v.  Insurance 
Co.,  106  Tenn.  282. 

If  no  mode  of  remitting  is  indi- 
cated by  the  creditor  a  remittance 
made  in  the  way  a  prudent  man 
would  do  if  he  was  paying  his  own 
debt  relieves  an  agent  from  re- 
sponsibility. Underwriters'  W.  Co. 
V.  Board  of  Underwriters,  35  La. 
Ann.  803. 

In  the  absence  of  an  express  di- 
rection to  remit  by  mail  or  a  usage 
or  course  of  dealing  from  which 
authority  to  so  remit  may  be  in- 
ferred, a  remittance  of  money  so 
made   is   at   the  risk   of   the   party 


§    214  ]     CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKGES.        623 

case  compliance  with  the  direction  in  respect  to  tlic  mode  of 
remittance  fulfills  all  the  requisites  of  payment — tender  and 
acceptance, — both  of  which  are  essential.  To  constitute  a  pay- 
ment, money  or  some  other  valnable  thing'  must  he  delivered  by 
the  debtor  to  the  creditor  for  the  purpose  of  extinguishing  the 
debt,  and  the  creditor  must  receive  it  for  that  purpose,"  and 
if  a  remittance  is  made  by  post  it  must  reach  the  creditor  on 
or  before  the  time  it  was  due.^^  It  is,  however,  competent  f<»r 
parties  to  agree  that  payments  shall  be  made  in  something  else 
of  value  than  money. ^^  If  an  employer  and  emjjloyce  stipulate 
that  advances  made  to  the  latter  should  1x3  re]iaid  by  services, 
the  former  is  bound  to  accept  payment  in  that  mode,  and  if 


mailing  it.  Burr  v.  Sickles,  17  Ark. 
428,  65  Am.  Dec.  437. 

There  is  no  evidence  of  payment 
when  the  instrument  remitted  de- 
scribes the  payee  by  a  wrong  Chris- 
tian name,  though  lie  keeps  it  and 
miglit  have  obtained  the  money  by 
signing  it  in  the  name  used.  Gordon 
V.  Strange,  ]  Ex.  477. 

l4Gaar  v.  Taylor,  128  Iowa,  630; 
Slaughter  v.  Slaughter,  7  Houst. 
482;  Lofland  v.  McDaniel,  1  Pennc. 
416;  Holdsworth  v.  DeBelaunzaran, 
106  N.  Y.  119;  Robinson  v.  Robin- 
son, 20  S.  C.  567;  Stciner  v.  Erie 
Dime  S.  &  L.  Co.,  98  Pa.  591 ;  Ryan 
V.  S'lSTeil,  49  Mich.  281;  Kingston 
Bank  v.  Gay,  19  Barb.  459.  See 
Collins  V.  Adams,  53  Vt.  433. 

A  promise  by  a  creditor  to  cover 
a  check  signed  by  a  third  person  in 
favor  of  the  debtor  does  not  prevent 
the  cheek,  on  its  transfer  to  the 
creditor  and  appropriation  by  him, 
from  operating  as  payment.  Tiddy, 
V.  Harris,  101  N.  C.  589. 

Payment  implies  a  voluntary  act 
of  the  debtor  looking  to  the  satis- 
faction, in  whole  or  in  part,  of  the 
demand  against  him.  A  creditor 
cannot  lawfully  pay  himself  witli 
the  debtor's  money  without  the  lat- 
ter's   consent,   expres.'s    or    implied; 


and  wlien  tlie  dcbinr  delivers  bim 
money  for  a  pnrjjose  wliich  nega- 
tives tiie  idea  of  payment  the  credit- 
or's control  of  it  is  limited  to  the 
jjinpose  declared.  Detroit,  etc.  R. 
Co.    v.   Smith,   50   Mich.    112. 

.Mt)nthly  payments  made  on  a 
mortgage  in  consideration,  as  stat- 
ed in  receipts  therefor,  of  tlie  ex- 
tension of  the  time  for  payment  of 
the  mortgage  debt  from  month  to 
month  will  be  applied  in  extinguish- 
ment of  such  debt.  Batenian  v. 
P.lake,  81  Mich.  227. 

If  money  paid  unconditionally  is 
retained  its  acceptance  cannot  be 
made  conditional  UTiless  notice  to 
that  effect  is  in  fact  given  the 
payor.  Shea  v.  Massachusetts  Ben. 
Ass'n,  160  Mass.  289,  39  Am.  St. 
475. 

15  Illinois  L.  Ins.  Co.  v.  McKay,  6 
Ga.  A  pp.  285. 

iBBurlee  D.  D.  Co.  v.  Besse,  L30 
Fed.  444,  64  C.  C.  A.  646;  Mail  & 
T.  Pub.  Co.  V.  Marks,  125  Iowa,  622; 
Mahnken  v.  Pelletreau,  93  App.  Div. 
(N.  Y.)  420;  United  W.  W.  Co.  v. 
Farmers'  L.  &  T.  Co.,  11  Colo.  App. 
225,  240;  Webb  v.  Vermillion,  13 
Ky.  L.  Rep.  367  (Ky.  Super.  Ct.)  ; 
Rider  v.  Gulp,  68  Mo.  App.  527; 
Pinson    v.    Puckett,    35    S.    C.    178; 


624 


SUTIIEKLAND    ON    DAMAGES. 


[§   214 


he  permits  the  employee  to  be  involuntarily  driven  from  the 
service  by  a  co-employee  the  debt  is  extinguished.^'  A  note 
jDayable  in  property  may  be  satisfied  by  the  payment  of  money ;  ^* 
by  failing  to  pay  in  property  as  agreed  the  debtor  forfeits  his 
election  to  pay  either  in  that  mode  or  in  money,  and  the  creditor 
may  demand  money. ^^  If  a  contract  may  be  satisfied  by  deliv- 
ery of  a  commodity  as  ordered  by  the  payee  the  failure  to  fill 
an  order  renders  the  balance  due  payable  in  money,  and  the  ac- 
ceptance of  another  order  in  the  course  of  business  does  not  re- 
instate the  clause  of  the  contract  as  to  the  mode  of  payment.^" 
For  the  failure  to  pay  a  given  sum  in  currency  or  in  coin,  it 
being  provided  that  less  of  the  latter  than  of  the  former  shall 
extinguish  the  debt,  the  measure  of  damages  is  the  lesser  sum 


Van  Werden  v.  Equitable  L.  Assur. 
Soc,  99  Iowa  621;  Bixby  v.  Grand 
Lodge  A.  0.  U.  W.,  105  Iowa,  505; 
Stirna  v.  Beebe,  11  App.  Div.  (N. 
Y.)  206;  Weir  v.  Iludnut,  115  Ind. 
525;  Sharp  v.  Carroll,  66  Wis.  62; 
Phillips  V.  Ocmulgoe  Mills,  55  Ga. 
633.     See  §  215. 

Payment  is  made  "at  the  time," 
within  the  meaning  of  the  statute 
of  frauds,  where  the  vendor  accepts 
as  paj'ment  a  check  which  is  then 
good  and  which  is  subsequently 
paid,  though  the  time  of  payment 
is  not  shown.  Hunter  v.  Wetsell, 
84  N.  Y.  549,  38  Am.  Rep.  544;  El- 
well  V.  Jackson,  1  Cab.  &,  Ellis, 
r,62. 

The  "good  will''  of  a  business  has 
a  market  value  so  tliat  it  may  be 
accepted  in  payment.  Beebe  v.  Hat- 
field, 67  Mo.  App.  609. 

A  creditor  receiving  a  commodity 
as  part  payment  of  an  indebtedness 
sliould  sell  it  in  accordance  with 
the  debtor's  directions  and  credit 
him  with  proceeds.  Williamson  v. 
Roberts,  70  Ore.  126. 

17  Hanlin  v.  Walters,  3  Colo.  App. 
519. 

18  Leapald  v.  McCartney,  14  Colo. 
App.  442,  citing  Pinney  v.  Gleason, 


5  Wend.  394,  21  Am.  Dec.  223; 
Brooks  v.  Hubbard,  3  Conn.  58,  8 
Am.  Dec.  154;  Hise  v.  Foster,  17 
Iowa,  23 ;  Ferguson  v.  Hogan,  25 
Minn.  135;  Hej'wood  v.  Hey  wood, 
42  Me.  229,  66  Am.  Dec.  277; 
White  v.  Tompkins,  52  Pa.  363; 
Xowbridge  v.  Holcomb,  4  Ohio  St. 
38. 

19  Sugar  Beets  P.  Co.  v.  Lyons  B. 
S.  R.  Co.,  161  Fed.  215;  Porter  v. 
Brown,  11  Ariz.  153;  Jonesboro, 
etc.  R.  Co.  V.  Watts,  80  Ark.  543; 
McKinnie  v.  Lane,  230  111.  544,  120 
Am.  St.  338;  Wroughten  v.  Waffle, 
122  Iowa,  486;  Irving  v.  Bond,  76 
Neb.  293;  Walker  v.  Venters,  148 
N.  C.  388;  Crowl  v.  Goodenberger, 
112  Mich.  683;  Wyman  v.  Winslow, 
11  Me.  398,  26  Am.  Dec.  542;  Rob- 
bins  V.  Luce,  4  Mass.  474;  Caldwell 
V.  Dutton,  20  Tex.  Civ.  App.  369; 
Brashear  v.  Davidson,  31  Tex.  191; 
Haskins  v.  Dern,  19  Utah,  89; 
Texas  &  P.  R.  Co.  v.  Marlor,  123 
U.  S.  687,  31  L.  ed.  303;  Pearson 
V.  Williams,  24  Wend.  244;  Roberts 
V.  Beatty,  2  P.  &  W.  63,  21  Am. 
Dec.  410;  Renwick  v.  Goldstone,  48 
Cal.  554;  Smith  v.  Coolidge,  68  Vt. 
516,  54  Am.  St.  902. 

20  Smith  v.  Coolidge,  supra. 


§    214  ]     CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKGES.        (525 

and  interest  thereon.^^  And  if  i)ayincnt  may  be  made  in  either 
of  several  kinds  of  specified  notes  the  {;ovenant<n'  may  elect  those 
in  which  payment  shall  be  made;  on  default  his  liability  will  be 
measured  by  the  specie  value  of  such  as  would  have  been  most 
to  his  interest  to  have  paid.^^  These  cases  proceed  on  the  prin- 
ciple that  where  a  contract  gives  an  alternative  and  the  party 
who  has  it  violates  it  the  damages  are  measurable  by  it  if  it 
will  be  least  burdensome  for  him.^' 

The  defendants  forwarded  to  the  plaintiffs  sufficient  funds  to 
jDay  a  note  held  by  the  latter  against  the  former,  but  they  re- 
fused to  receive  it,  and  informed  the  defendants  that  the  money 
was  subject  to  their  order.  There  was  no  payment;  if  the  de- 
fendants would  protect  themselves  against  costs  they  should 
have  withdrawn  the  deposit  and  made  a  tender.^*  The  weight 
of  authority  is,  as  will  be  seen  in  the  section  on  accord  and  sat- 
isfaction, that  the  payment  of  a  less  sum  than  is  due  does  not 
discharge  a  liquidated  demand  unless  a  sealed  acquittal  is 
given  as  evidence  of  the  fact.^^  But  this  principle  docs  not 
apply  if  something  else  of  value  than  money  is  received,  though 
the  security  accepted  is  of  inferior  rank  to  that  which  it  is  re- 
ceived in  lieu  of ,^^  or  is  less  in  amount,^'  if  the  parties  agree 
that  it  shall  be  payment.  There  are  well  considered  cases  by 
courts  of  good  standing  to  the  effect  that  ''if  one  owing  a  sum  of 

21  White  V.  Green,  ."5  T.  B.  Mon.  paid  by  money  received  froin  (he 
155.  principal    debtor's    estate    and    with 

22  Hixon  V.  Hixon,   7  Humph.  33.  the    administrator's    consent;     held 

23  Holliday  v.  Highland  1.  &,  S.  to  sliow  that  the  latter  agreed  that 
Co.,  43  Ind.  App.  342.  the  money    so    received    should    be 

24  Kingston  Bank  v.  Gay,  19  payment.  Johnson  v.  Breedlove, 
Barb.  459;   Greenough  v.  Walker,  5  104  Ind.  521. 

Mass.  214;   Clark  v.  Wells,  5  Gray,  25  Grinnell  v.    Spink,     12S    Ma.ss. 

69.  25;     'J'uttle     v.     Tuttle,     12     Mete. 

After  the  commencement  of  an  (Mass.)  551,  46  Am.  Dec.  701  ;  Mar- 
action  upon  a  note  by  the  indorsee  riman  v.  Harriman,  12  Gray,  341; 
against  the  maker  its  payment  by  Baldwin  v.  United  States,  15  Ct.  of 
the  payee  and  indorser  does  not  CIs.  297;  Bostwick  v.  Same,  94  U. 
constitute  a  defense  so  as  to  affect  S.  53. 

the  costs.     Concord  G.  Co.  V.  French,  26  Peters   v.    Barnhill,    1    Hill    ( S. 

12  Daly,  228.  C),  237;    Dogan  v.   Ashbey,   1    I'ich. 

An    answer    by    a    surety    alleged  36. 

that   the   plaintiff    had    been    fully  27  Fensler     v.     Prather,     43     Ind. 
Suth.  Dam.  Vol.  I.^O. 


626  SUTHERLAND    ON    DAMAGES.  [§    214 

money,  the  amount  of  wliicli  is  not  ascertained  and  fixed,  offers 
his  creditor  a  certain  sum,  declaring  that  it  is  in  full  for  all 
that  is  o\\'ing  him,  which  sum  is  accepted  by  the  creditor,  such 
acceptance  is  in  full  discharge  of  the  demand."  ^®     A  judgment 
against  an  insolvent  may  be  satisfied  with  less  than  the  amount 
due  if  the  creditor  so  agrees.^^    If  a  debtor  mails  to  his  creditor 
a  statement  of  the  account  between  them  and  sends  the  balance 
which  he  admits  to  be  due,  requesting  a  receipt  in  full,  the  claim 
will  be  satisfied  if  the  creditor  retains  the  money.^°     "When 
one  gets  his  due  ignorantly,  if  he  is  not  hurt  by  his  ignorance, 
it  is  the  same  as  if  he  acted  with  knowledge.     Thus,  where  a 
negotiable  note  Avas  transferred  before  maturity  as  collateral, 
and  was  afterwards  paid  ofi^  in  property,  not  to  the  holder  but 
to  the  payee,  who  collected  without  authority,  and  who,  after 
converting  the  property  into  money,  transmitted  the  proceeds 
to  the  holder  as  his  own  money,  and  the  holder  applied  the  same 
to  the  secured  debt  only,  not  applying  it  also  to  the  collateral, 
and  not  knowing  that  he  was  dealing  with  a  fund  derived  from 
the  collateral,  this  was  a  discharge  of  the  collateral  debt,  not- 
withstanding  such   ignorance   on   the   part   of   the   holder."  ^^ 
Crediting  an  agent  with  the  amount  due  his  principal  is  pay- 
ment if  the  agent  pays  it  to  the  principal. ^^ 

§  215.  Same  subject.  The  creditor  may  assent  in  advance 
to  a  mode  of  payment  which  reserves  no  subsequent  election 
by  excluding  any  concurrent  act  on  his  part  in  accomplishing 
it,  or  hy  making  any  such  act  obligatory.  Thus,  an  award 
made  against  a  party  in  pursuance  of  a  submission  in  which 


nt);  Wolls  V.  Morrison,  01  id.  51 
Sibree  v.  Tripp,  14  M.  &  W.  23 
Thomas  v.  Ileathorn,  2  B.  &  C.  477 


Iowa,  522,  101  Am.  St.  270,  64 
L.R.A.  75.  Pearson  v.  Thoraason, 
15  Ala.  700,  50  Am.  Dec.  159,  is  to 


Bush  V.  Abraham,  25  Ore.  336;  Bolt  ^^^,  contrary. 

V.  Dawkins,  16  S.  C.  198,  214.  30  Rumsey  v.  Barber,  78  111.  App. 

28  American    M.    Co.    v.    Virginia  „„       .^.        ^  ,        ■,             o    +*     i«i 

,,   ^         ,  ^T     ^^^  oo^      -i.-       T^  88,   citmg   Ostrander   v.    Scott,    161 

M.  Co.,  91  Va.  272,  284,  citing  Dono-  '            ^ 

Til     '^'^Q 

hue  V.  Woodbury,  6  Cush.  148;  Mc-  ^"-  ''"^''• 

Daniels  v.  Lapham,  21  Vt.  222;  Mc-  ^^  Coleman  v.  Jenkins,  78  Ga.  607; 

Daniels  v.  Bank,  29  Vt.  230,  70  Am.  Butts  v.  Whitney,  96  Ga.  445. 

Dec.  406.  ^^  Herring  v.   American   Ins.   Co., 

29Engbretson    v.    Seiberling,    122  123  Iowa,  533. 


§    215]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        627 

he  agreed  to  indorse  it  on  a  note  is  a  payment  pro  tanto.^^  So 
money  paid  by  a  debtor  to  a  third  person  on  the  prior  request 
of  the  creditor  is  a  payment,^*  and  so  is  the  transfer  of  a  credit 
if  all  the  parties  are  agreed.^^  The  acceptance  by  a  debtor  of 
a  written  order  of  his  creditor  to  pay  money  to  a  third  person 
entitles  the  former  to  a  credit  to  the  extent  of  the  sum  called 
for  by  the  order,  altlioiigh  payment  was  not  then  made,  if  the 
debtor  was  solvent  and  his  liability  fixed,^^  and  it  is  innnaterial 
that  the  debtor  thonght  he  had  not  accepted  the  order  and  paid 
it  only  after  judgiiicnt  was  rendered  against  him.^'  The  tender 
of  bonds,  etc.,  of  a  banking  association  to  them  in  payment  of 
a  debt,  in  pursuance  of  their  agreement  to  receive  them  in  pay- 
ment,^^  or  work  done  for  the  payee  of  a  note  by  the  maker 
under  an  agreement  that  the  proceeds  are  to  be  applied  to  dis- 
charge the  note,  is  a  payment. ^^  Where  it  is  agreed  between 
debtor  and  creditor  that  the  former  shall  do  some  collateral  act 
for  a  stipulated  price  or  a  price  which  may  be  made  certain, 
and  that  such  act  shall  be  deemed  a  payment  or  part  payment  of 
the  debt,  the  amount  so  stipulated  becomes  at  once  a  payment 
when  the  act  has  been  performed. 

In  case  of  mutual  connected  debts  it  is  not  necessary  that  the 
formality  should  be  gone  through  of  each  party  handing  the 

33  Flint  V.   Clark,   12  Johns,   374.  cut  Ins.  Co.,  120  Mass.  330;   Train 

34  Brady  v.  Durbrow,  2  E.  D.  v.  Holland  P.  Ins.  Co.,  G2  N.  Y.  .'598; 
Smith,  78;  Storey  v.  Menzieg,  3  Bang  v.  Farniville  Ins.  Co.,  1 
Pin.  329.  Hughes,  290;    Grifllth   v.  New   York 

35Brockman    v.    Ostdiek,    79    Neb.  L.  Ins.  Co.,  101  Cal.  027,  40  Am.  St. 

843;   Patterson  v.  First  Nat.  Bank,  no. 

73  Neb.  384;  Eyles  v.  Ellis,  4  Bing.  36  Morwin  v.  Austin,  i58  Conn.  22, 

112;     Shryer    v.    Morgan,    77    Ind.  -j  l/r.A.  84. 

479;   Beach  v.  Wakefield,  107  Iowa,  37  Carroll  v.  Weaver,  C5  Conn.  70. 

r,07;  Daniel  v.  St.  Louis  Nat.  Bank,  38  Loavitt  v.  Beers,  Hill  cl-  Denio, 

07  Ark.  223.  221.       See    Nortlianipton     Bank     v. 

If  an  insurance  agent  gives  credit  ^^^^^.^^    ^  ^^    ^^  ^    ^^^^  ^^  ^^^^^    ^^^ 

for   the   premium   due   on    a   pohcy  ^^„  ^  ^^.^^^^^^^^  ^                       ^^  ^^,, 

and   insurer   charges   him   with   the  ,„„,/,  ti     , 

X     ^u      X  <••        •=   o^„;„n         Sn,   10  How.   190;    Exchange  Bank 

amount,   the   transaction    is   equiva-  '  » 

,     ,    ,  ,        \v„+i,«„;n,.    Tna        V.    Knox,    19   Gratt.   739:    Mann    v. 

lent  to  payment.      VVytnevule    Jns.  > 

&    B.    Co.    V.    Teiger,    90    Va.    277;       Curtis,  0  Robert.  128. 

Miller  V.  Life  Ins.  Co.,  12  Wall.  28.'",,  39  Moore  v.  Stadden,  Wright,  88; 

20   L.   ed.   398;    White   v.    Connecti-       Hall  v.  Holmes,  4  Pa.  251. 


n28 


SUTHERLAND    ON    DAMAGES. 


[§   215 


araoimt  he  owes  over  to  the  other,  whether  the  sums  they  are 
mutually  entitled  to  be  equal  or  not.  If  they  are  equal  they 
wholly  cancel  each  other;  if  not  equal  the  lesser  is  to  be  de- 
ducted from  the'  greater.  These  compensations,  when  they 
fairly  and  properly  occur,  are  reciprocal  payments."  An  agree- 
ment between  parties  having  mutual  demands  to  set  off  one 
against  the  other  would  seem  on  principle  and  the  weight  of 
authority  to  take  effect  also  as  reciprocal  payments,  and  the 
same  result  follows  in  all  cases  of  connected  accounts.*^     Thus, 


40  Rutherford  v.  Schattman,  119 
N.  Y.  604;  Iron  Cliffs  Co.  v.  Gin- 
grass,  42  Mich.  30;  Roberts  v.  Wil- 
kinson, 34  Mich.  129;  Connecticut 
Mut.  Ins.  Co.  V.  State  Treasurer,  31 
Mich.  6;  Phoenix  Ins.  Co.  v.  Meier, 
28  Neb.  124;  McKeon  v.  Byington, 
70  Conn.  429.  See  Sword  v.  Keith, 
31  Mich.  247;  Jewett  v.  Winship, 
42  Vt.  205 ;  Slasson  v.  Davis,  1  Aik. 
73;  Strong  v.  McConnell,  10  Vt. 
231;  Chellis  v.  Woods,  11  Vt.  466; 
Robinson  v.  Hurlburt,  34  Vt.  115; 
Bronson  v.  Rugg,  39  Vt.  241;  Dow- 
ner V.  Sinclair,  15  Vt.  495;  Huff- 
mans  V.  Walker,  26  Gratt,  314; 
Eaves  v.  Henderson,  17  Wend.  190; 
National  C.  R.  Co.  v.  Bonneville, 
119  Wis.  222. 

41  Breck  v.  Barney,  183  Mass.  133. 
It  was  said  that  it  has  been  the  law 
of  England  for  thirty  years  that  a 
set-off  of  a  debt  absolutely  due  from 
a  joint  stock  company  to  a  sub- 
scriber to  its  shares  against  the 
sum  due  from  him  to  the  company 
on  his  subscription  is  a  payment  in 
cash  for  the  shares.  Spago's  Case, 
L.  R.  8  Ch.  407;  Kent's  Case,  39  Ch. 
Div.  259,  and  intermediate  cases 
are  cited. 

In  Davis  v.  Spencer,  24  N.  Y. 
386,  it  was  held  that  an  agreement 
between  the  payee  of  a  note  and 
the  maker,  made  with  the  assent  of 
the  latter's  partner,  to  apply  the 
indebtedness   of   the   payee   to    such 


maker  and  his  partner  in  payment 
of  the  note,  operates  in  prcesenti  as 
a  satisfaction  of  the  note  pro  ta/nto. 
Allen,  J.,  said:  "Formerly  there  ap- 
pears to  have  been  a  doubt  whether 
an  agreement  to  set  off  precedent 
debts  operated  as  payment,  satisfac- 
tion or  extinguishment.  An  accord 
that  each  of  the  parties  should  be 
quit  of  actions  against  the  other 
was  said  not  to  be  good  because  it 
was  not  any  satisfaction.  Bac.  Abr., 
Accord,  A.  But  there  is  no  differ- 
ence in  principle  between  an  agree- 
ment concerning  debts,  one  of  which 
is  to  be  contracted  in  the  future, 
as  in  Eaves  v.  Henderson,  17  Wend. 
190,  and  an  agreement  concerning 
debts  already  existing;  and  it  has 
been  decided  that  an  agreement  to 
discontinue  and  a  discontinuance  of 
cross-actions  for  false  imprisonment 
constitute  an  accord  and  satisfac- 
tion, and  bar  another  action  by 
either.  Foster  v.  Trull,  12  Johns. 
456.  Whenever  a  valid  new  con- 
tract is  substituted  in  the  place  of 
the  old,  ...  an  action  will  not 
lie  on  the  old  contract,  but  the  rem- 
edy of  the  parties  is  on  the  new  or 
substituted  agreement  although  the 
transaction  may  not  amount  to  a 
technical  accord  and  satisfaction. 
Good  V.  Cheesman,  2  B.  &  Ad.  328. 
Where  two  brothers,  A.  and  B.,  prin- 
cipal and  surety  in  an  annuity,  had, 
in  an  agreement  between  them  and 


§    215]      CONVENTIONAL    LIQUIDATIONS    AND    DISOHAKGES. 


629 


if  A.  has  a  valid  and  subsisting  demand  against  B.  for  goods, 
services  or  cash,  constituting  proper  items  of  an  account  upon 


a  third  brother  for  the  settlement 
of  their  affairs,  declared  that  the 
bond  was  the  debt  of  B.,  the  surety, 
it  was  held  that  this  agreement, 
Whether  subsequently  acted  upon  or 
not,  was  a  binding  accord  between 

A.  and  B.     Cartwright  v.  Cooke,  3 

B.  &  Ad.  701.     Hills  v.  Mesnard,  10 
Q.  B.  260,  is  in  principle  not  unlike 
Eaves  v.  Henderson,  supra.     The  ac- 
tion was  by  payees  against  acceptors 
of   a   bill.      The   defendants   became 
acceptors     for    the    accommodation 
of   one   Hundle,   and   the   plaintiffs, 
the     payees,     agreed     to     appropri- 
ate    certain     moneys     which     they 
expected  to  receive  in   discharge  of 
the  bill.    They  subsequently  received 
the  money,  and  the  court  held  it  a 
payment  of  the  bill  pro  tanto.    Lord 
Denman,  C.  J.,  says:  It  was 'compe- 
tent for  the  parties  to  agree  before- 
hand   that    the    money    should    be 
specifically  applied  to  the  discharge 
of  the  liability  on  the  bill  pro  tanto. 
'And  it  seems  to  be  the  good  sense 
of  the  transaction  to  treat  it  as  so 
much  money  paid  to  the  plaintiffs 
by  Hundle  on  their  account  and  as 
their  agent.'    Gardiner  v.  Callender, 
12  Pick.  374,  is  in  point,  and  decides 
that    when    E.    H.    K.,    one    of    the 
executors    of    A.    S.,     gave     to     the 
executors  of  W.  P.  a  memorandum 
as   follows:    'It   is   agreed   that    the 
sum  of  $3,23.5,   due  from   E.   IT.   R. 
to  the  estate  of  W.  P.,  shall  be  ap- 
plied  on    a   certain   note   of   $6,000 
now  held  by  the  representatives  of 
A.   S.,'  the  memorandum   amounted 
to  a  payment  on  the  note  and  was 
not  merely  an  executor's  agreement. 
The    fact    that    a    memorandum    in 
writing  was  made  of  the  agreement 
does   not   vary   its   legal   effect.     It 
was   not   required  by   law  to  be   in 


writing.     The  court,   as    in   Hills  v. 
Mesnard,   sought  the  good   sense  of 
the  transaction,  and  to  give  effect  to 
the  sensible  arrangement  of  the  par- 
ties, holding    that    it    could  not  be 
necessary,   in   order   to   connect   the 
one  debt  with  the  other  by  an  agree- 
ment in  prwsenti,  that  there  should 
be  the  vain  formality  of  passing  the 
money  from  one  party  to  the  other 
and  returning  it  again  to  the  party 
from  wliom  it  just  came,  or  that  a 
formal  release  or  receipt  should  be 
executed.     This  case  is  not  cited  by 
counsel  or  alluded  to  by  the  court 
in   the   subsequent  case   of   Cary   v. 
Bancroft,  14  Pick.  315,  but  the  lat- 
ter   was    decided     upon     a     ground 
which     distinguished     it     from     the 
former  case;  the  court  holding  that 
in  the  case  last  cited  tlie  agreement 
was   executory    and    not    executed, 
requiring    some    further    act    to    be 
done    before    the    one    note    would 
operate   as   payment   or   extinguish- 
ment  pro   tanto   of  the   other.      De- 
hou    V.    Stetson,    9    Mete.     (Mass.) 
341,  followed  Cary  v.  Bancroft,  and 
was  decided  upon  the  same  ground. 
Another   point   was   in   the   ease,   to 
wit:    that    one    of    tiie    parties    in- 
terested  in   the  debt   whicli    it    was 
sought  to  supply  in  payment  as  the 
individual   debt  of  one  of   his  part- 
ners   had    not    been    consulted,    and 
had    no    knowledge    of    the    eontem- 
lilated  arrangement."     See  I'eabody 
V.    Peters,    f)    Pick.     I  ;     Dudley    v. 
Stiles,    32    Wis.    371:     Ely    v.    Me- 
Night,    30    How.     Pr.    !)7 :     Ilawkes 
v.    Dodge    County    Mut.    Ins.    Co.. 
11     Wis.     183;      Shinkle     v.     First 
Nat.  Bank,  22  Ohio  St.  516;  Heaton 
V.  Angier,  7  N.  H.  397,  28  Am.  Dec. 
S.'iS;    Fatlock   v.   Harris,  4  D.  &  E. 
180;    Wilson    v.   Coupland,   5    B.   & 


630  SUTHERLAND    ON    DAMAGES.  [§    215 

which  he  has  a  present  right  of  action,  and  before  commencing 
suit  thereon  credits  on  such  account  a  demand  B.  has  against 
him  for  services  at  their  fair  and  full  value,  such  credit  by  A. 
so  far  operates  as  payment  that  B.  cannot  maintain  an  action 
for  his  demand  brought  while  such  other  suit  is  pending.'*^  But 
where  A.  owes  B.  by  promissory  note  payable  in  instalments, 
and  at  the  same  time  holds  a  note  against  B.  for  a  larger 
amount,  on  which  he  indorses  as  part  payment  the  amount  of 
the  instalments  of  his  own  note  as  they  fall  due,  but  without 
B.'s  consent,  this  is  not  a  payment  of  the  instalments.*'  A  pay- 
ment by  credit  occurs  where  a  bank  receives  a  check  drawn  on 
itself  and  credits  the  holder  the  amount,**  or  where  the  bank  is 
the  creditor  and  receives  the  debtor's  check  drawn  on  itself.** 
There  is  a  distinction  between  the  acceptance  by  a  creditor  from 
his  debtor  of  a  new  security  for  an  old  debt,  and  the  acceptance 
by  a  bank  of  a  check  drawn  upon  itself  in  payment  of  a  note. 
The  former  is  a  mere  substitution  of  one  executory  agreement  to 
pay  for  another,  or  a  commutation  of  securities;  there  is  no 
extinguishment  of  the  precedent  debt  unless  there  is  an  agree- 
ment to  accept  the  new  obligation  or  security  as  a  satisfaction 
of  the  old.    ]kit  when  a  bank  receives  upon  a  debt  a  check  drawn 

Aid.  228;  Wharton  v.  Walker,  4  V>.  v.  Biirkhardt,  ]00  U.  S.  688,  25  L. 

&  C.   1G3;    Cuxon   v.   Chadley,   3   B.  ed.  767;  American  Exeh.  Nat.  Bank 

&  C.  591.  V.   Gregg,   138   111.  596,   32  Am.   St. 

Evidence  of  payment  by  set-off  is  171   (although  the  bank  may  fail  to 

not  admissible  under  a  plea'  of  pay-  charge      the      drawer      with       the 

ment.     Williams  v.  Uzzell,  108  Ark.  amount)  ;    Watkins   v.    Parsons,    13 

241.  Kan.  420;   Wecdsport  Bank  v.  Park 

*2  Briggs    V.    Piflimond,    10    Pick.  Bank,  2  Keyes,  501. 
391,  20  Am.  Dec.  520;  Allen  v.  Car-  45  Pratt  v.   Foote,    9    N.   Y.   463; 

man,  1   E.  D.  Smith,  602;   Means  v.  Rozet  v.   McClellan,  48   111.   345,   95 

Smith,  Tappan,  00.  Am.  Dec.  551. 

43  Greenough    v.    Walker,   5   Mass.  If  the  guarantor  of  a  note  owned 

214.     See   Clark  v.   Wells,   5   Gray,  and  held  l)y  a  hank  has  on  deposit 

69.  in    it    a    sum    nearly    equal    to    the 

A    payment    to    a    vendor    on    his  amount    called    for    by    the    note,    a 

own   obligations    is    a    payment  in  tender   of   his   check   for    such    sum 

cash.     Hand  v.  Gas  E.  &  P.  Co.,  107  and  the  necessary  amount  of  cash  to 

N.  Y.   142;    Foley  v.  Mason,  G  Md.  the    assignee    of   the    bank    satisfies 

37.  the    note.      Lionberger    v.    Kinealy, 

44Addie   v.    National    City    Bank,  13    Mo.    App.     41.       See     Shipp     v. 

45  N.  Y.  735,  0  Am.  Pep.  160;  Bank  Stackor,  8  Mo.  145. 


§    215]      CONVENTIONAL    LIQUlJ)ATIONS    ANT)    DISC  II AKGIOS.        (l.".l 

u\Km  itself  hy  one  of  its  customers  and  clmru'es  it  in  accdiiiit, 
it  thereby  admits  that  it  has  funds  df  I  he  drawer  siillicient  to 
meet  the  eiieek,  and  the  acceptance  is  per  sc  an  apjjropriatiftn 
of  the  funds  to  pay  it.  Tlie  transaction  operates  directly  as 
a  payment  of  the  del)t.^°  If  the  dividends  on  a  ])olicy  of  life 
insurance  equal  the  i)remiums  and  have,  in  the  iiiuncdiately 
preceding  years,  at  the  request  of  the  insured  or  his  lx!neticiary, 
been  ap[)lied  to  the  payment  of  the  i)remiums  as  they  heciaui'j 
due,  the  latter  are  paid  as  fast  as  they  l)ecoiii('  due  so  long  as 
the  conditions  stated  exist.*'''  So  hmg  as  money  ilk;gally  exacted 
from  a  member  of  a  benefit  society  remains  in  its  ti-easury  and 
is  sufficient  to  meet  assessments  made  upon  him  he  is  not  in 
default."' 

By  a  valid  new  agreement  the  debtor  may  obtain  the  right 
to  pay  otherwise  than  in  monciy;  and  the  accei)taiice  by  the 
creditor  of  any  chose  in  action  or  property  will  operate  as 
payment."^  The  receipt  by  the  creditor  of  bank  bills  or  treasury 
notes  in  payment  of  a  gold  debt,  although  undei-  protest  and 
with  an  ex])ress  reservation  of  a  claim  for  the  diirer(>nce,  will 
be  payment  dollar  for  dollar.^"  So  gold  dollars,  if  api)Iied 
towards  the  payment  of  a  debt  without  any  special  contract  as 
to  the  value  at  which  they  are  to  be  taken,  cannot  be  treated 
as  having  any  greater  value  than  any  other  currency  which  is  a 
legal  tender  for  the  payment  of  debts.^^     The  common-law  rule 

46  1(1.^  Commercial  Bank  v.  TTnion  49  [nnian  v.  Criswoid,  1  Cow.  IDO; 
Bank,  ]]  N.  Y.  203.                                     Sword  v.  Koitli.  :U  Mich.  247;  Block 

If   a   siglit   draft   is   indorsed    for  ^     Dorman,    51    Mo.    31;    Casoy    v. 
collection    to    the    debtor's    bankers 
and  by  liis  direction  tlie  amount  it 
calls  for  is  charged  against  him,  tlio 

banker    drawing   his    check    for    tlie  ""i<Ierson,    17    Wen.l.    U)();    Perkins 

amount  to  the  order  of  the  creditor  v.    Cady,    111    Mass.    ;ilS;    Loci^e    v. 

and   transmitting     it     to     liiin,     tlie  Andres.   7    Ircd.    If)!);    Perit  v.    Pit! 

debt     is     paid,     although    the    hank  field,  f)  Pawlc,    IOC);   Cramer  v.  W'il- 

which  so  draws  fails  and  its  check  jj.^^g    ,;]    in    4^]  .    Brown  v.  Feeter, 

is  made  valueless.     Welge  v.  Batty,  ^   ^y^.^^^j     3^^^  .    B„,H,ard   v.   Fra/.er. 

11  111.  App.  461.  ,.^  ^^.^.,^    ^,^ 

47  Matlock  V.  Mutual  L.  Ins.  Co., 

180  Pa.  360.  50,;il„,an    v.    Duuglas    Cnunfy.    6 

48  Knight    V.     Supreme    Court    of       ^'cv.  27,   3   Am.   Hep.  237. 

Chosen    Friends,    2    Silvernail,    453.  51  Bush  v.  Baldrey,  M  Allen,  367. 


Harris,    2    Litt.    172;    Allegheny    R. 
Co.   V.   Casey,    79   Pa.    84 ;    leaves   v. 


G32  SUTIIEKLAND    ON    DAMAGES.  [§    215 

that  niarriago  has  the  legal  effect  of  paying  or  extinguishing  a 
debt  the  husband  might  owe  the  wife,  or  the  wife  the  husband 
at  the  time  of  marriage,  is  in  force  in  Kentucky.^^ 

§  216.  Same  subject.  On  the  foreclosure  of  a  naortgage  on 
real  estate  by  entry  the  land  inures  as  payment  to  the  extent 
of  its  value.^^  So  taking  possession  of  chattels  mortgaged  or 
forfeited  is  also  payment  to  the  amount  of  their  value;  ^*  and 
the  proceeds  of  sale  realized  by  foreclosure  are  pro  tanto  pay- 
ment.^^  Taking  the  debtor's  body  is  a  satisfaction  unless  he 
escape.^^  It  has  this  effect  though  the  creditor  consented  to 
his  being  set  at  liberty  under  an  agreement  which,  the  debtor 
has  failed  to  perform ;  ^'  or  on  his  giving  a  Avarrant  of  attorney 
which  turned  out  to  be  void  for  informality.^^  It  is  not,  how- 
ever, an  absolute  satisfaction  like  payment,  for  it  will  jiot  dis- 
charge a  guarantor,^^  nor  prevent  the  creditor  from  pursuing 
his  remedy  against  other  parties.^"  The  assignment  of  a  mort- 
gage on  land,  assumed  by  the  purchaser  of  the  land,  to  persons 
named  by  him,  who  paid  nothing  for  it  and  never  had  possession 
of  it,  and  which  he  caused  to  be  recorded,  evidences  its  pay- 
ment and  the  note  secured  by  it.^^  The  assignment  of  a  claim 
by  a  creditor  to  his  debtor  is  a  payment  of  it.^^ 

A  levy  on  sufficient  personal  property  by  execution  is  pre- 
sumably a  satisfaction  of  the  debt;  it  is  a  means  of  payment, 
aiul  re<|uires  only  the  performance  of  a  ministerial  duty  by  an 
officer  to  accomplish  it.  The  levy  is  not  of  itself  satisfaction, 
and  anything  which  subsequently,  without  the  fault  of  the 
officer  or  creditor,  prevents  actual  satisfaction,  as  if  the  debtor 

52  Farley  v.  Farley,  91   Ky.  407.  Blackburn  v.  Stupart,  2  East,  243; 

53  IIp,1}t(.  v.  Holmes,  10  Pick.  381 ;  Tanner  v.  Hague,  7  T.  R.  420. 
Briggs  V.  Richmond,  id.  301,  20  Am.  58  .Jaques  v.  Withy,  supra;  Loomis 
Dec.  526.  v.  Storrs,  4  Conn.  440.     See  Sheldon 

54  Case  V.  Boughton,  11  Wend.  v.  Kihbe,  3  Conn.  214,  8  Am.  Dec. 
106;    Charter   v.    Stevens,   3    Denio,  176. 

33.  59  Terrell  v.   Smith,  8  Conn.  426. 

55  Lansing  v.  Goelet,  9  Cow.  346;  60  Porter  v.  Ingraham,  10  Mass. 
Globe  Ins.  Co.  v.  Lansing,  5  id.  380,       88. 

15  Am.  Dec.  474.  61  Lydon   v.   Campbell,   204   Mass. 

56  Jaques  v.  Witby,  1  T.  R.  557;       580,  134  Am.  St.  702. 

Williams  v.  Evans,  2  McCord,  203.  62  Dial  v.  Inland  L.  Co.,  52  Wash. 

57  Vigers  v.  Aldrich,  4  Burr.  2482;        81. 


§    21G  ]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        033 

has  not  been  deprived  of  property  levied  upon,  will  destroy 
its  effect  as  evidence  of  that  resnlt.^^  So  long  as  the  property 
remains  in  legal  custody  the  other  renicdies  of  the  creditor  will 
be  suspended.  He  cannot  have  a  new  execution  against  the 
person  or  property  of  the  debtor,  nor  maintain  an  action  on 
the  judgment,  nor  use  it  for  the  purpose  of  becoming  a  redeem- 
ing creditor.^*  The  levy  does  not  divest  title;  it  only  creates  a 
lien.  It  often  happens  that  the  levy  is  overreached  by  some 
other  lien,  is  abandoned  for  the  benefit  of  the  debtor  or  defeated 
by  his  misconduct.  In  such  cases  there  is  no  color  for  saying 
that  the  judgment  is  gone.  The  judgment  is  satisfied  when 
the  execution  has  been  so  used  as  to  change  the  title  or  in  some 
other  way  to  deprive  the  debtor  of  his  property.  This  includes 
the  case  of  a  levy  and  sale,  and  also  of  a  loss  or  destruction  of 
the  goods  after  they  have  been  taken  out  of  the  debtor's  pos- 
session by  virtue  of  the  process.®^  In  admiralty,  where  a  res 
is  seized  by  a  judicial  process  for  a  debt  which  cari'ics  witli  it 
a  jus  in  re,  as  between  debtor  and  creditor,  the  maxim  domino 
perrit  res  means  that  the  destruction  of  the  seized  property, 
without  fault  of  the  debtor,  works  a  payment  of  the  debt  to 
the  extent  of  its  value.  Where  third  parties  voluntarily  join 
the  seizing  creditor  in  his  proceeding  and  unite,  so  to  speak, 
in  the  seizure,  also  asserting  claims  which  carry  with  them 
liens,  the  destruction  of  the  property,  without  fault  of  the 
debtor,  works  a  payment  of  their  respective  claims,  to  the  ex- 
tent of  the  value  of  the  property  destroyed,  in  the  oi-dci-  of  the 

63  Starr  V.  Mooro,  3  McLean,  354;  Ohio,    223;     Webb    v.    P.uinpass,    0 

Clerk  V.  Withers,  2  Ld.  Raym.  1072,  Port.  201,  23  Am.  Dec.  310:   Green 

1  Salk.  323,  6  Mod.  290;  Mountney  v.  Bnrke,  23  Wend.  490;   Browning 

V.   Andrews,  Cro.   Eliz.  237;   Atkin-  v.  Ilanford,  5  Tlill,  588;   Duncan  v. 

son   V.   Atkinson,   id.   391;    Ladd  v.  Harris,   17    S.   &   R.   436;    Farmers' 

Blunt,     4     East,     402;     Bayley     v.  &    M.    Bank    v.    Kingley,    2    Doug. 

French,  2  Pick.  590;  Denton  v.  Liv-  (Mich.)    379;    Churcliill  v.  Warren, 

ingston,  9  Johns.  98;  Hoyt  v.  Hud-  2   N.   H.   298;    Ordinary   v.   Spann, 

son,   12  id.  207;   Troup  v.  Wood,  4  1   Rich.  429;   Porter  v.  Boone,  1  W. 

Johns.  Ch.  228;  Ex  parte  Lawrence,  &   S.   252;    Ex   parte    King,   2   Dev. 

4  Cow.  417,  15  Am.  Dec.  386;  Jack-  .?41,   21    Am.   Dec.    3.3.");    Biiiford    v. 

son  V.  Bowen,  7  Cow.  13,  21 ;  Cornell  Alston,  4  Dev.  354. 

V.   Cook,   id.   312;    Wood  v.   Torrey,  64  P(.ople  v.  llopson,  1   Denio,  577. 

6    Wend.    562;    Cass    v.    Adams,    3  65  People  v.  ilopson,  1  Denio,  577. 


634  SUTHERLAND    ON    DAMAGES.  [§    216 

priority  of  their  claims,  and  operates  as  a  payment  up  to  its 
value  precisely  as  would  its  sale  and  the  application  of  its  pro- 
ceeds.^^ 

A  sufficient  tender,  made  and  kept  good  by  bringing  the 
money  into  court,  is  equivalent  to  a  payment,  and  is  such  of 
the  date  of  the  tender  to  prevent  costs  and  interest.  The 
debtor  pleading  it  cannot  withdraw  the  money  whatever  may 
be  the  verdict ;  it  must  be  paid  to  the  plaintiff  .^''^ 

§  217.  What  is  not  payment.  The  deposit  of  money  in  a 
bank  where  a  note  is  payable  is  not  of  itself  a  payment,  but 
simply  a  tender,^^  unless  in  some  way  appropriated  to  the 
note;  ^^  nor  is  the  surrender  of  a  check  at  the  clearing-house.'" 
A  note  held  by  an  administrator  and  payable  to  him  is  not  paid 
because  he  charges  himself  with  the  amount  it  re]jresents  in 
settling  his  accounts  with  the  estate.'^  So  charging  a  note  sup- 
posing the  maker  had  funds  in  bank,  when  in  fact  he  had  not, 
the  charge  being  canceled  the  next  day  on  discovery  of  the 
mistake,  will  not  amount  to  payment.'^^  And  where  the  presi- 
dent of  a  bank,  having  his  notes  lying  therein  under  protest, 
indorsed  for  his  accommodation,  procured  the  cashier  to  make 
a  new  note,  which  the  president  indorsed  and  exchanged  for 
those  protested,  delivering  the  latter  to  the  cashier  for  his 
security,  the  original  notes  were  not  thereby  paid,  although  the 
president  entered  them  as  i)aid  and  all  new  notes  as  discounted.'^ 
A  clerk  of  a  bank  stole  from  the  drawer  of  another  clerk 
bills  belonging  to  the  bank,  which  he  delivered  to  the  cashier, 
and  which  the  latter,   not  knowing  them   to  have  been   thus 

t 

66  Per   Billings,   D.   J.,   in   Gill   v.       tions  to  place  the  sum   to  the  lat- 

Packard,  4  Woods,  270.  ter's  credit  and  notify  him  thereof 

67  Reed  v.  Armstrong,  18  Wend.  is  payment  when  such  directions 
446;  Taylor  v.  Brooklyn  E.  R.  Co.,  have  been  carried  out.  Beranek  v. 
119  N.  Y.  561;  §  275.  Beranek,  95  Neb.  311. 

68  Capital  Nat.  Bank  v.  Robinson,  70  Merchants'  Nat.  Bank  v.  Proc- 
41    Wash.    454;    Hill    v.    Place,    36  ter,  1   Cin.  Super.  Ct.  1. 

How.  Pr.  26.  "^^  Robinson  v.  Robinson,  20  vS.  C. 

69  See  Johnston  v.  Green,  102  Va.       567. 

373;  Sutherland  v.  First  Nat.  Bank,  72  Troy  City  Bank  v.  Grant,  Hill 

31    Mich.   230.  &  Denio,  119. 

Payment  to  a  bank,  in  which  the  73  Highland    Bank    v.    Dubois,    5 

creditor  has  an  account,  with  direc-  Denio,  558. 


§    21Y]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        (JoT) 

stolen,  accepted  in  discliargc  of  tlie  l)aljnice  dtie  from  siicli  clerk 
to  the  bank;  the  transaction  did  not  work  a  payment.'*  Tlio 
nmtihition  of  a  note  by  a  stranger  to  it,  with  intent  to  cancel 
and  extinguish  it,  raises  no  presnnii)tion  of  its  payment.'*  'J'lie 
receipt  of  part  o("  the  amount  due  is  imt  a  waiver  of  the  right 
to  recover  the  balance,  nor  does  it  work  an  estojipc^I.'^  A  note 
is  not  paid  because  its  maker  placed  in  the  hands  of  the  payee's 
attorney,  who  had  the  note  for  collection,  notes  and  accounts 
to  be  collected,  on  which  cert:! in  sums  were  paid  the  attorney, 
but  not'  credited  or  applied  on  snch  note,  the  payee  of  which 
had  not  concurred  in  such  arrangement.  The  attorney  was 
agent  for  the  del)tor  in  making  collections,  and  money  paid  liiiii 
was  the  property  of  the  latter.  Until  applied  or  appropriated 
it  could  not  become  a  payment  on  the  note.''  Surrendering  a 
city  warrant  calling  for  the  payment  of  a  large  sum  for  others 
amounting  in  all  to  the  same  sum,  these  being  dated  nud  in- 
dorsed as  was  the  original,  is  a  mere  exchange.'*  An  insurance 
assessment  is  not  paid  by  depositing  the  necessary  sum  in  the 
mail  in  the  absence  of  anything  in  the  dealings  between  the 
parties  giving  such  de^Josit  that  effect.'^  If  money  wdiich 
reaches  insurer  after  it  is  due  is  tendered  insured  within  a  rea- 
sonable time  it  is  not  payment.*"  An  insurer  owing  an  insured 
employee  money  is  not  bound  to  apply  any  part  of  its  indebted- 
ness on  the  payment  of  an  assessment  due  from  him.*^  An  in- 
surance premium  is  not  paid  by  a  confession  of  judgment  for 
the  amount  of  premium  notes  held  by  insurer.*^     Thus  it  ap- 

74  State   Bank   v.    Wells,    3    Pick.  77  TIatcli   v.   Hutchinson.   G4   Ark. 

394.  ]]0;  Moore  v.  Norman,  52  Minn.  83, 

75Whitlock    V.    Manciet,    10    Ore.  is  L.K.A.   3.59,  38  Am.   St.   52G. 
366.  78Montieth    v.    Parker,    36    Ore. 

The  destruction  of  a  note  held  by  -.-q 
a  wife  against  her  husband,   under  ,9  ^.^^  ^    ^^.^^^^^  j^^^^^^    ,^    ^^    ^ 

the  influence  of   feelings  caused  by  ^^.^  ^^^  j^^^,^^  ^^3  ^  Continental  Ins. 
his   cruel   treatment   of   her,   is  not 
payment.     Schlemmer  v.  Schendorf, 
20  Ind.  App.  447. 

76  Hodges  V.  Tennessee  I.  Co..  123  '*!"• 
Ala.   572;    Greer   v.   Laws,   56   Ark.  81  Pister   v.    Keystone    Mut.    Bvn. 

37;    Clark    v.    Equitable   L.    Assur.  Ass'n,  3  Pa.  Super.  Ct.  50. 
Soc,  76  Miss.  22;   Whiting  v.  Plu-  82  Proebstel  v.  State   Ins.   Co.,   14 

mas  County,  64  Cal.  65.  Wash.  669. 


Co.  V.  Hargrove,  131   Ky.  837. 
80  Rice    V.    Lodge,    etc.,    92    Iowa, 


0^6 


SUTIIEIM.AJSl)    ON    J>A MAGES. 


[§  217 


pears  that  unless  there  is  an  actual  payment  and  receipt  of 
money,  or  something  else  accepted  in  its  place  as  payment,  a 
debt  is  not  satisfied ;  any  ceremony  by  which  payment  is  nomi- 
nally made  or  acknowledged  may  be  avoided  for  mistake  or 
fraud,  and  so  where  the  actual  or  authorized  assent  of  the  cred- 
itor is  wanting.^^  A  selling  agent  may  not  accept  goods  or 
services  in  payment  of  his  principal's  demand ;  but  if  the  debtor 
believes  the  agent  to  be  the  principal  and  the  latter  accepts  the 
contract  payment  so  made  it  is  binding.®* 

§  218.  Effect  of  payment.  Whether  a  payment  made  by  a 
guarantor  or  surety  or  a  volunteer  will  operate  as  a  purchase 
or  as  an  extinguishment  depends  on  the  intention  with  ^Vhich 
it  is  made.®^  But  a  debtor  cannot  himself  become  the  owner,*^ 
nor  pay  his  debt  without  discharging  it,  though  he  may  wish 


83  Hayden  v.  Lauffenburger,  157 
Mo.  88. 

Where  a  creditor  liaving  received 
checks  in  excess  of  the  amount  of 
an  indebtedness  inadverently  failed 
to  retain  a  sufficient  amount  to 
satisfy  such  indebtedness  and  re- 
turned an  excessive  balance,  only  a 
partial  payment  was  effected.  Mor- 
ris V.  Reyman,  55  Ind.  App.  112. 

A  payment  by  a  bankrupt  of  a 
joint  note  of  himself  and  another 
subsequently  set  aside  as  a  prefer- 
ence will  not  discharge  the  indebted- 
ness as  to  the  Ijankrupt  or  debtor 
even  though  the  note  was  marked 
paid  and  returned  to  the  bankrupt. 
Commercial  Bank  of  Boonville  v. 
Varnum,  176  Mo.  App.  78. 

84  Hook  V.  Crowe,  100  Me.  309. 

85  Fogarty  v.  Wilson,  30  Minn. 
289:  Swope  v.  Leffingwell,  72  Mo. 
348  Lucas  v.  Wilkinson,  1  Hurl.  & 
N.  423;  Morris  v.  Oakford,  9  Pa. 
498;  Kinley  v.  Hill,  4  W.  &  S.  426; 
Elkinton  v.  Newman,  20  Pa.  281; 
Carter  v.  Jones,  5  Ired.  Eq.  196, 
49  Am.  Dec.  425 ;  Mathews  v.  Aiken, 
1  N.  Y.  595;  1  Lead.  Cas.  in  Eq.  88; 
id.  pt.  1,  167   (2d  Am.  ed.)  ;  Low  v. 


Blodgett,  21  N.  H.  121;  Ex  parte 
Balch,  2  Low.  440;  Harbeck  v.  Van- 
derbilt,  20  N.  Y.  395;  Mechanics' 
Bank  v.  Hazard,  13  Johns.  353.  See 
Gillett  v.  Gillett,  9  Wis.  194. 

In  Louisiana  the  payment  of  a 
note  secured  by  a  mortgage  by  one 
not  bound  for  it,  and  who  had  no 
interest  in  discharging  it,  will  not 
subrogate  liim  to  the  rights  of  the 
party  to  whom  he  paid,  but  will  ex- 
tinguish the  debt  and  the  mortgage 
securing  it,  and  the  claim  for  reim- 
bursement will  constitute  the  party 
who  paid  an  ordinary  creditor  of 
him  for  whose  benefit  the  payment 
was  made.  Nicholls  v.  Creditors,  9 
Rob.  476;  Weil  v.  Enterprise  G.  & 
Mfg.  Co.,  42  La.  Ann.  492. 

86  Kingsley  v.  Purdom,  53  Kan. 
56;    Gordon  v.   Wansey,  21   Cal.   77. 

But  an  officer  of  an  insolvent  cor- 
poration may  in  the  absence  of 
fraud,  personally  purchase  at  full 
value  an  outstanding  obligation  of 
the  corporation  without  working  a 
discharge  of  the  obligation.  Martin 
v.  Chambers,  131  C.  C.  A.  181,  214 
Fed.  769. 


§    218]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKGES.        G37 

and  intend  to  keep  it  on  foot;  *'  and  any  assignment  to  a  third 
person  with  a  view  to  keeping  it  alive  will  be  void.*^  A  pay- 
ment actually  made  np<tn  a  debt,  whether  of  the  whole  or  a 
2)art,  is  a  total  or  partial  discharge,  and  cannot  afterwards  he 
changed  except  by  mutual  consent,  and  if  other  parties  are 
interested,  by  their  consent  also,^^  Where  marriage  extin- 
i>uishes  a  debt  due  from  the  wife  to  the  husband  it. also  dis- 
charges  any  lien  by  which  the  debt  was  secured,  and  the  debt 
is  not  revived  by  a  divorce.^"  As  will  more  fully  appear  in 
another  connection,^^  the  payment  of  a  debt  due  after  suit 
brought  will  prevent  the  recovery  of  interest  as  damages,''^ 
though  it  would  be  otherwise  if  there  had  been  a  contract  to 
pay  interest.'^ 

After  a  judgment  recovered  upon  a  paid  debt,  or  without 
deducting  payments,  the  sum  paid  cannot  be  recovered ;  pay- 
ment in  a  strict  sense  is  a  defense,  and  if  not  used  as  such  is 
lost.^*     The  payments  must  be  strictly  such  or  definitely  ap- 


87  Martin  v.  Chambers,  131  C.  C. 
A.  181,  214  Fed.  769;  Livermore  v. 
Truesdell,  0  Colo.  App.  332 ;  Champ- 
ney  v.  Coope,  34  Barb.  539;  Collins 
V.  Adams,  53  Vt.  433;  Hammatt  v. 
Wynian,  9  Mass.  138;  Brackett  v. 
Winslow,  17  id.  153;  Adams  v. 
Drake,  11  Cush.  504;  Tuckerman 
V.  Newhall,  17  Mafis.  581 ;  Chapman 
V.  Collins,  12  Cush.  163;  Pray  v. 
Maine,  7  id.  253;  Harbeck  v.  Van- 
derbilt,  20  N.  Y.  395,  398.  See 
Shaw  V.  Clark,  6  Vt.  507,  27  Am. 
Dec.  578. 

If  payment  is  made  at  tlie  rcijuest 
of  the  maker  the  obligation  is  ex- 
tinguished and  an  indorsement  of  it 
subsequently  made  by  the  payee  is 
ineffectual.  Moran  v.  Abbey,  63 
Cal.  56;  Pearce  v.  Bryant  C.  Co., 
121  111.  .590. 

88  Id.;  Moran  v.  Abbey,  58  Cal. 
167;  Gordon  v.  Wansey,  21  id.  78; 
Citizens'  Bank  v.  Lay,  80  Va.  436; 
Rolf  V.   Wooster,  58   N.  H.   526. 

It  makes  no  difference  that  an  at- 


tempt to  transfer  was  made  at  tlie 
time  of  payment,  and  as  a  part  of 
that  transaction.  Wright  v.  Mi.\, 
76  Cal.  465. 

If  a  note  is  deposited  in  a  bank 
for  collection,  a  payment  made  by 
a  guarantor,  surety  or  the  maker 
will  discharge  it.  Citizens'  Bank  v. 
Lay,  80  Va.  436;  Lancey  v.  Clark, 
64  N.  Y.  209,  21  Am.  Rep.  604; 
Eastman  v.  Palmer,  32  N.  Y.  238; 
Doolcy  V.  Virginia  K.  &  M.  Ins.  Co., 
3  Hughes,  221. 

89  Mead  v.  York,  6  N.  Y.  449,  57 
Am.  Dec.  467;  Marvin  v.  Vedder, 
5  Cow.  671;  Hawkins  v.  Stark,  19 
Johivs.  305;  Frost  v.  Martin.  26  N. 
TI.  422,  59  Am.  Dec.  353;  Miller  v. 
Montgomery,  31   111.  350. 

Farlov,  91   Kv, 


90  Farley  ' 

91  Ch.  8. 

92  Davis  V. 


Ilarriiigtim, 
Sav.    Bank 


497. 


160  Maas. 


Adams, 


93  Andover 
1   Allen.  28. 

94  Loring   v.   Mansfield,    17    Mass. 


638  SUTHERLAND  ON  DAMAGES.  [§  218 

propriatecl  to  the  debt  to  have  tliat  effect.^^  Where  a  sum  of 
money  was  delivered  by  the  obligor  to  the  obligee  to  be  credited 
by  the  latter  upon  the  bond  as  part  payment  and  the  obligee 
neglected  to  indorse  or  apply  it  and  obtained  judgment  for  the 
whole;  amount  cif  the  bond,  the  obligor  was  allowed  to  recover  the 
money  paid.®^  There  was  a  special  trust  reposed  in  the  defend- 
ant to  credit  the  money  on  the  bond  and  he  had  violated  it. 
Where,  however,  there  is  a  direct  payment  on  a  debt  which  is 
not  evidenced  by  writing  of  any  kind ;  where  no  act  beyond  pay- 
ment and  receipt  of  it  is  necessary  or  contemplated  to  give 
effect  to  the  payment,  and  the  money  is  passed  from  the  debtor 
to  the  creditor  as  payment  at  once,  and  not  simply  to  become 
such  on  the  doing  of  some  act  to  evidence  it,  it  is  strict  pay- 
ment and  cannot  be  recovered,  though  the  debt  is  afterivards 
sued  upon  and  judgment  rendered  for  it  without  deducting  the 
sum  paid.^'  If  payment  has  been  made  for  a  ccmsideration 
which  is  subsequently  withdrawn  or  withheld,  the  money  may 
be  recovered.  ^^ 

"It  is  undoubtedly  the  rule  that  one  partner  may  not  appro- 
priate the  property  or  money  of  the  firm  to  the  payment  of 
his  own  debt  without  the  consent  of  his  copartners,  and  that 
if  he  does  so  the  property  misapplied  may  be  followed  and  re- 
covered until  it  reaches  the  hands  of  a  bona  fide  purchaser  for 
value.  But  I  think  it  is  equally  well  settled  that  the  payment 
of  money  to  a  creditor,  who  receives  it  in  discharge  of  an  ex- 
isting debt  innocently  and  without  knowledge  or  means  of 
knowledge  that  the  debtor  paying  had  no  rightful  ownership 
of  the  fund,  is  good  and  effectual,  and  does  not  subject  the  re- 
cipient to  a  recovery  by  the  true  owner."  ^^ 

394;   Harriot  v.  Hampton,  7  T.  K.  Fowler  v.  Shearer,  7  Mass.  14.     Sec 

269;    De    Sylva   v.    Henry,    3    Port.  Wheeler  v.  Harrison,  28  Mich.  265. 

132:   Eggleston  v.  Knickerbacker,  6  97Driscoll  v.  Damp,  17  Wis.  419; 

Barb.    458;    Adams    v.    Barnes,    17  Bronson  v.  Ru^o-    39  Vt.  241. 


■■&&' 


Mass.  365 ;   Job  v.  Collier,  11  Ohio,  oa  ai-    i       •        p     rr ,      t   „     n^     ,r 

'                             '  98  Mechanics    &    l.s    ins.    Co.    v. 

422;    Seymour   v.   Lewis,    19    Wend.  ^^^^^.^^.  ^^  ^^    ^^^    ^^^^ 

95  See  Hazen  v.  Reed,  30  Mich.  ^^  Newhall  v.  Wyatt,  139  N.  Y. 
331;  Judd  V.  Littlejohn,  11  Wis.  452,  36  Am.  St.  712;  Stephens  v. 
176.  Board  of  Education,  79  N.  Y.   187, 

96  Woodward  v.  Hill,  6  Wis.  147;  35   Am.  Rep.  511. 


§    220]      CONVJiNTIONAL    LIQUIDATIONS    AND    DISCHARGES.        039 

§  219.  Payment  before  debt  due.  The  creditor  is  not  obliged 
to  receive  a  part  payment  ^  but  if  he  does  it  has  the  effect  of 
partial  satisfaction.  Payment  before  the  money  is  due  is  a 
payment  at  maturity.^  If  a  creditor,  however,  receives  money 
before  it  is  due  on  a  demand  drawing  interest,  such  payment, 
in  the  absence  of  an  agreement  to  the  contrary,  shonhl  be  ap- 
plied to  the  extinguishment  of  the  principal.^  And  even  when 
received  upon  the  understanding  that  it  was  not  to  draw  interest 
until  the  balance  of  the  debt  should  be  paid  because  the  cred- 
itor used  the  money  as  his  own  it  was  held  tluit  it  shoukl  be 
applied  at  the  date  of  payment.'*  The  holder  of  a  note  enti- 
tled to  grace  cannot  be  compelled  to  accept  payment  until  the 
last  day,  to  which  interest  should  be  computed.^ 

§  220.  Payment  by  devise  or  legacy.  A  devise  or  legacy  will 
operate  as  payment  when  it  is  intended  by  the  testator  and  ac- 
cepted by  the  creditor  as  sucli.^  A  legacy  to  a  creditor  which 
is  equal  to  or  greater  than  his  debt,  and  which  is  not  contingent 
or  uncertain,  is  presumed  to  be  a  satisfaction  of  tlie  debt.' 
Courts,  however,  have  given  effect  to  slight  circumstances,  ap- 
pearing on  the  face  of  the  will  or  otherwise,  by  way  of  repelling 

1  Jennings  v.  Slirivor,  5  Tllackf.  id.  135 ;  Blair  v.  Whito,  01  Vt.  110; 
37.  Brunn  v.  Schuott,  59  Wis.  260. 

2  Sykes  v.  Citizens'  Nat.  Bank,  G9  Where  it  was  agreed  between  the 
Kan.  134;  Patten  v.  Fullerton,  27  parties  that  tlie  claimant  was  to  be 
Me.  58;  Holmes  v.  Broket,  Cro.  paid  by  a  testamentary  provision 
Jac.  434.  See  Roberts  v.  Wilkin-  and  the  testator  has  made  such 
son,  34  Mich.  129.  provision,  wliicli  has  been  accepted, 

3  Starr  v.  Richmond,   30   111.  270.  tlie    intention    tliat    it    should    have 

4  Toll  V.  Hiller,  11  Paige,  228.  that  elTect  may  be  deduced  from  the 

5  Kornegay  v.  Georgia  iState  B.  &  will  and  the  surrounding  circum- 
L.  Ass'n,  91  Miss.  551;  Smith  v.  stances.  Alerding  v.  Allison,  31 
Merchants'    &    F.'s    Bank,    14    Oliio  Ind.  App.  397. 

C.  C.  199.  7(iiapin  v.  Leapley,  35  Ind.  App. 

6  Newcomb  v.  La  Roe,  1G2  App  511;  Wescoe's  App.,  52  Pa.  195; 
Div.  (N.  Y.)  906;  Scheerer  v  Eaton  v.  Benton,  2  Hill,  576;  Cloud 
Scheerer,  109  111.  11;  Rose  v.  Rose,  v.  Clinkinbeard,  8  B.  Mon.  398,  48 
7  Barb.  174;  Clarke  v.  Bogardus,  13  Am.  Dec.  397;  Strong-  v.  Williams, 
Wend.  67;  Mulheran  v.  Gillespie,  id.  12  Mass.  392,  7  Am.  Dec.  81;  Wil- 
349 ;  Courtenay  v.  Williams,  3  Hare,  Hams  v.  Crary,  5  Cow.  368 ;  2 
539;  Voorhees  v.  Voorhees,  IS  N.  Story's  E(|.,  §  1100;  Fetrow  v. 
J.  Eq.  227;    Brokaw  v.  Hudson,  27  Krause,  61  111.  App.  238. 


G40'  SUTllEKLAND    ON    DAMAGES.  [§    220 

the  presumption  of  satisfaction,^  And  the  rule  is  not  allowed 
to  prevail  where  the  legacy  is  a  less  amount  than  the  debt,  even 
as  a  satisfaction  'pro  tanto  except  where  a  conveyance  is  made 
for  a  nominal  consideration  to  become  operative  at  the  death  of 
the  grantor  in  pursuance  of  contract,^  nor  where  there  is  a 
difference  in  the  time  of  payment  of  the  debt  and  the  legacy; 
nor  where  they  are  of  different  natures  as  to  subject-matter; 
nor  whei'e  there  is  an  express  direction  in  the  will  for  the  pay- 
ment of  debts.''"  When  a  legacy  is  made  by  a  creditor  to  a 
debtor  and  the  debt  is  less  in  amount  than  the  legacy,  the  lega- 
tee is  considered  as  having  so  much  of  the  assets  in  his  hands 
as  the  debt  amounts  to  and  consequently  to  be  satisfied  pro 
tanto;  and  when  the  debt  exceeds  the  legacy,  the  executors 
of  the  testator  are  entitled  to  retain  the  legacy  in  part  discharge 
of  the  debt.^^  There  is  no  presumption  that  a  legacy  given  a 
creditor  is  in  satisfaction  of  the  debt  if  the  testator  is  a  joint 
debtor,  or  if  the  legacy  is  contingent.^^  Though  no  general 
rule  was  laid  down  a  legacy  has  been  declared  not  to  be  a  satis- 
faction of  a  debt  incurred  after  the  will  was  made.^^    A  bequest 

8  Id.      See    Story's    Eq.,    §§    1]00,  counteract    and    overcome    it.      Gil- 

1101 ;   Strong  v.  Williams,  12  Mass.  liam  v.  Brown,  43  Miss.  641.     Both 

392;    Willis   v.    Dun,   W^right,    133;  tliese  eases  are  approved  in  Patten 

Byrne  v.  Byrne,  3  S.  &  R.  r)4,"8  Am.  v.   Glover,    1   D.   C.   App.   Cas.   466, 

Dec.  641;   1  Pom.  Eq.,  §  527.  480.     See  Pitts  v.  Van  Orden   (Tex. 

"There  is  no  doubt  the  rule  still  Civ.  App.),  158  S.  W.  1043. 

nominally  exists;   but  the  tendency  9  In     re     McNamara's     Est.,     148 

of  the  more  recent   decisions   is  to  Mich.  346. 

consider  the  bequest  a  bounty  and  10  Fetrovv  v.  Krause,  61  111.  App. 

not  the  discharge  of  an  obligation.  2.'?8;  Van  Riper  v.  Van  Riper,  2  N. 

And  the  courts  now  lay  hold  of  any  J.   Eq.    ]  ;    Lisle  v.   Tribble,   92   Ky. 

circumstances,  however  trifling,   for  304 ;  Gibbons  v.  Woodward,  3  Walk- 

the    purpose    of    repelling    the    pre-  er    (Pa.    Sup.    Ct.),    303;    Cloud   v. 

sumption    that    the    legacy    was    in-  Clinkinbeard,    8    B.    Mon.    398,    48 

tended    as     a     satisfaction     of    the  Am.   Dec.   397 ;    Fort  v.   Gooding,   0 

debt."     Crouch  v.  Davis,  23   Gratt.  Barb.  371. 

62,  93.     In  another  case  it  was  ob-  ii  Tinkham  v.  Smith,  56  Vt.  187; 

served:    Inasmuch   as  the  prosump-  Clarke   v.    Bogardus,    12   Wend.   67. 

tion  is  arbitrary  and  often  in  con-  See   Close   v.   Van   Husen,   19   Barb. 

flict     with     the     real     motives     and  505. 

wishes  of  the  testator,  and  seeming-  12  Gibbons  v.  Woodward,  supra. 

ly  harsh,  courts  have  been   prompt  13  Sullivan    v.    Latimer,    38   S.   C. 

to  seize  upon  every  circumstance  to  158. 


§    221]      CONVENTIONAT.    LIQUIDATIONS    AND    DISCIIAIiaF.S.        041 

by  a  mother,  indebted  to  her  children  as  administratrix  of  the 
estate  of  their  fatlier  and  as  their  guardian,  of  a  portion  of  her 
own  estate,  which  is  more  than  the  amount  of  the  indebtedness, 
is  not  to  be  regarded  as  a  satisfaction  of  her  indebtedness  to 
them.  But  this  rule  does  not  apply  to  an  advancement  made  by 
a  father  or  other  person  in  loco  paventi<i  to  a  cliild  to  whom  he  is 
indebted.^* 

§  221.  Payment  by  gift  inter  vivos.     A  creditor  may  extin- 
guish a  debt  gratuitously  by  such  acts  as  are  equivalent  to  a 
gift  consummated.     Thus,  indorsements  made  in  consideration 
of  kindness,  by  direction  and  in  the  presence  of  a  mortgagee,  of 
part  payments  upon  a  mortgage  against  his  granddaughter  and 
her  husband,  with  whom  he  was  living  at  the  time,  and  which 
were  to  accord  with  his  deliberate  and  expressed  intention  to 
make  a  gift  or  donation  of  his  property  to  her,  have  been  sus- 
tained as  an  extinguishment  or  forgiving  of  the  mortgage  debt  to 
that  extent.     It  was  objected  that,  this  being  a  gift  inter  vivos, 
delivery  and  acceptance  were  essential  to  its  validity,  and  as 
there  was  no  delivery  it  could  not  take  effect.     Christiancy,  J., 
said:     "Doubtless  such  is  the  rule  where  the  gift  consists  of 
tangible  personal  property  which  admits  of  actual  delivery;  and 
the  same  rule  would  probably  apply  where  the  note  or  bond  of  a 
third  person  is  the  subject  of  the  gift.     Whether  if  the  whole  of 
the  mortgage  debt  in  the  present  case  had  been  the  subject,  de- 
livery of  the  note  and  mortgage,  or  one  of  them,  would  not  have 
been  essential  we  need  not  inquire.     In  the  present  case  it  was 
but  a  part  of  the  sum  secured  by  the  note  and  mortgage ;  and  the 
attempted  donation  was  to  the  debtors  themselves.     And  it  is 
difficult  to  conceive  how  any  delivery  could  have  been  made. 
But  it  is  said  that  there  must  have  been  a  delivery  of  the  papers 
or  of  a  release  or  receipt  for  the  portion  of  the  debt  intended  to 
be  given ;  because  without  something  of  this  kind  it  would  have 
been  in  the  power  of  the  donor  to  retract,  and  this  he  might 
doubtless  have  done  if  this  had  been  an  executory  agreement  or 
undertaldng  to  make  this  gift.    But  here  the  purpose  and  inten- 
tion of  making  the  gift  was  fully  executed,  and  by  one  of  the 

14  Patten  v.  Glover,  1  D.  C.  App.  Caa.  460;   Plunkett  v.  Lewis,  .3  Hare, 
;U6;  1  Pom.  Eq.,  §  540. 

Suth.  Dam.  Vol.  I.— 41. 


642  SUTHERLAND    ON    DAMAGES.  [§    221 

donees  actually  accepted  at  the  time ;  and  the  acceptance  by  the 
other  of  the  extinguishment  of  a  part  of  the  debt  against  him- 
self may  be  very  safely  presumed.  And  if  it  remained  in  the 
power  of  the  donor  to  retract,  it  would  have  been  equally  so,  if 
purely  a  gift,  had  a  receipt  been  given,  and  equally  so,  for 
aught  we  can  discover,  had  a  release  been  given,  there  being  no 
consideration  and  under  our  statute  ^*  which  makes  the  seal  no 
more  than  prima  facie  evidence  of  a  consideration.  The  want 
of  consideration  could,  therefore,  in  either  case,  have  been 
shown.  As  the  debt  which  was  the  subject  of  the  gift,  when 
considered  with  reference  to  the  fact  that  the  donee  was  the 
debtor,  and  that  only  part  of  the  debt  was  attempted  to  be 
given,  did  not  admit  of  actual  delivery,  and  as  all  was  done  that 
could  well  be  done  under  the  circumstances  to  make  the  gift 
eflFectual,  we  do  not  think  the  act  and  intention  of  the  donor 
should  be  defeated  merely  because  the  subject  did  not  admit  of 
an  actual  or  technical  delivery."  ^° 

A  delivery  is  so  essential  to  the  validity  of  a  gift  that  its 
place  cannot  be  supplied  by  a  formal  declaration  of  the  donor's 
executory  intention,  although  in  writing.^'  The  intention  to 
discharge  by  gift  a  debt  in  the  form  of  a  note,  bond  or  the  like 
should  be  executed  by  an  actual  surrender  of  the  instrument  or 
by  a  release  delivered  to  the  donee. ^^  The  delivery  of  a  note 
by  the  holder  to  the  maker,  with  the  intention  of  transferring 
the  title  thereto,  is  an  extinguishment  of  the  note  and  a  dis- 
charge of  the  obligation  to  pay  it." 

iSComp.  L.  of  Mich.  1871,  §  5947.  (N.   S.),   497;    Duffield  v.   Hicks,   1 

16  Green  v.  Langdon,  28  Mich.  221.  Dow.  &  C.  11;  Licey  v.  Licey,  7  Pa. 

17  Phimstead's    App.,    4    S.    &    R.  25],    47    Am.    Dec.    513;    1    Smith's 
545;    Wheatley  v.  Abbott,  32  Miss.  Lead.  Cas.  1st  pt.  *469. 


Hunter   v.    Hunter,    19    Barb.  In    Campbell's    Est.,    supra,    Gib- 

Noble  V.   Smith,   2   Johns.   52,       son,  C.  J.,  said  that  "the  gift  of  a 


343 
631 

3  Am.  Dec.  399 ;  Cook  v.  Husted,  12  bond,  note  or  other   chattel  cannot 

Johns.  188;  Davis  v.  Boyd,  6  Jones,  be  made  by  words  in  futuro  or  in 

249;  Brunn  v.  Schuett,  59  Wis.  260.  words    in   prcesenti,    unaccompanied 

18  Trombly   v.   Klersy,    141   Mich.  by   such   delivery   of  the  possession 

73;   Kidder  v.  Kidder,  33  Pa.  268;  as  makes  the  disposal  of  the  thing 

Campbell's  Est.,  7   id.   100,  47   Am.  irrevocable."    Brunn  v.  Schuett,  ^- 

Dec.   503;    Wentz  v.   Dehaven,   1   S.  pra. 

&  R.  312;  Whitehill  v.  Wilson,  3  P.  19  Slade  v.  Mutrie,  156  Mass.  19, 

&  W.  405;  Duffield  v.  Elwes,  1  Bligh  11  L.R.A.  710n;  Stewart  v.  Hidden, 


§    222]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        643 

§  222.  Retaining  money  by  executor,  etc.  Payment  or  sat- 
isfaction of  a  debt  may  result  as  the  legal  effect  of  the  debtor 
having  conferred  on  him  in  some  character  the  duty  or  right  to 
receive  payment.  This  conclusion  rests  upon  the  ground  that 
when  the  same  hand  is  to  pay  and  receive  the  money  that  whicli 
the  law  requires  to  be  done  shall  be  deemed  to  be  done ;  and, 
therefore,  that  such  debt,  when  due  from  an  administrator,  for 
instance,  shall  be  assets  de  facto  to  be  accounted  for  in  the 
probate  account.^"  But  the  principle  only  applies  where  it  is 
shown  that  the  personal  representative  had  sufficient  personal 
assets  for  the  payment  of  his  debt  M'hicli  he  could  have  applied 
for  that  purpose.^^  When  a  testator  makes  his  debtor  executor 
it  is  a  release  at  law,  but  the  former  may  reserve  the  debt,  and 
payment  be  enforced  by  the  party  to  whom  it  is  bequeated 
under  the  fiction  of  a  promise  to  him.^^  Such  appointment  does 
not  extinguish  the  debt,  nor  a  mortgage  security  for  it,^^  but  it 
becomes  assets  in  his  hands,^*  especially  if  there  is  a  deficiency 
to  pay  debts. ^^  An  executor  or  other  trustee  for  the  distribution 
of  moneys  to  pay  debts,  legacies,  etc.,  may  retain  for  a  debt 
owing  him  from  the  trust  funds,  and  may  also  retain  for  the 
benefit  of  the  trust  any  sum  due  from  a  beneficiary.  A  personal 
representative  may  retain  for  his  debt  by  withholding  within  the 
period  allowed  by  the  statute  of  limitations  a  sufficient  amount 
from  the  moneys  coming  to  his  hands,  and  is  entitled  to  due 
credit  therefor  in  the  settlement  of  his  accounts,^^  on  such  proof 

13  Minn.  43;  Ellsworth  v.  Fogg,  35  Pick.  500,  26  Am.  Dec.  C16,  If)  Pick. 

Vt.  355 ;  Vanderbeck  V.  Vanderbeck,  54,    1    Allen,    153.      See    JlsW    v. 

30  N.  J.  Eq.  265;  Jaffray  v.  Davis,  Jewott,  2  Mctc.    (Mass.)    168;   Wil- 

124  N.  Y.  164,  170,  11  L.R.A.  710;  son  v.  Wilson,   17  Ohio  St.   150,  91 

Patten  v.  Glover,  1  D.  C.  App.  Cas.  Am.   Dec.    125. 

466,  481.  21Jordan  v.  Hardie,  131  Ala.  72; 

20  Ipswich    Mfg.    Co.    v.    Story,    5  Miller  v.   Irby,  63  Ala.  485. 

Mete.   (Mass.)   310;  Stevens  v.  Gay-  22  Fishel  v.  Fishol,  7  Watts,  44. 

lord,   n    Mass.   255;    Kinney  v.   En-  23  p.acon  v.  Fairman,  6  Conn.  121; 

sign,  18  Pick.  232;  Winsliip  v.  Bass,  Collard  v.  Donaldson,  17  Ohio,  264. 

12  Mass.   199 ;   Wankford  v.  Wank-  See  Pratt  v.  Northam,  5  Mason,  95 ; 

ford,     1    Salk.    299 ;     Chectham    v.  Miller  v.  Irby,  63  Ala.  477. 

Ward,  1  B.  &  P.  630;   Freakley  v.  24  Winship  v.  Bass,  12  Mass.  198. 

Fox,  9  B.  &  C.  130;  Taylor  v.  Del)-  25  Marvin   v.    Stone,   2   Cow.   781. 

lois,  4  Mason,  131;  Bryant  v.  Smitli,  26  Batson   v.   Murrell,   10  Humph. 

10  Cush.   109;    Hunt  v.   Ncvers,   15  301,   51    Am.   Dec.   707;    Hamncr   v. 


644  SUTIIEKLAND    ON    DAMAGES.  [§    222 

as  would  uiitborizc  a  recovery  upon  it.^'^  And  such  retainer  will 
be  presumed  from  sufficient  assets  coming  into  his  hands  which 
were  susceptible  of  conversion  into  money.^*  His  debt,  however, 
will  not  be  deemed  extinguished  by  the  receipt  of  assets  sufficient 
to  discharge  it,  but  which  he  fails  to  reduce  to  money  and  turn 
over  to  his  successor.^^  The  right  of  retainer,  and  the  legal 
incidents  thereof,  applies  to  debts  due  the  personal  representa- 
tive as  trustee,  or  as  executor  or  administrator  of  another  per- 
son.^"   An  executor  de  son  tort  cannot  retain  for  his  own  debt.^^ 

Sureties  in  a  bond  who  i)ay  it  after  the  death  of  the  principal 
are  entitled  to  rank  as  his  specialty  creditors  and  if  they  be 
administrators  of  his  estate  may  retain  whatever  they  pay  on 
account  of  such  suretyship  out  of  assets  that  come  to  their 
hands  as  administrators  against  other  specialty  creditors.^^  A 
retainer  may  either  be  pleaded  or  given  in  evidence  under  the 
plea  of  plene  administrwvit.^^ 

§  223.  Payment  in  counterfeit  money,  bills  of  broken  banks, 
forged  notes  and  checks.  It  accords  with  principles  governing 
in  like  cases,  and  certainly  with  the  decided  weight  of  author- 
ity, to  hold  that  the  party  paying  by  legal  implication  warrants 
the  genuineness  of  what  he  pays  as  money,^*  unless  the  char- 
acter of  the  transaction  or  the  accompanying  circumstances  show 
a  different  intention.^^     This  rule  is  now  recognized  as  an  ex- 

Hamner,  3  Head,   398;    Harrison  v.  33  Evans    v.    Norris,    Hayw.     (by 

Henderson,  7  Heisk.  315.  Batt.)   473. 

27Kirksey    v.    Kirksey,    41    Ala.  34  Watson    v.    Cresap,    ]    B.    Men. 

626.  195,  36  Am.  Dec.  572;   Edmunds  v. 

28  Glenn  v.  Glenn,  41  Ala.  571.  Digges,   1   Gratt.   359,  42   Am.   Dec. 

29  Harrison  V.  Henderson,  7  Hcisk.  561;  Hargrave  v.  Dusenbury,  2 
315;  Ross  V.  Wharton,  10  Yerg.  190.  Hawks,  326;    Fogg  v.  Sawyer,  9  N. 

30  Miller  v.  Irby,  63  Ala.  477;  H.  365;  Buck  v.  Doyle,  4  Gill,  478, 
Thompson  v.  Cooper,  1  Call,  861,  1  45  Am.  Dec.  176;  Goodrich  v.  Tracy, 
Am.    Dec.    509:    Thomas    v.    Thomp-  43.  Vt.  314,  5  Am.  Rep.  281. 

son,  2  Johns.  471  ;  Hosack  v.  Rogers,  35  See  Dakin  v.  Anderson,  18  Ind. 

6  Paige,  415;   Morrow  v.  Payton,  8  52. 

Leigh,  54.  In  Orchard  v.  Hughes,  1  Wall.  73, 

31  Turner  v.  Child,  1  Dev.  331.  it  was  held  to  be  no  defense  to  a 

32  Powell  V.  White,  11  Leigh,  309.  suit  for  debt  that  the  debt  arose 
See  Copis  v.  Middleton,  1  Turn.  &  from  the  receipt  of  the  bills  of  a 
Russ.  224 ;  Jones  v.  Davids,  4  Russ.  bank  chartered  illegally,  and  for 
277.  fraudulent   purposes,   and   that   the 


§    223]      CONVENTIONAL    LIQUIDATIONS    AND    DISC  II AIJOKS.        G45 

cei)tioii  to  that  of  caveat  emptor,  but  it  is  evident  it  was  not 
always  so.^^  This  warranty  of  genuineness,  liowcver,  is  not 
absolute;  but  the  general  current  of  antliority  is  tliat  the  payer 
warrants  the  quality  to  such  an  extent  that  he  is  bound  to  make 
it  good,  if  found  bad  and  return  within  a  j^roper  time."  It  is  a 
special  warranty,  requiring  the  return  of  the  thing  wjiiTanted 
and  involving  an  obligation  of  the  debtor  to  pay  tlu;  amount 
again  in  good  money  but  leaving  the  creditor,  of  course,  the 
option,  on  returning  the  spurious  money,  to  proceed  on  the  statu 
quo  as  upon  a  rescission.  The  payment  in  either  case,  to  the 
extent  of  the  counterfeit  money,  is  treated  as  a  nullity  when  it 
has  been  restored.^^ 

bills  were  void  in  law,  and  finally  ly  a  good  perfoiniiuice  of  tlie  con- 
proved  worthless  in  fact;  they  them-  dition." 

selves  having  been  actually  current  37  ^/\t wood    v.   Cornwall,   2S   Mich. 

at  the  time  the  defendant  received  .3;50,   15   Am.  Eep.  210;    Wingatc  v. 

them,  and  not  having  proved  worth-  Neidlinger,  .50  Ind.  520;  Samuels  v. 

less  in  his  hands,  and  he  not  being  King,  id.  527;   Stebbina  v.  Stebbiiis, 

bound  to  take  them  back  from  the  51     Ind.     595.       See     Alexander     v. 

person  to  whom  he  paid   them.  Byers,  10  Ind.  .SOI. 

36In  Wade's  Case,  5  Coke,  114a,  38i,i.;  Markle  v.  llnifield,  2 
it  was  said:  "It  was  adjudged  be-  John.s.  45:?;  Ciliiiaii  v.  Peck,  14  \"t. 
tween  Vare  and  Studley  that  when  510;  Thomas  v.  Todd,  (>  Hill,  ;!-U); 
the  lessor  demanded  rent  of  the  Torrcy  v.  Baxter,  l.'J  Vt.  452;  Piii- 
Icssee,  according  to  the  condition  of  dall  v.  Northwestern  Bank,  7  Leigli, 
re-entry,  and  the  lessee  payeth  tlie  617;  Raymond  v.  Baar,  l.")  S.  iV:.  R. 
rent  to  his  lessor,  and  he  received  318,  15  Am.  Dec.  ()().'!;  Bank  v.  I''ai- 
it  and  put  it  in  his  purse,  and  after- 
wards in  looking  it  over  again  at 
the  same  time  he  found  amongst 
the  money  that  he  had  received  some 
counterfeit  pieces  and  thereupon  re- 
fused to  carry  away  the  money,  but  lie  who  passes  a  bill  as  nioncv  passes 
re-entered  for  the  condition  broken,  it  a,s  genuine,  and  the  law  implies 
it  was  adjudged  the  entry  was  not  an  assumpsit  or  warranty  tliat  it  is 
lawful;  for  when  the  lessor  had  ac-  so  (2  Johns.  45S.  15  .fohns.  241  i  ; 
cepted  the  money  it  was  at  his  peril,  and  if  the  hill  should  be  counterfeit 
and  upon  that  allowance  he  shall  ;ind  worthless,  this  implied  promise 
not  take  exception  to  any  part  of  is  inunediately,  upon  passing  the 
it."  And  it  is  said  in  Shepherd's  bill,  broken,  and  an  action  lies  for 
Touchstone,  140,  in  respect  to  mort-  its  breach;  nor  does  it  nuitter 
gages:  "If  the  payment  be  made,  whether  he  wbo  passes  it  knows 
part  of  it  with  counterfeit  coin,  and  that  it  is  counterfeit  or  not.  2 
the  party  accept  and  put  it  up,  this  Johns.,  supra.  The  aclioii  is  not 
is  a  good  payment,  and  consequent-  an  action  for  fraud,  but  for  breach 


iiiers'    &    M.    jtan 

k,    11)    \(.    Ill,    33 

Am.  Dec.   ISS. 

In   Watson    v. 

Cresap,    1    15.    Mon. 

195,  30  Am.   Dec. 

572,  .Iiiclgc   lowing 

said:      "It   must 

lie    prrsinni'il    tbat 

646 


SUTIIEKLAND    ON    DAMAGES. 


[§   ^23 


The  same  principle  applies  to  the  notes  or  checks  of  indi- 
viduals. If  they  are  forged,  in  whole  or  in  part,  or  are  void 
because  of  the  incapacity  of  their  makers,  the  paper  does  not  dis- 
charge the  debt  it  was  accepted  in  payment  of.^^  A  contract  to 
receive  payment  in  certificates  of  indebtedness  issued  by  pnb- 


of  promise  implied  by  law.  And  to 
sustain  this  form  of  declaring  it 
would  certainly  be  unnecessary  to 
prove  that  the  note  was  tendered 
back,  as  it  goes  for  breach  of 
promise,  and  not  for  restitution  of 
the  consideration  upon  a  disaffirm- 
ance of  the  contract  of  payment. 
As  the  first  count  in  the  case  under 
consideration  is  a  count  on  the  im- 
plied promise,  the  proof  justified 
the  recovery  without  any  evidence 
that  the  bill  was  tendered  back  to 
the  defendants  before  suit  brought. 
We  are  also  satisfied  that  if  money 
or  other  bills  which  pass  and  are 
received  as  money  be  the  consider- 
ation given  for  a  counterfeit  bill, 
that  it  may  be  recovered  back  on  an 
indchitatits  count  for  so  much  money 
had  and  received.  Payment  for 
such  a  bill  must  be  regarded  as  a 
payment  by  mistake  for  a  thing  of 
no  value,  but  which  was,  at  the 
time  it  was  received,  believed  to  be, 
and  imported  on  its  face  to  be,  of 
intrinsic  worth.     2  Johns.  458. 

"But  this  form  of  declaring  pro- 
ceeds on  the  ground  of  a  disaffirm- 
ance of  the  contract  and  a  restitu- 
tion of  the  thing  given  in  exchange. 
It  is  an  equitable  remedy,  and  to 
entitle  the  plaintiff  to  recovery,  if 
anything  of  value  has  been  received, 
it  must  be  shown  that  it  was  ten- 
dered back  before  the  action  was 
brought.  A  counterfeit  bill  is  cer- 
tainly of  no  intrinsic  value;  it 
would  be  as  worthless  in  the  hands 
of  the  defendants  as  that  of  the 
plaintiffs,  and  according  to  the  rule 
laid  down,   it  would   seem  unneces- 


sary to  show  that  it  was  tendered 
back,  even  in  this  form  of  declar- 
ing. But  wliether  it  was  or  not  it 
is  not  now  necessary  to  determine, 
as  the  recovery  was  proper  on  the 
first  count." 

This  case,  it  is  respectfully  sug- 
gested, would  not  now  be  regarded 
as  correctly  decided,  for  it  proceeds 
upon  a  ground  fundamentally  erro- 
neous; namely,  that  a  counterfeit 
bill  "would  be  as  worthless  in  the 
hands  of  the  defendants  as  in  tliat 
of  the  plaintiffs."  An  absolute  war- 
ranty of  genuineness  is  assumed 
doubtless  on  that  theory.  The  con- 
sideration appears  to  liave  been 
overlooked  that  Avhere  a  covmter- 
feit  bill  has  been  innocently  paid 
and  received,  the  prompt  return  of 
it  will  enable  the  party  who  had 
paid  it  to  restore  it  to  the  person 
from  whom  he  received  it,  and  thus 
obtain  its  nominal  amount  in  good 
money.  The  implied  warranty  re- 
quires such  restitution. 

39  Simpson  v.  New  Orleans,  109 
La.  897;  Bass  v.  Wellesley,  192 
Mass.  o2G;  Central  Nat.  Bank  v. 
Copp,  184  Mass.  328;  Godfrey  v. 
Crisler,  121  Ind.  203;  First  Xat. 
Bank  v.  Buchanan,  87  Tenn,  32, 
1  L.R.A.  199,  10  Am.  St.  617; 
School  Town  v.  Grant,  104  Ind.  168; 
Gerwig  v.  Sitterly,  56  N.  Y.  214; 
Stratton  v.  McIMakin,  84  Ky.  641, 
4  Am.  St.  215;  Bitter  v.  Singmaster, 
73  Pa.  400;  Graham's  Est.,  14 
Phila.  280;  Emeric  v.  O'Brien,  36 
Ohio  St.  49]  ;  Guichard  v.  Brande, 
57  Wis.  534;  Sandy  River  Nat. 
Bank  v.  Miller,  82  Me.  137. 


§    224]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        G47 

lie  officers  contemplates  that  the  iustruments  shall  he  eiiforce- 
able;  that  thev  shall  rest  upon  antecedent  proceedings  which 
gave  the  officers  jurisdiction  to  issue  them.*"  The  tendency  of 
modern  decisions  is  to  require  reasonable  vigilance  in  the  re- 
ceipt and  prompt  diligence  in  the  return  of  counterfeits,  or  in 
giving  notice  to  the  payer  that  he  may  protect  himself  against 
prior  parties.  What  is  diligence  is  determined  with  reference 
to  the  facts  of  each  case,  but  upon  analogies  drawn  from  the  law 
of  commercial  paper.  A  delay  of  months  or  even  a  few  days 
may  be  fatal  to  the  right  of  recourse  to  the  payee.*^  Any  un- 
necessary delay  beyond  such  reasonable  time  as  would  enable 
the  taker  to  inform  himself  as  to  its  genuineness  operates  as 
a  fraud  on  the  payer  and  prevents  a  recovery.*^ 

§  224.  Same  subject.  When  payment  is  made  in  the  bills  of 
insolvent  banks  or  in  other^  depreciated  conventional  currency 
the  question  of  who  should  bear  the  loss  may  arise  under  various 
circumstances.  If  both  parties  deal  in  the  currency  in  question 
as  uncurrent  money  it  is  like  dealing  in  a  commodity.  And  if 
a  debtor  pays  as  money  bank  notes,  knowing  the  bank  to  be  in- 
solvent, and  conceals  it  from  the  creditor  or  payee,  it  will  be 
deemed  a  fraud.*^  But  there  are  various  aspects  in  which  an 
innocent  payment  of  depreciated  or  worthless  currency  mav  be 
viewed;  that  is,  though  both  the  payer  and  receiver  take  for 

Payment    by    means    of    a    stolen  Bank,  7  Leigh,  6] 7;  Union  Bank  v. 

check    bearing    the    forged    indorse-  Baldenwick,  45  111.  375;   Pumphrey 

ment  of  the  payee  will  not  discharge  v.  Eyre,  Tappan,  283.     See  Youn»  v. 

the  indebtedness.  Main  Street  Bank  Adams,   6   Mass.    187;    Salem   Bank 

V.    Planters'    Nat.    Bank    of    Rich-  v.    Gloucester    Bank,    17    id.    1,    28, 

mond,  116  Va.   137.  9  Am.  Dec.  111. 

40Catlin    V.    Munn,    37    Hun    (N.  42  Atvvood   v.   Cornwall,   28   Mich. 

Y.),  23.  336,  15  Am.  Rep.  219.     This  case  is 

41  Raymond  v.  Baar,  13  S.  &  R.  valuable  because  of  the  ability  and 
318;  Samuels  v.  King,  50  Ind.  527;  learning  with  which  Judge  Camp- 
Thomas  V.  Todd,  6  Hill,  340;  Law-  bell  discusses  the  legal  relations  be- 
renceburgh  Nat.  Bank  v.  Stevenson,  tweon  the  payer  and  receiver  of 
51  Ind.  594;  Corn  Exch.  Nat.  Bank  coimterfeit  money.  See  First  Nat. 
v.  National  Bank,  78  Pa.  233;  Bank  v.  Ricker,  71  III.  439,  22  Am. 
Kenny  v.  First  Nat.  Bank,  50  Barb.  Rep.  104;  Simms  v.  Clark,  11  111. 
112;  Camidgc  v.  Allenby,  6  B.  &  C.  137;  United  States  Bank  v.  Bank, 
373;  Bank  v.  Farmers'  &  M.  Bank,  10  Wheat.  333,  0  L.  ed.  334. 
10  Vt.  141  ;  Pindall  v.  Northwestern  43  Story  on  Prom.  Notes,  §  118. 


648  SUTHERLAND    ON    DAMAGES.  [§    224 

granted  it  is  good,  aud  may  be  equally  ignorant  of  any  fact 
tending  to  lessen  its  value:  first,  the  bank  may  be  in  fact  in- 
solvent, but  had  not  stopped  payment;  second,  it  may  have 
stoi)ped  payment,  but  a  knowledge  of  it  not  have  reached  the 
neighborhood  where  the  payment  was  made  and  the  bills  may 
have  continued  there  actually  current ;  third,  the  currency  used 
may  be  wholly  worthless  or  only  depreciated.  Mr.  Chitty  says : 
''It  should  seem  that  if  in  discounting  a  note  or  bill  the  promis- 
sory note  of  country  bankers  be  delivered,  after  they  have 
stopped  payment,  but  unknown  to  the  parties,  the  person  taking, 
unless  guilty  of  laches,  might  recover  the  amount  of  the  dis- 
counter because  it  must  be  implied  that  at  the  time  of  the  trans- 
fer the  notes  were  capable  of  being  received  if  duly  presented 
for  payment."^^  And  Mr.  Story  says  of  a  payment  in  bills  of 
an  insolvent  bank,  where  both  parties  are  equally  innocent,  and 
alike  ignorant  that  the  bank  had  become  insolvent,  that  the 
weight  of  reasoning  and  of  authority  seems  to  be  in  favor  of  the 
payer  bearing  the  loss.  The  decisions  in  New  York,^^  Wiscon- 
sin,*^ Vermont,  *'  N"ew  Hampshire,*^  Illinois,  *^  Maine,^°  South 
Carolina,^^  and  Ohio  ^^  are  in  accord  with  that  doctrine.  But  in 
Pennsylvania,^^  Tennessee,^*  and  Alabama  ^^  such  loss  must  be 
borne  ])y  the  receiver. ^^ 

44  Chitty  on  Bills,  247.  53  Bayard  v.  Shunk,  1  W.  &  S.  94, 

45Liolitbody  V.  Ontario  Bank,  11  37  Am.  Dec.  441. 

Wend.  9,  afl["ci  13  id.  101;  Houghton  54  Scruggs   v.   Gass,   8   Yerg.   175, 

V.  Adams,  IS  Barb.  54.5.  29  Am.  Dec.  114.     But  see  Ware  v. 

46  Townsends  v.  Bank,  7  Wis.  185.  Street,   2   Head,   609,    75   Am.   Dec. 

47  Oilman  v.  Peck,  11  Vt.  516,  34  7.55. 

Am.  Dec.  702;  Wainwright  v.  Web-  55  Lowrey  v.  Murrell,  2  Port.  282, 

ster,   11   Vt.  576,  34  Am.  Dec.  707.  ^7  Am.  Dec.  651. 

48  Fogg  V.  Sawyer,  9  N.  H.  305,  '' ^ee  Young  v.  Adams,  6  Mass. 
„_  ,  ^'1  ,'^  ^  182;  Edmunds  v.  Digges,  1  Gratt. 
2n  Am.  Deo.  462.                                             „ ^,  .„.                ^r^ ,         ,     ^^  . 

,     ..,  T„    ^o^  329;     Phillips    v.     Blake,     1    Mete. 

49Magee  v.  Carmack,  13  111.  289.  ,^/      ^   _  *    .,      .,            ah     i       c 

^  (Ma.ss. )    156;  Camidge  v.  Allenby,  6 

50  Frontier  Bank  v.  Morse,  22  Me.  ^    ^   ^    3^3.    Qwenson   v.   Morse,   7 

88,  38  Am.  Dec.  284.  rp    p^    g^.    ^^  ^^^.^^  Blackburne,   10 

slHarley     v.     Thornton,     2     Hill  y^g    204;    Emly  v.  Lye,   15   East  7. 

In   Corbit  v.   Bank,  2  Harr.   235, 

52Westfall  V.  Braley,  10  Oliio  St.  39  Am.  Dec.  635,  it  was  held  that 

188,  75  Am.  Dec.  ,509.     But  see  Im-  the  receipt  by  a  bank  for  deposit  as 

bush    V.    Meclianics'   Bank,    1    West.  money  of  the  bills  of  a  bank  that 

L.  J.  49.  had  just  suspended,  but  before  either 


)09. 


§    224]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        649 

The  failure  of  a  bank  has  the  effect  of  depriving  its  bills  of 
the  distinctive  character  of  money;  it  becomes  insolvent  when 
it  ceases  to  redeem  them  with  legal  tender  money."  Bank  notes 
are  the  representative  of  money,  and  circulate  as  such  by  gen- 
oral  consent  and  usage.  But  this  consent  and  usage  are  based 
upon  the  convertibility  of  such  notes  into  coin  at  the  pleasure 
of  the  holder,  upon  tlieir  presentation  to  the  bank  for  redeiup- 
tion.  This  fact  is  the  vital  principle  which  sustains  their  char- 
acter as  money.  So  long  as  they  are  in  fact  what  they  purport 
to  be,  payable  on  demand,  common  consent  gives  them  the  at- 
tributes of  money.  But  upon  the  failure  of  the  bank  by  which 
they  were  issued,  when  its  doors  are  closed  and  the  inability  to 
redeem  its  bills  is  openly  averred,  they  instantly  lose  that  char- 
acter, their  circulation  as  currency  ceases  with  the  usage  and 
consent  upon  which  it  rested,  and  the  notes  become  the  mere 
dishonored  and  depreciated  evidences  of  debt.  When  this  change 
in  their  character  takes  place  the  loss  must  necessarily  fall  upon 
him  who  is  the  owner  of  them  at  the  time;  and  this,  too, 
whetlier  he  is  aware  or  unaware  of  the  fact.  His  ignorance 
can  give  him  no  right  to  throw  the  loss  he  has  already  incurred 
upon  an  innocent  third  party. ^^  Therefore,  if  such  bills,  after 
failure  of  the  bank,  are  paid  out  and  received  as  money  by  per- 
sons ignorant  of  the  fact  the  receiver  is  entitled  to  return  them 
and  require  their  amount  in  good  money  on  the  ground  of  mis- 
take.^^  The  very  time  when  a  bank  announces  its  failure,  by 
closing  its  doors  and  ceasing  to  redeem,  is  that  at  which  its 
failure  is  deemed  to  occur,  without  reference  to  its  antecedent 
real  condition  between  parties  having  no  cause  to  anticipate 

the  bank  oi-  the  depositor  was  in-  when  received  for  a  precedent  deht 
formed  of  the  failure,  was  at  the  it  is  not  discharged  unless  the  bills 
risk  of  the  bank  receiving  them.  are  of  solvent  banks  when  received. 
And  a  distinction  was  taken  be-  57'Jownsends  v.  Bank,  Lighthody 
tween  the  receipt  of  bank  bills  for  v.  Ontario  Bank,  supra. 
a  contemporaneous  debt  or  consider-  58  Westfall  v.  Bralcj',  supra. 
ation  and  receiving  them  for  a  pre-  59  Id.;  Frontier  Bank  v.  Morse, 
cedent  debt.  In  the  former  case  supi-a;  Boberts  v.  Fisher,  43  N.  Y. 
the  bills  are  supposed  to  be  the  L^D,  3  Am.  Bep.  6S0;  Leger  v.  Bon- 
thing  bargained  for,  and  therefore  nafl'e,  2  Barb.  475;  Baldwin  v.  Van 
at    the    risk    of    the    receiver;    but  Dcusen,  37  N,  Y.  487. 


050 


SUTIIERI^AJSTD    ON    DAMAGES. 


[§   224 


that  eveiit.^°  The  doctrine  that  the  h^ss  falls  upon  him  in  whose 
hands  the  bills  are  at  the  time  of  the  failure  necessarily  involves 
an  implied  guaranty  in  everj  payment  of  bank  bills  that  at 
that  time  the  bank  has  not  suspended  or  failed,  unless  a  con- 
trary intention  is  manifested. 

On  the  contrary,  in  Pennsylvania  and  some  other  states,  as 
stated,  Avhere  a  payment  in  bank  bills  is  made  in  good  faith 
their  acceptance  is  not  deemed  to  be  upon  the  faith  of  any  such 
guaranty,  but  is  governed  by  the  rule  of  caveat  emptor,  and  the 
maxim  of  nielior  est  conditio  defendentis.^^ 


60  Ware  v.  Street,  2  Head  609,  75 
Am.  Dec.  755.  In  this  case  a  pay- 
ment in  bank  bills  was  made  on  the 
12th  of  July,  1858,  late  in  the  even- 
ing and  was  held  good,  although  the 
suspension  was  resolved  upon  that 
same  evening,  but  was  not  announced 
until  the  next  day.  The  court  say: 
"The  loss  must  fall  upon  one  of  two 
innocent  men,  and  the  law  must  con- 
trol it.  At  the  time  the  payment 
was  made  the  notes  were  circulat- 
ing as  currency  and  considered  good 
by  the  community.  But  they  were 
in  fact  of  no  value  at  the  hour  they 
were  paid  out,  although  a  few  hours 
before  they  were  convertible  into 
specie.  .  .  .  The  supposed  com- 
mercial interest  of  our  country  and 
the  general  convenience  of  the  peo- 
ple have  produced  a  course  of  legis- 
lation by  which  bank  paper  has  be- 
come the  circulating  medium  and  the 
standard  of  value  instead  of  specie. 
True,  it  has  not  been  made  a  lawful 
tender  and  cannot  be  without  a 
change  of  the  Constitution.  But  by 
almost  universal  consent  it  has  be- 
come the  medium  of  exchange  and 
the  representative  of  property.  It 
has  taken  the  place  of  the  precious 
metals  and  is  regarded  as  money. 
This,  however,  is  by  consent  and  not 
by  law.  No  man  is  hound  to  re- 
ceive it  in  payment  of  debts  gr  for 


property.  But  if  it  gets  into  hia 
hands  by  consent,  and  a  loss  comes 
by  failure  of  the  bank,  the  misfor- 
tune must  and  should  be  his  in 
whose  hands  it  happens  to  be  at  the 
time.  The  risk  must  follow  the 
paper  and  not  the  former  owners. 
It  passes  from  hand  to  hand  with- 
out recourse  except  in  cases  of 
fraud  or  concealment." 

61  In  Bayard  v.  Shunk,  1  W.  &  S. 
92,  37  Am.  Dec.  441,  Gibson,  C.  J., 
expounds  and  enforces  this  view 
with  great  vigor  of  language  and 
logic.  He  says:  "Cases  in  which 
the  bills  and  notes  of  a  third  party 
were  transferred  for  a  debt  are  not 
to  the  purpose;  and  most  of  those 
which  have  been  cited  are  of  that 
stamp.  Where  the  parties  to  such 
a  transaction  are  silent  in  respect 
to  the  terms  of  it,  the  rules  of  in- 
terpretation are  few  and  simple.  If 
the  securities  are  transferred  for  a 
debt  contracted  at  the  time,  the  pre- 
sumption is  that  they  were  received 
in  satisfaction  of  it;  but  if  for  a 
precedent  debt,  it  is  that  they  are 
received  as  collateral  security  for 
it;  and  in  either  case  it  may  be  re- 
butted by  direct  or  circumstantial 
evidence.  But  by  the  conventional 
rules  of  business,  a  transfer  of  bank 
notes,  though  they  are  of  the  same 
mould    and    obligation   betwixt   the 


224]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        051 


Where  recourse  is  allowed  to  the  party  who  paid  out  the 
bills  it  does  not  depend  on  their  being  worthless.    Parker,  C.  J.. 


original  parties,  is  regulated  by  pe- 
culiar  principles,   and   stands   on   a 
different  footing.     They  are  lent  by 
the    banks   as    cash ;    they    are   paid 
away  as  cash ;   and  the  language  of 
Lord  Mansfield  in  Miller  v.  Race,  1 
Burr.  452,  was  not  too  strong  when 
he  said,  'they  are  treated  as  money, 
as  cash,  in  the  ordinary  course  and 
transaction  of  business  by  the  gen- 
eral consent  of  mankind,  which  gives 
them    the    credit    and    currency    of 
money  to  all  intents  and  purposes; 
they  are  as  much  money  as  guineas 
themselves   are,   or    any   other   coin 
that  is  used  in  common  payments  is 
money  or  cash.'    If  such  were  their 
legal   character   in    England,   where 
there   was   but   one   bank,   how  em- 
phatically must  it  be  so  here  where 
they  have  supplanted  coin  for  every 
purpose   but   that   of   small   change, 
and    where    they    have    excluded    it 
from     circulation     almost    entirely. 
It    is    true,    as    was    remarked    in 
Young  V.  Adams,  6  Mass.  182,  that 
our  bank  notes  are  private  contracts 
without  a  public  sanction  like  that 
which  gives  operation  to  the  lawful 
money  of  the  country;  but  it  is  also 
true  that  they  pass  for  cash,  both 
here  and   in  England,  not  by  force 
of   any    such    sanction,    but   by   the 
legislation    of    general    consent,    in- 
duced by  their  great  convenience,  if 
not  tlie  absolute  necessities  of  man- 
kind.    Miller  v.   Race   is  a  leading 
case  which  has  never  been  doubted 
in    England,    or,    except    in    a    case 
presently  to  be  noticed,  in  America; 
and    it   goes    very    far   to    rule   the 
point  before  us;  for  if  the  wheel  of 
commerce  is  to  be  stopped  or  turned 
backwards  in   order  to  repair  acci- 
dents to   it   from   impurities   in   the 
medium   whicli   keeps    it    in   motion. 


except  those  which,  few  and  far  be- 
tween, are  occasioned  by  forgery, 
bank  notes  must  cease  to  bo  a  part 
of  the  currency,  or  the  l)usiness  of 
the  world  must  stand  still.  The 
weight  of  authority  bearing  direct- 
ly on  the  point  is  ( 1841 )  decisive- 
ly in  favor  of  tlie  position  tiiat  bona 
fide  payment  in  tlie  notes  of  a 
l)roken  bank  discliarges  the  debt. 
.  .  .  Camidge  v.  Allenby,  (5  B.  & 
C.  373;  Scruggs  v.  Gass,  8  Yerg. 
175,  29  Am.  Dec.  114;  Young  v. 
Adams,  0  Mass.  182;  against  Light- 
body  v.  Ontario  Bank,  11  Wend.  9, 
affirmed,  13  id.  101.     .     .     . 

'•'J'o  assume  that  the  solvency  of 
the  bank  at  the  time  of  the  transfer 
is  an  inherent  condition  of  it  is  to 
assume  the  whole  ground  of  the  ar- 
gument. The  conclusion  concurred 
in  by  all,  however,  was  that  the  me- 
dium must  turn  out  to  have  l)een 
what  the  debtor  offered  it  for  at  the 
time  of  payment.  How  does  that 
consist  with  the  equitable  principle 
that  there  must  be,  in  every  case,  a 
motive  for  the  interference  of  tlie 
law,  but  that  it  must  be  stronger 
than  any  to  be  found  on  the  other 
side;  else  the  equity  being  equal, 
and  the  balance  inclining  to  neither 
side,  things  must  be  left  to  stand 
as  they  are  (Fonb.  B.  1,  ch.  V.  §  3; 
id.  ch.  IV.  §  25)  ;  in  other  words, 
that  the  law  interferes  not  to  shift 
a  loss  from  one  innocent  man  to  an- 
other equally  innocent,  and  a  stran- 
ger to  the  cause  of  it.  The  self- 
evident  justice  of  this  would  be 
proof,  were  it  necessary,  that  it  is  a 
principle  of  the  common  law.  But 
we  need  go  no  further  in  search  of 
authority  for  it  than  Miller  v.  Race, 
in  which  one  who  liad  received  a 
stolen  Iiank  note  for  full  considera- 


652 


SUTHERLAND    ON    DAMAGES. 


[§  224 


said:     "The  case  of  a  i^aymeut  in  bills  of  a  broken  bank  cannot 
be  distinguished  in  principle  from  a  payment  in  counterfeit 


tion  in  the  course  of  his  business 
was  not  compelled  to  restore  it.  It 
was  intimated  in  the  Ontario  Bank 
V.  Lightbody  that  there  was  a  pre- 
ponderance of  equity  in  that  case, 
not  on  tlie  side  of  him  who  had  lost 
the  note,  but  of  him  who  had  last 
given  value  for  it.  Why  last?  The 
maxim,  prior  in  tempore  potior  in 
jure,  prevails  between  prior  and  sub- 
sequent purchasers  indifferently  of 
a  legal  or  an  equitable  title.  It  is 
for  that  reason  the  owner  of  a  stolen 
horse  can  reclaim  him  of  a  pur- 
chaser from  the  thief;  and  were  not 
the  field  of  commerce  market  overt 
for  everything  which  performs  the 
office  of  money  in  it,  the  owner  of  a 
stolen  note  might  follow  it  into  the 
hands  of  a  bona  fide  holder  of  it. 
But  general  convenience  requires 
that  he  should  not;  and  it  was  that 
principle,  not  any  consideration  of 
the  equities  betwixt  the  parties, 
whicli  ruled  the  case  of  Miller  v. 
Race.  But  a  more  forcible  illustra- 
tion of  the  principle,  were  the  case 
indisputably  law,  might  be  had  in 
Levy  V.  Bank  of  the  United  States, 
4  Ball.  234,  1  Bin.  27,  in  which  the 
placing  even  a  forged  check  to  the 
credit  of  a  depositor  as  cash — a 
transaction  really  not  within  any 
principle  of  conventional  law — was 
held  to  conclude  the  bank;  and  to 
this  may  be  added  the  entire  range 
of  cases  in  which  the  purchaser  of 
an  article  from  a  dealer  has  been 
bound  to  bear  a  loss  from  a  defect 
in  the  quality  of  it.  And  for  the 
same  reason  that  the  law  refuses  to 
interfere  between  parties  mutually 
innocent,  it  refuses  to  interfere  be- 
tween those  who  are  mutually  cul- 
pable; as  in  the  case  of  an  action 
for  negligence.     What  is  there,  then, 


in  the  case  before  us  to  take  it  out 
of  this  great  principle  of  the  com- 
mon law?  The  position  taken  by 
the  courts  of  New  York  is  that 
every  one  who  parts  with  his  prop- 
erty is  entitled  to  expect  the  value 
of  it  in  coin.  Doubtless  he  is.  He 
may  exact  payment  in  precious 
stones,  if  such  is  the  bargain.  But 
where  he  has  accepted  without  re-, 
serve  what  the  conventional  laws  of 
the  country  declare  to  be  cash,  his 
claim  to  anything  else  is  at  an  end. 
Bills  of  exchange  and  promissory 
notes  enter  not  into  the  transactions 
of  commerce  as  money;  but  it  im- 
presses even  these  with  qualities 
which  do  not  belong  to  ordinary  se- 
curities. The  holder  of  one  of  them, 
who  has  taken  it  in  the  ordinary 
course,  can  recover  on  it,  whether 
there  was  a  consideration  between 
the  original  parties  or  not. 

"The  assertion  that  it  is  always 
an  original  and  subsisting  part  of 
the  agreement  that  a  bank  note 
shall  turn  out  to  have  been  good 
when  it  was  paid  away  can  be  con- 
ceded no  farther  than  regards  its 
genuineness.  That  genuine  notes 
are  supposed  to  be  equal  to  coin  is 
disproved  by  daily  experience,  which 
shows  that  they  circulate  by  the 
consent  of  whole  communities  at 
their  nominal  value  when  notori- 
ously below  it.  But  why  hold  the 
payer  responsible  for  the  failure  of 
the  bank  only  when  it  has  been  as- 
certained at  the  time  of  the  pay- 
ment, and  not  for  insolvency  ending 
in  an  ascertained  failure  after- 
wards? As  the  bank  may  have  been 
actually  insolvent  before  it  closed 
to  let  the  world  know  it,  we  must 
carry  his  responsibility  back  beyond 
the  time  when   it  ceased  to  redeem 


224]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.        653 


money.    From  the  time  of  the  failure  of  the  bank  they  cease  to 
be  the  proper  representatives  of  money,  whether  they  are  at  the 


its  notes,  if  we  carry  it  back  at  all. 
Were    it    not    for    the    conventional 
principle    that    tlie    purcliaser   of    a 
cliattel  takes  it  with  its  defects,  the 
purchaser  of  a  horse  witli  the  seeds 
of  mortal  disease  in  him  might  re- 
fuse  to   pay     for     him     though   his 
vigor  and  usefulness  were  yet  unim- 
paired;  and  if  we  strip  a  payment 
in  bank  notes  of  the  analogous  casii 
principle,  why  not  treat  it  as  a  nul- 
lity, by  showing  tliat  the  bank  was 
actually,  though  not  ostensibly,   in- 
solvent at  the  time  of  the  transac- 
tion.    It  is  no  answer  that  the  note 
of    an    unbroken    bank    may    be    in- 
stantly converted  into  coin  by  pre- 
senting  it   at   the   counter.      To   do 
that  may   recjuire    a    journey   from 
Boston  to  New  Orleans,  or  between 
places     still      further     apart,     and 
the  bank  may  have  stopped  in  the 
meantime,    or    it   may    stop    at   the 
instant   of   presentation   when   situ- 
ated where  the  holder  resides.     And 
it  may  do  so  when    it    is    not    in- 
solvent   at    all,    but    perfectly  able 
eventually  to  pay  the  last  shilling. 
This   distinction    between    previous 
and    subsequent   failure   evinced   by 
stopping   before    the    time    of    the 
transaction   or   after   it   is  an   arbi- 
trary  and   impracticable    one.      To 
such  a  payment  we  must  apply  the 
cash    principle   entire,   or    we   must 
treat  it  as  a  transfer  of  negotiable 
paper,    imposing   on   tlie   transferee 
no  more  than  the  ordinary  mercan- 
tile responsibility  in  regard  to  pre- 
sentation   and    notice    of    dishonor. 
There  is  no  middle  ground.     .     . 
The  case  of  a  counterfeit  baniv  note 
is  entirely  different.      The    laws    of 
trade  extend  to  it  only  to  prohibit 
the   circulation    of    it.      They   leave 
it  in  all  beside  to  what  is  the  rule 


botli  of  the  common  and  the  civil 
law,  wiiich  requires  a  thing  parted 
with  for  a  price  to  have  an  actual 
or  at  least  a  potential  existence  (2 
Kent,  408),  and  a  forged  note,  des- 
titute as  it  is  of  tlie  quality  of 
legitimate  being,  is  a  nonentity.  It 
is  no  more  a  bank  note  than  a  dead 
horse  is  a  living  one;  and  it  is  an 
elementary  principle,  that  what  has 
no  existence  cannot  be  the  subject 
of  a  contract.  But  it  cannot  be 
said  that  the  genuine  note  of  an 
insolvent  bank  has  not  an  actual 
and  a  legitimate  existence,  though 
it  be  little  worth ;  or  that  the  re- 
ceiver of  it  has  not  got  the  thing 
he  expected.  It  ceases  not  to  be 
genuine  by  the  bank's  insolvency; 
its  legal  obligation  as  a  contract  is 
undissolved,  and  it  remains  a  prom- 
ise to  pay,  though  the  promisor's 
ability  to  perform  it  be  impaired  or 
destroyed.  .  .  .  The  difference 
between  forgery  and  insolvency  in 
relation  to  a  bank  note  is  as  distinct- 
ly marked  as  the  difference  between 
title  and  quality  in  relation  to  the 
sale  of  a  chattel. 

"What  then  becomes  of  the 
boasted  principle  that  a  man  shall 
not  liave  parted  with  his  property 
until  he  shall  have  had  value,  or 
rather  what  he  expected  for  it? 
Like  many  others  of  the  same 
school,  it  would  be  too  refined  for 
our  times,  even  did  a  semblance  of 
justice  lie  at  the  root  of  it.  But. 
nothing  devised  by  human  sagacity 
can  do  equal  and  exact  justice  in 
the  apprehension  of  all  men.  The 
best  that  can  be  done,  in  any  case, 
is  no  more  than  an  approximation 
to  it;  and  when  the  incidental  risks 
of  a  business  are  so  disposed  of  as 
to   consist    with    tlie    general    con- 


654  SUTHERLAND  ON  DAMAGES.  [§  224 

time  near  to  or  at  a  distance  from  the  bank.  They  may  have  a 
greater  value  than  counterfeit  bills,  but  in  neither  case  has  the 
party  received  what  in  the  contemplation  of  both  parties  he  was 
entitled  to  receive,  if  the  contract  was  to  pay  a  certain  sum.  In 
neither  case  has  he  received  money  or  its  representative.  The 
sum  contracted  to  be  paid  has  not  been  paid  in  money  or  any- 
thing which  by  usage  passes  as  money,  or  which  was  entitled 
at  the  time  to  represent  it ;  and  the  party  has  therefore  failed  to 
pay  what  he  contracted  to  pay.  Counterfeit  coin  may  contain  a 
portion  of  good  metal  and  thus  have  some  value,  but  this  would 
not  make  it  a  good  medium  of  payment.  Entire  worthlessness, 
or  not,  is  not,  therefore,  the  criterion."  ^^  A  return  of  such 
paper  by  the  receiver  is  required  as  a  condition  of  the  right  to 
recover  from  the  payer;  and  the  necessity  of  returning  it  arises 
from  the  same  considerations  in  the  case  of  counterfeit  money,  to 
enable  the  party  paying  to  secure  himself  with  prior  parties. 
Ijut  whether  the  rule  requiring  return  within  a  reasonable  time 
is  confined  to  cases  in  which  the  payer  has  recourse  does  not 
appear  to  be  decided.  If  the  failure  occurred  while  he  was  the 
owner  of  the  bills  he  has  no  recourse;  and  if  they  are  not  re- 
turned why  may  not  the  party  receiving  and  retaining  them 
be  charged  with  their  value  and  the  recovery  be  limited  to  the 
depreciation  ?  ^^ 

venience,    no    injustice    will    in    the  one   innocent  man  to  the  shoulders 

end  be  done  to  those  by  whom  they  of  another  equally  so." 

are  borne.     Commerce   is   a   system  62  Fogg  v.  Sawyer,  9  N.  H.  365 ; ' 

of  dealing  in  which  risk,  as  well  as  Frontier  Bank  v.  Morse,  22  Me.  88, 

labor   and  capital,    is    to    be    com-  38   Am.   Dec.   284 ;     Magee    v.    Car- 

pensated.     But  nothing  can  be  more  mack,  13  111.  289. 

exactly   balanced   than   the   equities  63  Townsends  v.  Bank,  7  Wis.  185; 

of  parties  to  a  payment   in  regard  Ontario     Bank     v.     Lightbody,     13 

to  the  risk  of  the  medium  when  its  Wend.   104. 

worthlessness  was  unsuspected  by  In  Magee  v.  Carmack,  13  111.  289, 
cither  of  them.  The  difference  be-  the  court  remark  as  to  the  ques- 
tween  them  is  not  the  tithe  of  a  tion  of  what  is  a  reasonable  time: 
hair  or  any  other  infinitesimal  '"When  from  the  nature  of  the  sub- 
quantity  that  can  be  imagined;  and  ject  a  general  rule  can  be  applied 
in  such  a  case  the  common  law  al-  to  all  cases,  then  what  constitutes 
lows  a  loss  from  mutual  mistake  to  reasonable  notice  may  be  a  question 
rest  where  it  has  fallen,  rather  than  of  law  for  the  court,  as  notice  to 
to  remove  it  from  the  shoulders  of  the  indorser  of  a  bill  or  note.     But 


§    225]      CONVENTIONAL    LIQUIDATIONS    AND    mSCIlAKGES.        655 

§  225.  Payment  by  note,  bill  or  check.  A  creditor  may  re- 
ceive anything  of  value  as  payment.^*  A  debtor,  by  agreement 
with  his  creditor,  may  pay  his  contemporaneous  or  antecedent 
debt  in  a  note  or  bill  against  a  third  person ;  but  there  must  be 
a  mutual  agreement  that  it  shall  be  transferred  and  received 
as  final  satisfaction  without  recourse  or  condition  of  being  pro- 
ductive.®* Where  goods  are  sold  for  a  particular  note  it  is  an 
exchange  or  barter,  and  the  note  has  the  effect  of  payniciit.^® 
In  some  states  the  rule  is  that  the  note  of  the  vendee  is  presumed 
to  have  been  taken  by  the  vendor  in  payment  of  a  contemporane- 
ous debt  unless  the  contrary  be  shown,  or  the  note  be  void,  or 
there  has  been  fraud  or  misrepresentation  respecting  it ;  ®'  but 
it  is  otherwise  as  to  an  antecedent  debt.®'    And  when  the  note 


wlien,  as  in  this  case,  the  question 
of  what  would  constitute  a  reason- 
able time  must  depend  upon  the 
peculiar  circumstances  of  each  case, 
and  cannot  reasonably  be  subjected 
to  any  general  rule,  then  it  is  a 
question  of  fact  for  the  jury  to  be 
determined  from  all  the  circum- 
stances." 

64  Kennedy  v.  Fidelity  &  C.  Co., 
100  Minn.  1,  117  Am.  St.  658;  Lou- 
den V.  Birt,  4  Ind.  566;  Reed  v. 
Bartlett,  19  Pick.  273;  Tilford  v. 
Roberts,  8  Ind.  254. 

65Hutkoff  V.  Glazer,  78  N.  Y. 
Misc.  362;  American  Ins.  Co.  v. 
McGehee  L.  Co.,  93  Ark.  62;  Elm 
City  L.  Co.  V.  Mackenzie,  77  Conn. 
1;  Kinard  v.  First  Nat.  Bank,  125 
Ga.  228,  114  Am.  St.  201;  Flannery 
V.  Harley,  117  Ga.  483;  Taylor  v. 
Wahl,  72  N.  J.  L.  10;  f3t.  John  v. 
Purdy,  1  Sandf.  9 ;  New  York  State 
Bank  v.  Fletcher,  5  Wend.  85; 
Conkling  v.  King,  10  N.  Y.  440, 
affirming  10  Barb.  372;  Roberts  v. 
Fisher,  53  Barb.  69;  Wright  v. 
First  C.  W.  Co.,  1  N.  H.  281,  8  Am. 
Dec.  68;  Jaffrey  v.  Cornish,  10  N. 
H.  505;  Elliot  V.  Sleeper,  2  id.  527; 
Randlet    v.    Herren,     20     id.     102; 


Brewer  v.  Brancli  Bank,  24  Ala. 
440;  Ilutchins  v.  Olcutt,  4  Vt.  549, 
24  Am.  Dec.  634;  Hart  v.  Boiler,  15 
S.  &  R.  162,  16  Am.  Dec.  536;  Citi- 
zens' Bank  v.  Carson,  32  Mo.  191; 
Smitli  V.  Owens,  21  Cal.  11;  Graves 
V.  Friend,  5  Sandf.  568.  See  Gordon 
M.  Co.  V.  Bartels  B.  Co.,  206  N.  Y. 
528. 

66  Ferdon  v.  Jones,  2  E.  D.  Smitli, 
106;  Whitbeck  v.  Van  Ness,  11 
Johns.  409,  6  Am.  Dec.  383;  Breed 
V.  Cook,  15  Johns.  241;  Rew  v.  Bar- 
ber, 3  Cow.  272. 

A  creditor  who  accepts  from  his 
debtor  notes  of  third  persons  which 
were  to  be  received  as  payment  if 
tiie  former  approves  them  is  bound 
to  determine  whetiier  they  are  to 
be  so  received  or  not  witliin  a  rea- 
sonable time  and  to  give  his  debtor 
notice  of  his  decision.  If  he  delays 
for  forty  days  it  is  for  the  jury  to 
find  whether  he  has  accepted  them 
as  payment.  Acme  H.  Co.  v.  Axtell, 
5  N.  D.  315. 

67  Ford  v.  Mitchell,  15  Wis.  308; 
Challoner  v.  Boyington,  83  Wis.  399. 

68  \\ill()w  River  L.  Co.  v.  Luger 
F.  Co.,  102  Wis.  636. 


656 


SUTHERLAND    ON    DAMAGES. 


[§  225 


of  a  third  person  is  taken  without  recourse,  by  indorsement  or 
otherwise,  for  goods  sold  at  the  time  the  presumption  is  it  is 
taken  in  payment.  ^^  There  is  no  dissent  from  the  proposition 
that  an  agent  who  has  no  authority  to  sell  property  and  receive 
payment  for  his  principal  is  not  presumed  to  be  empowered  to 
take  anything  but  money  in  payment  therefor;''"  and  this  is 
true  of  an  agent  who  is  appointed  to  receive  and  collect  demands 
due  his  principal.'''^    This  view  is  qualified  in  some  states  as  to 


69  Challoner  v.  Boyington,  83 
Wis.  399 ;  Hall  v.  Stevens,  116  N.  Y. 
201,  5  L.R.A.  802,  reversing  40  Hun 
578;  Gibson  v.  Tobey,  46  N.  Y.  637, 
7  Am.  Rep.  397;  Corbit  v.  Bank,  2 
Harr.  235,  239,  30  Am.  Dec.  635; 
Torry  v.  Hadley,  27  Barb.  192; 
Whitbeck  v.  Van  Ness,  supra;  Noel 
V.  Murray,  13  N.  Y.  167;  Rew  v. 
Barber,  3  Cow.  272;  Breed  v.  Cook, 
]5  Johns.  241;  Bank  of  England  v. 
Newman,  1  Ld.  Raym.  442;  Bayard 
v.  Shunk,  1  W.  &  S.  92,  37  Am. 
Dec.  44] ;  Fydell  v.  Clark,  1  Esp. 
447;  Clark  v.  Mundall,  1  Salk.  ]24. 
But  see  Darnell  v.  Morehouse,  30 
How.  Pr.  511;  Turner  v.  Bank,  3 
Keyes,  425;  Youngs  v.  Stalielin,  34 
N.  Y.  258;  Owenson  v.  Morse,  7  T. 
R.  64;  Burrows  v.  Bangs,  34  Mich. 
304;  Gardner  v.  Gorliam,  1  Doug. 
(Mich.)  507;  Van  Clcef  v.  Theras- 
son,  3  Pick.  12;  Carroll  v.  Holmes, 
24  111.  App.  453,  and  a  dictum  in 
I\Iorrison  v.  Smith,  81  111.  221. 

70  Ornisbj'  v.  Graham,  123  Iowa, 
202;  Runyon  v.  Snell,  1]6  Ind.  164, 
9  Am.  St.  839;  Stewart  v.  Wood- 
ward, 50  Vt.  78,  28  Am.  Rep.  488; 
Victor  S.  M.  Co.  v.  Heller,  44  Wis. 
265;   Quinn  v.  Sewell,  50  Ark.  380. 

If  the  principal  ships  goods  sold 
by  the  agent  for  other  than  a  cash 
consideration  the  contract  of  sale  is 
ratified.  Billings  v.  Mason,  80  Me. 
496. 

71  Cranston  v.  West  Coast  L.  Ins. 
Co.,  63  Ore.  427 ;  Davis  v.  Home  Ins. 


Co.,  127  Tenn.  330,  44  L.R.A.  (N.S.) 
626;  Roberts  v.  McKim,  34  Nev. 
191;  Becker  v.  Bluemel,  129  Wis. 
491;  Scott  V.  Gilkey,  153  111.  168; 
Cooney  v.  United  States  W.  Co.,  101 
111.  App.  468;  Morris  v.  Eufaula 
Nat.  Bank,  106  Ala.  383;  McCor- 
mick  H.  Mach.  Co.  v.  Breen,  61  111. 
App.  528;  National  Bank  v.  Grimm, 
109  N.  C.  93;  Bank  of  Commerce  v. 
Hart,  37  Neb.  197,  40  Am.  St.  479, 
20  L.R.A.  780;  Sandy  River  Bank 
V.  Merchants  &  M's  Bank,  1  Bias. 
146;  Western  Brass  Mfg.  Co.  v. 
Maverick,  4  Te.x.  Civ.  App.  535; 
Everts  v.  Lawther,  165  111.  487; 
Lawther  v.  Everts,  63  111.  App.  432; 
Scully  V.  Dodge,  40  Kan.  395;  Mc- 
Cormick  v.  Peters,  24  Neb.  70; 
Nicholson  v.  Pease,  61  Vt.  534; 
Lochenmeyer  v.  Fogarty,  112  111. 
572;  Wilcox  &  W.  0.  Co.  v.  Lasley, 
40  Kan.  521;  Deatherage  v.  Hender- 
son, 43  Kan.  684;  Mitchell  v.  Print- 
up,  68  Ga.  675. 

If  the  agent  of  a  mortgagee  ac- 
cepts a  certificate  of  deposit  in  pay- 
ment of  a  mortgage  and  deposits  it 
in  the  bank  which  issued  it  to  tlie 
credit  of  his  own  account,  the  pay- 
ment is  of  cash.  Harrison  v.  Le- 
gore,  109  Iowa  618;  Hare  v.  Bailey, 
73  Minn.  409. 

It  seems  that  an  attorney,  acting 
in  good  faith,  has  broader  powers 
than  other  agents.  It  has  been 
ruled  where  an  attorney,  under  his 
employment,  obtained  judgment  and 


§    225]      CONVENTIONAL    LIQUIDATIONS    AND    DISCirARGES.        C57 

banks  which  arc  intrusted  with  collections  if  their  usage  is  to 
accept  checks  in  payment  of  claims,  whether  the  customer  has 
knowledge  of  the  usage  or  not,  if  he  has  not  given  directions  as 
to  the  mode  of  payment.'^  But  this  is  denied  in  Missouri.'^ 
A  government  revenue  collector  has  no  authority  to  receive  in 
payment  for  stamps  anything  but  money.'* 

Whether  the  receipt  by  the  creditor  of  the  debtor's  note,  or 
the  note  of  one  of  several  debtors,  with  the  agreement  that  it 
is  received  at  the  risk  of  the  creditor  and  as  full  satisfaction, 
will  have  the  effect  to  extinguish  the  debt,  is  not  universally 
agreed.  In  ISTew  York  it  has  been  several  times  held,  and  per- 
haps the  doctrine  there  may  be  deemed  settled,  that  a  debtor's 
note,  although  expressly  received  as  satisfaction,  cannot  extin- 
guish his  precedent  debt.'''^ 


presented  a  certified  transcript  of 
it  to  the  defendant,  demanding  pay- 
ment, which  was  made  in  confeder- 
ate funds  in  1862,  tliat  such  pay- 
ment was  binding,  and  that  payment 
in  such  funds,  they  being  current, 
to  clerks,  sheriffs  and  other  officers 
authorized  to  collect  money,  was 
binding  on  the  creditor,  while  it 
was  otherwise  as  to  payments  so 
made  to  private  agents.  East  Ten- 
nessee, etc.  R.  Co.  V.  Williams,  3 
Tenn.  Cas.  8.     See  §  211. 

72  Griffin  v.  Erskinc,  131  Iowa, 
444;  Farmers'  Bank  &  T.  Co.  v. 
Newland,  97  Ky.  464;  Morse  on 
Banks  &  Banking,  sec.  221. 

73  National  Bank  of  Com.  v. 
American  Exch.  Bank,  ]51  Mo.  320, 
74  Am.  St.  527. 

74  American  B.  Co.  v.  United 
States,  33  Ct.  of  Cls.  349;  Milten- 
berger  v.  Cooke,  18  Wall.  421,  21  L. 
cd.  864. 

75  Cole  V.  Sackett,  1  Hill,  516.  In 
this  case  Cowen,  J.,  said:  "It  may 
be  considered  at  present  as  entirely 
settled  that  to  operate  as  a  satis- 
faction the  promise  must  be  of  some 
third  person ;  in  other  words,  somc- 

Suth.  Dam.  Vol.  I.— 42. 


thing  over  and  above  the  original 
deljt.  A  promise  by  note  is  a  secur- 
ity of  no  higher  degree  than  an  im- 
plied promise;  and  the  logic  of 
these  pleas  is  no  more  than  saying: 
'Yo,ur  precedent  debt  is  discharged 
because  I  promised  to  pay  it  in  an- 
other form,  and  you  accepted  the 
latter  promise  as  a  satisfaction.' 
What  consideration  is  there  for  such 
an  acceptance?  Tlie  new  promise  to 
do  a  thing  which  the  debtor  was 
bound  to  do  before — a  thing  wliieh 
he  now  refuses  to  do,  because  he 
had  promised  again  and  again  to 
do  it!  In  these  promising  times, 
there  are,  I  apprehend,  few  delits 
which  on  such  a  tlieory  are  not  in 
danger  of  being  barred  much  short 
of  the  statutes  of  limitations;  for 
creditors,  however  unwilling,  are 
many  times  obliged  to  accept  prom- 
ises as  the  only  satisfaction  they 
can  obtain  for  the  present.  It  is 
entirely  settled  that  a  promissory 
note  in  no  way  affects  or  impairs 
the  original  debt  unless  it  l>e  paid." 
NotwitJistanding  the  argument, 
from  want  of  consideration,  in  the 
foregoing     opinion.     Judge     Cowen 


658 


SUTHEKLAND    ON    DAMAGES. 


[§  225. 


In  England,  and  generally  in  this  conntry,  it  is  believe'd  that 
the  debtor's  negotiable  note  or  bill  of  a  third  person,  when  re- 
ceived by  mutual  agreement  of  the  parties  as  satisfaction,  has 
that  effect;  and  the  rule  applies  equally  whether  the  debt  be 
antecedent  or  contemporaneous.''®  Where  any  person  is  obli- 
gated to  pay  money   a  payment  made  in  any  mode,   either 


conceded  to  negotiable  notes  taken 
for  an  account  some  additional 
value  to  the  creditor  in  Myers  v. 
Welles,  5  Hill,  463:  "Being  nego- 
tiable, they  might  be  used  more 
beneficially  than  the  account.  Be- 
sides, they  operate  to  liquidate  the 
plaintiff's  claim.  These  advantages 
constituted  sufficient  consideration 
for  the  suspension."  See  Frisbie  v. 
Larned,  21  Wend.  450;  Putnam 
V.  Lewis,  8  Johns.  389;  Hawley  v. 
Foote,  19  Wend.  516. 

On  principle,  it  might  well  be 
claimed  that  wliere  the  new  note  is 
supported  by  sufficient  consideration 
for  forbearance,  that  consideration 
is  sufficient  for  a  discharge  of  the 
original  debt. 

76  Roberts  v.  Vonnegut,  —  Ind. 
App.  — ,  104  N.  E.  321;  Lomax  v. 
Colorado  Nat.  Bank,  46  Colo.  229; 
Sill  V.  Burgess,  134  111.  App.  373 
(contemporaneous)  ;  Citizens'  C.  & 
S.  Bank  v.  Piatt,  135  Mich.  267; 
Kirkpatrick  v.  Puryear,  93  Tenn. 
409,  22  L.R.A.  785;  Thum  v.  Wol- 
stenholme,  21  Utah,  446;  Holmes  v. 
Laraway,  64  Vt.  175;  Mulligan  v. 
Hollingsworth,  99  Fed.  216;  Kell 
V.  Larkin,  72  Ala.  493;  Dryden  v. 
Stephens,  19  W.  Va.  1;  Mayer  v. 
Mordecai,  1  S.  C.  398;  Smith 
V.  Hobleman,  12  Neb.  502;  Sard  v. 
Rhodes,  1  M.  &  W.  153;  Sibree  v. 
Tripp,  15  id.  23;  2  Am.  Lead.  Cas. 
(5th  ed.)  273;  1  Smith  Lead.  Cas. 
pt.  1  (7th  Am.  ed.)  *456;  Yates 
V.  Valentine,  71  111.  643;  Chitty  on 
Bills,  289  et  seq.  and  p.  119;  Story 


on    Prom.    Notes,     §     389,     note     3, 
§   405;    Seltzer   v.   Coleman,   32  Pa. 
493;    Smith's   Merc.   L.   542;    Corn- 
wall V.  Gould,  4  Pick.  444;  Huse  v. 
Alexander,    2    Mete.     (Mass.)     157; 
Shcehy  v.  Mandeville,  6  Cranch,  253, 
3  L.  ed.  215;   Maillard  v.   Duke  of 
Argyle,  6  M.  &  G.  40;   Hart  v.  Boi- 
ler, 15  S.  &  R.  162,  16  Am.  Dec.  536; 
Jones   V.   Shawan,   4  W.   &   S.   257;* 
Sutton  V.  The  Albatross,  2  Wall.  C. 
C.  327 ;  Keough  v.  McNitt,  6  Minn. 
513.     See   Goenen   v.    Schroeder,    18 
id.  66;  Bank  v.  Bobo,  11  Rich.  597; 
Haven  v,  Foley,  19  Mo.  636;  Dougal 
V.   Cowles,   5   Day,   511;    Bonnell   v. 
Chamberlin,  26  Conn.  487;  McMur- 
ray  v.  Taylor,  30  Mo.  263,  77  Am. 
Dec.  611;   Foster  v.  Hill,  36  N.  H. 
526;  Moody  v.  Leavitt,  2  N.  H.  171; 
Costelo  v.  Cave,  2  Hill   (S.  C.)   528, 
27   Am.  Dec.  404;   Drake  v.  Mitch- 
ell, 3  East,  251 ;  Foster  v.  Allanson, 
2  D.  &  E.  479;  Moravia  v.  Levy,  id. 
483n.;    Watson    v.    Owens,    1    Rich. 
Ill;    The   Kimball,   3   Wall.   37,   18 
L.    ed.    50;    Brown   v.    Olmsted,    50 
Cal.  162;  Alley  v.  Rogers,  19  Gratt. 
366;    Burrows  v.   Bangs,    34    Mich. 
304. 

"The  giving  and  acceptance  of  a 
promissory  note  for  a  prior  indebt- 
edness will  not  be  regarded  as  pay- 
ment, unless  there  be  an  express 
agreement  between  the  parties  to 
that  effect."  Chicago,  B.  &  G.  R. 
Co.  V.  Burns,  61  Neb.  793;  Edwards 
&  Bradford  Lumber  Co.  v.  Lamb,  95 
Neb.  263. 


§    225]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES. 


Gf)!) 


property,  his  negotiable  paper,  or  other  securities,  if  such 
payment  is  received  as  a  full  satisfaction  of  the  demand, 
is  equivalent  for  the  purpose  of  payment  to  cash."''^  Though 
the   general    rule    is    otherwise,    in    Massachusetts,''    Maine,'^ 


77  National  Life  Ins.  Co.  v.  Mc- 
Dermott,  186  111.  App.  157 ;  O'Bryan 
V.  Jones,  38  Mo.  App.  90;  Rice 
V.  Dudley,  34  id.  383;  Drydon  v. 
Stepliens,  19  W.  Va.  1  ;  Ralston  v. 
Wood,  15  111.  1,59,  58  Am.  Dec.  604; 
Gillilan  v.  Nixon,  20  111.  52;  Cox  v. 
Reed,  27  id.  434;  Wilkinson  v. 
Stewart,  30  id.  48;  Leake  v.  Brown, 
43  id.  376;  Tinsley  v.  Ryon,  9  Tex. 
405;  Robson  v.  Watts,  11  Tex.  764; 
Van  Middlesworth  v.  Van  Middles- 
worth,  32  Mich.  183;  Wright  v. 
Lawton,  37  Conn.  167;  Gage  v. 
Lewis,  68  111.  604;  Doolittle 
V.  Dwight,  2  Mete.  (Mass.)  561; 
Witherby  v.  Mann,  11  Johns.  518; 
McLellan  v.  Crofton,  6  Me.  304; 
Randall  v.  Rich.  11  Mass.  494;  Pear- 
son V.  Parker,  3  N.  H.  366 ;  Atkinson 
V.  Stewart,  2  B.  Mon.  348;  Howe  v. 
Buffalo,  etc.  R.  Co.,  37  N.  Y.  297; 
Keller   v.   Boatman,   49   Ind.   104. 

In  Pitzer  v.  Harmon,  8  Blackf. 
112,  44  Am.  Dec.  738,  a  negotiable 
note  was  given  by  the  surety  and 
was  taken  in  discharge  and  satisfac- 
tion ;  held  not  such  a  payment  as 
would  warrant  a  recovery  against 
the  principal  for  money  paid.  See 
Bennett  v.   Buchanan,   3   Ind.  47. 

If  a  check  given  for  a  pre-exist- 
ing debt  is  ultimately  paid  there  is 
no  "debt  owing  or  accruing"  to  the 
creditor  between  the  times  of  the 
delivery  of  the  check  and  its  pay- 
ment so  as  to  make  the  debtor  who 
drew  it  subject  to  garnishment.  El- 
well  V.  Jackson,  1  Cab.  &  Ellis,  302; 
Thompson  v.  Peck,  115  Ind.  512,  1 
L.R.A.  201;  Hunter  v.  Wetsell,  84 
N.  Y.  549,  38  Am.  Rep.  544. 

As   to   the   payment   of   costs    by 


check,  see  Burns  v.  Smith,  180  Pa. 
606. 

78  Baldwin  v.  Porter,  217  Mass. 
15;  American  M.  Co.  v.  Souther  B. 
Co.,  194  Mass.  89  (though  note  ac- 
cepted in  state  where  the  rule  is 
otherwise  if  payable  in  Massachu- 
setts and  goods  delivered  there)  ; 
Melledge  v.  Boston  I.  Co.,  5  Cush. 
158,  51  Am.  Dec.  59;  Thatcher  v. 
Dinsmore,  5  Mass.  299,  4  Am.  Dec. 
61;  Goodenow  v.  Tyler,  7  Mass.  36, 

5  Am.  Dec.  22;   Maneely  v.  McGee, 

6  Mass.  143,  4  Am.  Dec.  105;  Chap- 
man v.  Durant,  10  Mass.  47;  John- 
son v.  Johnson,  11  id.  361;  Whit- 
comb  v.  Williams,  4  Pick.  288; 
Fowler  v.  Bush,  21  id.  230;  Wood 
v.  Bodwell,  12  id.  268;  Scott  v.  Ray, 
18  id.  268;  French  v.  Price,  24  id. 
13;  Brewer  L.  Co.  v.  Boston  &  A. 
R.  Co.,  179  Mass.  228,  54  L.R.A. 
435. 

79  Dole  V.  Hayden,  1  Me.  152; 
Wise  V.  Hilton,  4  id.  435 ;  Homes  v. 
Smith,  10  id.  181;  Gilmore  v.  Bus- 
sey,  12  id.  418;  Trustees,  etc.  v. 
Kendrick,  id.  381;  Corastock  v. 
Smith,  23  id.  202;  Bunker  v.  Bar- 
ron, 79  id.  62,  1  Am.  St.  282;  Var- 
ner  v.  Nobleborough,  2  Me.  121,  11 
Am.  Dec.  48;  Bryant  v.  Grady,  98 
Me.  389. 

In  Dole  v.  Hayden,  supra,  upon 
a  settlement  of  mutual  accounts  a 
promissory  note  was  given  for  the 
balance  supposed  to  be  due,  but  by 
a  mistake  in  computation  the  note 
was  made  for  $20  more  than  was 
due;  it  was  held  that  the  debtor 
might  recover  this  sum  from  the 
creditor  although  the  note  still  re- 
mained unpaid.     The  court  treated 


660 


SUTHERLAND    ON    DAMAGES. 


[§  225 


Indiana,^"  Louisiana  ®^  and  Vermont,*''  it  is  thoroughly  settled 
that  when  a  creditor  receives  a  negotiable  note  of  the  debtor, 
either  for  an  antecedent  or  a  contemporaneous  simple  contract 
debt,  it  is  presumed  to  be  received  as  absolute  and  not  condi- 
tional payment.  This  is  a  presumption  of  fact  only,  liable  to 
be  controlled  by  evidence  that  such  was  not  the  intention  of  the 
parties.®^  In  Wisconsin  the  taking  of  a  bill  of  exchange  on  a 
previous  indebtedness  of  the  drawer  to  the  payee  is  prima  facie 
payment  of  the  debt.** 

This  presumption  rests  upon  the  theory  that  when  r  note  is 
given  for  goods  it  is  equally  convenient  for  the  creditor,  and 
generally  more  so,  to  sue  on  it  than  on  the  original  promise; 


the  mistake  as  substantially  an 
omission  to  allow  $20  of  the  plain- 
tiff's account,  and  tlie  action  as 
brought  for  it. 

80  "It  is  settled  by  the  decisions 
of  this  court  that  the  giving  of  a 
promissory  note,  governed  by  the 
law  merchant,  for  a  pre-existing  in- 
debtedness of  the  maker  to  the 
payee  will  discharge  such  debt  un- 
less it  is  shown  that  the  parties  did 
not  intend  it  to  have  that  effect. 
And  the  giving  of  a  promissory 
note  not  governed  by  the  law  mer- 
chant does  not  operate  as  a  pay- 
ment thereof  unless  it  is  so  agreed 
between  the  parties."  Sutton  v. 
Baldwin,  146  Ind.  3G1;  Stevenson 
V.  Stunkard,  44  Ind.  App.  716; 
Knight  V.  Kerfoot,  (Ind.  App.)  102 
N.  E.  983. 

Where  a  debtor  gave  his  creditor 
notes  payable  to  his  wife  the  coui't 
refused  to  hold  that  they  were  given 
and  accepted  as  payment,  although 
they  were  payable  in  bank,  because 
the  creditor  could  not  use  them  as 
commercial  paper  unless  the  wife 
indorsed  them.  Bradway  v.  Groen- 
endyke,  153  Ind.  508. 

The  presumption  of  payment  aris- 
ing from  the  acceptance  of  bills  of 
exchange    is    not    difficult   to    over- 


come, and  parol  evidence  may  be  re- 
ceived for  that  purpose.  Keck  v. 
State,  12  Ind.  App.  119. 

81  Hunt  V.  Boyd,  2  La.  109. 

82  Hodges  v.  Fox,  36  Vt.  74; 
Street  v.  Hall,  29  id.  165. 

But  if  the  creditor  takes  a  note 
under  a  misapprehension  as  to  the 
facts,  he  supposing  that  parties  are 
bound  by  it  who  are  not,  the  pre- 
sumed intention  to  treat  the  note 
as  payment  is  rebutted,  and  there 
may  be  a  recovery  upon  the  original 
debt.  Wait  v.  Brewster,  31  Vt.  51 6, 
527. 

83  Reynolds  v.  Schade,  131  Mo. 
App.  1 ;  Buttoan  v.  Howell,  144 
Mass.  66;  Green  v.  Russell,  132 
Mass.  536;  Fowler  v.  Ludwig, 
34  Me.  460;  Dodge  v.  Emerson,  131 
Mass.  407;  Melledge  v.  Boston  I. 
Co.,  5  Gush.  158,  51  Am.  Dec.  59; 
Maneely  v.  McGhee,  6  Mass.  143,  4 
Am.  Dec.  105;  Watkins  v.  Hill,  8 
Pick.  522;  Howland  v.  Coffin,  9  id. 
54 ;  Reed  v.  Upton,  10  id.  525 ;  Butts 
v.  Dean,  2  Mete.  (Mass.)  76,  35  Am. 
Dec.  389 ;  Brewer  L.  Co.  v.  Boston 
&  A.  R.  Co.,  infra,  and  cases  cited 
in  notes  to  the  next  paragraph. 

84Mehlberg  v.  Tisher,  24  Wis. 
007;    Schierl  v.  Baumel,  75  id.   69. 


§    225]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        661 

aiid  so  there  is  no  reason  for  considering  the  original  simple 
contract  as  still  subsisting  and  in  force;  therefore,  it  is  pre- 
sumed that  it  was  intended  by  the  parties  that  the  note  should  be 
deemed  a  satisfaction.^^  The  presumption,  however,  is  founded 
on  the  negotiable  character  of  the  note,  and  does  not  apply  to 
other  instruments.'®  The  same  presumption  arises  in  Massa- 
chusetts when  payment  is  made  by  the  note  of  a  third  person, 
unless  there  is  an  agreement  to  the  contrary,  or  ecpiivalent  cir- 
cumstances; '^  but  it  is  otherwise  in  Indiana,'*  unless  the  cred- 
itor surrenders  the  debtors  notes  and  sues  upon  the  note  of  the 
third  person.'^  The  presumption  that  a  note  is  taken  as  satis- 
faction is  aifected  by  circumstances.  Thus,  where  the  note  giv- 
en is  not  the  obligation  of  all  the  parties  who  are  liable  for  the 
simple  contract  debt,  and,  a  fortiori,  when  the  note  given  is  that 
of  a  third  person,  and  if  held  to  be  in  satisfaction  would  wholly 
discharge  the  liability  of  other  parties  previously  liable,  the  pre- 
sumption, if  it  exists  at  all,  is  of  much  less  weight.^"  The  fact 
that  such  presumption  would  deprive  the  party  who  takes  the 
note  of  a  substantial  benefit  has  a  strong  tendency  to  show  that 
it  was  not  so  intended ;  ^^  as  where  it  Avould  imply  the  discharge 
of  a  mortgage,^^  or  the  lien  of  a  vendor,  including  the  right  of 

85  Curtis     V.     Hubbard,     9     Mete.  89  Dick  v.  Flanagan,  122  Ind.  277, 
(Mass.)   322.     See  Brewer  L.  Co.  v.  7  L.R.A.  590.     See  Hooker  v.  Hub- 
Boston  &  A.  E.  Co.,  179  Mass.  228,  bard,  97  Mass.  175;   Dewey  v.  Bell. 
234,   54   L.K.A.   43.^,   for   other   rea-  5  Allen  105. 
sons.  90  Paine  v.  Dwinel,  53  Me.  52,  87 

86Alford  V.   Baker,   53  Tnd.   279;  Am.  Dec.  533;   Kidder  v.  Knox,  48 

Trustees  v.  Kendrick,   12  Me.   381;  Me.    555;    Strang   v.    Hirst,    Gl    id. 

Chapman   v.   Coffin,    14   Gray,   4.54;  ^5;    Melledge  v.   Boston    I.    Co..    5 

Greenwood  v.  Curtis,  6  Mass.  358,  4  Gush.  158,  51  Am.  Dec.  59;  I^Ianooly 

Am.   Dec.   145;    Wade  v.   Curtis,  90  ^-  ^«««^.  «  Mass.  143,  4  Am.  Dec. 

■w^     „„„  105;  Emerson  v.  Providence  H.  ]\Ifg. 

■_„,.'  ,  -    ,,  Co.,   12  Mass.  237,  7   Am.  Doc.  fifi; 

8"  Wiseman    v.    Lyman,    7    Mass 

286. 


French  v.  Price,  24  Pick.   13;   Bar- 
nard  V.   Graves,   16    id.   41  ;    Curtis 
Taking  the  negotiable    note    of    a       ^   Hubbard,  9  Mete.  (Mass.)  328. 
third  person  and  entering  it  on  the  91  Spitz  v.  Morse,  104  Me.  447. 

books  as  payment  is  not  conclusive.  92  p^ach    v.    Huntsman,     42    Tnd. 

Brigham    v.   Lally,    130   Mass.    485.       ^pp.   205;   Taft  v.   Boyd,   13   Allen, 
88  Godfrey    v.     Crisler,    121     Tnd.       gf,.    Bunker  v.   Barron,   79   Me.   02, 
203;    Bristol  Mfg.   Co.  v.   Probasco,       1  Am.  St.  282;   Watkins  v.  Hill.  8 
G4  Tnd.  406.  Pick.  522;   Pomeroy  v.  Rice,  16  id. 


662 


SUTIIEKLAND    ON    DAMAGES. 


[§  225 


stoppage  in  tmnsitu.^^  The  taking  of  a  note  is  to  be  regarded 
as  payment  only  when  the  security  of  the  creditor  is  not  thereby 
impaired.^*  In  some  states,  and  upon  very  good  reasons,  a  dis- 
tinction is  made  as  to  the  effect  to  be  given  to  security  executed 
by  the  debtor.  If  it  is  not  of  higher  rank  than  the  evidence  of 
indebtedness  held  by  the  creditor  it  is  not  presumed  to  be  ac- 
•cepted  in  payment,  but  if  he  takes  a  higher  security  or  a  better 
assurance  of  payment  than  he  was  before  possessed  of  the  pre- 
sumption is  to  the  contrary.^^  Where  the  debtor  executes  a  note 
in  wliich  he  waives  his  right  to  claim  exemptions  and  gives  it 
to  his  creditor  it  is  presumed  to  be  taken  by  him  in  payment  of 
a  book  account.^^  The  general  distinction  was  made  by  Judge 
Story ;  he  thought,  however,  that  it  ought  not  to  be  extended  to 
security  given  by  a  third  person.^'  Whether  a  note  is  to  have 
the  effect  of  payment  or  to  be  considered  as  collateral  only  is 


22;  Zerrano  v.  Wilson,  8  Cnsh.  424. 
See  Fowler  v.  Bush,  21  Pick  230. 

In  Weddigen  v.  Boston,  etc.  Co., 
100  Mass.  422,  a  buyer  sent  the  seller 
a  third  person's  check  to  pay  for  a 
bill  of  goods;  the  seller  sent  a  re- 
ceipt for  the  amount  as  received  in 
settlement  of  the  bill.  At  the  time 
of  sending  the  check  the  buyer  sup- 
posed it  to  be  good,  but  it  was  sea- 
sonably presented  and  dishonored; 
held  not  a  payment  or  accord  and 
satisfaction. 

Where  a  debtor  gave  his  negoti- 
able note  for  the  amount  of  his 
debt,  and  included  more  than  law- 
ful interest  in  consideration  of 
further  delay  of  payment,  the  note 
being  void  for  usury,  held  the 
original  debt  was  not  discharged 
and  might  still  be  recovered,  though 
a  receipt  was  given  at  the  time  the 
note  was  taken.  Johnson  v.  John- 
son, 11  Mass.  359;  Stebbins  v. 
Smith,  4  Pick.  97;  Ramsdell  v. 
Soule,  12  Pick.  126;  Meshke  v.  Van 
Doren,  16  Wis.  319;  Lee  v.  Peck- 
ham,  17  id.  383.  See  Webster  v. 
Stadden,  14  id.  277. 


A  negotiable  note  given  in  New 
York  for  goods  sold  there  by  a  citi- 
zen of  that  state  is  no  satisfaction 
of  tlie  original  debt,  so  as  to  bar  an 
action  in  Massachusetts  for  the 
same,  although  the  note  was  lost 
and  the  vendor  had  given  the  vendee 
a  receipt  stating  that  the  note  was 
received  in  full  for  the  goods.  Van- 
cleef  V.  Therasson,  3  Pick.  12. 

93  Brewer  L.  Co.  v.  Boston  &  A. 
R.  Co.,  svpra. 

94  Bryant  v.  Grady,  98  Me.  389; 
Paddock  v.  Simmons,  186  Mass.  1.52; 
Paine  v.  Dwinel,  53  Me.  52,  87  Am. 
Dec.  533;  Lovell  v.  Williams,  125 
Mass.  442;  Walker  v.  Mayo,  143  id. 
42;  Vallier  v.  Ditson,  74  Me.  553; 
Hercules  I.  Works  v.  Hummer,  4 
Til.  App.  598. 

95  Keys  v.  Keys,  217  Mo.  48 ; 
Chalmers  v.  Turnipseed,  21  S.  C. 
126;  Pelzer  v.  Steadman,  22  id. 
279;   Gardner  v.  Hust,  2  Rich.  60S. 

96  Lee  v.  Green,  83  Ala.  491. 

97  Lang  V.  Shaw,  6  Ga.  App.  747 ; 
United  States  v.  Lyman,  1  Mason, 
482,  ,505. 


226]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES. 


663 


to  be  (letennined  hy  tlic  law  of  the  state  in  which  it  was  made 
and  is  payable,  thon.iih  the  creditor  resides  in  another  state  and 
the  indebtedness  wliich  was  the  consideration  for  the  note  was 

incnrred  therc.^* 

§  226.  Same  subject.  The  rnle  in  the  states  above  named 
is  exceptional  It  "is  held  generally-  in  this  conntry,  as  well  as 
in  England,  that  a  note,  bill  or  check  of  the  debtor  or  of  a 
third  i)erson,  given  and  received  on  account  of  a  previous  debt 
or  one  contemporaneously  contracted,^^  is  not  absolute,  but  con- 
ditional, payment,  unless  it  is  accepted  as  such,  or  unless  it  pro- 
duces payment.^     The  principle  is  applicable  to  a  check  which 


98  Oilman  v.  Stevens,  63  N.  H. 
342;  Thomson-H.  E.  Co.  v.  PaWor, 
52  Minn.  174,  38  Am.  St.  536. 

99  Wisconsin  is  apparently  an- 
other exception  so  far  as  contempo- 
raoeous  debts  are  concerned.  Chal- 
loner  v.  Boyington,  83  Wis.  399; 
but  not  as  to  antecedent  debts.  Wil- 
low River  L.  Co.  v.  Luger  F.  Co., 
102  Wis.  636,  But  see  Emigh  v. 
Earling,  134  Wis.  565,  27  L.R.A. 
(N.S.)   243. 

1  The  cases  which   expressly  hold 
the  doctrine  stated  in  tlie  text  are 
very  numerous ;  a  few  only  are  cited 
here;    those  which   will  be  cited  in 
the  subsequent  discussion  of  the  va- 
rious branches  of  the  subject  under 
consideration   are  in  harmony  with 
those  here  collected,  except  the  de- 
cisions    in     Massachusetts,     Maine, 
Indiana,    Louisiana    and    Vermont, 
and  in  Wisconsin  as  to  bills  of  ex- 
change   and    some    cases    there    and 
elsewhere  wliich  make  a  distinction 
between     the     obligations     of     the 
debtor  and     third     persons     where 
they    are   given    for    a    contempora- 
neous debt.     See  first  paragraph  of 
last   section.      Hunter   v.    Moul,   98 
Pa.  13,  42  Am.  Rep.  610;   White  v. 
Boone,    71     Tex.    712;    Caldwell    v. 
Hall,      49      Ark.      508;      Comptoir 
D'Escomptc  v.  Dresbach,  78  Cal.  15 ; 


Thomas  v.  Westchester  County,  115 
N.  Y.  47,  4  L.R.A.  477;  Fry  v. 
Patterson,  49  N.  J.  L.  612;  Braba- 
zon  V.  Seymour,  42  Conn.  554;  Bank 
V.  GifTord,  79  Iowa,  300;  Bradley 
V.  Harwi,  43  Kan.  314;  Levan  v. 
Wilten,  135  Pa.  61;  Whitcher  v. 
Dexter,  61  N.  H.  91;  Holmes  v. 
Briggs,  131  Pa.  233  (these  last  two 
cases  qualify  the  proposition  by  the 
condition  that  the  creditor  must  not 
so  improperly  conduct  himself  with 
respect  to  the  note  as  to  injure  the 
debtor);  Selby  v.  McCullough,  26 
Mo.  App.  66;  Knox  v.  Gerhauser,  3 
Mont.  267 ;  Salomon  v.  Pioneer  Co-  • 
op.  Co.,  21  Fla.  374,  58  Am.  Rep. 
667;  Fleig  v.  Sleet,  43  Ohio  St.  53, 
54  Am.  Rep.  800;  First  Nat.  Bank 
v.  Case,  63  Wis.  504  (the  rule  is 
otherwise  where  a  bill  of  exchange 
is    accepted;    see    last    paragraph)  ; 

Woodburn    v.    Woodburn,     115     111. 

427;   Heath  v.  White,  3  Utah,  474; 

Wiles  v.  Robinson,  80  Mo.  47 ;  Hunt 

v.   Hignuin,   70  Iowa,  406;    Hess  v. 

Dille,  23  W.  Va.  90;  Keel  v.  Larkin, 

72   Ala.   493;    Cheltenham   S.   &   G. 

Co.  V.  Gates,  I.  Works,  23  111.  App. 

635,    aff'd    124    111.    623;    Walsh    v. 

Lennon,  98  111.  27,  38  Am.  Rep.  75; 

Wilhelm    V.    Schmidt,    84    111.    183; 

Pritcliard    v.    Smith,    77    Ga.    463; 

Costelo  V.  Cave,  2  Hill  (S.  C.)  207; 


664 


SUTHERLAND    ON    DAMAGES. 


[§  226 


is  certified  l^efore  its  delivery  to  the  creditor.     The  only  effect 
of  the  certificate  is  to  increase  the  currency  of  the  check  by 


Slocomb  V.  Lurty,  Hempst.  C.  C. 
431;  People  v.  Howell,  4  Johns. 
296;  Bates  v.  Eosekrans,  37  N.  Y. 
409;  Webster  v.  Stadden,  14  Wis. 
277;  Burrows  v.  Bangs,  34  Mich. 
304;  Peter  v.  Beverly,  10  Pet.  532, 
9  L.  ed.  522;  Owenson  v.  Morse,  7 
T.  R.  64;  Chastain  v.  Johnson,  2 
Bailey,  574;  Alley  v.  Rogers,  19 
Gratt.  368;  The  Kimball,  3  Wall. 
37,  18  L.  ed.  50;  Newell  v.  Nixon, 
4  id.  572;  Lee  v.  Tinges,  7  Md.  215; 
Harris  v.  Johnston,  3  Cranch,  311, 

2  L.  ed.  450;  Good  v.  Cheesnian,  2 
B.  &  Ad.  328;   Winslow  v.  Hardin, 

3  Dana,  543;  Adger  v.  Pr ingle,  11 
S.  C.  527;  Johnson  v.  Clarke,  15 
id.  72;  Scott  v.  Gilkey,  153  111.  168; 
Dellapiazza  v.  Foley,  112  Cal.  380; 
Angus  V.  Chicago  T.  &  S.  Bank,  170 
III.  398;  Hercules  I.  Works  v.  Hum- 
mer, 49  111.  App.  598;  Schumacher 
V.  Edward  P.  Allis  Co.,  70  id.  556; 
Bradford  v.  Neil  &  Mahnke  C.  Co., 
76  111.  App.  488;  Stone  v.  Evan- 
gelical Lutheran  St.  Paul's  Church, 
92  111.  App.  77;  Topeka  Capital  Co. 
V.  Merriam,  60  Kan.  397;  Kirk- 
patrick  v.  Bessalo,  116  Mich.  657; 
London  &  San  Francisco  Bank  v. 
Parrott,  125  Cal.  472,  73  Am.  St. 
64;  Woodward  v.  Holmes,  67  N.  H. 
494;  Acme  H.  Co.  v.  Axtell,  5  N. 
D.  315;  Carroll  v.  Sweet,  128  N. 
Y.  19,  13  L.R.A.  43;  Willow  River 
L.  Co.  v.  Luger  F.  Co.,  102  Wis. 
636  (previous  debt)  ;  Sutton  v. 
Baldwin,  146  Ind.  361;  Blair  v.  Wil- 
son, 28  Gratt.  165;  Holland  v.  Ron- 
gey,  168  Mo.  16;  Nason  v.  Fowler, 
70  N.  H.  291;  Kirby  Planing  Mill 
Co.  V.  Titus,  14  Ga.  App.  1; 
Churchill  v.  Yeatman-Gray  Grocer 
Co.,  Ill  Ark.  529;  In  re  Raflo,  217 
Fed.  313;  Bien  v.  Robinson,  208  U. 
S.  423,  52  L.  ed.  556;  Bcall  v.  Hud- 


son County  W.  Co.,  185  Fed.  179; 
Stewart  v.  Laberee,  id.  471,  109  C. 
C.  A.  351;  Bankers'  T.  Co.  v.  Gil- 
lespie, 181  Fed.  448,  104  C.  C.  A. 
196;  Pflueger  v.  Lewis  F.  &  M.  Co., 
134  Fed.  28,  67  C.  C.  A.  102;  Man- 
ser V.  Sims,  157  Ala.  167;  Sharp 
v.  Fleming,  75  Ark.  556;  Williams 
V.  Braun,  14  Cal.  App.  396;  King 
V.  McConnell,  57  Fla.  77;  Baugh- 
man  v.  Lowe,  41  Ind.  App.  1  (debt- 
or's check)  ;  Dille  v.  White.  132 
Towa  327,  10  L.R.A.  (N.S.)  510; 
Thompson  v.  Seek,  84  Kan.  674; 
Webb  V.  National  Bank,  67  Kan. 
02;  Isackson  v.  Lowell,  115  Minn. 
481;  McFadden  v.  Follrath,  114 
Minn.  85,  37  L.R.A.  (N.S.)  £01; 
First  Nat.  Bank  v.  McConnell,  103 
Minn.  340,  14  L.R.A.  (N.S.)  616, 
123  Am.  St.  336;  Citizens'  Bank  v. 
Ketchmar,  91  Miss.  608;  Peoples' 
Bank  v.  Stewart,  152  Mo.  App.  314; 
Keyser  v.  Hinkle,  127  Mo.  App.  62; 
Atterbury  v.  Edwa,  61  N.  Y.  Misc. 
234;  Fuller  B.  Co.  v.  Waldron,  112 
App.  Div.  (N.  Y.)  814;  Bank  v. 
Hollingsworth,  135  N.  C.  556;  Small 
V.  Rush,  (Tex.  Civ.  App.)  132  S.  W. 
874;  Dudley  v.  Barrett,  66  W.  Va. 
363;  Acme  F.  Co.  v.  Older,  64  W. 
Va.  255,  17  L.R.A.  (N.S.)  807; 
Berger  v.  Berger,  44  Pa.  Super.  Ct. 
305 ;  Kennedy  v.  Groves,  50  Tex.  Civ. 
App.  266;  Jensen  v.  Wilslef,  36 
Nev.  37;  Edwards  B.  Works  v.  Jar- 
nagin,  11  Ga.  App.  162;  McHcnry 
V.  Croft,  163  111.  App.  426;  Cran- 
ston V.  West  Coast  L.  Ins.  Co.,  63 
Ore.  427. 

That  a  check  was  received  n 
absolute  discharge  of  the  indebted- 
ness may  be  shown  by  circum- 
stances. Rohrbach  v.  Hammill,  162 
Iowa,  131. 


§    226]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        005 

adding  to  the  liability  of  the  drawer  that  of  the  bank.  The 
creditor  does  not  assume  the  risk  of  the  solvency  of  the  latter.^ 
Renewal  of  a  note  is  not  always  considered  to  be  a  payment,^ 
and  will  not  discharge  a  mortgage  security.^  But  it  seems  where 
renewal  is  a  discount  of  the  new  note  and  there  is  a  payment 


2  Born  V.  First  Nat.  Bunk,  12.3 
Ind.  78,  7  L.R.A.  442,  18  Am.  St. 
312;  Bickford  v.  Same,  42  111.  238; 
Larsen  v.  Breene,  12  Colo.  480;  An- 
drews V.  German  Nat.  Bank,  9 
Heisk.  211,  24  Am.  Rep.  300;  Mu- 
tual Nat.  Bank  v.  Rotge,  28  La. 
Ann.  933,  25  Am.  Rep.  126;  Hol- 
land V.  Mutual  F.  Co.,  8  Ga.  App. 
714.  Contra,  Hermann  F.  &  P'S.  C. 
W.  V.  German  Exch.  Bank,  (N.  Y. 
Misc.)  87  N.  Y.  Supp.  462;  Daven- 
port V.  Palmer,  1,52  App.  Div.  (N. 
Y.)   761. 

But  procurement  of  certification 
by  the  creditor  works  a  discharge 
of  tlie  indebtedness  pro  tanto. 
Adams  v.  Weissner,  —  Misc.  (N.  Y.) 
— ,  147  N.  Y.  Supp.  940. 

3  Daniel  v.  Gordy,  84  Ark.  218; 
McLaughlin  v.  Blake,  46  Pa.  Super. 
274;  Adams  v.  Sijuires,  61  111.  App. 
513;  Chisholm  v.  Williams,  128  111. 
115;  Tyler  v.  Hyde,  80  111.  App. 
123;  Kemmerer's  App.,  102  Pa.  558; 
Graham's  Est.,  14  Phila.  280;  Na- 
tional Bank  v.  Bigler,  83  N.  Y.  51; 
Kibbey  v.  Jones,  7  Bush,  243;  Jag- 
ger  I.  Co.  V.  Walker,  76  N.  Y.  521. 

"The  question  whether  renewal 
notes  extinguish  the  debt  is  a  vexed 
one,  and  is  usually  one  of  fact,  and 
the  courts  have  differed  somewhat 
upon  the  presumptions  which  arise 
from  the  bare  fact  of  renewal  by 
note  bearing  the  signature  of  other 
parties.  The  subject  was  discussed 
in  the  case  of  Nightingale  v.  Chafee, 
11  R.  I.  609,  23  Am.  Rep.  531,  where 
it  was  held  that  an  agreement  to 
discharge  a  retiring  partner  will 
not  be  inferred  from  the  acceptance 


of  the  note  of  tiie  continuing  part- 
ners. Whatever  may  be  the  rule  in 
other  cases,  we  concur  witli  Prof. 
Parsons  in  the  opinion  tliat,  unless 
there  is  evidence  of  a  contrary  in- 
tention, renewals  at  l)ank  ought  al- 
ways to  be  regarded  as  payment 
because  the  banks  themselves  so  re- 
gard them.  See  2  Pars.  Notes  & 
B.  (2d  ed.),  p.  203.  In  commenting 
on  the  opinion,  the  court  in  the 
Rhode  Island  case  says:  'lie  does 
not  tell  us  how  he  knows  they  so 
regard  them.'  Tliis  opinion  of  Prof. 
Parsons  is  not  to  be  brushed  away 
l)y  a  question.  The  practices  of 
banks  are  well  known,  and  from 
them  their  understanding  may  be 
inferred.  Cei'tainly,  since  the  pas- 
sage of  the  federal  banking  law,  the 
whole  course  of  national  banks  has 
been  at  variance  with  tlie  idea  tliat 
the  original  debt  continued,  and 
that  successive  renewals  were  ad- 
ditional and  collateral  security  to 
the  first  obligation.  The  policy  of 
the  law  is  to  require  the  banks  to 
confine  their  loans  to  short-time 
paper,  generally  secured  by  indors- 
ers,  who  may  vary  from  time  to 
time  as  the  notes  are  renewed.  We 
think  it  would  be  a  surprise  to 
those  who  indorse  paper  to  be  told 
that  their  obligation  remains  after 
the  note  has  been  taken  up  and  can- 
celed by  several  renewals,  and  each 
in  its  turn  taken  up  and  canceled." 
Childs  V.  Peliett,  102  ]Mich.  558, 
506. 

4  Farmers'  L.  ct  T.  Co.  v.  ]\fadison 
Mfg.  Co.,  153  Fed.  310;  Reeder  v. 
Nay,     95     Ind.     164;     Williams     v. 


G66 


SUTHERLAND    ON    DAMAGES. 


[§  22G 


of  the  old  note  out  of  the  avails,  it  is  a  discharge  of  the  old  debt.* 
Courts  are  in  the  habit  of  saying  that  when  such  paper  is  given 
for  a  debt  it  is  not  to  be  deemed  a  satisfaction  unless  there  is 
an  express  agreement  to  that  effect.^  It  is  probably  not  neces- 
sary that  the  proof  should  be  just  in  that  form ;  but  it  is  doubt- 
less essential  that  there  be  an  express  agreement  or  circum- 
stances of  approximately  equal  force  to  show  that  intention.''^ 
There  is  such  a  lack  of  harmony  in  the  adjudications  that  it  is 


Starr,  5  Wis.  534;  Eastman  v.  Por- 
ter, 14  Wis.  39;  Flower  v.  Elwood, 
66  111.  438;  Coles  v.  Withers,  33 
Gratt.  180;  Fowler  v.  Bush,  21 
Pick.  230. 

In  the  last  case  a  mortgage  was 
given  as  security  for  a  debt  payable 
in  instalments;  after  the  first  in- 
stalment became  due  the  mortgagee 
called  on  the  mortgagor  for  pay- 
ment, saying  lie  could  sell  the  note 
and  mortgage  if  such  instalment 
were  paid.  The  mortgagor  there- 
upon gave  a  negotiable  note  for 
sucli  instalment,  payable  in  four 
months,  upon  which  the  mortgagee 
proposed  to  raise  the  money  at  a 
bank ;  and  the  following  indorse- 
ment was  made  on  the  original 
note:  "Received  the  first  instalment 
on  the  within  $402.78."  The  mort- 
gagee subsequently  sold  the  note 
and  mortgage.  It  was  held  that 
this  was  a  payment  of  such  instal- 
ment and  not  a  mere  change  of  se- 
curity for  the  same  debt;  that  the 
mortgage  was  discharged  pro  tanto. 

5  Fisher  v.  Marvin,  47  Barb.  1.59; 
Castleman  v.  Holmes,  4  J.  J.  Marsh. 
1.  Contra,  Jagger  I.  Co.  v.  Walker, 
76  N.  Y.  521. 

6  The  Kimball,  3  Wall.  37,  18  L. 
ed.  .50;  Segrist  v.  Crabtree,  131  U. 
S.  287,  33  L.  ed.  125;  Pritchard 
V.  Smith,  77  Ga.  463;  Comptoir 
D'Escompte  v.  Dresbach,  78  Cal.  15; 
Willow  River  L.  Co.  v.  Luger  F. 
Co.,   102  Wis.   630.     See   Case  Mfg. 


Co.  v.  Soxman,  138  U.  S.  431,  .34 
L.  ed.  1019;  Rayfield  v.  Lincher, 
J  80  111.  App.  454. 

7  Leschen  &  Sons  R.  Co.  v.  May- 
flower G.  M.  &  R.  Co.,  173  Fed. 
855,  35  L.R.A.(N.S.)  1,  97  C.  C. 
A.  465,  35  L.R.A.(N.S.)  1;  Rand- 
let  V.  Herren,  20  N.  H.  102;  John- 
son V.  Cleaves,  15  id.  332;  Slocomb 
V.  Lurty,  Hemp.  C.  C.  431 ;  Youngs 
V.  Stahelin,  34  N.  Y.  258;  Yates  v. 
Valentine,  71   111.  643. 

In  Eastman  v.  Porter,  14  Wis.  39, 
it  is  said  that  where,  in  connection 
with  the  fact  that  negotiable  paper 
is  taken  on  account  of  a  debt,  it  is 
alleged  or  acknowledged  to  have 
been  received  "as  payment,"  or  "in 
full,"  or  "in  full  of  all  demands," 
tliese  expressions  must  be  considered 
with  that  fact,  and  interpreted  as 
meaning  conditional  payment. 

In  La  Fayette  County  M.  Co.  v. 
Magoon,  73  Wis.  627,  3  L.R.A.  761, 
the  communications  between  the 
parties  were  to  the  effect  that  M. 
hereby  subscribes  and  hands  to  the 
treasurer  of  said  corporation  $1,000 
in  money  to  be  used,  etc.  In 
acknowledging  the  receipt  of  this 
and  the  accompanying  check  it  was 
said,  "received  from  M.  the  sum  of 
$1,000  according  to  the  foregoing 
letter."  Held,  that  the  check  Avas 
received  as  money.  Glenn  v.  Smith, 
2  Gill  &  J.  49.3,  20  Am.  Dec.  542; 
Johnson  v.  Weed,  9  Johns.  310,  6 
Am.   Dec.   279;    Tobey   v.   Barber,   5 


§    226]      CONVBNTIONAI.    1.1QU1J)AT10NS    AND    DlSCllAKUES. 


007 


unsafe  to  attempt  to  formulate  a  rule  from  them.     There  is  a 
marked  toiidenc}'  in  tlic  later  cases  to  lessen  the  old  rule  which 


Johns.  68,  4  Am.  Dec.  326 ;  Putnam 
V.  Lewis,  8  Johns.  389;  Bateman  v. 
Bailey,  5  T.  R.  512;  Puckford  v. 
Maxwell,  6  id.  52;  Bradford  v.  Fox, 
38  N.  Y.  289;  Comptoir  D'Escompte 
V.  Dresbach,   78  Cal.   15. 

In  Connecticut,  as  evidence  that 
a  new  note  is  received  in  payment 
of  an  account,  peculiar  importance 
is  attached  to  a  receipt  which  ex- 
presses that  the  note  is  given  in  full 
payment.  Such  a  receipt  is  a  dis- 
charge unless  it  is  executed  under 
circumstances  of  mistake,  accident 
or  surprise,  or  is  founded  in  fraud. 
Bonnell  v.  Chamberlin,  26  Conn. 
487;  Fuller  v.  Crittenden,  9  id.  401, 
23  Am.  Dec.  364;  Tucker  v.  Bald- 
win, 13  Conn.  136,  33  Am.  Dec.  384; 
Hurd  v.  Blackman,  19  Conn.  177. 
See  Bishop  v.  Perkins,  id.  300; 
Beam  v.   Barnum,  21   id.   202. 

An  effort  to  collect  acceptances 
given  by  a  debtor,  when  they  were 
not  received  in  payment,  is  not  such 
an  appropriation  of  them  as  satis- 
fies the  debt.  Olyphant  v.  St.  Louis 
0.  &  S.  Co.,  28  Fed.  729. 

Entering  the  amount  of  the  nego- 
tiable note  of  a  third  person  upon 
the  creditor's  books  to  the  debtor's 
credit  without  making  any  other  ap- 
propriation of  it  does  not  conclu- 
sively show  that  it  was  taken  in 
payment.  Brighton  v.  Lally,  130 
Mass:  485.  Nor  does  tlie  subsequent 
rendering  of  monthly  statements 
showing  such  credit.  Cheltenham 
S.  &  G.  Co.  V.  Gates  I.  Works,  2.! 
111.  App.  35,  aff'd  124  111.  623. 

If  the  check  of  a  third  person  is 
taken  the  creditor's  neglect  to  give 
the  debtor  prompt  notice  of  its 
dishonor,  his  retention  of  it  and 
collecting  a  dividend  out  of  the 
drawer's  estate  do  not  raise  a  pre- 


sumption that  it  was  taken  as  abso- 
lute payment;  tliese  facts  are  for 
the  jury.  Holmes  v.  Briggs,  131  Pa. 
233. 

The  English  law  is  thus  stated: 
"The  debt  may  be  considered  as  act- 
ually paid  if  the  creditor  at  the 
time  of  receiving  the  note  has 
agreed  to  take  it  in  payment  of 
the  debt,  and  to  take  upon  himself 
the  risk  of  the  note  being  paid,  or 
if,  from  the  conduct  of  the  creditor 
or  the  special  circumstances  of  tlie 
case,  such  an  agreement  is  legally 
to  be  implied.  But  in  the  absence 
of  any  special  circumstances  throw- 
ing the  risk  of  the  note  upon  the 
creditor,  his  receiving  the  note  in 
lieu  of  the  present  payment  of  tlic 
debt  is  no  more  than  giving  an  ex- 
tended credit,  or  giving  time  for 
payment  on  a  future  day,  in  con- 
sideration of  receiving  this  species 
of  security.  Whilst  the  time  runs 
payment  cannot  legally  be  enforced, 
but  the  debt  continues  till  payment 
is  actually  made;  and  if  payment 
be  not  made  when  the  time  has 
run  out,  payment  of  the  debt  may 
be  enforced  aa  if  the  note  had  not 
been  given."  Per  Langdale,  M.  R., 
in  Sayer  v.  Wagstaff,  5  Beav.  415, 
423.  If  the  creditor  is  offered  cash 
but  voluntarily  takes  a  bill  he  is 
paid  and  cannot  resort  to  his  debtor 
if  the  bill  is  dishonored.  Marsh  v. 
Pedder,  4  Camp.  257;  Strong  v. 
Hart,  6  B.  &  C.  160;  Smith  v.  Fer- 
rand,  7  id.  19;  Anderson  v.  Jlillies, 
]2  C.  B.  499.  But  unless  the  cred- 
itor had  an  opportunity  to  receive 
money  a  bill  if  taken  will  be  pre- 
sumed to  have  been  accepted  as  con- 
ditional payment.  Robinson  v. 
Read,  9  B.  &  C.  449.  Under  a  con- 
tract   for    the    sale    of    goods    to    be 


G68 


SUTHERLAND    ON    DAMAGES. 


[§  226 


required  an  cx})rcss  agreement  in  order  that  payment  should 
follow  the  taking  of  security,^  and  to  regard  the  surrender  or 
retention  of  the  original  security  as  decisive  of  the  intention  of 
the  parties,^  because  if  the  creditor  intends  to  resort  to  security 
he  already  holds  he  will  not  surrender  it.     In  the  absence  of  an 


paid  for  by  the  buyer's  acceptances 
or  otlier  like  forms  of  credit,  the 
payment  is  conditional  only,  and 
upon  dishonor  of  the  bills  the  seller 
may  sue  upon  the  original  contract 
for  the  price  of  the  goods;  upon  a 
refusal  to  give  the  bills  the  remedy 
of  the  seller  is  for  that  breach  of 
contract,  and  he  cannot  sue  for  the 
contract  price  until  the  expiration 
of  the  stipulated  credit.  Leake's 
Contracts,  894;  Paul  v.  Dodd,  2  C. 
B.   800;    Helfs   v.   Winterbottom,   2 

B.  &  Ad.  431;  Gunn  v.  Bolckow,  L. 
R.  ]0  Ch.  500. 

8  An  express  agreement  to  receive 
payment  in  something  else  than 
money  need  not  be  proved;  it  may 
be  implied  from  the  facts  and  cir- 
cumstances.   Griffin  v.  Petty,  101  N. 

C.  380;  Adams  v.  Squires,  61  111. 
App.  513;  Ghisholm  v.  Williams, 
128  111.  115. 

A  debtor  proposed  by  letter  to 
remit  a  draft  "in  payment  of  bill 
in  full;"  the  creditor  acknowledged 
the  receipt  of  the  draft  in  full  pay- 
ment. There  was  no  cause  of  ac- 
tion against  the  debtor  on  the  ac- 
count; his  liability  rested  upon  his 
indorsement.  Daj^  v.  Thompson,  65 
Ala.  269. 

An  express  agreement  is  not  nec- 
essary to  make  the  check,  note  or 
bill  payment.  Riverside  I.  Works 
V.  Hall,  64  Mich.  165;  Brown  v. 
Dunckel,  46  Mich.  32;  Keel  v.  Lar- 
kin,  72  Ala.  493 ;  Morris  v.  Harveys, 
75  Va.  726;  Hall  v.  Stevens,  116  N. 
Y.  201,  5  L.R.A.  802  (contempo- 
raneous debt) . 


The  intention  to  receive  a  note 
and  collaterals  in  payment  is  in- 
ferable from  an  entry  in  the  credit- 
or's books  to  the  effect  that  they 
were  received  in  settlement  of  bal- 
ance, and  a  receipt  expressing  that 
they  were  in  settlement  of  the  above 
account.  Williams,  Ex  parte,  17  S. 
C.  396. 

In  Griffin  v.  Anderson,  3  S.  C. 
105,  the  words  "settled  in  full"  in 
the  bond  of  a  commissioner  were 
considered  sufficient  to  indicate  that 
a  note  was  taken  in  payment  of  a 
balance  due  from  him.  See  In  re 
Hurst,  1  Flip.  462. 

If  notes  secured  by  a  mortgage 
nearly  equal  in  amount  to  the  debt 
are  given  and  the  balance  is  paid  in 
cash,  and  part  of  the  notea  are  used 
by  the  creditor,  the  debt  is  extin- 
guished. Quidnuck  Co.  v.  Chafee, 
13  R.  I.  438. 

9  Smith  V.  Pitts,  167  Ala.  461; 
Riverside  Iron  Works  v.  Hall ; 
Brown  v.  Dunckel ;  Morris  v.  Har- 
veys, siipra;  Fidelity  Ins.,  etc.  Co. 
V.  Shenandoali  Valley  R.  Co.,  86  Va. 
],  19  Am.  St.  858;  Burchard  v. 
Frazer,  23  Mich.  224;  Kirkpatrick 
v.  Puryear,  93  Tenn.  409,  22  L.R.A. 
785. 

A  creditor  cannot  insist  tliat  a 
note  taken  by  him  does  not  dis- 
charge his  claim  unless  he  offers  to 
surrender  it.  Davis  &  R.  B.  &  Mfg. 
Co.  V.  Montrose  B.  &  C.  Co.,  59  111. 
App.  573. 

Where  the  new  note  is  made  by 
a  third  person  the  surrender  of  the 
old  will  be,  prima  facie,  a  discharge 


§    226]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAEGES.        669 

agreement  or  acts  of  the  parties  indicative  of  a  contract,  a 
negotiable  note  or  bill  of  cxcbano'e  taken  as  conditional  payment 
will  have  the  effect  to  suspend  the  right  of  action  nntil  it  ma- 
tures." And  then  it  will  not  be  presumed  in  favor  of  the 
creditor  that  it  remains  unpaid;  ho  must  account  for  it;  and 
so  if  he  receives  a  check.     Such  pai)er,  unless  it  has  been  lost, 


of  it  and  a  rolcaso  of  its  maker  from 
personal  liability;  but  not  if  the 
holder  of  the  old  note  had  a  specific 
lien  on  land  as  security  for  the  debt 
and  the  result  of  giving  the  new 
note  is  to  make  the  person  liable 
on  it  the  owner  of  the  land,  part  of 
the  consideration  being  the  new 
note.  Hess  v.  Dille,  23  W.  Va.  90; 
Merchants'  Nat.  Bank  v.  Good,  21 
id.  455. 

Walker,  C.  J.,  in  Strong  v.  King, 
35  111.  9,  ]9,  said:  "The  bare  recep- 
tion of  a  check  from  the  drawer  for 
the  amount  of  the  bill  will  not,  or- 
dinarily, be  considered  as  payment, 
but  only  as  a  means  of  payment; 
and  this  is  the  rule  whether  the  bill 
is  surrendered  to  the  drawer  at  the 
time  of  receiving  the  check  or  is  re- 
tained by  the  holder  until  the  pay- 
ment is  consummated.  It  may  be 
imprudent  to  surrender  the  bill  be- 
fore actual  payment  is  made,  but 
such  improvidence  does  not  change 
the  rule." 

In  Flower  v.  Elwood,  G6  111.  4.".S, 
444,  the  same  judge  said:  "And  al- 
though the  surrender  of  the  notes 
by  the  mortgagee  to  the  maker  is 
prima  facie  evidence  of  their  pay- 
ment, still  such  presumption  may 
be  rebutted." 

In  Yates  v.  Valentine,  71  111.  04:5, 
his  associate,  apparently  delivering 
the  unanimous  opinion  of  the  court, 
said:  "We  can  conceive  of  no  act 
showing  more  decisively  that  it  was 
intended  by  the  parties  that  the 
note  was  satisfied  and  should  be  can- 


celed. It  was  intended  that  llie  de- 
fendant should  thereaftiT  be  bound 
by  the  terms  of  the  notes  then 
given,  and  the  old  note  was  given 
him  that  it  might  cease  to  exist  as 
an  evidence  of  indebtedness  against 
him."  Chastain  v.  Johnson,  2 
Bailey,  574;  Eastman  v.  Porter,  14 
Wis.  39;  Smith  v.  Miller,  43  N.  Y. 
171,  3  Am.  Rep.  690. 

Ordinarily  the  surrender  by  a 
creditor  to  the  debtor  of  the  promis- 
sory note  of  the  latter  on  tlie  accept- 
ance of  the  note  of  a  third  person 
for  that  amount  is  prima  facie  evi- 
dence that  it  is  taken  in  satisfac- 
tion of  the  note  so  surrendered. 
Youngs  V.  Lee,  ]2  N.  Y.  551;  Pratt 
v.  Coman,  37  id.  440;  Phocni.x  Ins. 
Co.  V.  Church,  81  id.  218,  22.5,  37 
Am.  Rep.  494.  But  whether  the 
original  debt  is  in  fact  discharged 
depends  upon  the  parties'  intcn- 
ti(m.    Noel  v.  Murray,  13  N.  Y.  107. 

A  note  given  by  executors  does 
not  discharge  an  indebtedness  due 
from  the  estate  of  their  testator 
whose  note  was  surremlered  to  them 
unless  sucli  was  the  understanding 
of  the  parties,  (ilenn  v.  Rurrows, 
37   Hun,  002. 

10  The  Kimball.  3  Wall.  37,  18  L. 
ed.  50;  Pii(eiiix  Ins.  Co.  v.  Allen,  11 
Mich.  501,  83  Am.  Dee.  7.56;  Grif- 
fith V.  Grogan,  12  Cal.  317:  Put- 
nam v.  Lewis,  8  .lohns.  389;  Brew- 
ster V.  Bours,  8  Cal.  501  ;  Lee  v. 
Tinges,  7  Md.  215;  Smith  v.  Owens, 
21   Cal.  11. 


670 


SUTHERLAND    ON    DAMAGES. 


[§  227 


must  be  produced  at  the  trial  of  an  action  on  the  original  con- 
sideration that  it  may  be  surrendered  or  canceled." 

§  227.  Same  subject.  By  accepting  the  note,  bill  or  check, 
either  of  the  debtor  or  of  a  third  person,  as  conditional  pay- 
ment the  creditor  assumes  the  duty  of  doing  anything  in  re- 
spect to  it  which  is  necessary  not  only  to  obtain  payment  by 
due  presentment,  but  also  by  protest  and  notice  to  fix  the  lia- 
bility of  the  parties.  And  the  onus  is  upon  him  to  show  that 
he  has  performed  that  duty.^'^  If  there  are  other  parties  to 
such  paper  to  which  the  holder  could  resort  in  case  of  its  dis- 
honor any  want  of  diligence  on  the  part  of  the  creditor  re- 
ceiving it,  by  which  such  parties  are  discharged,  will  preclude 
such  creditor  from  returning  it  and  suing  upon  the  original 
debt.'' 

There  is  not  the  same  arbitrary  strictness  in  the  rule  of  dili- 
gence and  in  respect  to  consequences  of  neglect  where  a  check 
is  received  as  a  means  of  payment,  or  even  as  payment,  that 
prevails  in  regard  to  notes  and  bills.     The  drawer  is  in  no 


11  Goodall  V.  Norton,  88  Minn.  1 ; 
Southwestern  Surety  Ins.  Co.  v. 
Clay  &  Nowlin,  112  Ark.  220; 
Stevens  v.  Bradley,  22  111.  224; 
Heartt  v.  Rhodes,  66  id.  351;  Car- 
roll V.  Holmes,  24  111.  App.  453; 
O'Bryan  v.  Jones,  38  Mo.  App.  90; 
McMurray  v.  Taylor,  30  Mo.  263, 
77  Am.  Dec.  611;  Salomon  v.  Pio- 
neer Co-op.  Co.,  21  Fla.  374,  58  Am. 
Rep.  667;  McConnell  v.  Stettinius, 
7  111.  707;  Dangerfield  v.  Wilby,  4 
Esp.  159;  Hadvven  v.  Mendizabel,  10 
Moore,  477  ;  Jaffrey  v.  Cornish,  10  N. 
H.  505;  Mehlberg  v.  Tisher,  24  Wis. 
607;  Dayton  v.  Trull,  23  Wend. 
345;  Burdick  v.  Green,  15  Johns. 
247;  Smith  v.  Rogers,  17  id.  340; 
Hughes  V.  Wheeler,  8  Cow.  78; 
Eastman  v.  Porter,  14  Wis.  39; 
Plant's  Mfg.  Co.  v.  Falvey,  20  Wis. 
200;  Cromwell  v.  Lovett,  1  Hall, 
56;    Taylor  v.   Allen,   36   Barb.  294. 

i2Kilpatrick  v.  Home  B.  &  L. 
Ass'n,  119  Pa.  30;   Phoenix  Ins.  Co. 


V.  Allen,  11  Mich.  501,  83  Am.  Dec. 
756;  Dayton  v.  Trull,  23  Wend. 
345;  Cooper  v.  Powell,  Anthon,  49; 
Little  V.  Phenix  Bank,  2  Hill,  425, 
7  id.  359;  Jennison  v.  Parker,  7 
Mich.  355;  Heartt  v.  Rhodes,  66 
111.  351;  Bradford  v.  Fox,  39  Barb. 
203,  16  Abb.  Pr.  51,  38  N.  Y.  289; 
Story  on  Prom.  Notes,  §  498; 
Roberts  v.  Thompson,  14  Ohio  St. 
1,  82  Am.  Dec.  465;  Schierl  v. 
Baumel,  75  Wis.  69;  Corbett  v. 
Clark,  45  Wis.  406 ;  Allan  v.  Eldred, 
50  id.  135;  Chicago,  etc.  R.  Co.  v. 
Wisconsin,  etc.  R.  Co.,  76  Iowa, 
615. 

The  drawer  does  not  waive  any- 
thing by  a  subsequent  promise  to 
pay  unless  he  made  it  with  knowl- 
edge of  the  facts,  which  the  holder 
has  the  burden  of  proving.  Schierl 
V.   Baumel,  supra. 

13  Id. ;  Sandy  River  Nat.  Bank  v. 
Miller,  82  Me.  137. 


§    227]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        671 

case  discharged  from  his  responsibility  to  pay  the  check  unless 
he  has  suffered  some  loss  or  injury  by  the  omission  or  neglect 
to  make  presentment,  and  then  only  'pro  tanto}* 

AVhere  the  debtor  is  an  indorser  of  the  check  he  delivers  to 
his  creditor  the  latter  must  present  it  for  payment  within  the 
time  limited  for  so  doing  by  the  law  merchant,  otherwise,  if 
the  bank  upon  which  the  check  is  drawn  fails  and  there  was 
money  to  the  credit  of  the  drawer  to  meet  the  check  if  it  had 
been  presented  without  undue  delay,  the  debtor's  liability  for 
the  original  indebtedness  will  be  extinguished.  The  creditor 
has  the  onus  of  showing-  that  the  indorser  was  not  injured  by 
the  delay,  the  latter  having  proved  that  the  check  was  not 
duly  presented,  and  this  rule  prevails  whether  the  suit  is  on 
the  check  or  on  the  indebtedness  to  pay  which  the  check  was 


14  Mc Williams  v.  Phillips,  71  Ala. 
80;  Hunter  v.  Moiil,  98  Pa.  13,  42 
Am.  Rep.  610;  Gibbs  v.  Cannon,  9 
S.  &  R.  201;  Overton  v.  Tracey,  14 
id.  311;  Holmes  v.  Briggs,  131  Pa. 
233;  Story  on  Prom.  Notes,  §  497; 
Cruger  v.  Armstrong,  3  Johns.  Cas. 
5;  Conroy  v.  Warren,  id.  259; 
Murray  v.  Judah,  6  Cow.  484;  Com- 
mercial Bank  v.  Hughes,  17  Wend. 
94;  Harbeck  v.  Craft,  4  Duer,  122; 
Mohawk  Bank  v.  Broderick,  10 
Wend.  304;  Little  v.  Phenix  Bank, 
2  Hill,  425;  Serle  v.  Norton,  2 
Mood.  &  Rob.  401;  Hill  v.  Beebe, 
13  N.  Y.  556. 

In  Bradford  v.  Fox,  38  N.  Y.  289, 
the  defendant  averred  payment,  and 
it  was  held  that,  though  made  by  a 
check,  the  onus  of  proving  that  the 
check  resulted  in  payment  was  on 
him.  Grover,  J.,  said:  ''To  effect 
this,  proof  of  the  delivery  and  re- 
ceipt of  the  check  by  the  plaintiff 
not  being  sufllcient,  the  defendant 
was  bound  to  go  further  and  show 
that  by  the  laches  of  the  plaintiff 
a  loss  had  been  incurred,  to  be 
borne  by  some  one;  and  when  this 
appeared,    the   law   would    cast   the 


loss  upon  the  plaintiff,  and  would 
work  out  such  result  by  making  tlie 
check  operate  as  payment  of  the 
debt." 

It  is  believed,  however,  that  after 
delivery  of  a  check  to  a  creditor  as 
a  means  of  payment,  the  weiglit  of 
authority  puts  the  burden  of  proof 
on  him  to  show  that  tlie  check  was 
unproductive;  and  if  there  lias  been 
a  want  of  diligence,  that  no  loss  or 
injury  has  resulted  to  the  debtor. 
Murray  v.  Judah,  6  Cow.  484;  Syra- 
cuse, etc.  R.  Co.  V.  Collins,  3  Lans. 
29. 

The  drawer  of  a  check  has  his 
remedy  against  the  agent  who  ac- 
cepted it  for  collection  if  harm  re- 
sulted from  his  negligence.  ISlorria 
V.  Eufaula  Nat.  Bank,  106  Ala.  383, 
389;  Smith  v.  Miller,  43  N.  Y.  171, 
3  Am.  Rep.  690,  52  N.  Y.  546; 
Chouteau  v.  Rowse,  56  ilo.  65; 
Clarke  v.  Gates,  67  Mo.  130. 

As  to  the  measure  of  diligence  re- 
quired in  the  case  of  a  bank  which 
has  received  a  local  check  for  collec- 
tion, see  Morris  v.  Kufaula  Nat. 
Bank,  122  Ala.  580,  overruling 
s.  c,  106  Ala.  383. 


072 


SUTIIKRLAND    ON    DAMAGES. 


[§  227 


indorsed  and  transferred.^^  In  an  earlier  case  in  the  same  state 
a  debtor  indorsed  to  his  creditor  a  draft  on  a  third  party  due 
in  thirty  days,  the  proceeds  of  which  were  to  be  credited  to 
the  debtor's  acconnt.  The  draft  was  not  presented  at  maturity, 
and  soon  thereafter  trhe  drawee  became  insolvent.  The  cred- 
itor had  no  redress  either  npon  the  draft,  or  the  original  in- 
debtedness.-'^ "Tf  the  creditor  had  received  of  his  debtor  a 
check  and  failed  to  present  it,  the  principle  would  have  been 
the  same  jM-ecisely.  Tf  he  had  received  part  or  all  the  money 
on  the  draft  and  failed  to  credit  it,  beyond  question  such  re- 
ceipt would  have  been  a  good  defense  pro  tanto  or  in  whole  to 
the  collection  of  the  debt  due  by  the  account;  so  we  think,  on 
sound  principle,  a  failure  to  receive  when  he  ought  to  have  re- 
ceived, such  failure  l)eing  the  result  of  his  own  negligence  or 


15  Kirkpatrick     v.     Puryear,     93 
Tenn.  409,  22  L.R.A.  785. 

16  Eetterton  v.  T^oope,  .3  Lea,  215, 
31  Am.  Rep.  633. 

In  Carroll  v.  Sweet,  128  N.  Y.  19, 
13  L.R.A.  43,  the  defense  to  an  ac- 
tion to  recover  a  claim  was  pay- 
ment. Tlie  facts  as  stated  by  the 
reporter  were  that  W.  gave  his 
cheek  to  tlie  defendant  for  the 
aniount  of  a  loan.  The  defendant, 
the  same  day,  indorsed  and  delivered 
the  check  to  the  plaintiff,  at  the 
place  where  the  bank  on  which  it 
was  drawn  was  located,  to  apply 
upon  the  indebtedness  in  suit.  W. 
requested  the  plaintiff  to  hold  the 
check  for  a  few  days,  stating  that 
if  the  plaintiff  would  let  hira  know 
when  he  wished  to  use  the  check  he 
would  tlien  provide  for  it.  W.  testi- 
fied on  the  trial  that  he  had  then 
money  enough  to  pay  the  check  and 
would  have  paid  it  had  payment 
been  insisted  upon.  The  plaintiff 
kept  the  check  for  nine  days  be- 
fore he  presented  it  for  payment. 
W.  in  the  meantime  had  become  in- 
solvent. The  cashier  of  the  bank  on 
which  the  check  was  drawn  testified 


that  there  were  no  funds  to  meet  it, 
and  that  it  would  not  have  been 
paid  if  it  had  been  pi'esented  any 
time  after  its  date.  There  was  no 
agreement  that  the  check  should  be 
taken  in  satisfaction  of  the  debt. 
Held,  that  it  was  error  to  direct  a 
verdict  for  the  plaintiff;  that  the 
delay  in  presenting  the  check  dis- 
charged the  defendant  from  liabil- 
ity as  indorser;  that  the  delay  was 
not  excused  by  the  fact  that  the 
drawer  had  no  funds,  or  was  in- 
solvent, or  because  presentment 
would  have  been  unavailing  as  a 
means  of  procuring  payment;  that 
while  the  indorsement  and  transfer 
of  the  check  operated  as  a  pro- 
visional payment  only,  if  the  delay 
caused  a  loss  to  the  defendant,  to 
the  extent  of  the  loss  the  delay 
was  tantamount  to  actual  payment; 
that  as  there  was  evidence  tending 
to  show  that  the  delay  prevented  a 
collertion  of  the  check  in  whole  or 
in  part,  and  that  so  much  was  lost 
to  the  defendant,  the  case  was  for 
the  jury.  See  Western  Pacific  L. 
Co.  V.  Wilson,  19  Cal.  App.  338. 


§    228]      CONVENTIONAT-    I.TQUTDATIONS    AND    DISCHARGES.        073 

the  party  to  wlioiu  ho  had  iiuh)rscd  it,  should  e(]iially  work  the 
same  result.  lie  fails  to  account  in  either  case  for  the  col- 
lateral, lie  has  had  the  benefit  of  it  as  a  security  for  his  deht 
and  took  it  as  a  means  of  ])aynient,  thus  depriving  the  original 
holder  of  the  right  to  control  and  putting  himself  in  his  place. 
He  cannot  impose  upon  him  the  entire  loss  when  it  results 
from  his  own  neglect,  while  controlling  or  having  the  right  to 
control  the  paper."  A  chose  in  action  in  any  form  received 
as  conditional  })ayment  or  as  collateral  security,  to  the  extent 
collected  or  paid,  or  of  the  loss  by  the  creditor's  negligence,  or 
when  transferred  by  him  to  a  third  person,  unless  taken  back, 
is  payment  on  account  of  the  debt  for  which  it  was  received.''^ 
So  if  the  creditor  take  from  his  debtor  an  order  or  note  payal)le 
to  a  third  person." 

§  228.  Collaterals  collected  or  lost  by  negligence  of  creditor 
are  payments.  When  security  is  given  for  a  debt  and  money 
is  realized  therefrom,  it  is,  as  has  just  been  said,  a  payment  pro 
tanto}^     The  money  thus  received  is  deemed  so  appropriated 


"Life  Ins.  C.  Co.  v.  Altschiilcr, 
55  Neb.  341;  Massacliusettts  B.  L. 
Ass'n  V.  Robinson,  104  Ga.  256,  42 
L.R.A.  261  ;  Looncy  v.  District  of 
Columbia,  11.3  U.  S.  258,  29  L.  ed. 
974;  Brown  v.  Same,  17  Ct.  of 
Cls.  402;  Donnelly  v.  Same,  119  U. 
S.  339,  30  L.  od.  4G5 ;  Loth  v.  iMotli- 
ner,  53  Ark.  IIG;  Smith  v.  Ferrand, 
7  B.  &  C.  19;  Harris  v.  Johnston,  .? 
Cranch,  311,  2  L.  ed.  45;  .Tohn  v. 
John,  Wright,  584;  McCluny  v. 
Jackson,  6  Gratt.  96 ;  Parker  v. 
United  States,  1  Pet.  C.  C.  202; 
Lawrence  v.  Schuylkill  N.  Co.,  4 
A^ash.  C.  C.  562;  Bill  v.  Porter.  9 
Conn.  23;  Board  of  Directors  v. 
Roach,  174  Fed.  949,  99  C.  C.  A. 
453;  La  Fayette  G.  Co.  v.  K'elsay, 
164  Ind.  503;  Penn  Mut.  L.  Ins.  v. 
Norcross,  163  Ind.  379.  See  Smith 
R.  &  C.  Co.  V.  Mitchell,  117  Ga.  772, 
97  Am.  St.  217;  Case  Mfg.  Co.  v. 
Soxman,  138  IT.  S.  431.  438,  34  L. 
ed.   1019. 

Snth.   Dam.   Vol.    I.— 13. 


18  Shaw  V.  Gookin,  7  N.  H.  16. 

19  Montgomery  v.  Schenck,  82 
Hun,  24;  Pauly  v.  Wilson,  57  Fed. 
548,  §  227.  See  New  London  Bank 
V.  Lee,  11  Conn.  112,  73  Am.  Dec. 
713. 

A  mortgage  or  other  security  to 
indemnify  an  accommodation  in- 
dorser  is  not  availaltle  as  security 
for  the  debt,  eitlier  to  relieve  the  iii- 
dorscr  or  surety  from  paying  it 
(Post  V.  Tradesmen's  Bank,  28 
Conn.  420;  Horner  v.  Savings  Bank, 
7  id.  478),  or  as  a  means  of  pay- 
ment at  tlie  instance  of  tlie  creditor. 
Oliio  L.  Ins.  &  T.  Co.  v.  lleeder,  18 
Ohio,  .!."),  46.  See  Russell  v.  La 
Ro(iue,  13  .\la.   149. 

If  collat(,'rals  liavc;  l)een  exeiianged 
foi'  other  .secui'ities  wliieli  prove  to 
be  wortbless.  the  delitor,  whose 
]iajiei-  was  aeee|)ted  conditionally,  is 
iiiil  ii'leasei!  e\ee|i(  so  far  as  he  is 
injnicl.      Iluiifc  r  \.  .Monl,  98  Pa.  13, 


674 


SUTHERLAND    ON    DAMAGES. 


[§  228 


by  mutual  agreement.^"  It  is  payment,  not  merely  a  set-off ;  ^^ 
but  if  the  debtor  pays  his  debt  after  such  collections  on  col- 
laterals he  may  recover  them  from  the  creditor.^^ 

There  is  an  implied  obligation  on  the  creditor  to  account  for 
the  proceeds  of  collaterals.  His  failure  or  refusal  to  give  an 
account  of  the  application  thereof  will  operate  as  a  bar  to  the 
recovery  of  the  debt  itself. ^^  But  where  the  collaterals  are 
placed  in  the  hands  of  a  third  person  by  the  debtor,  and  were 
never  in  the  hands  or  under  the  control  of  the  creditor,  he  is 
entitled  to  recover  against  the  debtor  without  accounting  for 
them.^*  If  bank  bills  have  been  received  it  lies  on  the  creditor, 
in  a  suit  against  a  surety,  to  show  what  has  been  done  with 
tliem.^^  Taking  a  collateral  does  not  suspend  the  right  to  bring 
suit  on  the  debt  secured.^®  ISTor  can  the  debtor  obtain  credit 
thereon  for  such  collateral  unless  it  has  been  collected  or  appro- 
priated by  the  creditor,  or  lost  by  his  negligence  or  fault.^' 


42  Am.  Rep.  610;    Girard  F.  &  M. 
Ins.  Co.  V.  Marr,  46  Pa.  504. 

20  Pope  V.  Dodson,  58  111.  360 ; 
Kemmil  v.  Wilson,  4  Wash.  C.  C. 
308;  Midgeley  v.  Slocomb,  2  Abb. 
Pr.  (N.  S.)  275;  Lincoln  v.  Bassett, 
23  Pick.  154;  Kenniston  v.  Avery, 
16  N.  H.  117;  Dismukes  v.  Wright, 
3  Dev.  &  Bat.  78. 

21  King  V.  Hutchins,  28  N.  H. 
561;   In  re  Ouimette,  1  Sawyer,  47. 

22  0ver8treet  v.  Nunn,  36  Ala. 
G66;  Dorrill  v.  Eaton,  35  Mich.  302. 

The  consent  of  the  holder  of  a 
note  to  the  sale  of  the  collateral 
securing  it  and  the  application  of 
the  proceeds  to  the  payment  of  an- 
other indebtedness  does  not  operate 
as  a  payment  of  the  note.  Burns 
V.  National  Mining,  Tunnel  &  Land 
Co.,  23  Colo.  App.  545. 

23Alden  v.  Camden  A.  R.  Mach. 
Co.,  107  Me.  508;  Simes  v.  Zane,  1 
Phila.  500;  Dussol  v.  Bruguire,  50 
Cal.  456. 

24  Bank  of  United  States  v.  Pea- 
body,  20  Pa.  454. 


25  Spaulding  v.  Bank,  9  Pa.  28. 

26Wilhelm  v.  Schmidt,  84  111. 
183;  Flanagan  v.  Hambleton,  54 
Md.  222;  Williams  v.  National 
Bank,  72  id.  441,  450;  Dugan  v. 
Sprague,  2  Ind.  600;  Foster  v. 
Purdy,  5  Mete.  (Mass.)  442;  Lin- 
coln V.  Bassett,  23  Pick.   154. 

27  Id.;  Fiske  V.  Stevens,  21  Me. 
457;  Hawks  v.  Hinchcliff,  17  Barb. 
492;  Cooke  v.  Chaney,  14  Ala.  65; 
Slevin  v.  Morrow,  4  Ind.  425 ;  Hall 
v.  Green,  14  Ohio,  499;  Prettyman 
V.  Barnard,  37  111.  105;  Marschuetz 
V.  Wright,  50  Wis.  175;  Hunter  v. 
Moul,  98  Pa.  13,  42  Am.  Rep.  610. 

The  holder  of  a  note  as  collateral 
cannot  receive  another  note  in  pay- 
ment of  it,  and  subsequently,  with- 
out the  consent  of  the  pledgor  or 
his  assignee,  return  the  note  re- 
ceived and  take  back  the  original 
note,  so  as  to  reinstate  the  liability 
of  the  pledgor  or  deprive  his  as- 
signee of  the  right  to  the  surplus. 
Post  V.  Union  Nat.  Bank,  159  111. 
421. 


§    228]      CONVENTIONAL    LKiUlDATlONS    AND    DISCIIARQES.        675 

Where  negotiable  paper  is  received  as  a  means  of  payment 
it  is  prima  facie  payment,  and  the  creditor  must  show  what 
has  become  of  it;  show  diligence  to  obtain  payment,  or  excuse 
non-presentment  and  produce  it  at  the  trial.*^'  A  note  delivered 
as  collateral  continues  a  valid  security  until  the  debt  is  paid, 
notwithstanding  it  is  changed  in  form,  as  into  a  judgment.^^ 
And  a  creditor  who  holds  security,  without  special  instructions 
for  its  application,  for  various  notes  due  from  his  debtor,  some 
of  which  bear  the  names  of  sureties,  may,  in  case  of  the  in- 
solvency of  the  principal  debtor  and  of  some  of  the  sureties, 
apply  the  same  towards  the  payment  of  such  of  the  notes  as 
may  be  necessary  for  his  own  protection ;  and  insolvent  parties 
upon  others  cannot  avail  themselves  thereof  in  any  way,  in 
equity,  without  paying  or  offering  to  pay  the  whole  of  the  notes 
for  which  the  security  was  given.^°  A  creditor  is  only  obliged  to 
apply  the  net  proceeds  of  collaterals.  Expenses  necessarily 
incurred  in  rendering  them  available  are  to  be  deducted,  and 
the  balance  only  is  a  payment  upon  the  debt  secured.^^  But 
the  equitable  interest  of  the  assignee  of  a  non-negotiable  promis- 
sory note  assigned  as  collateral  security  extends  only  to  the 

28  Dayton  V.  Trull,  23  Wend.  345;  H.  as  collateral  security.  After 
Cooper  V.  Powell,  Anth.  49 ;  Rob-  this  S.  sold  and  assigned  the  note 
erts  V.  Gallagher,  1  Wash.  C.  C.  of  F.  and  H.,  then  in  the  hands  of 
156;  Brown  v.  Cronise,  21  Cal.  386;  F.,  to  D.,  who  thereafter  demanded 
Plant's  Mfg.  Co.  v.  Falvey,  20  Wis.  the  $4,500  of  F.,  offering  to  credit 
200;  Bullard  v.  Hascall,  25  Mich.  the  same  with  the  amount  of  the 
132.  $1,000     note,     wliich     was     refused. 

29  Fisher  v.  Fisher,  98  Mass.  303 ;  Held,  that  D.  was  entitled  to  re- 
Smith  V.  Strout,  63  Me.  205;  Chap-  cover  on  the  note  against  F.  and 
man  v.  Lee,  64  Ala.  483;  Sonoma  H.  less  the  amount  of  the  $1,000 
Valley   Bank  v.   Hill,   59   Cal.   107;  note. 

Buncombe  v.  New  York,  etc.  R.  Co.,  A     principal     note     is     paid     as 

84  N.  Y.  193,  88  id.  1 ;   Waldron  v.  against  a  surety  thereon,  when  the 

Zacharie,  54  Tex.  503.  Iioldor  receives  payment  of  a  larger 

30  \^ilcox  V.  Fairhaven  Bank,  7  note  pledged  as  collateral  security 
Allen,  270.  F.  and  H.  made  and  do-  tliorefor,  though  a  third  note  be 
livered  to  S.  their  joint  and  several  taken  in  lieu  of  sucli  collateral  note, 
note  for  $4,500;  before  its  maturity  Post  v.  Union  Nat.  Bank,  159  HI. 
S.   gave  his  note  for   $1,000  to   C,  421. 

and   indorsed  and  delivered   as  col-  31  Starrett  v.  Barber,  20  Me.  457 ; 

lateral   the  note  of   F.   and  H.      C.  Herrington    v.    Pouley,    26    HI.    94; 

subsequently   assigned    S.'s   note   to  Van  Blarcom  v.  Broadway  Bank,  37 

F.  and  delivered  the  note  of  F.  and  N.  Y.  540. 


67G 


SUTHEKLAND    ON    DAMAGES. 


[§  228 


amount  of  the  debt  for  the  security  of  which  it  was  assigned, 
and  not  to  the  costs  whicli  have  accrued  in  a  suit  subsequently 
brought  thereon.  And  a  release  from  the  payee,  executed  subse- 
quent to  the  assignment,  will  be  available  for  all  of  such  col- 
lateral in  excess  of  such  debt.^^  A  chose  in  action  which  is 
transferred  as  collateral  security  is  put  under  the  control  of  the 
creditor  to  make  his  claim  out  of  it,  and  is  not  in  the  nature  or 
subject  to  the  incidents  of  a  pawn  or  pledge.  It  should  be  col- 
lected,  not   sold.^^ 

§  229.  Same  subject.  A  creditor  receiving  collateral  se- 
curities is  required  to  use  ordinary  diligence,  and  to  observe 
good  faith  in  respect  to  the  same;  if  they  are  lost  or  impaired 
through  his  act  or  neglect  he  is  liable  to  the  debtor  to  the  ex- 
tent of  the  injury;  and  such  damages,  or  so  much  as  is  neces- 
sary therefor,  A\ill  inure  as  a  payment  of  the  debt  for  which 
the  coHaterals  were  received  as  security.^*    If  they  be  negotiable 


32  Blake  v.  Buclianan,  22  Vt.  548. 
The  defendant  and  one  A.  of  INIassa- 
chnsetts  exchanged  notes  of  equal 
amounts  and  having  equal  time  to 
run,  in  August,  1854.  Later  in  the 
same  month  A.  deposited  defend- 
ant's notes  and  others  as  collateral, 
and  procured  a  discount  of  his  own 
note  for  $8,000  by  plaintiflf.  The 
note  had  ten  days  to  run ;  A.  failed 
to  pay  it,  and  was  driven  into  insol- 
vency. Separate  suits  were  brought 
against  tlie  defendant  on  liis  notes 
when  they  became  due.  At  the  time 
of  bringing  these  suits  between 
$3,000  and  $4,000  of  the  collaterals 
had  been  paid.  When  the  actions 
(together)  were  tried,  the  collater- 
als had  been  paid  in  to  an  amount 
sufficient  to  pay  the  plaintiff's 
claim,  except  about  $200.  Held,  that 
the  plaintiff  should  have  judgment 
for  the  full  amount  of  the  notes, 
interest  and  costs,  but  the  rights  of 
the  defendant  should  be  provided 
for  by  an  order  in  the  judgment  per- 
mitting   him    to    be    discharged    by 


paying  the  balance  due  the  plaintiff 
with  costs;  the  residue  to  be  paid 
into  court  to  be  subject  to  its  fur- 
ther order  on  the  application  of  A.'s 
assignees,  or  of  A.  on  notice.  Nan- 
tucket Bank  v.  Stebbins,  6  Duer, 
341. 

In  Kussell  v.  La  Roque,  13  Ala. 
149,  it  was  held  that  where  a  surety 
received  from  his  principal  a  note 
as  indemnity,  and  passed  the  same 
over  to  the  creditor  as  collateral 
security  for  the  principal,  the  credit- 
or could  not  recover  upon  such  note 
after  the  principal  debt  was  barred 
by  the  statute  of  limitations;  but  it 
would  have  been,  otherwise  if  the 
note  had  been  delivered  to  the  cred- 
itor in  discharge  of  the  surety's  lia- 
bility. 

33  Chambersburg  Ins.  Co.  v. 
Smith,  11  Pa.  120;  Nelson  v.  Wel- 
lington, 5  Bosw.  178;  Brookman  v. 
Metcalf,  id.  429. 

34  Roberts  v.  Gallagher,  1  Wash. 
C.  C.  156;  Gallagher  v.  Roberts,  2 
id.    191  ;    Hanna  v.   Holton,   78   Pa. 


§    229]      COJVVENTIOMAI,     M  (^  U  I  DATIONS    AND    J)JSC  H  AR(iK«.        (>77 

paper  to  iiiature  at  a  future  day,  clue  diligence  imposes  on  the 
creditor  the  necessity  of  doing  those  acts  which  will  ])reserve 
the  liability  of  indorsers  or  other  secondary  parties.^^  lu  case 
of  neglect  the  creditor  is  liable  for  the  actual  loss,  but  no  more :  '^ 
and  the  onus  is  on  the  debtor  to  show  the  extent  of  the  injury." 
So  if  the  creditor  receives  a  check  in  payment  of  a  dei)t  and 
unreasonably  delays  presenting  it,  he  is  only  liable  for  the  actual 
injury  to  the  drawer.^^ 

A  transfer  of  the  collateral  l)y  the  creditor  is  an  appropria- 
tion of  it,  and  he  will  be  held  to  have  elected  to  take  it  for 
what  appears  by  its  face  to  be  due  thereon  in  satisfaction  to 


334,  21  Am.  Rep.  20;  Girard  F.  & 
M.  Ins.  Co.  V.  Marr,  46  Pa.  ,504; 
Miller  v.  Gettysburg  Bank,  8  Watts, 
392;  Dyott's  Est.,  2  W.  &  S.  463; 
Lishy  V.  O'Brien,  4  Watts,  141; 
Bank  of  United   States  v.  Pcabody, 

20  Pa.  454;  Chambersburg  Ins.  Co. 
V.  Smith,  11  id.  120;  Sellers  v. 
Jones,  22  id.  423 ;  Muirhead  v.  Kirk- 
patrick,  21  id.  237;  Foote  v.  Brown, 
2  McLean,   369;    Brown  v.   Cronise, 

21  Cal.  386;  Whitten  v.  Wright,  34 
Mich.  92;  Exeter  Bank  v.  Gordon, 
8  N.  H.  66;  Finnell  v.  Meaux,  3 
Bush,  449;  Kenniston  v.  Avery,  16 
N.  H.  117;  In  re  Brown,  2  Story, 
502;  Chamberlyn  v.  Delarive,  2  Wil- 
son, 353;  Bonta  v.  Curry,  3  Bush, 
678;  Russell  v.  Hester,  10  Ala.  535; 
Powell  V.  Henry,  27  Ala.  612;  Lee 
V.  Baldwin,  10  Ga.  208;  Cardin  v. 
Jones,  23  Ga.  175;  Kiser  v.  Rud- 
dick,  8  Blackf.  382;  Noland  v. 
Clark,  10  B.  Mon.  239;  Hoffman  v. 
Johnson,  1  Bland  Ch.  103;  Steger 
V.  Bush,  Sm.  &  M.  Ch.  172;  Barrow 
V.  Rhinelander,  3  Johns.  Ch.  619; 
Jennison  v.  Parker,  7  Midi.  355: 
Goodhall  v.  Richardson,  14  N.  II. 
567;  White  v.  Howard,  1  Sandf.  81; 
Nexsen  v.  Lyell,  5  Hill,  466;  :\Ion- 
tague  V.  Stelts,  37  S.  C.  200,  34 
Am.  St.  736.  See  In  re  Sanderson, 
150  Fed.  236. 


If  the  creditor  is  iu'<;Iigciit  the 
debtor  need  not  claim  liis  damages 
by  separate  action  or  counter-claim, 
but  may  interpose  the  ncgligonce  as 
a  defense  to  iiis  creditor's  action 
and  require  an  accounting  for  the 
collaterals.  IMontague  v.  Stelts,  su- 
pra. Tile  loss  of  the  collateral  by 
theft,  without  negligence,  licfore  tlie 
maturity  of  the  principal  note,  is 
not  a  defense  to  an  action  on  the 
latter.  Wiiitlirop  Sav.  Bank  v. 
Jackson,  67  :\Ie.  570,  24  Am.  Rep. 
56. 

35  .Jennison  \.  Parker.  7  .Mieli. 
355;  Russell  v.  Hester,  10  Ala.  535: 
Kenniston  \.  Avery,  K!  X.  11.  117; 
Foote  V.  ISrown.  2  McLean,  .'UVI; 
Brown  \.  Cronise,  21  Cal.  :!Sti ; 
Pluenix  Ins.  Co.  v.  .\lleii,  1  1  Mich. 
501,  S3  .\ni.  Dee.  75(i. 

36Aldricli  V.  Gdddell,  75  111.  1.52: 
Coonley  v.  Coonley,  iiill  &  Deiiio, 
312. 

37  Jd.:  Fiske  V.  Stevens.  21  Me. 
457. 

38  (  lieniical  Nat.  liank  v.  Kellogg, 
183  X.  V.  92,  11!  .\ni.  St.  717:  Mc- 
Williams  v.  Phillips,  71  Ala.  80; 
Hunter  v.  Moul,  98  Pa.  13,  42  Am. 
Rep.  610;  Bell  v.  Alexander,  21 
Gratt.  1.     See  §  227. 


678 


SUTIIKKLAND    ON     DAMAGES. 


[§  229 


that  exteiit.^^  If  lie  transfers  the  collateral  for  less  tliau  its  face 
it  is  his  loss.*"  He  must  settle  with  tlie  debtor  for  the  whole 
nominal  value  of  the  collateral,  though  he  settled  with  the  maker 
for  less,  or  took  a  note  in  part  satisfaction.*^  A  creditor  may 
relinquish  a  collateral  security  to  his  debtor  without  the  consent 
of  other  creditors,  and  not  thereby  lose  his  resort  to  the  debtor's 
property.*^  But  a  surety  would  be  discharged  by  such  re- 
linquishment; for  the  creditor  is  bound  to  hold  security  for  the 
benefit  of  the  surety  as  well  as  for  himself;  and  if  he  parts 
with  it,  without  the  knowledge  or  against  the  will  of  the  surety, 
he  will  lose  his  claim  against  him  to  the  value  of  what  is  so 
surrendered.*'  One  who  receives  from  his  debtor  as  collateral 
negotiable  paper  of  a  third  person,  indorsed  by  the  debtor, 
makes  it  his  own  and  releases  the  debtor's  indorsement  if  he 
neglects  to  protest  it  for  non-payment.**     A  creditor  having  a 


39  Hawks  V.  Hinchcliff,  17  Barb. 
492;  Looney  v.  District  of  Colum- 
bia, 113  U.  S.  258,  29  L.  ed.  974; 
Donnelly  v.  Same,  119  U.  S.  339, 
30  L.  ed.  465;  Williams,  Ex  parte, 
17  S.  C.  396;  Adger  v.  Pringle,  11 
id.  535 ;  Tovvnsends  v.  Stevenson,  4 
Rich.  62. 

40  Id. 

4iDepuy  V.  Clark,  12  Ind.  427. 
See  Garlick  v.  James,  12  .Johns. 
146;  Phillips  v.  Thompson,  2  Johns. 
Ch.  418,  7  Am.  Dec.  535. 

42  Dyott's  Est.,  2  W.  &  S.  4G3. 

43  Stewart  v.  Davis,  18  Ind.  74. 
See  ch.  17. 

44Whitten  v.  Wright,  34  Mich. 
92.  In  this  case,  upon  the  trial  the 
plaintiff  offered  to  show  that  at  the 
time  the  note  was  given  the  maker 
was  insolvent,  that  he  was  so  at  the 
time  of  its  maturity,  and  continued 
so  up  to  the  time  of  the  trial,  for 
the  purpose  of  showing  that  though 
the  note  was  not  properly  protested 
the  defendant  lost  nothing  by  it. 
Marston,  J.,  delivering  the  opinion 
of  the  court,  said:  "It  is  of  the 
utmost   importance   that   no   uncer- 


tainty should  exist  as  to  the  rights 
and  liabilities  of  parties  to  negoti- 
able paper.  Should  the  introduction 
of  evidence  upon  the  trial  be  sanc- 
tioned to  show  that  an  indorser  had 
not  suffered  any  injury  from  a  want 
of  protest  and  notice,  an  element  of 
uncertainty  would  then  exist,  and 
the  way  would  be  opened  for  a  new 
class  of  questions  and  much  needless 
litigation.  The  value  of  a  note  can- 
not always  be  determined  from  the 
solvency  or  insolvency  alone  of  the 
maker.  As  was  said  in  Rose  v. 
Lewis,  10  Mich.  485,  'the  value  of 
negotiable  paper  is  well  understood 
not  to  be  absolutely  dependent  on 
the  amount  of  property  liable  to  exe- 
cution which  may  be  possessed  by  the 
maker.  A  very  large  portion  of  cur- 
rent securities  of  undoubted  good- 
ness would,  under  such  a  test,  be 
worthless.  And  in  cases  where  the 
holder  of  siich  paper  is  indebted  to 
the  maker,  it  may  be  as  valuable  to 
him,  by  way  of  set-off,  as  if  the  maker 
were  wealthy  and  in  sound  credit. 
The  value  of  commercial  paper  must 
always  depend  very  much  upon  the 


§    230]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIFAROES.        G79 

note  for  the  purchase-money  of  a  slave,  on  the  death  of  the 
purchaser  took  possession  of  the  slave;  he  was  liable  for  the 
injury  done  to  the  estate  as  executor  de  son  tort,  and  the  amount 
of  such  liability  payment  so  far  upon  the  note.**  A  creditor 
who  included  in  a  mortgage  a  premium  for  a  policy  of  insurance 
on  the  life  of  the  debtor  as  additional  security  for  the  debt 
and  neglected  to  effect  the  insurance  was  held  liable  as  upon 
an  express  agreement  to  insure  for  the  amount  of  the  sum  for 
which  he  should  have  procured  insurance.*^ 

§  230.  Who  may  make  payments.  The  general  rule  as  to 
payment  or  satisfaction  by  a  third  person,  not  himself  liable 
as  a  co-contractor  or  otherwise,  seems  to  be  that  it  is  not 
sufficient  to  discharge  the  debtor  unless  it  is  made  as  agent  for 
him  and  on  his  account,  and  with  his  prior  authority  or  sub- 
sequent ratification;  but  the  debtor  may  ratify  the  payment 
by  pleading  it  unless  he  has  previously  disavowed  it.*''  The 
payment  by  a  principal  of  a  claim  for  goods  delivered  to  his 
agent  is  not  the  satisfaction  of  it  by  a  mere  stranger,  and  it 


integrity  and  business  habits  of 
those  who  issue  it.  And  we  cannot 
perceive  the  justice  or  good  sense  of 
any  rule  which  should  disregard  tlie 
results  of  common  experience.'  If 
the  note  in  this  case  had  been  prop- 
erly protested  and  notice  given  to 
the  defendant,  he  might  have  been 
able  to  collect  it  or  secure  its  pay- 
ment. We  think  the  evidence  was 
properly  excluded."  This  seems  in 
harmony  with  Peacock  v.  Pursell, 
14  C.  B.  (N.  S.)  728.  The  rule  in 
Massachusetts  is  to  the  contrary. 
Coleman  v.  Lewis,  183  Mass.  485, 
66  L.R.A.  482,  97  Am.  St.  450. 

45  Finnell  v.  Meaux,  .3  Bush,  44i). 

46Soule  V.  Union  Bank,  45  Barl). 
Ill,  30  How.  Pr.   105. 

47  Bradley  v.  Lehigh  Valley  R. 
Co.,  153  Fed.  350,  82  C.  C.  A.  426; 
Gray  v.  Herman,  75  Wis.  453,  6 
L.R.A.  691 ;  Walter  v.  James,  L.  R. 
6  Ex.  124;  Simpson  v.  Eggington, 
10  Ex.  845;   James  v.  Isaacs,  12  C. 


B.  791;  Belshaw  v.  Bush,  11  id. 
191;  Jones  v.  Broadhurst,  9  id.  193; 
Clow  V.  Borst,  0  Johns.  37;  Stark 
V.  Thompson,  3  T.  B.  Mon.  290; 
Woolfolk  V.  McDowell,  9  Dana,  268 ; 
Lucas  V.  Wilkinson,  1  Hurl.  &  N. 
420;  Atlantic  D.  Co.  v.  Mayor,  53 
N.  Y.  64;  Bleakley  v.  White,  4 
Paige,  654. 

In  a  note  to  Simpson  v.  Egging- 
ton,  supra,  it  is  said  that  "the  rule 
which  requires  the  consideration  to 
move  between  the  parties  has  been 
modified  in  many  important  par- 
ticulars by  the  introduction  of  the 
action  for  money  had  and  received, 
and  it  would  seem  only  reasonable 
to  permit  a  debt  to  be  extinguished 
by  a  payment  made  to  a  creditor 
whenever  the  circumstances  are  such 
that  the  amount  paid  might  have 
been  recovered  by  the  debtor  had 
no  debt  exi.sted." 

Tiie  early  eases  are  considered  Ity 
Creswell,  J.,  in  Jones  v.  Broadhurst, 


680 


SUTHERLAND    ON    UAMAGKS. 


[§  230 


extinguishes  the  demand  of  the  creditors.*^  And  so  of  the  pay- 
ment of  a  claim  made  by  the  principal  stockholder  in  a  cor- 
poration to  one  for  services  rendered  it  as  general  manager.*^ 
A  payment  made  to  the  holder  of  a  note  by  an  indorser,  not 
as  agent  for  the  maker,  but  in  discharge  of  his  own  obligation, 
the  note  having  been  executed  by  the  maker  for  value,  does 
not  inure  to  the  benefit  of  the  latter,  and  in  an  action  upon  the 
note  he  is  liable  for  the  whole  amount  for  which  it  was  given. 
So  far  as  the  indorser's  payment  is  concerned  it  was  an  equitable 
purchase  of  the  note  by  him.^°    In  a  Wisconsin  case  the  defend- 


supra,  and  also  in  the  arguments  of 
counsel  in  Walter  v.  James,  supra. 
See  Hooper's  Case,  2  Leon.  110; 
Grimes  v.  Blofield,  Cro.  Eliz.  541; 
Edgecombe  v.  Rodd,  5  East,  294. 

In  Belshaw  v.  Bush,  11  C.  B.  191 
(1851),  Maule,  J.,  said:  "If  a  bill 
given  by  the  defendant  himself  on 
account  of  the  debt  operate  as  a 
conditional  payment,  and  so  be  of 
the  same  force  as  an  absolute  pay- 
ment by  the  defendant,  if  the  con- 
dition by  which  it  is  to  be  defeated 
has  not  arisen,  there  seems  no  rea- 
son why  a  bill  given  by  a  stranger 
for  and  on  account  of  the  debt 
should  not  operate  as  a  conditional 
payment  by  the  stranger;  and  if  it 
have  tliat  operation,  the  plea  in  the 
present  case  will  have  the  same 
effect  as  if  it  had  alleged  that  the 
money  was  paid  by  William  Bush 
(the  stranger)  for  and  on  account 
of  the  debt.  But,  if  a  stranger  give 
money  in  payment,  absolute  or  con- 
ditional, of  the  debt  of  another,  and 
the  causes  of  action  in  respect  to 
it,  it  must  be  payment  on  behalf  of 
the  other,  against  whom  alone  the 
causes  of  action  exist,  and  if  adopt- 
ed by  him,  will  operate  as  payment 
by  himself."  Coke,  Litt.  2066,  36 
li.  6. 

James  v.  Isaacs,  12  C.  B.  701 
(1852).     In  assumpsit  for  work  and 


labor  the  defendant  pleaded  that  the 
money  mentioned  in  the  declaration 
accrued  due  to  the  plaintiff  under 
an  agreement  for  the  building  of  a 
church ;  that  the  plaintiff  having 
suspended  the  work  another  agree- 
ment was  entered  into  between  him 
and  one  A.  under  which  the  plain- 
tiff, in  consideration  of  certain 
stipulated  payments,  undertook  to 
complete  the  work  and  to  rely  for 
the  residue  of  the  contract  price 
upon  certain  subscriptions  which 
were  to  be  raised ;  and  that  A.  duly 
made  and  the  plaintiff  received  the 
payments  stipulated  for  by  the 
second  agreement  in  satisfaction  and 
discharge  of  the  original  agreement 
between  the  plaintiff  and  the  defend- 
ants, and  of  the  performance  there- 
of by  the  latter.  Held,  that  the 
plea  was  bad  in  substance  inasmuch 
as  it  did  not  show  that  the  agree- 
ment made  by  A.  and  the  payments 
under  it  were  intended  to  be  made 
for  the  benefit  of  the  defendants, 
and  that  they  adopted  A.'s  acts. 
See  2  Am.  Lead.  Cas.  (4th  ed.) 
270;  Wellington  v.  Kelly,  84  N.  C. 
543;    Wolff   V.   Walter,   56  Mo.   292. 

48  Case  V.  Phillips,  182  111.   187. 

49  Porter  v.   Chicago,  etc.   R.   Co., 
on  Iowa,  351. 

50  Madison  Square  Bank  v.  Pierce, 
137   N.  Y.  444,  33  Am.  St.  751,  20 


§    230]      CONVENTIONAJ,    LIQUIDATIONS    ANl)    J)ISCnARGES.        081 

ant  l>ecaine  a  debtor  for  tlic  benefit  of  a  tbird  person,  wbo  made 
payment  of  liis  own  volition  and'  on  his  own  behalf.  The  trial 
conrt  rnled  that  it  was  not  competent  for  the  party  sned  to 
plead  payment  by  another  party  who  was  not  sued,  and  wlm 
could  not  be  affected  by  the  judgment.  Cole,  C  J.,  considered 
this  ruling  by  asking:  "Why  not,  if  it  is  shown  that  the  creditor 
accepts  the  payment  in  satisfaction  of  tlic  dciif  '.  Can  it  be  saiil 
that  the  obligation  is  still  in  force?  What  sense  or  reason  is 
there  in  any  such  technical  rule  as  that,  if  it  exists?  If  a  debt 
is  fully  paid  it  would  seem,  according  to  plain  common  sense, 
that  the  obligation  was  extinguished  and  is  no  longer  in  force  as 
a  contract.  What  concern  is  it  to  the  creditor  who  pays  his 
debt,  especially  where  he  accepts  the  payment  made  in  satis- 
faction of  his  debt  ?"  ^^  The  demand  of  a  creditor  which  is 
paid  v.'ith  the  money  of  a  third  person,  without  an  agreement 
that  the  security  shall  be  assigned  or  kept  alive  for  the  benefit 
of  such  third  person,  is  extinguished.^^  Payment  made  by  a 
third  person  at  the  request  of  the  debtor  inures  to  the  latter's 
benefit.®^  After  default  in  the  performance  of  the  conditions 
of  a  bill  of  sale  providing  that  the  title  to  the  goods  shall  not 
pass  until  full  performance,  the  vendor  is  not  bound  to  receive 
payment  from  any  person  except  his  own  vendee.^^  I  f  the 
creditor  accepts  payment  under  a  mistake  of  fact,  as  by  erro- 
neously supposing  that  the  person  who  made  it  had  authority  to 

L.R.A.      335,      following     Jones     v.  m.    590,    paj'nient    by    a   trustee    at 

Broadhurst,   9   C.   B.    175,   the   doc-  the  retjuest  of  an  oHieer  of  the  coi- 

trine  of  which  is  recognized  in  Eng-  poration     owing     tlie     deht     extin- 

land  in  Thornton  v.  Maynard,  L.  R.  guished  the  evidence  of  the  indebt- 

10  C.  P.  695.     The  New  York  case  ^^j^^.^^  ^^  ^j^.^,.  ^j,^  ^^^,^4^^  ^.q,,,^  ^^^ 

is  of  first  impression  in  the  United  ,  ., 

'  enforce  it. 

States. 

51  Gray  v.  Herman,  75  Wis.  453, 
6  L.R.A.  691;  Porter  v.  Chicago, 
etc.  R.  Co.,  99  Iowa  351. 

In  Harrison  v.  Hicks,  1  Port.  423, 
27  Am.  Dec.  638,  the  payment  of  a       P«>^^<^11  ^^  Flickinger,  46  Mont.  526. 
debt  by  a  stranger  to  the  contract  ^^  Ex  parte  Ziegler,   83   S.  C.  78, 

was  held   an   extinguishment   of   it,       21  L.R.A.  (N.S.)    1005;   Crawford  v. 
whether  made  by  the  debtor's  con-       '''.vng,  10  N.  Y.  ]\Iisc.  143. 
sent  or  not.  64  Lippincott    v.    Ricli,    19    Utah, 

In   Pearce  v.   Bryant  C.   Co.,   121       140. 


Payment  made  by  one  who  is  pri- 
marily liable  extinguishes  the  debt. 
Smith  V.  Waugh,  84  Va.  806. 

82  Grady  v.  O'Reilly,  116  Mo.  346; 


682  SUTllEKLAND    ON    DAMAGES.  [§    230 

do  SO,  he  may  return  the  money  and  apply  to  his  debtor  for  the 
payment  of  his  demand. ^^  Satisfaction  by  one  joint  tort-feasor 
or  joint  debtor  is  a  bar  to  an  action  against  another,^®  and  a 
payment  made  by  one  of  several  joint  debtors  inures  to  the  bene- 
fit of  all  as  a  credit  upon  the  debt."  But  one  joint  maker  of 
a  note  cannot,  by  payment  thereon,  unless  authorized  by  his  co- 
obligor,  stop  the  running  of  the  statute  of  limitations.  Where 
that  statute  is  involved  and  the  payments  on  a  note  are  all  in- 
dorsed in  the  payee's  handvi^riting,  made  in  the  absence  of  the 
maker,  the  former  must  show  that  such  payments  were  made 
by  the  latter  or  by  his  authority.^^  If  a  creditor,  knowing  the 
liability  of  his  debtor,  takes  the  individual  note  of  his  agent  in 
payment,  without  at  the  same  time  doing  anything  to  indicate 
a  purpose  to  hold  the  principal,  the  latter  is  discharged.^^ 

Where  an  acceptance  is  payable  at  a  designated  bank  it  is 
tantamount  to  an  order  by  the  acceptor  to  the  bank  to  pay  the 
bill  to  any  person  entitled  to  receive  payment.^"  A  note  pay- 
able at  a  bank  where  the  maker  has  a  deposit  is  equivalent  to  a 
check  drawn  by  him  upon  such  bank,^^  at  least  if  that  has  been 
the  custom  of  business  between  the  bank  and  the  depositor. ^^ 
The  implied  authority  of  a  bank  to  pay  the  notes  of  a  depositor 
made  by  him  payable  there,^^  does  not  extend  to  notes  made  long 
before  the  maker  became  a  depositor  and  made  payable  at  an- 
other bank.^* 

55  Walter  v.  James,  L.  R.  6  Ex.  Mote.  (Mass.)  169;  Wilkin  v.  Reed, 
124.  6  Me.  220,  19  Am.  Dec.  211;  French 

56  Reynolds  v.  Schade,  1.31  Mo.  v.  Price,  24  Pick.  22 ;  Hyde  v.  Paige, 
App.  ]  ;  Livingston  v.  Bishop,  1  9  Barb.  250.  A  less  extended  rule 
Johns.  291,  3  Am.  Dec.  330;  Thomas  is  applied  in  some  cases.  Coleman 
V.  Rumsey,  6  Johns.  31;  Barrett  v.  v.  First  Nat.  Bank,  53  N.  Y.  388; 
Third  Ave.  R.  Co.,  45  N.  Y.  635;  Calder  v.  Dobell,  L.  R.  6  C.  P.  486. 
Woods  V.  Pangborn,  76  id.  498 ;  Ellis  60  Robarts  v.  Tucker,  16  Q.  B.  560. 
V.  Esson,  50  Wis.  138,  36  Am.  Rep.  61  indig  v.  National  City  Bank, 
830 ;  Knapp  v.  Roche,  94  N.  Y.  329 ;  80  N.  Y.  100 ;  Wyman  v.  Fort  Dear- 
Brick  V.  Bual,  73  Tex.  511;  Gold-  born  Nat.  Bank,  181  111.  279,  72 
beck  V.  Kensington  Nat.  Bank,  147  Am.  St.  259,  48  L.R.A.  565. 

Pa.  267.  62  Nineteenth  Ward  Bank  v.  First 

57  Goldbeck  v.  Bank,  supra.  Nat.  Bank,  184  Mass.  49. 
58Waughop   v.   Bartlett,    165   111.  63  Carr  v.  National  S.  Bank,  107 

124.  Mass.  45,  9  Am.  Rep.  6. 

59  Ames  P.  &  P.  Co.  v.  Tucker,  8  64  Elliott  v.  Worcester  T.  Co.,  189 

Mo.    App.    95;    Paige   v.    Stone,    10       Mass.  542. 


§    231]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIARQES.        083 

A  purchaser  of  mortgaged  property  subject  to  the  inoi'tgage 
may  pay  the  debt,  and  payment  by  him  extinguishes  the  lien." 
If  a  mere  stranger  or  volunteer  pays  a  debt  for  which  another  is 
bound  he  cannot  be  subrogated  to  the  creditor's  rights  in  respect 
to  the  security  given  by  the  real  debtor ;  but  if  the  person  who 
pays  is  compelled  to  pay  for  the  protection  of  his  own  interests 
and  rights,  he  is  entitled  to  sucli  subrogation.®^ 

§  231.  To  whom  payment  may  be  made,  raynieut  uuist  be 
made  to  the  creditor  or  to  one  authorized  by  him  to  receive  it 
as  agent  or  assignee;  ^"^  or  to  one  whom  the  law  substitutes  in 
the  creditor's  jdace  as  executor,  administratoi',  creditor  by 
trustee  process,  or  the  like.®^  If  it  is  made  to  one  entitled  to 
receive  it  the  debt  is  extinguished  though  there  was  a  mistake 
as  to  the  right  in  which  the  amount  paid  accrued.®^  Payment 
of  a  judgment  decree  to  an  attorney  of  record  who  obtained 
it,  before  his  authority  is  revoked  and  notice  of  it  given,  is 
valid  as  to  the  party  making  the  payment,'''''  but  payment  of  a 
judgment  or  claim  after  it  has  been  assigned  and  notice  thereof 
given  to  one  who  is  merely  the  beneficial  owner  is  not  a  discharge 
of  it ;  it  is  otherwise  when  payment  is  made  to  the  person  having 
the  legal  title  without  notice  of  his  assignment.'''^  Payment  of 
a  judgment  to  the  judgment  creditor  with  notice  of  the  lien  of 
the  attorney  is  ineffectual.'''^  Payment  to  the  sheriff  of  the  price 
bid  at  an  execution  sale  discharges  the  purchaser.'''^  lUit  it 
has  been  ruled  tliat  a  sheriff  is  only  entitled  to  receive  pay- 
ee Appledorn  v.  Strocter,  20  Mich.  70  Harper  v.  Harvey,  4  W.  Va. 
9.                                                                       530;    Yoakum   v.   Tilden,   .-]   id.   1G7, 

66  Hough  V.  ^tna  L.  Ins.  Co.,  57  ]00  Am.  Dec.  738;  Equitable  Mort. 
111.  318,  11  Am.  Rep.  18;  Grady  v.  Co.  v.  Montfort,  121  Ga.  fiitO;  Davis 
O'Reilly,  116  Mo.  346.  v.  Gott,  130  Ky.  486. 

67  Littleton  v.  Wells,  etc.  Council,  71  Cummins'  Est.,  In  re,  143  Cal. 
98  Md.  453;  Mendel  v.  Boyd,  3  Neb.       525;   Seymour  v.  Smith,    114   N.   Y. 
(Unof.)   473,  91  N.  W.  8G0;  Lovett       481,  11  Am,  St.  683;  Sykes  v.  Citi- 
V.  Eastern  O.  Co.,  68  W.  Va.  667.             zens'  Nat.  Bank,  69  Kan.  134   (non- 
68  McMahon   v.   German-Am.  Nat.       negotiable  note   before  maturity   to 

Bank,    111    Minn.    313,    29    L.R.A.  holder  without  notice  of  its  nssign- 

(N.S.)   67.  ment). 

69  Hemphill    v.    Moody,     64     Ala.  72  North rup      v.      Ilayward,      102 

468.     May  be  made  by  nonresident  Minn.  307. 

debtors   to   an   executor.      Ousley   v.  73  Fuller    v.    Exchange    l'.aiii<,    38 

Central  T.  Co.,  196  Fed.  412.  Ind.  App.  570. 


G84 


SUTHERLAND    ON    DAMAGES. 


[§  231 


ment  of  an  execution  when  he  is  in  possession  of  a  judicial 
mandate  directing  him  to  make  the  collection  of  the  sum  called 
for,  unless  he  is  the  creditor's  agent.'*  Payment  made  to  the 
party  designated  by  the  creditor  is  good/*  but  such  a  desig- 
nation may  be  changed,  and  if  changed,  the  debtor  pays  to 
the  person  originally  designated  at  his  peril,'^^  if  he  has  notice 
of  the  substitution.''''  If  an  attorney  who  has  a  claim  for  collec- 
tion places  it  in  the  hands  of  another  for  that  purpose,  the 
owner  assenting,  payment  to  the  latter  discharges  the  debtJ' 
If  a  principal  has  clothed  his  agent  with  the  indicia  of  au- 
thority to  receive  payment,'''^  as  by  intrusting  to  him  the  pos- 
session of  the  goods  to  be  sold,  the  purchaser  is  warranted  in 
paying  the  price  of  such  as  he  buys  to  the  agent;  but  if  the 
latter  is  not  in  possession  of  the  goods  and  is  only  authorized 
to  make  sales  payments  made  to  him  are  at  the  risk  of  the 
payer.®"    An  agent's  authority  to  receive  payment  may  be  im- 


74  Bailey  v.  Hester,  101  N.  C.  538; 
Brooks  0.  Co.  v.  Weatherford,  91 
Miss.  501. 

75  Superior  Mfg.  Co.  v.  Russell, 
127  Ga.  151;  La  Fayette  G.  Co.  v. 
Kelsay,  164  Ind.  563;  Diamond  D. 
Co.  V.  Gott,  137  Ky.  585,  31  L.R.A. 
(N.S.)  643;  Walker  v.  Crosby,  38 
Minn.  34;  Sailer  v.  Barnousky,  60 
Wis.  169;  Fiske  v.  Fisher,  100  Mass. 
97. 

76  Rice  &  B.  M.  Co.  v.  Interna- 
tional Bank,  185  111.  422,  86  111. 
App.  136;  Meeker  v.  Manina,  162 
111.  203;  Mechem  on  Agency,  §  224. 

77  The  apparent  authority  of  the 
|)erson  receiving  payment  may  be 
rolled  upon  if  notice  of  the  limita- 
tion upon  it  has  not  been  given. 
Fitzgerald  v.  Beckwith,  182  Mass. 
177. 

78  Dentzel  v.  City  &  S.  R.  Co.,  90 
Md.  434. 

79  Porter  v.  Roseman,  165  Ind. 
255,  112  Am.  St.  222;  Indiana  T. 
Co.  V.  International  B.  &  L.  Ass'n, 
36  Ind.  App.  685;  Florida  Cent.  & 
P.  R.  Co.  V.  Ragan,  104  Ga.  353. 


80  Mitchell  V.  Boyer,  160  App. 
Div.  (N.  Y.)  565;  Kellenberger  v. 
Oskaloosa  Nat.  B.,  L.  &  I.  Ass'n, 
129  Iowa,  582;  Dreyfus  v.  Goss,  67 
Kan.  57;  Robinson  v.  Corsicana  C. 
Factory,  124  Ky.  435,  8  L.R.A. 
(N.S.)  474;  Burstein  v.  Sullivan, 
134  App.  Div.  (N.  Y.)  623; 
Scarritt-C.  F.  Co.  v.  Hudspeth,  19 
Okla.  429;  Lakeside  P.  &  P.  E.  Co. 
V.  Campbell,  39  Fla.  523;  McKindly 
V.  Dunham,  55  Wis.  515,  42  Am. 
Rep.  740;  Law  v.  Stokes,  32  N.  J. 
L.  249,  90  Am.  Dec.  655;  Clark  v. 
Murphy,  164  Mass.  490;  Seiple  v. 
Irwin,  30  Pa.  513;  Hirshfield  v. 
Waldron,  54  Mich.  649;  Chambers 
V.  Short,  79  Mo.  204;  Clark  v. 
Smith,  88  111.  298;  Brown  v.  Lally, 
79  Minn.  38;  Crawford  v.  Whit- 
taker,  42  W.  Va.  430;  Butler  v. 
Dorman,  68  Mo.  298,  30  Am.  Rep. 
795;  Keown  v.  Vogel,  25  Mo.  App. 
35;  Pardridge  v.  Bailey,  20  111. 
App.  351;  Putnam  v.  French,  53  Vt. 
404,  38  Am.  Rep.  682;  Hoskins  v. 
Johnson,  5  Sneed,  470;  Capel  v. 
Thornton,  3   C.  &  P.   352;   Dean  v. 


§    231]      CONVENTIONAL    LIQUIDATIONS    AND    DISCKAKGKS.        GST) 

plied  if  he  has  previously  received  payment  of  similar  accounts 
and  the  debtor  knows  that  his  acts  in  tliat  respect  have  been  rati- 
fied.*^ A  selling  agent  authorized  to  receive  payment  nuiy  not 
bind  his  principal  by  accepting  the  cancellation  of  his  own  debt 
to  the  vendee  if  the  latter  knows  or  by  reasonable  diligence  could 
know  that  the  vendor  was  merely  an  agent/'^  If  payment  is 
authorized  to  be  made  to  two  persons  they  constitute  but  one 
agent,  and  payment  to  one  of  them,  without  the  consent  of  the 
other,  is  ineffectual.*^  Payment  to  an  agent  is  unauthorized 
after  the  death  of  the  principal,**  unless  the  agency  is  coupled 
with  an  interest.  The  fact  that  the  agent  is  entitled  to  com- 
missions on  sums  collected  does  not  give  him  such  an  interest  as 
will  continue  his  power  after  the  principal's  death;  the  interest 
which  will  work  that  result  must  be  in  the  thing  on  account  of 
which  payment  is  made  or  in  the  money  paid  as  such.*^  If  a 
negotiable  note,  indorsed  by  the  payee  in  blank,  is  in  the  hands 
of  an  agent  for  collection  its  payment  in  good  faith,  after  the 
death  of  the  principal  and  without  notice  thereof,  is  valid. *^ 
Possession  of  mercantile  paper  authorizes  the  receipt  of  the 
money,  even  before  it  is  due,*''  if  the  possessor  has  authority 
from  the  owner  to  collect  the  amount  payable  on  it.**  But  cir- 
cumstances may  impeach  a  payment  made  to  one  having  posses- 
International  T.  Co.,  47  Hun,  319;  81  Grant  v.  Humerick,  123  Iowa, 
Higgins    V.    Moore,    34    N.    Y.   417;        571. 

Artley  v.   Morrison,   73   Iowa,   132;  82  Grooms  v.  Neff  H.  Co.,  79  Ark. 

Adams  v.  Kearney,  2  E.  D.  Smith,       401. 

42.     See  Stanton  v.  French,  83  Cal.  83Robbins   v.   ITorgan,   192   Mass. 

194.  443. 

If  money  is  paid  to  an  agent  not  84  Lochonnicyer    v.    Fogarty,    1 12 

autliorized    to    receive    it    the    pay-       111.  572. 

nient   is   ratified   by   the   principal's  85  Farmers'   L.   &   T.   Co.   v.   Wil- 

bringing  an   action   against  him   to       son,  139  N.  Y.  384. 
recover  it.     Bailey  v.  United  States,  86  Deweese   v.    Muff,    57    Neb.    17, 

15  Ct.  of  Cls.  490.  And  by  suing  42  L.R.A.  789,  73  Am*.  St.  488; 
to  recover  the  purchase  price  of  Johnson  v.  Hollensworth,  48  Mich, 
goods    sold.      Pardridge    v.    Bailey,       143. 

supra.      See    Estey    v.    Snyder,    70  87  Warnock    v.    Itavis.    38    Wash. 

Wis.  624;  Payne  v.  Hackney,  84  144;  Bliss  v.  Cutter,  lit  Barb.  9; 
Minn.   195.  Thornton   v.  Lawther,   109   111.  228. 

A  broader  rule  is  sometimes  recog-       For  limitations  on  this  rule  see  Dil- 
nized.     Perry  v.  Sumrall  L.  Co.,  95       enl)eok  v.   Rchse,  105  Iowa,  749. 
Miss.  691.  ®^  l\Iercliants'  Nat.  Bank  v.  Camp, 


686  SUTHERLAND  ON  DAMAGES.  [§  231 

sion  of  the  evidence  of  the  debt.  Thus,  payment  by  the  maker 
of  a  note  before  maturity  to  the  son  of  the  holder,  who  had  been 
forbidden  to  take  payment,  with  the  knowledge  of  the  party  pay- 
ing, is  not  a  good  payment,  although  the  note  is  delivered  up 
by  the  son;  the  father  may  maintain  a  suit  for  the  note,  not 
having  ratified  the  payment.®^  The  circumstances,  however, 
must  show  payment  in  bad  faith ;  it  is  not  enough  that  there  is 
gross  negligence  in  not  ascertaining  the  party  entitled  to  the 
money.®"  Payment  of  a  lost  negotiable  instrument,  after  notice 
of  its  loss,  will  not  operate  as  a  discharge  against  the  loser  un- 
less the  person  presenting  it  establishes  his  title  thereto.  A 
notice  previously  given  of  the  loss  of  a  coupon,  distinguishable 
by  its  number  or  other  ear-mark,  is  sufficient  to  fix  upon  the 
maker  the  duty  of  inquiry  and  of  refusal  to  pay  a  holder  who 
cannot  prove  his  right ;  especially  is  this  the  rule  where  an  in- 
strument is  presented  after  it  has  matured.®^  Payment  to  one 
not  in  possession  of  the  evidence  of  debt  and  without  a  sur- 
render of  it,  is  at  the  risk  of  the  payer;  if  the  party  receiving 
the  money  had  no  right  to  receive  it  the  note  is  not  discharged.®^ 

110  Ga.  780;   Cheney  v.  Libby,  134  Am.  St.  679;   Marling  v.  Mommen- 

U.  S.  68,  33  L.  ed.  818.  sen,  127  Wis.  363,  115  Am.  St.  1017, 

89  Kingman  v.  Pierce,  17  Mass.  5  L.R.A.(N.S.)  412;  Lane  v.  First 
247.  Nat.    Bank    (Tex.    Civ.    App.),    155 

90  Cothran  v.  Collins,  29  How.  S.  W.  307 ;  Fortune  v.  Stockton,  182 
Pr.  113;  Haescig  v.  Brown,  34  Mich.  111.  454,  aflf'g  82  111.  App.  272  (suh 
503.  nom.    Stockton  v.  Fortune)  ;  Leon  v. 

A  bank  is  not  protected  by  a  pay-  Mclntyre,    88    id.    349;    Englert    v. 

ment  made  to  an  agent  designated  White,  92  Iowa,  97 ;  Bank  v.  tnger- 

in  a  certificate  of  deposit  if  it  knew  son,  105  Iowa  349;  Hall  v.  Smith,  3 

the   money   belonged   to   his   princi-  Kan.  App.  685;  Cummings  v.  Hurd, 

pal   when   it   issued   the   certificate.  49  Mo.  App.  139;   Dodge  v.  Birken- 

Robards  v.   Hamrick,   39   Ind.   App.  feld,    20    Mont.    115;    Hitchcock   v. 

134.  Kelley,  18  Ohio  C.  C.  808;  Hollins- 

91  Page  Woven  F.  Co.  v.  Pool,  133  head  v.  Stuart,  8  N.  D.  35 ;  Stalz- 
Mich.  323;  Hinckley  v.  Union  Pae.  man  v.  Wyman,  8  N.  D.  108;  Rhodes 
R.  Co.,  129  Mass.  52,  37  Am.  Rep.  v.  Belchee,  36  Ore.  141;  Wheeler  v. 
297.  See  Hinckley  v.  Merchants'  Guild,  20  Pick.  545,  32  Am.  Dec. 
Nat.  Bank,  131  Mass.  147.  231;    Rush   v.    Fister,   23    111.   App. 

92  Hughes  V.  Clifton,  147  Ala.  348;  Viskoeil  v.  Doktor,  27  id.  232; 
531;  Goodyear  v.  Williams,  73  Kan.  Stiger  v.  Bent,  111  111.  328. 

192;    Powers  v.   Woolfolk,   132   Mo.  Payment  of  a  pledged  note  to  the 

App.  354;  Hoffmaster  v.  Black,  78  pledgor  will  not  discharge  it.  Gris- 
Ohio    1,    28    L.R.A.(N.S.)     52,    125       wold  v.  Davis,  31  Vt.  390. 


§    231]      CONVENTIONAL    LIQUIDATIONS    AND    DlSCIl ARap:S.        687 

i)Ut  if  the  person  who  receives  the  money,  thnu;j;h  he  had  not 
possession  of  the  evidence  of  the  indebtedness  or  authority  to 
receive  payment,  pays  it  to  tlie  person  entitled  and  such  person 
receives  it,  the  debt  is  dischai'ged.^^ 

The  rnh)  that  payment  to  one  who  is  without  the  evidence 
of  indebtedness  is  at  the  risk  of  the  debtor  applies  though  the 
note  is  paid  at  the  place  designated  in  it  for  payment."  It 
was  held  in  Iowa  that  if  a  note  is  made  payable  at  a  bank 
payment  made  there;  on  the  date  of  the  maturity  of  the  note 
is  satisfaction  though  the  note  was  not  in  possession  of  the 
bank.^^  But  this  position  has  been  receded  from,  in  deference 
to  the  ahnost  unvarying  current  of  authority,  to  the  extent  of 
holding  that  the  fact  that  a  note  is  so  payable  docs  not  au- 
thorize the  bank,  in  the  absence  of  the  note,  to  collect  any- 
thing on  it  before  maturity.^^  The  authorities  are  reviewed  by 
the  New  Jersey  court,  and  the  conclusion  arrived  at  (which  is 
concurred   in   by   the   Iowa   court),   that   the  contract   of   the 


The  authorities  recognize  the  rule 
tliat  "where  a  principal  has,  by  his 
voluntary  act,  placed  an  agent  in  a 
situation  that  a  person  of  ordinary 
prudence,  conversant  with  business 
usages  and  the  nature  of  the  partic- 
ular business,  is  justified  in  presum- 
ing that  such  agent  has  authority  to 
perform,  on  behalf  of  his  principal, 
a  particular  act,  such  particular  act 
having  been  performed,  the  princi- 
pal is  estopped,  as  against  sucli  in- 
nocent third  person,  from  denying 
the  agent's  authority  to  perform  it." 
Johnston  v.  Milwaukee  &  W.  I.  Co., 
46  Neb.  480;  Reid  v.  Kellogg,  8  S. 
D.  596.  This  doctrine  has  been  ap- 
plied where  an  agent  who  was  not 
possessed  of  the  niortgage  or  notes, 
or  a  satisfaction  of  them,  received 
payment  before  it  was  due.  Harri- 
son v.  Legore,  109  Iowa,  6]  8;  Doyle 
V.  Corey,  170  Mass.  337,  is  in  har- 
mony with  the  cases  referred  to. 

93  Second    Nat.    Bank    v.    Spotts- 


wood,    10    N.    D.    114;    Coleman    v. 
Jenkins,  78  Ga.  60.5. 

94McNamara  v.  Clark,  So  111. 
App.  439;  Englert  v.  White,  92 
Iowa,  97 ;  Klindt  v.  Higgins,  95 
Iowa,  529;  Cumraings  v.  Hurd,  49 
Mo.  App.  139. 

95  Lazier  v.  Horan,  55  Iowa,  75. 

96  Bank  v.  Ingerson,  105  Iowa, 
349,  distinguishing  Bank  of  Charles- 
ton Nat.  Banking  Ass'n  v.  Zorn,  ]4 
S.  C.  444,  and  citing  Caldwell  v. 
Evans,  5  Bush,  380,  96  Am.  Dec. 
358;  Adams  v.  Hackensack  I.  Com., 
44  N.  J.  L.  638,  43  Am.  Rep.  406; 
St.  Paul  Nat.  Bank  v.  Cannon,  46 
Minn.  95,  24  Am.  St.  189;  Hills 
v.  Place,  48  N.  Y.  520,  8  Am.  Rep. 
568;  Cheney  v.  Libby,  134  U.  S.  68, 
33  L.  ed.  818;  Ward  v.  Smith,  7 
Wall.  447,  19  L.  ed.  207;  Williams- 
port  G.  Co.  v.  Pinkerton,  95  Pa.  62 ; 
Wood  v.  Merchants'  Sav.,  L.  &  T. 
Co.,  41  111.  267;  Grissom  v.  Bank, 
87  Tcnn.  350,  3  L.R.A.  273,  10  Am. 
St.  669;  Turner  v.  Hayden,  4  B.  & 
C.  1;   Walton  v.  Henderson,  Smith 


G88  SUTllKJJLAN])    ON    IJAMACiES.  [§    231 

maker,  accci)t()r,  or  obligor  is  to  imy  the  holder  of  the  paper, 
and  tlie  place  fur  payment  is  designated  simply  for  the  con- 
venience of  both  parties.  Making  a  bill  or  note  payaljle  at  a 
banker's  is  authority  to  the  banker  to  apply  the  funds  of  the 
acceptor  or  maker  on  deposit  to  the  payment  of  the  paper.  If 
matiirinu'  paper  be  left  with  the  banker  for  collection  he  be- 
comes the  agent  of  the  holder  to  receive  payment;  but  unless 
the  banker  is  made  the  holder's  agent  by  a  deposit  of  the 
paper  with  him  for  collection,  he  has  no  authority  to  act  for 
the  holder.  The  naming  of  a  bank  in  a  note  as  the  place  of 
payment  does  not  make  the  banker  an  agent  for  the  collection 
of  the  note  or  the  receipt  of  the  money.  No  power,  authority 
or  duty  is  thereby  conferred  upon  the  banker  in  reference  to 
the  note ;  and  the  debtor  cannot  make  the  banker  the  agent 
of  the  holder  simply  by  depositing  with  him  the  funds  to  pay 
it.  Unless  the  banker  has  been  made  the  agent  of  the  holder 
by  the  indorsement  of  the  paper  or  the  deposit  of  it  for  col- 
lection, any  money  which  the  banker  receives  to  apply  in  pay- 
ment of  it  \\i\\  be  deemed  to  have  been  taken  by  him  as  the 
agent  of  the  payer.^''' 

An  attorney  authorized  to  collect  interest  is  not  thereby  au- 
thorized to  receive  the  principal.^*  Such  authority,  in  the  ab- 
sence of  direct  proof,  may  in  some  cases  be  inferred  from  the 
possession  of  the  bond  and  mortgage;  but  according  to  the 
current  of  authority,  it  is  incumbent  upon  the  debtor  who  pays 
to  the  attorney  to  show  that  the  securities  were  in  his  possession 
on  each  occasion  when  payments  were  made ;  their  withdrawal 
\\()nld  1)0  a  revocation  of  the  authority.^^     If  an  attorney  em- 

(X.  H.),  168,  as  sustaining  the  doc-  98  Cornish  v.  Woolvorton,  32 
trine  that  tlie  bank,  in  such  a  case,  Mont.  456,  108  Am.  St.  598;  Camp- 
is  not  the  agent  of  tlie  payee  of  tlie  bell  v.  O'Connor,  55  Neb.  638. 
note,  though  the  latter  be  due,  so  99  Williams  v.  Walker,  2  Sandf. 
as  to  be  authorized  to  accept  pay-  Ch.  325 ;  Doubleday  v.  Kress,  50  N. 
ment  of  it,  unless  the  note  is  in  its  Y.  410,  10  Am.  Rep.  502;  Smith  v. 
possession.  Kidd,  68  X.  Y.  130,  23  Am.  Rep. 
97  Adams  v.  Hackensack  I.  Com.,  157;  Crane  v.  Gruenewald,  120  N. 
supra;  First  Xat.  Bank  v.  Chilson,  Y.  274,  17  Am.  St.  643;  HenH  v. 
45  Neb.  257;  Bartel  v.  Brown,  104  Conisby,  1  Ch.  Cas.  93;  Gerard  v. 
Wis.  493;  Hollinshead  v.  Stuart,  8  Baker,  id.  94;  Garrels  v.  Morton,  26 
N.  D.  35,  42  L.R.A.  659.  111.  App.  433;   Cox  v.  Cutter,  28  N. 


§    231]      CONVENTIONAL    J,1QU1I>AT10NS    AND    DlSCll AlUiKS. 


689 


ployed  to  collect  a  note  receives  part  of  the  sum  due  in  cash 
and  takes  security  in  his  own  favor  for  the  balance,  tlie  pay- 
ment is  good  pro  tanto;  but  the  creditor  may  refuse  to  accept 
such  security  and  recover  on  the  note  from  the  maker.^  If  pay- 
ment of  a  loan  is  made  to  the  attorney  who  negotiated  it  wliile 
ho  has  the  custody  of  the  bond  and  mortgage,  with  the  consent 
of  the  nu)rtgagce,  and  the  mortgagor  knows  the  fact,  he  is  dis- 
charged although  the  attorney  was  not  in  fact  authorized  to  re- 
ceive it.^  If  the  attorney  of  a  plaintiff  comes  into  possession  of 
money  belonging  to  the  defendant  and  the  latter  and  the  attor- 
ney agree  that  it  should  be  paid  on  the  plaintiff's  claim,  such 
agreement  is  payment.^ 

The  court  of  errors  and  appeals  of  New  Jersey  has  ruled, 
by  a  vote  of  eleven  to  one,  reversing  the  vice-chancellor,  that 
the  mere  possession  of  a  bond  and  mortgage  by  one  not  the 
obligee  will  not  warrant  the  payment  thereof  to  such  possessor. 
Many  years  before  payment  these  papers  were  drawn  by  the 
person  to  whom  payment  was  made,  but  of  that  fact  it  did  not 
appear  that  the  debtor  had  knowledge.  The  papers  were  in  the 
possession  of  the  mortgagee  from  the  time  of  their  execution 
until  they  were  delivered  to  the  scrivener  for  safe  keeping  in 
his  vault,  and  were  put  up  by  the  mortgagee  in  a  bundle,  tied 
with  strings  and  sealed  with  wax.  Interest  had  been  paid  to 
the  scrivener  under  special  authority  from  the  mortgagee.*     A 

J.  Eq.  13;  Eaton  v.  Knowles,  61  his  possession.  Boardinan  v.  Bliz- 
Mich.  625;  Brewster  v.  Carnes,  103  zard,  36  Fed.  26. 
N.  Y.  556;  Lane  v.  Duchac,  73  Wis.  The  apparent  authority  of  an  at- 
646.  Contra,  Shane  v.  Palmer,  43  torney  to  receive  payment  of  inter- 
Kan.  481;  Quinn  v.  Dresbach,  75  est  does  not  depend  upon  his 
Cal.  159,  7  Am.  St.  138.  Compare  production  to  the  debtor  of  the  se- 
Wilcox  V.  Carr,  37  Fed.  130.  curities,  but  on  his  possession  of 
A  mortgagor  who  makes  the  agent  them.  Crane  v.  Gruenewald.  supra. 
of  his  mortgagee  for  the  collection  i  Davis  v.  Severance,  40  Minn, 
of  the  principal  and  interest  due  the  528;  Willis  v.  Gorrell,  102  Va.  740 
latter  his  own  agent  for  the  purpose  (as  to  the  last  proposition), 
of  securing  a  loan  to  be  used  in  dis-  2  Crane  v.  Gruenewald,  sttpra; 
charging  a  mortgage  must  stand  a  McConnell  v.  Mackin,  22  App.  Div. 
loss  caused  by  the  agent's  embezzle-  (N.  Y.)    537. 

ment  of  the  money  so  obtained,  the  3  :Millbiser    v.    Marr.    130    N.    C. 

mortgagor   not  having  directed   the  510. 

agent  to  apply  it  to  the  mortgage  in  4  Lawson   v.   Nicholson,   52   N.   J. 
Suth.  Dam.  Vol.  I.— 44. 


690  SUTHERLAND  ON  DAMAGES.  [§  231 

late  case  in  New  York  is  hard  to  harmonize  with  the  case  just 
stated,  and  holds  a  rule  more  consonant  with  the  authorities 
and  the  analogies  of  the  law.  The  attorney  to  whom  payment 
was  made  had  not  made  the  original  loan,  but  had  negotiated 
the  purchase  of  an  outstanding  bond  and  mortgage.  Of  the  lat- 
ter fact  it  does  not  appear  that  the  mortgagor  had  any  knowl- 
edge; indeed,  he  did  not  know  of  the  assignment  of  the  bond 
and  mortgage  until  informed  of  it  by  the  receipt  of  the  attorney 
for  interest  paid  a  short  time  before  payment  of  the  principal. 
The  same  attorney  had  been  authorized  to  receive  the  interest 
from  the  assignor  of  the  mortgage,  and  was  so  authorized  by 
the  assignee,  the  papers  being  left  in  the  attorney's  possession. 
It  is  said:  The  fact  that  the  agent  or  attorney  has  made  the 
loan  does  not  give  him  authority  to  collect  the  debt,^  nor,  it 
seems,  does  the  mere  possession  of  the  security  by  such  attorney 
give  such  authority.^  Both  conditions  must  concur.  It  is  said 
in  the  case  last  cited:  "The  reason  of  the  rule  that  one  who 
has  made  a  loan  as  agent  and  taken  the  security  is  authorized 
to  receive  payment  when  he  retains  possession  of  the  security  is 
founded  upon  human  experience  that  the  payer  knows  that  the 
agent  has  been  trusted  by  the  payee  about  the  same  business,  and 
he  is  thus  given  a  credit  with  the  payer."  The  same  rule  was 
applied  to  the  case  before  the  court.'' 

In  case  of  a  mortgage  or  other  non-negotiable  evidence  of 
debt,  probably  a  payment  in  good  faith  to  the  original  holder, 
in  the  absence  of  the  paper  evidence,  would  be  treated  as  valid, 
although  there  had  been  an  actual  assignment  of  the  deljt.' 
Payment,  however,  may  not  be  made  to  an  assignor  after  notice 

Eq.   821,   reversing  Lawson   v.   Car-  N.    Y.   285,   approving   Williams   v. 

son,  50  N.  J.  Eq.  370.  Walker,  2  Sandf.  Ch.  325. 

6  To  that  effect  is  Heflin  v.  Camp-  8  Bartholf     v.     Bensley,    234     111. 

bell,    5    Tex.    Civ.    App.    ]06;    Ort-  336;    Gemkow  v.   Link,   225   111.   21 

meier  v.  Ivory,  208  111.  577.  (unless  the  existence  of  the  note  is 

6  Doubleday  v.  Kress,  50  N.  Y.  subsequently  recognized  in  favor  of 
410,  10  Am.  Rep.  502.  Contra,  the  transferee  before  maturity)  ; 
O'Loughlin  v.  Billy,  95  App.  Div.  Swan  v.  Craig,  73  Neb.  182;  Trus- 
(N.  Y.)  99.  Compare  McLeod  v.  tees  of  Union  College  v.  Wheeler,  61 
Despain,  49  Ore.  536,  124  Am.  St.  N.  Y.  88;  Foster  v.  Beals,  21  id. 
1066,  19  L.R.A.(N.S.)   276.  247.     See  Richardson  v.  Ainsworth, 

7  Central   T.    Co.   v.    Folsom,    167  20     Hovif.     Pr.     521;     Robinson     v. 


231]      CONVENTIONAL    LIQUIDATIONS    AND    DISCllAROKS. 


091 


of  such  assignment ;  ^  and  will  not  be  recognized  even  if  the 
assignor  has  jmssession  of  the  securities ;  ^°  not  even  under 
garnishment  proceedings  and  an  order  of  court,  if  that  defense 
is  not  made."  Where  the  demand  has  been  assigned  payment 
as  garnishee  of  the  original  creditor  is  not  good  unless  it  is 
compulsory,  though  there  has  been  no  notice  of  the  assignment, 
for  assignment  passes  the  title  without  notice.^^  Payment  to  the 
creditor  after  knowledge  of  the  issuance  of  an  execution  is  not 
authorized.^^ 

The  ho7ia  fide  payment  of  a  debt  due  a  person  who  died 
intestate  to  his  sole  heir  and  the  sole  distributee  of  the  funds 
of  the  estate,  before  administration  is  granted,  will,  if  equity 
requires  it,  relieve  the  debtor  from  liability  to  an  administrator 
subsequently  appointed.^*  If  the  executor  of  a  deceased  post- 
master has  made  application  for  the  readjustment  of  the  latter's 
salary,  requesting  that  payment  be  made  to  him,  a  payment  to 
the  widow  of  the  deceased  is  not  binding  on  the  executor,  though 
she  also  applied  for  readjustment.^^    One  who  pays  a  note  to  a 


Weeks,  6  id.  161;  Muir  v.  Schenck, 
3  Hill,  228,  38  Am.  Dec.  633; 
Gamble  v.  Cummings,  2  Blackf.  235. 
It  is  a  fair  legal  presumption  that 
the  creditor  who  holds  a  non-nego- 
tiable chose  in  action  is  entitled  to 
receive  payment  thereof.  If  it  is 
assigned  it  is  incumbent  upon  the 
assignee  to  show  that  the  debtor 
was  notified  in  order  to  protect  him- 
self against  any  payment  made  to 
the  original  creditor.  Heermans  v. 
Ellsworth,  64  N.  Y.  115;  Quinn  v. 
Dresbach,  75  Cal.  159,  7  Am.  St. 
138;   Bank  v.  Jones,  65  Cal.  437. 

Under  the  recording  acts  the  rec- 
ord of  the  assignment  of  a  mortgage 
is  constructive  notice  to  the  world 
of  the  rights  of  the  assignee;  a  pur- 
chaser of  the  equity  of  redemption 
cannot  claim  any  benefit  from  pay- 
ments made  to  the  mortgagee  after 
his  assignment  has  been  recorded. 
Brewster  v.  Carnes,  103  N.  Y.  556; 
Viele  V.  Judson,  82  N.  Y.  32. 


The  assignee  of  record  may  re- 
ceive payment  of  a  mortgage  and 
note,  the  latter  being  in  his  pos- 
session, though  the  maker  knows 
of  the  claim  of  another.  Casner  v. 
Johnson,  66  Kan.  404. 

9  Lyman  v.  Cartwright,  3  E.  D. 
Smith,  117;  Meriam  v.  Bacon,  5 
Mete.  (Mass.)  95;  Guthrie  v.  Bash- 
line,  25  Pa.  80;  Field  v.  Mayor,  6 
N.  Y.  179;  Ten  Eick  v.  Simpson,  1 
Sandf.  Ch.  244. 

10  Chase  v.  Brown,  32  Mich.  225. 

11  Roy   V.   Baucus,   43    Barb.   310. 

12  Richardson  v.  Ainsworth,  20 
How.  Pr.  521;  Robinson  v.  Weeks, 
6  id.  161;  Muir  v.  Schenck,  3  Hill, 
228,  38  Am.  Dec.  633. 

13  Park  V.  McCauley,  67  W.  Va. 
104,  28  L.R.A.(N.S.)    1036. 

H  Vail  v.  Anderson,  61  Minn.  552 ; 
Hannah  v.  Lankford,  43  Ala.  163; 
Lewis  V.  Lyons,  13  111.  117. 

16  Holt  V.  United  States,  29  Ct.  of 
Cls.  56. 


692  SUTIIEKLAND    ON    DAMAGES.  [§    231 

person  who  had  sued  upon  it  at  law  does  so  at  his  peril  if,  at  the 
time  of  payment,  he  has  notice  of  the  pendency  of  an  appeal  in 
a  chancery  suit  brought  against  him  by  another  person  to  estab- 
lish his  right  to  the  note.^®  A  husband  is  not  authorized  to  ac- 
cept payment  for  the  personal  labor  of  his  wife  rendered  outside 
his  family;  but  if  the  debtor  sold  property  to  the  husband  and 
wife  jointly  and  she  agreed  that  the  money  due  her  might  bo 
applied  on  the  purchase  price,  her  demand  is  satisfied." 

A  compulsory  payment  under  a  foreign  attachment  from  a 
court  of  competent  jurisdiction  is  good,  and  will  be  recognized 
even  in  a  foreign  jurisdiction,  though  in  the  latter  an  earlier 
attachment  had  been  levied  for  the  same  debt.^^  A  payment 
as  trustee  or  garnishee  is  good  though  the  trustee  might  have 
disputed  the  jurisdiction  of  the  court  ordering  such  payment. ^^ 
It  is  immaterial  so  far  as  the  discharge  from  liability  is  con- 
cerned that  the  debtor  was  garnished  while  temporarily  in  the 
state  of  the  residence  of  his  creditor's  creditor,  he  having  paid 
the  judgment  rendered  against^  him  there.^°  A  garnishee  who 
knows  that  the  claim  sued  upon  has  been  assigned  must  set  up 
that  fact,  though  the  assignee  did  not  intervene  in  the  proceed- 
ings, of  which  he  knew.^^  Money  paid  by  the  government  to 
a  receiver  of  the  property  of  a  citizen  by  the  court  of  a  state 
in  which  he  is  domiciled  discharges  the  claim  of  the  govern- 
ment's creditor.  ^^ 

^Vhere  a  debt  is  owing  to  two  or  more  persons  jointly  it  may 
be  paid  to  either.^^    Payment  to  the  owner  or  master  of  a  vessel 

16  McClintock  v.  Helberg,  168  111.  21  Greenwich  Ins.  Co.  v.  Columbia 
384,  aff'g  64  111.  App.  190.  Mfg.  Co.,  73  111.  App.  560. 

17  Strickland  v.  Hamlin,  87  Me.  22  Borcherling  v.  United  States, 
81.  35  Ct.  of  Cls.  311,  329. 

18  Minor  v.  Rogers  Coal  Co.,  25  23  Waters  v.  Travis,  9  Johns.  450 ; 
Mo.  App.  78;  Allen  v.  Watt,  79  111.  Flanigan  v.  Seelye,  53  Minn.  231; 
284;  Lieber  v.  St.  Louis  A.  &  M.  Oatman  v.  Walker,  33  Me. 
Ass'n,  36  Mo.  382;  Holmes  v.  Rem-  67;  Moore  v.  Bevier,  60  Minn.  240; 
sen,  4  Johns.  Ch.  460,  20  Johns.  229,  Henry  v.  Mt.  Pleasant,  70  Mo.  500; 
11  Am.  Dec.  269;  McDaniel  v.  Mosby  v.  United  States,  194  Fed. 
Hughes,  3  East,  367.  346,    116    C.    C.    A.    74;    Thacke   v. 

19  Reed  v.  Parsons,  11  Cush.  255;  Hensheim,  —  Misc.  (N.  Y.)  — ,  115 
Sauntry  v.  Dunlap,  12  Wis.  364.  N.  Y.  Supp.  216.     Compare,  Linville 

20  Harris  v.  Balk,  198  U.  S.  215,  v.  Jones  (Tex.  Civ.  App.),  137  S. 
49  L.  ed.  1023.  W.  415. 


§    231]      CONVENTIONAL    T-IQUIDATIONS    AND    DISCirATJGES.        093 

for  the  owner  of  salvage  compensation  extinguishes  the  claims 
of  all  co-salvors.^*  If  the  survivor  of  two  joint  payees  of  a  note 
is  the  sole  devisee  of  the  deceased  payee  payment  may  be  made 
to  him.^®  But  payment  made  to  a  third  person  is  not  valid  un- 
less such  person  was  authorized  by  all  the  obligees  to  receive 
it.^^  Payment  of  money  to  a  part  of  the  heirs  of  a  person  in- 
sured for  their  benefit  does  not  discharge  the  insurer's  liability ; 
the  indebtedness  was  not  joint.^''  Payment  of  a  debt  due  to  a 
deceased  person,  made  before  letters  granted,  to  a  person  who 
afterward  takes  them  out,  is  made  good  by  the  subsequent 
letters.^^ 

The  secondary  liability  of  the  owner  of  a  building  for  the 
services  of  workmen  employed  by  the  contractor  and  for  ma- 
terials supplied  does  not  arise  until  the  steps  prescribed  by 
statute  to  acquire  a  lien  therefor  have  been  taken ;  hence  pay- 
ment made  to  other  persons  than  the  contractor  does  not  bind 
him.^^  The  right  to  the  emoluments  of  an  ofiice  follows  the 
true  title  to  it.^°  As  between  the  person  entitled  to  an  office 
and  the  public,  there  is  no  obligation  upon  the  latter  until  the 
duties  of  the  office  have  been  assumed.  The  salary  fixed  there- 
for is  the  reward  for  express  or  implied  services,  and  therefore 
cannot  belong  to  one  who  has  not  performed  services  although 
he  is  wrongfully  hindered  from  occupying  the  position  in  which 
he  might  have  rendered  them.^^  Where  disbursing  officers 
pay  compensation  for  official  services,  pursuant  to  law,  they 

24  The  Manaqua,  126  Fed.  208;  Tieman,  .30  Barb.  19.3;  Dolan  v. 
McConnochin  v.  Kerr,  15  id.  .545;  Mayor,  68  N.  Y.  274,  23  Am.  Rep. 
Roff  V.  Wass,  2  Sawy.  538.  168;    McVeany  v.  Mayor,  80   N.   Y. 

25  Perry  v.  Perry,  98  Ky.  242.  185,    36    Am.    Rep.    600;    People    v. 

26  Moore  v.  Bevier,  60  Minn.  240.  Miller,    24   Mich.   458,   9   Am.   Rep. 

27  Brown  v.  Iowa  Legion  of  ]3];  Dorsey  v.  Smith,  28  Cal.  21; 
Honor,  107  Iowa,  439.  Hunter    v.    Chandler,    45    Mo.    452; 

28  Priest  V.  Watkins,  2  Hill,  225,  Glascock  v.  Lyons,  20  Ind.  1,  8.3 
38  Am.  Dec.  584;  In  re  Faulkner,  Am.  Dec.  299;  Douglass  v.  State, 
7  Hill,  181.  31    Ind.    429;    Warden    v.    Bayfield 

29  Walker    v.     Newton,     53     Wis.  County,  87  Wis.  181. 

336.  31  Smith  v.  Mayor,  37  N.  Y.  518; 

80  Conner  v.  New  York,  2  Sandf.  Connor  v.  Mayor,  5  id.  285;   Audi- 

370;  Nichols  v.  MacLean,  101  N.  Y.  tors  v.  Bonoit,  20  Mich.  176,  4  An>. 

526,    54    Am.    Rep.    730;    People    v.  Kcp.  382. 


G94 


SUTHERLAND    ON    DAMAGES. 


[§  231 


are  justified,  bj  the  weight  of  authority,  on  grounds  of  public 
policy  in  paying  to  a  de  facto  officer,  and  such  payment  is  a  good 
defense  to  an  action  against  the  public  by  the  de  jure  officer  to 
recover  the  salary  after  he  has  been  placed  in  possession  of  the 
office.^^  The  public  is  liable  for  the  salary  due  and  unpaid  a 
de  jure  officer  before  judgment  in  his  favor.^^  This  is  the  rule 
whether  the  compensation  arises  from  fees  payable  from  the 
public  treasury  or  an  annual  salary  payable  at  intei-vals,  and 
whether  the  officer  was  appointed  or  elected.'*  If  payment  is 
made  after  notice  of  an  adjudication  against  the  right  of  the 
person  in  office  the  public  is  liable  to  the  de  jure  officer  for  the 
amount,^^  Notice  to  the  government  from  a  corporation  that  it 
has  changed  its  treasurer  is  not  effective  to  prevent  payment 
to  the  former  treasurer  in  pursuance  of  a  contract  in  his  name.^^ 
Payment  of  a  private  debt  due  to  a  member  of  a  firm  to  the 
firm  of  which  the  creditor  is  a  member  will  not  support  a  plea 
of  payment  in  the  absence  of  evidence,  express  or  implied,  that 


32Dolan  V.  Mayor,  68  N.  Y.  274, 
23  Am.  Rep.  160;  McVeany  v.  May- 
or, 80  N.  Y.  185,  36  Am.  Rep.  600; 
Auditors  v.  Benoit,  20  Mich.  176,  4 
Am.  Rep.  382;  Couglilin  v.  McElroy, 
74  Conn.  397,  409;  State  v.  Clarlc, 
52  Mo.  508 ;  Westberg  v.  Kansas,  64 
Mo.  493;  Steubenville  v.  Gulp,  38 
Ohio  St.  18,  23,  43  Am.  Rep.  417; 
Commissioners  of  Saline  County  v. 
Anderson,  20  Kan.  298,  27  Am.  Rep. 
171;  State  v.  Milne,  36  Neb.  301, 
19  L.R.A.  689,  38  Am.  St.  724; 
Sliannon  v.  Portsmouth,  54  N.  H. 
183;  Shaw  v.  Prina  County,  2  Ariz. 
399.  Contra,  Dorsey  v.  Smyth,  28 
Cal.  21;  Carroll  v.  Siebenthaler,  37 
Cal.  193;  Andrews  v.  Portland,  79 
Me.  484;  Rasmussen  v.  Carbon 
County,  S  Wyo.  277,  45  L.R.A.  295 ; 
Philadelphia  v.  Rinlc  (Pa.),  2  Atl. 
505. 

In  Tennessee  the  test  applied  is, 
could  the  person  wrongfully  in  office 
compel  the  payment  of  the  salary  to 
him?     The  case  ruled  was  this:   A. 


was  elected  to  succeed  L. ;  the  latter 
obtained  an  injunction  restraining 
A.  and  tlie  authorities  who  were 
about  to  induct  hiui  into  office  from 
interfering  with  his  enjoyment  of 
it.  The  injunction  was  made  per- 
petual and  L.  remained  in  posses- 
sion and  drew  tlie  salary.  After  the 
injunction  was  dissolved  and  A.'s 
title  established  by  the  appellate 
court,  he  recovered  from  the  public 
the  salary  provided  for  the  office 
and  paid  L.  during  his  incumbency. 
The  injunction  did  not  require  the 
officers  to  make  payment  thereof  to 
L.  Memphis  v.  Woodward,  12 
Ileisk.   499. 

33  Dolan  V.  Mayor,  supra;  Corn- 
stock  V.  Grand  Rapids,  40  Mich. 
397 ;  People  v.  Brenan,  30  How.  Pr. 
417. 

34  McVcany  v.  Mayor,  supra. 

35  Id. 

36  Chapter  of  Calvary  Cathedral 
V.  United  States,  29  Ct.  of  Cls.  269. 


§    232]      COJM  VJfiJN'TlOiN  A  L    J  J(^  U  IDATIONS    AND    JUSCIlAKtiES.        095 

the  creditor  lias  authorized  the  receipt  of  the  money  by  the  liriii 
as  his  agents.'' 

§  232.  Pleading  payment.  ]}y  the  theory  of  coimiiou-law 
pleading  in  tlie  action  of  assuinpsU,  as  well  as  by  tbe  provi- 
sions of  the  modern  code,  jiayment,  either  full  or  paitial,  ])eing 
in  confession  and  avoidance,  nnist  l)e  ph'aded.^*  It  cannot  be 
proved  under  the  general  issue  or  general  deniah^^  The  issue 
in  debt  was  ujion  the  existence  of  present  in(lebte<hiiess ;  and 
therefore  in  that  action  the  rule  was  different.  The  general 
issue  in  assmni'sil,,  however,  l)y  a  later  practice,  came  to  be  so 
expanded  as  to  materially  infringe  this  logical  rule;  and  it  was 
held  to  embrace  many  defenses  which  admitted  all  the  essential 
facts  stated  in  the  declaration,  and  avoided  their  effects  by 
matter  subsequent,  including  payment.*"  If  the  plaintiff  al- 
leges non-payment  and  must  establish  it  to  show  a  cause  of 
action,  payment  may  be  proven  under  a  general  denial.*^    Under 


37  Powell  V.  Brodhiirst,  [IttOl]  2 
Ch.  160. 

38  Trimble  v.  Texarkana,  etc.  R. 
Co.,  399  Mo.  44. 

39  In  McDonald  v.  Place,  88  Vt. 
80,  it  was  held  that  while  payment 
cannot  usually  be  shown  under  the 
general  issue  without  notice,  j'et 
when  a  case  is  referred,  the  plead- 
ings are  to  be  treated  as  adapted 
to  the  facts  found,  when  by  so  do- 
ing no  new  cause  of  action  is 
brought  in. 

40McKyring  v.  Bull,  16  N.  Y. 
297.  In  this  case  the  opinion  of 
Selden,  J.,  interestingly  and  instruc- 
tively discusses  the  subject  and  re- 
views many  English  cases;  the  con- 
clusion reached  being  that  the  code 
requires  the  defendant  to  plead  any 
new  matter  constituting  either  an 
entire  or  partial  defense,  and  pro- 
hibits him  from  giving  such  mat- 
ter in  evidence  upon  the  assessment 
of  damages  when  not  set  up  in  the 
answer.  Skipworth  v.  Morton,  3 
Call,  234.  See  Edson  v.  Dellage,  8 
How.   Pr.  273.     But  see  llirsch  v. 


Caler,  21  Cal.  71;  Davaney  v.  Eg- 
genhoff,  43  id.  397;  Conkling  v. 
Weatherwax,  181  N.  Y.  258. 

In  Kentucky  it  is  settled  that  a 
partial  payment  on  or  before  the 
day  on  which  the  debt  is  due  may 
be  pleaded;  and  full  payment  after 
the  day  is  pleadable  by  statute;  but 
the  courts  there  have  not  gone  so 
far  as  to  sanction  a  plea  of  partial 
payment  after  the  day,  but  have  de- 
cided that  it  cannot  be  pleaded. 
Gearhart  v.  Olmstead,  7  Dana,  445; 
Mc Waters  v.  Draper,  5  T.  B.  Mon. 
494;  Young  v.  Park,  6  J.  J.  Marsh. 
540;  Craigs  v.  Whips,  1  Dana,  375. 
Nor  is  either  partial  or  full  pay- 
ment after  the  day  provable  under 
the  general  is.sue.  llaiiiilton  v. 
Coons,  5  Dana,  317. 

When  the  petition  states  facts 
constituting  the  plaintiff's  claim  a 
general  denial  does  not  present  an 
issue  authorizing  the  defendant  to 
prove  payment.  St.  Louis,  etc.  R. 
Co.  V.  Grove,  39  Kan.  731. 

«Pinckard  v.  Bramlett,  165  Ala. 
327;    Metzger   v.    Metzger,   35   App. 


690 


SLTTIIKIfLANJ)    ON    DA  ^rA(;  KS. 


[§   232 


H  ooiH'i'jil  ;ill('i;iiti()n  (if  ])ayincnt  the  defendant  niay,  in  some 
jiii'isdictintis,  ,i;ivo  in  evidence  any  facts  wliich  in  law  amount 
to  payment;*^  while  in  others  only  such  facts  can  be  shown 
as  tend  to  establish  a  coinnion-law  or  actual  payment.*'  Under 
a  plea  of  ]iayment  particular  applications  of  payments  may  be 
shown  and  olijcctions  niade  thereto,**  A  j)lea  of  payment  need 
not  allciic  llio  amount  paid,  the  date  of  payment  nor  the  person 
who  rocoivod  il  ;  *^  under  such  plea  partial  payment  may  be 
liroxcn.*^  Ihit  if  payment  in  property  is  relied  on  the  answer 
must  he  specilic  as  to  its  value.*'  And  this  is  necessary  in 
some  cases  whei-e  partial  payment  is  admitted  and  the  suit  is  on 
a  contract  for  the  payment  of  money.  The  defendant  may 
phvid  a  ])aymcnt  in  excess  of  the  admission,  but  should  allege  the 
amount  paid  and  not  merely  that  the  plaintiff  has  been  fully  paid 
as  to  some  or  all  of  Ihc  items  of  the  demand,  especially  where 
the  amount  payable  is  dependent  upon  another  amount,  also 


D.  (!.  38!);  «lioie  v.  Powt'll,  71  VV. 
Va.  6J;  Knapp  v.  RocIil',  !)4  N.  Y. 
329;  Quin  v.  Lloyd,  41  id.  349;  Mc- 
Elwee  V.  Hutchinson,  10  S.  C.  436; 
State  V.  Roche,  94  Ind.  372;  Rob- 
ertson V.  Robertson,  37  Ore.  339; 
Marloy  v.  Smith,  4  Kan.  1,5.5;  State 
V.   Peterson,   142  Mo.  526. 

42  Edmunds  v.  Black,  13  Wasli. 
490;  Bush  v.  Sprout,  43  Ark.  416; 
Morehouse  v.  Northrop,  33  Conn. 
380,  89  Am.  Dec.  211  ;  Hart  v.  Craw- 
ford, 41  Ind.  197;  Farmers'  &  C.'s 
Bank  v.  Sherman,  33  N.  Y.  69; 
Wliittiii{,'ton  V.  Roberts,  4  T.  B. 
Mon.  173.  See  Day  v.  Clarke,  1  A. 
K.  Marsh.  521  ;  Columl)ia  Dif^ger 
Co.  V.  Rector,  215  Fed.  618. 

Under  an  oral  plea  of  payment 
the  delivery  of  a  deed  may  be 
shown.  Dawson  v.  Owen,  78  Ark. 
93. 

43  Lovegrovc  v.  Christnian,  164 
Pa.  390. 

This  doctrine  is  said  to  have  no 
application     to     .suits     in     justices' 


courts.  Rider  v.  Culp,  68  Mo.  App. 
527. 

An  (^(|uit;ible  defense  caimot  be 
proven  without  leave  and  upon  no- 
tice. Steiner  v.  Erie  Dime  S.  &  L. 
Co.,  98  Pa.  491  ;  Hawk  v.  Gcddis,  16 
S.  &  R.  28. 

In  Massachusetts  the  discharge  of 
a  note  payable  in  money  by  the 
delivery  and  acceptance  of  property 
must  be  the  result  of  a  subsequent 
and  independent  agreement  resting 
upon  substantial  facts  which  the 
answer  must  set  forth.  Ulsch  v. 
Mullcr,  143  Mass.  379. 

44  Columbia  Digger  Co.  v.  Rector, 
215  Fed.  618. 

45  Johnson  v.  Breedlove,  104  Ind. 
521  ;  Stacy  v.  Coleman,  10  Ky.  L. 
Rep.  78   (Ky.  Super.  Ct.). 

46  Elm  City  L.  Co.  v.  McKenzie, 
7  Conn.  1;  Keyes  v.  Fuller,  9  111. 
App.  528;  State  v.  Roche,  94  Ind. 
372. 

47  Choate  v.  Hoogstraat,  46  C.  C. 
A.  174,  105  Fed.  Rep.  713. 


§    232]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        697 

traversable."  An  allegation  of  the  place  of  payment  is  sur- 
plusage and  will  not  prejndicc.*^  It  has  hccn  held  in  Kentucky 
not  necessary  for  a  jury,  when  sworn  on  an  incpiiry  of  dam- 
ages, or,  indeed,  on  the  trial  of  an  issue,  to  notice  credits  in- 
dorsed on  a  note,  unless  under  the  issue  of  payment;  but  under 
the  practice  in  that  state  whenever  a  note  on  which  an  action 
is  brought  is  tiled  the  courts  of  original  jurisdiction  notice  it 
so  far  as  to  cause  the  clerk  to  note  on  the  record  all  credits  in- 
dorsed thereon  as  credits  on  the  judgment,  and  this  after  a 
writ  of  inquiry  or  verdict  when  the  jury  has  not  noticed  them.^" 
Payment  of  a  debt  and  costs  while  suit  is  pending  for  its  recov- 
ery extinguishes  the  claim.*^  Payment  is  an  affirmative  defense 
and  must  be  pleaded, ^^  and  with  great  particularity/'  An  ac- 
cord and  satisfaction  must  also  be  pleaded.^*  The  defense  of 
payment  may  be  made  to  an  action  upon  contract  under  an 
answer  to  a  declaration  in  set-off  alleging  that  if  the  defendant 
shall   prove  that   the  plaintiff  ever   owed   the   defendant  the 


48  Shipu»an  v.  State,  43  Wis.  381. 

49  Brown  v.  Gooden,  16  Ind.  444. 
60  Phelps  V.  Taylor,  4  T.  B.  Mon. 

170. 

51  Root  V.  Ross,  29  Vt.  488. 

52  In  re  Raflo,  217  Fed.  313; 
American  Slicing  Machine  Co.  v. 
Kuchukian,  —  Misc.  (N.  Y.)  — , 
147  N.  Y.  Supp.  352;  Jarvis  v. 
Andrews,  80  Ark.  277;  Light  v. 
Stevens,  159  Cal.  288;  V^elles  v. 
Colorado  Nat.  L.  Ins.  Co.,  49 
Colo.  508;  Harvey  v.  Denver,  etc. 
R.  Co.,  44  Colo.  258,  130  Am.  St. 
120;  Florence  0.  &  R.  Co.  v.  First 
Nat.  Bank,  38  Colo.  119;  Stalker  v. 
Hayes,  81  Conn.  711  (unless  it  can 
be  inferred  as  a  legal  conclusion 
from  the  allegations  of  the  com- 
plaint) ;  International  H.  Co.  v. 
Smith,  51  Fla.  222;  Archibald  v. 
Banks,  203  111.  380;  Gas  Belt  T. 
Co.  v.  Ward,  43  Ind.  App.  537; 
Howerton  v.  Augustine,  130  Towa 
389;    Galbraith   v.   Starks,   117   Ky. 


015;  Lee  v.  Prudential  L.  Ins.  Co., 
203  Mass.  299;  Miller  v.  Snyder,  149 
Mo.  App.  97;  Fuller  v.  Manhattan 
C.  Co.,  44  N.  Y.  Misc.  219;  Rosen- 
thal V.  Rudnick,  84  App.  Div.  (N. 
Y.)  611;  Pickle  v.  Anderson,  62 
Wash.  552;  Dodrill  v.  Gregory,  60  W. 
Va.  118;  Drake  v.  Drake,  142  Wis. 
002;  Gregory  v.  Hart,  7  Wis.  532, 
540;  Martin  v.  Pugh,  23  id.  184; 
Hawes  v.  Woolcock,  30  id.  213;  Ros- 
siter  V.  Schultz,  62  id.  655;  Chris- 
tian V.  Bryant,  102  Ga.  561;  Hander 
v.<.  Baade,  16  Tex.  Civ.  App.  119; 
Posner  v.  Rosenberg,  149  App.  Div. 
(N.  Y.)  272;  Williams  v.  Uzzell, 
108  Ark.  241;  Garrett  v.  Gri.sliam 
(Tex.  Civ.  App.).  15(;  S.  W.  505. 
But  see  Altmaii  v.  Bungay  Co.  of 
New  York.  Kil  App.  Div.  ( N\  Y.) 
583. 

53  National  D.  Bank  v.  Mawson, 
40  Pa.  Super.  85. 

54Fogil   V.    Boodv.   70   C(.iiii.    1!I4. 


G98 


SriTTIF.KLAND    ON    DAMAGES. 


[§.  232 


aiuoiiiits  alleged  lie  lias  paid  the  same  in  full."  The  party 
alleging  payment  has  the  onus;  and  if  it  is  claimed  that  pay- 
ment was  made  in  anything  but  money  he  has  also  the  burden 
of  proving  that  what  was  received  was  taken  in  satisfaction  and 
at  the  creditor's  risk.^^  Under  a  plea  of  payment  the  laws 
of  the  state  in  which  the  note  sued  upon  was  made  may  be  re- 
ceived in  evidence  to  show  that  such  note  was  there  paid  and  ex- 
tinguished by  another  note.^' 

§  233.  Evidence  of  payment.  Possession  of  the  evidence 
of  debt  is  presumptive  evidence  of  authority  to  receive  pay- 
ment.®* But,  as  evidence  of  agency,  the  presumption  ceases  on 
the  death  of  the  principal.®^  So  possession  of  the  evidence  of 
debt  by  the  maker,  or  one  who  succeeds  to  his  rights  or  estate, 
is  prima  facie  evidence  of  payment.^"  Thus  the  possession  of 
a  bank  check  l)y  the  bank  on  which  it  is  drawn  is  such  evi- 
dence that  the  l)ank  has  paid  it,^^    The  possession  of  a  canceled 


65Gos8  V.  Calkins,  164  Mass.  546; 
Sweet  V.  Routliworth,  125  Mass.  417. 

An  allegation  of  payment  made 
upon  information  and  belief  is  good. 
First  Nat.  Bank  v.  Roberts,  2  N.  D. 
195. 

56  Essex  Fertilizer  Co.  v.  Dan- 
forth.  111  Me.  212;  Baldwin  v.  Por- 
ter, 217  Mass.  15 ;  Van  Sceiver  v. 
King,  176  Mich.  605;  In  re  Raflo, 
217  Fed.  313;  Todd  v.  Guffin,  55 
Ind.  App.  605;  Tonn  v.  Pier,  82  N. 
J.  422;  Hill  v.  Waight,  140  Iowa 
584;  Atkinson  v.  Linden  S.  Co.,  138 
111.  187;  Marshall  I.  Bank  v.  Child, 
76  Minn.  173;  Griffith  v.  Creighton, 
61  Mo.  App.  1;  Godfrey  v.  Crisler, 
121  Ind.  203;  Cheltenham  S.  &  G. 
Co.  V.  Gates  I.  Works,  124  111.  623, 
afPg  23  111.  App.  35;  Hunter  v. 
Moul,  98  Pa.  13,  42  Am.  Rep.  610; 
Brown  v.  Olmsted,  50  Cal.  162; 
Bradley  v.  Harwi,  43  Kan.  314; 
Runyon  v.  Snell,  116  Ind.  164,  9 
Am.  St.  839;  McWilliams  v.  Phil- 
lips, 71  Ala.  80;  Insurance  Co.  v. 
Dunscomb,  108  Tenn.  724,  735,  58 
L.R.A.    694. 


But  see  Winter  v.  Pollak,  —  Ala. 
— ,  66  So.  11,  holding  that  an  ad- 
ministrator suing  for  the  value  of 
services  of  tlie  deceased  must  prove 
nonpayment. 

57Thomson-H.  E.  Co.  v.  Palmer, 
52  Minn.  174,  38  Am.  St.  536. 

58  Loehenmeyer  v.  Eogarty,  112 
111.  572;  Williams  v.  Walker,  2 
Sandf.  Ch.  325;  Megary  v.  Funtis, 
5   id.  376.     See  §  231. 

59  Id. 

60  Hill  V.  Buchanan,  71  N.  J.  L. 
301  ;  Dodrill  v.  Gregory,  60  W.  Va. 
118;  Hall  v.  O'Brien,  160  App.  Div. 
(N.  Y.)  851;  Gibbon  v.  Featherston- 
liaugh,  1  Stark.  92;  Hollenberg  v. 
Lane,  47  Ark.  394;  Potts  v.  Cole- 
man, 67  Ala.  221  ;  Grimes  v.  Ilil- 
liary,  150  111.  141;  Smith  v.  Gard- 
ner, 36  Neb.  741.  When  such  pre- 
sumption arises  it  is  inferred  that 
payment  was  made  to  a  person  au- 
tliorized  to  receive  it.  Lipscomb  v. 
De  Lanos,  68  Ala.  592. 

61  Wilson  v.  Goodin,  Wright,  219. 


2o3]      CUJVVKNTIOJNAI,    J .1(^11  IDATIONS    AND    DISCIfARGES.        699 


chock  by  the  driiwcr  who  Icstitics  that  <ui  the  (hiv  of  its  (hite 
ho  niado  and  delivered  it  to  tlic  j)ayee  in  payiueiit  oi"  a  debt 
is  sufficient  prima  facie  proof  of  tlic  payment  of  tlie  amount 
it  calls  for.^^  It  is  presumed,  where  a  check  payable  to  bearer 
was  one  day  the  property  of  A.  and  the  following  day  was  in 
the  possession  and  apparent  ownership  of  B.,  that  it  was  de- 
livered by  A.  to  B.  in  payment  of  a  debt,  though  it  is  not  pre- 
sumed tluit  the  transfer  was  direct.^^  Possession  of  the  evidence 
of  the  indebtedness  by  the  payee  is  prima  facie  ])roof  that  the 
debt  has  not  been  paid/*  and  if  no  indorsements  appear  it  is 
presumed  that  nothing  has  been  ])aid.®^  The  execution  and  de- 
livery of  a  deed  which  acknowledges  the  receipt  of  the  pur- 
chase-money, in  the  absence  of  any  other  proof,  is  prima  facie 
evidence  of  its  payment.^^  But  possession  of  a  note  by  the 
maker  is  such  evidence  only  after  maturity ;  ^'  nor  is  the  pre- 
sumption of  payment  from  such  possession  rebutted  by  proof 
of  the  mere  fact  that  the  payee  or  former  holder  is  dcad.^^    The 


62  Patterson  v.  First  Nat.  Bank, 
73  Neb.  384.  See  Bailey  v.  Kobison, 
233  111.  614;  Miller  v.  Pratz,  170 
III.  App."  204;  Peavy  v.  liovey,  16 
Neb.  416;  Magruder  v.  De  Haven, 
21  Ky.  L.  Rep.  580.  See  also,  R. 
Pierce  &  Son  v.  Davis,  155  Ky. 
270. 

But  possession  by  a  debtor  of  a 
canceled  check  signed  by  him  in  a 
representative  capacity  is  not  prima 
facie  evidence  of  payment  of  an  in- 
dividual indebtedness.  Ball  v.  Elli- 
ott, —  Misc.  (N.  Y.)  — ,  143  N.  Y. 
Supp.  038. 

63  Pouciior  v.  Scott,  08  N.  Y.  422. 
See  Stimson   v.   Vroman,   09   id.   74. 

64Keyes  v.  Fuller,  9  111.  App. 
528;  Humpeler  v.  Hickman,  13  id. 
537;  Brooks  v.  Holt,  65  Mo.  App. 
613;  Light  v.  Stevens,  159  Cal.  288; 
Sarraille   v.   Calmon,    142   Cal.   651. 

But  such  presumption  of  nonpay- 
ment is  overcome  by  the  production 
by  the  debtor  of  a  receipt  in  full 
the  genuineness  of  which  the  credit- 
or   has    failed   to    successfully    con- 


trovert.    IMcKenzie  v.  Kay,  108  Cal. 
618. 

65  Collins  V.  Maude,  144  Cal.  289. 

66  Brown  v.  Crown  G.  M.  Co.,  150 
Cal.  376;  Wherley  v.  Rowe,  106 
Minn.  494;  Doherty  v.  Doherty,  155 
Mo.  App.  48] ;  Devencenzi  v.  Cas- 
sinelli,  28  Nev.  222;  Komp  v.  Ray- 
mond, 175  N.  Y.  102;  Guano  Co.  v. 
Marks,  135  N.  C.  50;  Gregory 
V.  Hnslander,  227  Pa.  607 ;  Crowe  v. 
Colbeth,  63  Wis.  643;  Coles  v.  Souls- 
by,  21  Cal.  47;  Kinster  v.  Habcock, 
26  N.  Y.  378;  Clark  v.  Dcshon,  12 
Cush.  589. 

67p:rwin  v.  ShafTer,  9  Ohio  St. 
43;  Baring  v.  Clark,  19  Pick.  220; 
McGee  v.  Prouty,  0  Mete.  (Mass.) 
547,  43  Am.  Dec.  400.  See  Ileald 
V.  Davis,  11   Cusli.  :)1!). 

A  note  found  among  tlu^  maker's 
papers  after  his  death  is  presumed 
to  have  been  paid.  Brady  v.  Brady, 
no  Md.  656. 

68  Larimorc  v.  Wells,  20  Oliio  St. 
13. 


700  SUTHERLAND  ON  DAMAGES.  [§  233 

force  of  tliG  presuinption  varies  with  the  circumstances  of  the 
case  ill  which  it  is  sought  to  be  applied;  and  the  amount  of 
evidence  necessary  to  overcome  it  is  for  the  jury.^^  A  debtor's 
books  of  account  are  not  evidence  to  prove  payments  made  by 
him  to  his  creditor."^"  It  is  otherwise  as  to  an  entry  in  the  ac- 
count books  of  a  creditor  if  made  when  against  his  interest,'^ 
and  as  to  the  books  of  an  agent  who  received  payment,  the  entry 
being  made  contemporaneously  therewith,''''^ 

"A  bond  and  mortgage  taken  for  the  same  debt,  though  dis- 
tinct securities  possessing  dissimilar  attributes  and  subject  to 
remedies  which  are  as  unlike  as  personal  actions  and  proceed- 
ings in  rem,  are,  nevertheless,  so  far  one  that  payment  of  either 
discharges  both,  and  a  release  or  extinguishment  of  either,  with- 
out actual  payment,  is  a  discharge  of  the  other,  unless  otherwise 
intended  by  the  parties;"  hence,  an  acknowledgment  upon  the 
record  of  full  satisfaction  of  the  mortgage,  no  mention  being 
made  of  the  debt  or  the  bond,  prima  facie  imports  the  extingTiish- 
ment  of  the  debt.''^ 

The  receipt  of  rent  for  a  specified  period  is  presumptive  evi- 
dence of  the  payment  of  previous  rent.'*  So  of  board  '^  and 
taxes.'®  So  where  A.,  in  consideration  of  a  bill  of  goods  sold  to 
him  by  B.,  agreed  to  pay  the  amount  of  the  bill  in  discharge  of 
certain  notes  signed  by  B.  and  indorsed  by  A.,  it  is  like  evidence 
of  the  payment  of  a  previous  indebtedness  of  B.  to  A."  The 
conveyance  of  land  to  a  son  to  whom  the  grantor  was  indebted  is 
evidence  of  payment.'^ 

69  Davidson  v.  Browning,  73  W.  74  Mercer  Electric  Mfg.  Co.  v. 
Va.  276,  L.R.A.1915C,  976;   Grimes       Connecticut    Electric    Mfg.    Co.,    87 

V.    Hilliarv,    150    111.    141;    Gray  v.        ,,           /.m      o      4.1         +         rr  i     *    rp 

•'  Conn.   601;    Southwestern  Tel.  &  T. 

Gray,    47    N.    Y.    552;    Larimorc  v. 

Wells,  29  Ohio  St.  13.  ^o.   v.   Luckett,   -   Tex.   Civ.   App. 

70  Hess'  App.,  112  Pa.  168.  — ,   127   S.  W.  856. 

Such    entries    are    competent    to  75  Morrow   v.   Frank ish,     27     Del. 

show  payment  in  goods.    Blackshear       534. 

V.  Dekle,  120  Ga.  766.  76  Brewer  v.  Knapp,  1  Pick.  332; 

71  Van  Name  v.  Barber,  115  App. 
Div.   (N.  Y.)   593. 

72Hastie  v.  Burrage,  69  Kan.  560. 

73  Fleming  v.   Parry,   24   Pa.   47 ;  ''  Colvin   v.   Carter,   4   Ohio,   354. 

Seiple  V.  Seiple,  133  id.  460.  78  Heber  v.  Heber,   139   Wis.  472. 


Attleborough    v.   Middleborough,    10 
Pick.   378. 


§    2-'>3]      CONVENTIONAL    LKiUlDATlONS    AND    DISCII ARUKS.        70l 

Jf  a  debtor  is  jilaccd  in  an  olHcial  ..r  lidiioiary  relation,  in 
whii'li  it  becomes  his  diitv  to  receive  money,  tbc  hiw  will  m 
general  ju'esume  payment  of  the  debt — but  the  presumption  may 
bo  rebutted.''^  Payment  re<'cived  on  Sunday,  though  in  violation 
of  the  law  for  the  observance  of  that  day,  if  it  is  retained,  is 


good 


80 


81 


An  indorsement  of  credit  on  an  evidence  of  debt  by  the 
payee,  within  the  period  that  raises  the  legal  presumption  of 
payment,  is  evidence  for  him  for  the  purpose  of  repelling  that 
presumption ;  "  but  for  that  i)urpose  it  has  reference  to  the 
time  when  such  payment  purports  to  have  been  made.*^  And  on 
indorsement  on  a  note  in  the  plaintiff's  possession  is  evidence  of 
payment.*'  No  presumption  of  payment  arises  from  the  fact 
of  long  delay  in  prosecuting  a  claim  because  the  alleged  debtor 
had  property  near  the  creditor's  place  of  residence  if  such  prop 
erty  could  not  have  been  reached  without  giving  a  bond 
Though  a  presumption  of  payment  arises  from  a  delay  of  20 
years  in  instituting  proceedings  to  collect  a  debt  due  on  a 
specialty  or  judgment  not  subject  to  the  statute  of  limitations,®* 
such  presumption  does  not  arise  where  within  the  20  years  there 
has  been  a  bona  fide  though  unsuccessful  attempt  to  make  col- 
lection thereon.®^  If  no  obstacle  has  existed  to  bringing  suit  or 
making  other  demand  of  payment  long  delay  in  doing  either 
raises  a  presumption  of  payment,*''  unless  the  relation  between 

79  Wilson  V.   Wilson,   17   Ohio  St.  84  Ludwig      v.      Blacksliorc,      102 
150,  91  Am.   Dec.   125.     See   §  222.       Iowa,  366.    See  McAllister  v.  Cliam- 

80  Johnson  v.  Willis,  7  Gray,  164;       bers,  71  Wash.  521. 

Shields     v.     Klopf ,     70     Wis.     69 ;  85  Parsons  v.   Cannon's    Ex'r,    27 

Jameson  v.  Carpenter,  68  N.  H.  62.  y)c\.      298;       Farmers'      Bank      v. 

81Dabney  V.  Dabney,  2  Rob.  (Va.)  Leonard,    4    Har.    536;    Maxwell    v. 

622,  40  Am.  Dec.  761.  j^^  Valinger,  2  Pennewill,  504. 

But  in  Missouri  it  has  been  held  86  James  v.  Jarrett,   17   Pa.   370; 

that  marking  a  note  "paid"  will  not  ^^  ^^  Miller's  Estate,  243  Pa.  328. 

raise  a  prima  facie  presumption  of  ^^  ^^^^   ^    j^^^,^^    ^2     Kan.    658; 

payment.     Powell  v.   Blow,   34  Mo. 

*^  "^                      .   ,  T.     1      f  T.  -n         Elliott  V.  Capital  City  fe.  nank,   i4.» 

485;  Commercial  Bank  of  Boonville       ^'  *                   o     »           i  k; 

T7                17R  M.     Anr.    78  lowa,  309;   Ilolway  V.  Sanborn,  145 

V.  Varnum,  176  Mo.   App.  78.  t>      i        1 1 1  t  „ 

ooTT               Tv/r           Q  \T4^    111  Wis.  151;  Kuhn  v.  Bercher,  114  La. 

82  Hayes  V.  Morse,  8  Vt.  313.  '^^'='-   ''    '                                       ,,    x- 

83  Iberia  C.   Co.   v.   Christen,    112       602;    Dowling   v.   Ilastui-s,   211    N. 
La.  451.  Y.  199. 


702  SUTHERLAND    ON    DAMAGES.  [§    233 


88 


the  parties  is  one  of  social  intimacy  with  a  view  to  marriage 
In  England  "where  a  person  serves  in  the  capacity  of  a  domestic 
servant,  and  no  demand  for  the  payment  of  wages  is  made  by 
the  servant  for  a  considerable  period  after  such  service  has 
terminated,  the  inference  is  either  that  the  wages  have  been 
paid,  or  that  the  service  was  performed  on  the  footing  that  no 
payment  was  to  be  made/^  This  doctrine  is  fully  recognized  in 
Pennsylvania.^" 

No  presumption  of  payment  for  services  arises  because  the 
person  to  whom  they  were  rendered  paid  the  plaintiff  for 
board.^^  In  connection  with  failure  to  demand  the  payment  of 
a  note,  the  neglect  to  return  any  credits  for  taxation  is  to  be 
considered.^^  Whenever  the  presumption  of  payment  arising 
from  lapse  of  time  comes  into  operation  it  increases  in  strength 
year  by  year.^^  Such  presumption,  whether  arising  from  lapse 
of  time,^*  or  the  continued  possession  by  a  mortgagor  of  the 
premises  in  question^®  is  rebuttable,  and  the  course  of  dealing 
between  the  parties  may  be  shown  for  the  purpose  of  overcoming 
it.^« 

Section  2. 

application  of  payments. 

§  234.  General  rule.  The  general  rule  on  this  subject  is 
til  at  a  debtor  paying  money  to  a  creditor  to  whom  he  owes 
several  debts  may  appropriate  it  to  which  he  pleases.  In  the 
absence  of  an  appropriation  by  the  debtor  the  creditor  has  a 
right  to  make  the  application.  If  both  omit  to  make  an  ap- 
propriation the  law  will  apply  it  according  to  the  justice  and 

ssSchrader    v.    Beatty,    206    Pa.  92  Norton  v.  Ailen,  134  Ga.  21. 

184.  93  Cannon    v.    Hilenian,    229    Pa. 

89Scllen   V.    Norman,    4    C.    &   P.  414. 

80;  Gough  v.  Findon,  7  Ex.  49.  94  Swinley  v.  Force,  78  N.  J.  Eq. 

90  Taylor  v.  Beatty,  202  Pa.   120,  52. 

125;  Winfield  v.  Beavers  T.  Co.,  229  95  Jenkins  v.  Andover  Theological 

Pa.    530;     Hatfield's    Est.,    50    Pa.  Seminary,  205  Mass.  376. 

Super.  450.  96  Shuman's    Est.,    45    Pa.    Super. 

91  Fry  V.  Fry,  119  Mo.  App.  476.  587. 


235]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       70.3 


equity  of  the  case.^'  That  some  of  the  claims  are  secured  is 
immaterial  so  far  as  the  right  of  either  party  to  make  the  ap- 
plication is  concerned.®^ 

§  235.  By  debtor.  The  right  of  the  debtor  who  makes  a  vol- 
untary payment  to  direct  how  it  shall  be  applied  is  absolute  if  he 
sienifies  his  election  at  the  time  of  making  it  ^'  or  at  any  time 


97  p.  Ballantine  &  Sons  v.  Fenn, 
88  Vt.   IGG;    French  v.   Richardson, 
167  N.  C.  41;   Columbia  Digger  Co. 
V.    Rector,    215    Fed.    618;    Hall    v. 
Nix,   156  Ala.   423;   National  Bank 
V.   Bigler,   83   N.   Y.   51;    Wetherell 
V.  Joy,  40  Me.  325;  Thayer  v.  Den- 
ton, 4  Mich.  192;  Hall  v.  Constant, 
2  Hall,  185;  Baker  v.  Stackpoole,  9 
Cow.  420,  18  Am.  Dec.  508;  Parker 
V.    Green,    8    Mete.     (Mass.)     137; 
Truscott    V.    King,    6    N.    Y.    147; 
Stewart  v.  Hopkins,  30  Ohio  St.  502 ; 
McDaniel   v.    Barnes,    5    Bush    183; 
Parks  V.  Ingram,  22  N.  H.  283,  55 
Am.  Dec.  153 ;  Bosley  v.  Porter,  4  J. 
J.  Marsh.  621 ;  Reed  v.  Boardman,  20 
Pick.  441;   Shaw  v.  Picton,  4  B.  & 
C.    715;    Scott   V.    Fisher,    4    T.    B. 
Mon.   387;    Bayley  v.   Wynkoop,   10 
ni.  449;  Nutall  v.  Brannin,  5  Bush, 
11;  Hall  V.  Marston,  17  Mass.  575; 
Goddard  v.  Cox,  2  Str.  1194;  Peters 
V.  Anderson,  5   Taunt.  596;   Bosan- 
quet  V.  Wray,  6  id.  597;   Brooke  v. 
Enderby,  2  B.  &  B.  70;    Bodenham 
V.  Purchas,  2  B.  &  Aid.  39;   Brady 
V.  Hill,  1  Mo.  315;  Sprinkle  v.  Mar- 
tin,   72    N.    C.    92;    Dent    v.    State 
Bank,  12  Ala.  275;   Wooten  v.  Bu- 
chanan, 49  Miss.  386;   Hamilton  v. 
Benbury,  Mart.  &  Hay w.  586 ;  James 
V.   Malone,   1    Bailey,  334;    Mills  v. 
Kellogg,     7     Minn.     469;     Bobe     v. 
Stickney,     36      Ala.     492;      Dennis 
.V.  McLaurin,  31  Miss.  606;   Gaston 
V.  Barney,  11  Ohio  St.  506;  Jones  v. 
Smith,    22    Mich.    360;     Waterman 
V.  Younger,  49  Mo.  413;  Starrett  v. 
Barber,     20     Me.     457 ;     Irwin     v. 
Paulett,  1  Kan.  418;  Pearl  v.  Clark, 


2  Pa.  350;  Moorehead  v.  West 
Branch  Bank,  3  W.  &  S.  550;  Sel- 
leck  V.  Sugar  Hollow  T.  Co.,  13 
Conn.   459;    Whetniore  v.   Murdock, 

3  Woodb.  &  M.  390;  Dulles  v.  De 
Forest,  19  Conn.  190;  Souder  v. 
Schechterly,  91  Pa.  83;  Clarke  v. 
Scott,  45  Cal.  86;  Hargroves  v. 
Cooke,  15  Ga.  321;  Haynes  v.  Nice, 
100  Mass.  327;  Cardinell  v.  O'Dowd, 
43  Cal.  586;  Putnam  v.  Russell,  17 
Vt.  54,  42  Am.  Dec.  478;  Robson  v. 
McKoin,  18  La.  Ann.  544;  Early  v. 
Flannery,  47  Vt.  253;  Holmes 
V.  Pratt,  34  Ga.  558;  McMillan  v. 
Grayston,  83  Mo.  App.  425;  Under- 
bill V.  Wynkoop,  15  Pa.  Super.  Ct. 
230;  Burnett  v.  Sledge,  129  N.  C. 
114. 

98  Post-Intelligencer  Pub.  Co.  v. 
Harris,  11  Wash.  500;  Wood  v. 
Callaghan,  61  Mich.  402,  1  Am.  St. 
597;  Arbuckles  v.  Chadwick,  140 
Pa.  393. 

99  Benton-Shingler  Co.  v.  Mills,  13 
Ga.  App.  632;  Reram  v.  Landon,  44 
Ind.  App.  430;  Sparks  v.  Jasper 
County,  213  Mo.  218;  Lincoln  v. 
Lincoln  St.  R.  Co.,  67  Neb.  469; 
Lee  V.  Manley,  154  N.  C.  244;  Mul- 
herin  v.  Stansell,  70  S.  C.  568 ;  Car- 
son V.  Cook  County  L.  Co.,  37  Okla. 
12;  Eppinger  v.  Kendrick,  114  Cal. 
620;  Longworth  v.  Aslin,  106  Mo. 
155;  Brown  v.  Brown,  124  Mo.  79; 
Koch  V.  Rotli,  150  111.  212,  226; 
Aderholt  v.  Embry.  78  Ala.  185; 
McCurdy  v.  Middleton,  82  id.  131; 
Baldwin  v.  Flash,  59  Miss.  61  ; 
Miles  V.  Ogden,  54  Wis.  573;  Long 
V.   Miller,   93   N.   C.  233;    Libby   v. 


•04 


SUTHERLAND    ON    DAMAGES. 


[§  235 


before  application  of  it  has  been  made  by  the  creditor.^  The 
debtor  will  not  lose  that  right  unless  he  has  an  opportunity  Ui 
exercise  it  and  neglects  to  do  so.^  The  rule  is  the  same  in  respect 
to  a  partial  payment  accepted  by  the  creditor.'  The  direction 
of  the  debtor  may  be  inferred  from  circumstances,  and  if  his 
intention  can  thus  be  shown  it  is  of  the  same  force  as  though 
it  had  been  expressed.*  The  intention  to  appropriate  a  pay- 
ment to  a  particular  debt  may  be  collected  from  the  nature  of 
the  transaction,  and  be  referred  to  the  jury  as  a  question  of 
fact.^     Thus,  where  two  charges  of  unequal  amounts  exist,  one 


Hopkins,  104  U.  S.  303,  26  L.  ed. 
769;  Washington  N.  G.  Co.  v. 
Jolinson,  123  Pa.  576;  Bray  v. 
Grain,  59  Tex,  649;  Robinson 
\.  Doolittle,  12  Vt.  246;  Wendt  v. 
Ross,  33  Cal.  650;  Gaston  v.  Bar- 
ney, 11  Ohio  St.  506;  Selleck  v. 
Sugar  Hollow  T.  Co.,  13  Conn.  453; 
Reynolds  v.  McFarlane,  1  Overt. 
488;  McDaniel  v.  Barnes,  5  Bush, 
183;  Parks  v.  Ingram,  22  N.  H.  283, 
55  Am.  Dec.  153;  Bosley  v.  Porter, 
4  J.  J.  Marsh.  621;  Parker  v.  Green, 
8  Mete.  (Mass.)  144;  Mann  v. 
Marsh,  2  Cal.  99;  Trotter  v.  Grant, 
2  Wend.  413;  Allen  v.  Culver,  3 
Denio  284;  Van  Rensselaer  v.  Rob- 
erts, 5  id.  470;  Walther  v.  Wet- 
more,  1  E.  D.  Smith  7;  Pattison  v. 
Hull,  9  Cow.  747;  Baker  v.  Staek- 
poole,  id.  420,  18  Am.  Dec.  508; 
Webb  V.  Dickinson,  11  Wend.  02; 
Stone  v.  Seymour,  15  id.  19. 

Payments  made  by  an  agent  to 
his  principal's  creditor  after  the 
death  of  the  principal  cannot  be 
applied  to  the  discharge  of  indebted- 
ness existing  before  his  death  in  a 
proceeding  against  the  testator's 
estate,  at  least  when  the  estate  is 
insolvent.  GifFord  v.  Thomas'  Est.. 
62  Vt.  34. 

Under  the  Louisiana  code  a  debt- 
or who  has  the  opportunity  of  ascer- 
taining that  his  creditor  has  made 


an  application  cannot,  after  failing 
to  avail  himself  of  the  right  to  ob- 
ject thereto  and  allowing  a  long 
time  to  pass,  be  heard  to  ask  for  a 
different  application.  Baker  v. 
Smith,  44  La.  Ann.  925. 

iLynn  v.  Bean,  141  Ala.  236; 
Petty  V.  Dill,  53  Ala.  645. 

2  Jones  V.  Williams,  39  Wis.  300; 
Waller  v.  Lacy,  1  M.  &  G.  54. 

3  Gaston  v.  Barney,  11  Ohio  St. 
506;   Wetherell  v.  Joy,  40  Me.  325. 

4  Smith  V.  Mould,  87  Misc.  (N. 
Y.)  199;  French  v.  Richardson,  167 
N.  C.  41;  P.  Ballantine  &  Sons  v. 
Fenn,  88  Vt.  166;  Cavanaugh  v. 
Marble,  80  Conn.  389,  15  L.R.A. 
(N.S.)  127;  Snell  v.  Cottingham,  72 
111.  124;  Tayloe  v.  Sandiford,  7 
Wheat.  13;  Mayor  v.  Patten,  4 
Cranch,  317,  2  L.  ed.  633;  Terhune 
v.  Colton,  12  N.  J.  Eq.  233,  312; 
Howland  v.  Bench,  7  Blackf.  236; 
Mitchell  V.  Dall,  2  Har.  &  G.  159; 
Robinson  v.  Doolittle,  12  Vt.  246; 
Shaw  V.  Picton,  4  B.  &  C.  715; 
Scott  V.  Fisher,  4  T.  B.  Mon.  387; 
Keane  v.  Branden,  12  La.  Ann.  20; 
Smuller  v.  Union  C.  Co.,  37  Pa.  68; 
Lanten  v.  Rowan,  59  N.  H.  215; 
Roakes  v.  Bailey,  55  Vt.  542;  Bray 
V.  Grain,  59  Tex.  649;  Hansen  v. 
Rounsavell,  74  111.  238;  Plain  v. 
Roth,  107  id.  588. 

5  Pritchard  v.  Comer,  71    Ga.   18; 


§    235]      CONVENTIOiSrAL    LKanUAI'lONS    AiSD    DISCll  AKliKS.        705 

legal  and  the  other  illegal,  the  former  not  due,  and  a  general 
payment  of  an  amount  not  in  excess  of  the  illegal  claim  is  made 
on  account,  it  was  held  to  have  been  paid  upon  that  claim  al- 
though there  was  no  direction  given. ^  And  so  where  a  payment 
is  made  to  a  creditor  who  holds  an  original  claim  against  the 
debtor,  of  which  the  latter  has  knowledge,  and  also  claims  which 
have  been  purchased  without  the  (h^btor's  knowledge,  it  will  be 
presumed  that  the  payment  was  intended  to  be  applied  upon  the 
former/  If  the  debtor,  at  the  time  of  making  the  payment, 
makes  an  entry  in  his  own  book,  stating  that  it  is  upun  a  i)artic- 
ular  demand,  and  shows  the  entry  to  the  creditor  it  is  a  sulHcieut 
appropriation.*  The  fact  of  the  entries  being  made  must  be 
communicated  to  the  debtor,^  unless  the  right  to  make  them  was 
exercised  pursuant  to  a  previous  direction.^"  The  proper  time 
to  direct  the  application  of  the  proceeds  of  personal  property 
delivered  or  consigned  to  a  lienee  for  sale  is  when  the  delivery 
or  consignment  is  made.^^ 

But  this  right  of  the  debtor  to  elect  to  which  of  several  debts 
a  payment  shall  be  applied  is  confined  to  voluntary  payments; 
it  does  not  extend  to  moneys  collected  by  legal  process, ^^     The 


West  Branch  Bank  v.  Morehead,  5 
W.  &  S.  542;  Morehead  v.  West 
Branch  Bank,  '3  id.  550. 

Paying  money  on  account,  with- 
out specifying  any  particular  ac- 
count, is  not  an  application  of  it, 
the  payer  owing  the  creditor  on 
more  than  one  account.  Orr  v. 
Nagle,  87  Hun,  12. 

6  Caldwell  v.  Wentworth,  14  X. 
H.  431;  Frazer  v.  Bunn,  8  C.  &  P. 
704;  Dorsey  v.  Wayman,  6  Gill, 
59.  See  McCarty  v.  Gordon,  16 
Kan.  35. 

7  Holley  V.  Hardeman,  7G  Ga. 
328;  Moose  v.  Marks,  IIG  N.  C.  78.1. 

8  Frazer  v.  Bunn,  8  C.  &  P.  704. 

9  Reiss  V.  Schemer,  87  111.  App. 
84. 

10  First  Nat.  Bank  v.  Roberts,  2 
N.  D.  195. 

11  Bell  V.  Bell,  20  S.  C.  34;  Frost 

Suth.  Dam.  Vol.  I.— 45. 


V.  Weathcrsbe*^,  23  id.  308;  Baum 
V.  Trantham,  42  id.  104,  4(1  Am.  St. 
097. 

The  same  right  exists  in  tiie  debt- 
or to  direct  the  application  of  pay- 
ments made  by  services  as  if  tiiey 
were  made  in  money,  and  such  di- 
rection may  be  given  when  the  con- 
tract for  the  services  was  made. 
Carson  v.  Cook  County  L.  Co.,  37 
Okla.  12. 

i2Kinkead  v.  Pcct.  104  Iowa,  05: 
Citizens'  Sav.  Bank  v.  Wood,  134 
Iowa,  232;  Blackstone  Bank  v.  Hill. 
10  I'ick.  129;  Barrett  v.  Lewis,  2 
id.  123;  Wooten  v.  Buchanan,  49 
Miss.  386;  Forelander  v.  Hicks,  0 
Ind.  448;  Nicliols  v.  Knowles,  3 
JilcCrary  477,  17  Fed.  494;  Moiison 
v.  Meyer,  190  Til.  105,  all'g  92  111. 
App.  127;  Blair  v.  Teel  (Tex.  Civ. 
App.),  152  S.  W.  878. 


706  SUTHERLAND    ON    DAMAGES.  [§    235 

right  of  the  debtor  to  so  direct,  however,  cannot  be  defeated 
by  the  creditor  obtaining  possession  of  the  debtor's  funds  with- 
out his  consent,  except  by  legal  proceedings  binding  upon  him. 
Where  a  debtor  intrusted  funds  to  an  agent  with  directions  to 
apply  them  by  way  of  compromise  in  satisfaction  of  two  de- 
mands held  against  him  by  the  same  person,  and  the  creditor, 
knowing  this  fact,  levied  an  attachment  on  the  money  so  con- 
fided to  the  agent  and  also  on  the  money  of  the  agent,  and 
thereupon  the  latter,  to  regain  possession  of  his  own  money, 
assented,  under  protest,  to  the  application  of  the  debtor's  money 
to  one  of  the  debts  which  was  unsecured,  it  was  not  binding 
upon  the  debtor,  and  he  was  allowed,  when  afterwards  sued,  to 
apply  it  to  either  at  his  option.^^  So  where  a  surety  sends  money 
by  the  principal  to  the  creditor  and  such  principal  so  informs 
the  creditor,  they  can  make  no  other  application  than  that  di- 
rected by  the  surety.^* 

Where  money  is  paid  by  the  principal  debtor  a  surety  cannot 
interfere  to  control  the  application  contrary  to  the  intention 
of  the  party  paying. ■^^  ITor  can  subsequent  incumbrancers  or 
other  third  parties  control  the  application  of  moneys  made  by 
the  parties. ^^  But  sureties  on  official  bonds  will  not  be  ren- 
dered liable  as  for  defalcation  by  application  of  funds  received 
in  their  time  to  cancel  prior  balances  or  defalcations."  Nor 
will  an  intention  of  the  principal  debtor  to  apply  a  payment 
in  favor  of  a  surety  be  presumed,  and  thus  exclude  the  right 

13  Dennis  v.  McLaurin,  31  Miss.  17  In  United  States  v.  Eckford,  1 
006;  Pearl  v.  Clark,  2  Pa.  350.  How.  250,   11   L.   ed.   120;    McLean, 

14  Reed  v.  Boardman,  20  Pick.  J.,  said:  "The  treasury  officers  are 
441.  See  Lansdale  v.  Graves,  the  agents  of  the  law.  It  regulates 
Sneed,  215.  their   duties,   as   it   does  the   duties 

16  Mathews    v.    Switzler,    46    Mo.  and  rights  of  the  collector  and  his 

301 ;  Gaston  v.  Barney,  11  Ohio  St.  sureties.     The  officers  of  the  treas- 

506 ;    Field    v.    Holland,    6    Crancli  ury  cannot,  by  any  exercise  of  their 

8,  3  L.  ed.   136;    Allen  v.  Jones,   8  discretion,    enlarge    or    restrict    the 

Minn.  202;  Halsted  v.  Griefen,  173  obligation    of    the    collector's  bond. 

111.  App.  551.  Much   less  can  they,    by    the    mere 

16  Kline  v.   Miller,   107   Va.   453;  fact  of  keeping  an  account  current, 

Richardson  v.  Washington  Bank,  3  in    which    debits    and    credits    are 

Mete.     (Mass.)    536;    Mills    v.    Kel-  entered  as  they  occur,  and  without 

'ogg>  7  Minn.  469.     But  see  Green  any   express   appropriation    of   pay- 

V.  Tyler,  39  Pa.  361.  ments,  affect  tlie  right  of  sureties. 


§    235]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       707 

of  the  creditor  to  iiiakc  the  applicatiou."  The  right  of  a  debtor 
to  apply  money  regardless  of  his  surety  exists  only  where  the 
payment  is  made  by  his  own  funds  free  froTu  any  equity  in 
favor  of  the  surety  to  have  the  application  made  in  payment 
of  the  debt  for  which  he  is  liable.  Where  the  specific  money 
paid  to  the  creditor  and  applied  on  a  debt  of  the  principal,  for 
which  the  surety  is  not  held,  is  the  money  for  the  collection 
and  payment  of  which  the  surety  is  bound  the  latter  is  entitled 
to  have  the  money  applied  to  the  payment  of  the  debt  for 
which  he  is  surety  unless  the  creditor  shows  a  superior  equity 
to  sustain  the  application  made.     The  surety  has  the  burden 


The  collector  is  a  mere  agent  or 
trustee  of  the  government.  He 
holds  the  money  he  receives  in 
trust,  and  is  bound  to  pay  it  over 
to  the  government  as  the  law  re- 
quires. And  in  the  faithful  per- 
formance of  til  is  trust  the  parties 
have  a  direct  interest,  and  their 
rights  cannot  be  disregarded.  It 
is  true,  as  argued,  if  the  collector 
shall  misapply  the  public  funds,  his 
sureties  are  responsible.  But  that 
is  not  the  question  under  considera- 
tion. The  collector  does  not  mis- 
apply the  funds  in  his  hands,  but 
pays  them  over  to  the  government 
without  any  special  direction  as 
to  their  application.  Can  the  treas- 
ury officers  say,  under  such  circum- 
stances, that  the  funds  currently 
received  and  paid  over  shall  be  ap- 
propriated in  discharge  of  a  defal- 
( ation  wliich  occurred  long  before 
the  sureties  were  bound  for  the  col- 
h'ctor,  and  by  such  appropriation 
liold  the  sureties  bound  for  the 
amount?  The  statement  of  the  case 
is  the  best  refutation  of  the  argu- 
ment. It  is  so  unjust  to  the  sure- 
ties, and  so  directly  in  conflict  with 
the  law  and  its  policy,  tluit  it  re- 
quires but  little  consideration." 
Jones    v.    United     States,     7     llow. 


681,  12  L.  cd.  870;   Boody  v.  Same, 

1  Woodb.  &  M.  150;  Postmaster- 
General  V.  Norvell,  Gilpin,  100; 
United  States  v.  January,  7  Cranch, 
572,  3  L.  ed.  443;  Seymour  v.  Van 
Slyck,  8  Wend.  403;  Stone  v.  Sey- 
mour, 15  id.  19;  United  States  v. 
Linn,  2  McLean,  501;  State  v. 
Smith,  26  Mo.  226,  72  Am.  Dec. 
204,  holds  that  if  the  officer  receiv- 
ing the  payment  knew-  that  the 
money  was  derived  from  current 
collections  tlie  state  cannot  apply 
it  to  the  injury  of  sureties  upon  the 
current  bond.  It  is  said  in  First 
Nat.  Bank  v.  National  S.  Co.,  130 
Fed.  401,  64  C.  C.  A.  601,  66  L.R.A. 
777,  tliat  the  cases  cited  are  in  con- 
flict with  Gwynne  v.  Barnes,  7  CI. 
&  F.  571;  State  v.  Sooy,  39  N.  J. 
L.  538;  Seymour  v.  Van  Slyck,  8 
Wend.  403;  Stone  v.  Seymour,  15 
id.  19,  and  Sandwich  v.  Fish.  2 
Gray,  208. 

18  Smith's  Merc.  L.  672;  Plomer 
V.  Long,  1  Stark.  153;  Hargroves  v. 
Cooke,  15  Ga.  321 ;  Clark  v.  Burdett, 

2  Hall,  197;  James  v.  Malone,  1 
Bailey,  334.  See  Lansdalc  v. 
Graves,  Sneed,  215;  Gard  v. 
Stevens,  12  Midi.  292,  SO  Am.  Dec. 
52. 


708  SUTIIKRLANI)    ON    DAMAGES.  [§    235 

of  showing  that  the  application  made  is  inequitable  to  him.^^ 
The  absolute  right  of  directing  the  application  of  payments 
which  a  debtor  has  does  not  pass  to  his  personal  representatives ; 
nor  does  it  pertain  to  any  one  making  payments  in  a  fiduciary 
capacity.^"  If  the  terms  of  an  express  trust  do  not  determine  the 
order  of  payments,  their  order,  it  is  believed,  must  be  fixed  by 
law. 

A  series  of  cases  in  Pennsylvania  have  dealt  with  the  right 
of  members  of  building  and  loan  associations  to  direct  the  ap- 
plication of  payments  made  to  the  latter.  Originally  it  was 
determined  that  all  payments  were  to  be  credited  to  the  debt 
created  by  tlie  loan  made  to  the  member.^^  But  this  doctrine 
was  qualified  and  is  not  to  be  regarded  as  laying  down  the 
rule  that  payment  of  dues  on  the  stock,  ijjso  facto,  works  an 
extinguishment  of  so  much  of  the  mortgage.  "The  debtor 
may  so  apply  it,  but  the  payment  itself  is  not  an  application 
of  the  money  to  the  reduction  of  the  mortgage."  ^^  The  right 
of  the  debtor  to  direct  the  application  of  the  payments  on  the 
stock  to  the  extingiiishment  of  the  debt  is  now  recognized  if 
the  rights  of  creditors,  based  on  the  assignment  of  the  stock, 
are  not  affected, ^^  (U*  legal  process  has  not  been  resorted  to  or 
insolvency  has  not  intervened.^*  An  application  made  at  the 
inception  of  the  contract  for  the  loan  cannot  be  subsequently 

19  Merchants'  Ins.   Co.  v.  ITcrber,  the  order  in  which  the  money  is  to 

6S  Minn.  420.  be  applied  the  agent  may  make  the 

A  surety  may  insist  upon  the  ap-  application  according  to  his  discre- 
plication of  the  very  moneys  for  ^jon  and  the  debtor  will  ^be  bound 
the  collection  and  payment  of  which  ^^  j^  Carpenter  v.  Coin,  19  N.  H. 
he  is  hound  in  discharge  of  the  lia-  ^'-.^ 

bility      assumed.        Crane      Co.      v.  21  Kiipfert  v.  Guttenberg  B.  Ass'n, 

Pacific  H.  &  P.  Co.,  3G  Wash.  95. 


30  Pa.  465;  Hughes's  App.,  id.  471. 
22  Building    Ass'n    v.    Sutton,    35 
Pa.  463,  78  Am.  Dec.  349. 


20  Putnam  v.  Russell,  17  Vt.  54 
42  Am.  Dec.  47S;  Barrett  v.  Lewis 
2  Pick.  123;  Cole  v.  Trull,  9  id.  325. 

But     in     Marshall     v.     Nagel,     1  23  Wadlinger  v.  Washington  Ger- 

Bailey,   308,   it  was  held   that   if   a  '"=^"  B.  &  L.  Ass'n,  153  Pa.  622. 

debtor  pays  a  sum  of  money  on  ac-  ^4  Strohen   v.    Franklin    S.     &    L. 

count  of  distinct  debts  due  to  dif-  Ass'n,  115  Pa.  273;   York  Trust,  R. 

ferent  creditors  to  a  common  agent  E.    &   D.    Co.   v.    Gallatin,    186    Pa. 

of  all  and  gives  no  directions  as  to  150. 


§    236]      CONVENTIONAL    LKiUlDATJONS    AND    JJlSCllAKCiKS.        TU'J 

interfered  witli.^*  Where  a  borrowing  member  of  such  an  as- 
sociation gives  it  his  obligation  for  the  payment  of  the  princi- 
pal debt  in  equal  monthly  instalments  nntil  the  whole  is  paid 
according  to  the  statute  and  the  rules  of  the  association,  sucii 
instalments  cannot  be  appropriated  to  a  direct  payment  on 
account  of  the  loan  with  the  effect  of  leaving  dues  on  the 
stock  unpaid.^^ 

§  236.  Same  subject.  An  agreement  between  debtor  and 
creditor  for  a  particular  application  of  moneys  expected  from 
a  specific  source  will  preclude  any  diversion  by  either,  withont 
the  consent  of  the  other,  when  the  money  is  received.^'''  Tlins, 
where  money  is  realized  by  a  creditor  from  a  collateral  se- 
curity for  a  debt,  such  money  is  deemed  appropriated  to  that 
debt.^*  The  plaintiff,  an  equitable  mortgagee  for  600/.,  lent 
the  title  deeds  of  the  property  to  the  defendant  E,  the  mort- 
gagor, to  enable  him  to  negotiate  a  sale  of  it,  the  deeds  to  be 


25  York,  etc.  Co.  v.  Gallatin, 
sup7-a. 

26  Freemansbuig  B.  &  L.  Ass'n,  v. 
Watts,   199   Pa.   221. 

27  Van  Buren  County  Sav.  Bank 
V.  Sterling  W.  M.  Co.,  125  Iowa, 
645;  Planters'  State  Bank  v. 
Schlamp,  124  Ky.  295;  Thompson 
V.  Hudson,  L.  R.  6  Ch.  320;  Lans- 
dale  V.  Mitchell,  14  B.  Mon.  348; 
Hughes  V.  McDougle,  17  Ind.  39!); 
King  of  Spain  v.  Oliver,  Pet.  C.  C. 
276;  Sproule  v.  Samuel,  5  III.  135; 
Stackpole  v.  Keay,  45  Me.  297 ; 
Gwathney  'y.  McLane,  3  McLean, 
371;  White  v.  Toles,  7  Ala.  50!); 
Smith  V.  Wood,  1  N.  J.  Eq.  74; 
Hahn  v.  Geiger,  96  111.  App.  104; 
Hansen  v.  Rounsavell,  74  111.  238. 
See  §  235,  last  paragraph. 

In  Ross  V.  Crane,  74  Iowa,  375, 
the  purchaser  of  a  note  and  mort- 
gage agreed  with  their  maker  in 
writing  to  employ  him  and  apply 
his  wages  in  payment  of  the  mort- 
gage debt.  After  money  enough 
had  been   earned  to   pay    tlie  mort- 


gage the  liolder  ap|)]i('(l  tlie  amoiiiit 
to  anotlicr  account  and  assi,i,Ni('(] 
the  security  and  tlic  nntc  (o  a  third 
person.  'I'lie  agici'Miciit  was  l)iii(l- 
ing  and  tli(>  (h>l)t  to  liave  Ix'cn  satis- 
lied  hcfoic  the  assigmiient  waa 
made. 

28  Howard  v.  Schwartz.  22  Tex. 
Civ.  App.  400;  Caldwell  v.  Hall.  41) 
.Ark.  508:  Strickland  v.  llardie,  S2 
.\la.  412:  (Irecr  v.  'I  inner,  47  Ark. 
17;  I'ritcliaid  \.  (  oiiicr.  71  (!a.  IS; 
IFatclicr  V.  Comer,  7:!  id.  IIS;  Tay- 
lor V.  Cockr.'ll,  SO  Ala.  -JMC) ;  Mar- 
ziou  V.  riddle,  S  (  al.  .')22  ;  lUirkley 
V.  Garrett,  47  Pa.  280;  SantOrd  v. 
Clark,  29  Conn.  457;  Masten  v. 
Cnnimings,  24  Wis.  023;  Cmss 
V.  .Tolin.son,  30  Ark.  390;  .MeCune  v. 
Belt,  45  Mo.  174;  Paine  v.  Bonney, 
6  Abb.  Pr.  99;  Donally  v.  Wilson. 
5  Leigh,  329;  Windsor  v.  Kennedy, 
52  Miss.  164;  Hicks  v.  Bingham.  II 
Mass.  300;  Hall  v.  Marston,  17 
Mass.  575.  See  Green  v.  Ford,  79 
Ga.  130;  Baum  v.  Frantham,  24  S. 
C.  104. 


710  SUTHERLAND    ON    DAMAGES.  [§    236 

returned.  E.  paid  plaintiff  3001.  received  by  him  as  part  of 
the  purchase-money;  afterwards  E.  became  bankrupt.  Before 
such  payment  was  made  E.  was  indebted  to  the  plaintiff  on  a 
trade  account  for  a  larger  amount.  E.  made  no  application 
of  the  300Z.  he  paid,  and  the  plaintiff  contended  that  he  might 
apply  it  to  the  trade  account,  thus  leaving  the  mortgage  un- 
discharged. This  contention  was  disapproved  of,  it  being  infer- 
able from  the  nature  of  the  transaction  that  E.  made  the  pay- 
ment only  in  respect  to  the  plaintiff's  right  to  the  mortgage, 
and  that  it  must,  from  the  circumstances,  be  understood  that 
the  payer  meant  the  money  to  be  applied  toward  the  satisfac- 
tion of  the  mortgage.^^  If  money  is  advanced  by  a  factor  to 
purchase  property,  upon  the  security  of  its  being  shipped  to 
him,  it  will  be  implied  that  the  advances  were  made  upon  the 
condition  that  they  should  be  paid  out  of  the  proceeds  of 
the  property ;  after  the  factor  has  obtained  possession  of  it  the 
debtor  cannot  direct  the  application  of  the  amount  realized 
from  it  to  another  debt.^°  But  the  agreement  to  control  the 
debtor's  choice  must  be  such  as  to  give  the  creditor  a  right  in 
the  nature  of  a  lien  which  can  be  specifically  enforced.^^ 

Where  the  debtor  has  directed  the  application  of  his  pay- 
ment to  a  particular  debt,  he  has  a  right  to  treat  it  as  actually 
so  applied.  The  debt  will  be  deemed  extinguished  to  the  ex- 
tent of  such  payment.^^  The  creditor  has  no  option  to  disre- 
gard the  direction,^^  and  no  different  application  by  him  will 
avail  unless  afterwards  ratified  or  acquiesced  in  hy  the  debtor ;  ^* 

29  Young  V.  English,  7  Boav.  10;  303,  26  L.  ed.  769;  Washington  N. 
Buster  v.  Holland,  27  W.  Va.  510,  G.  Co.  v.  Johnston,  123  Pa.  576; 
.533;  Illinois  T.  &  S.  Bank  v.  Lauten  v.  Rowan,  59  N.-  H.  215; 
Stewart  L.  Co.,  119  Wis.  54.  See  Irwin  v.  Paulett,  1  Kan.  418. 
Stoveld  V.  Eade,  4  Bing.  154;  33  Runyon  v.  Latham,  5  Ircd. 
Waters  v.  Tompkins,  2  Cr.,  M.  &  R.  551  ;  Wetherell  v.  Joy,  40  Me.  325; 
273;  Pearl  v.  Deacon,  24  Beav.  186.  Scott  v.  Fisher,  4  T.  B.  Mon.  387; 

30  Frost  V.  Weathersbee,  23  S.  C.  Blanton  v.  Rice,  5  id.  253 ;  Rugeley 
354.  V.  Smalley,  12  Tex.  238;   Farmers,' 

31  Whit.iey  v.  Traynor,  74  Wis.  etc.  Bank  v.  Franklin,  1  La.  Ann. 
289;  Stewart  v.  Hopkins,  30  Ohio  393;  Stewart  v.  Hopkins,  30  Ohio 
St.  502.  See  Mellendy  v.  Austin,  St.  502;  Bank  v.  Carpenter,  7  Ohio, 
69  111.  15;   Clarke  v.  Scott,  45  Cal.  21,  28  Am.  Dec.  616. 

86.  34  Sherwood  v.   Haight,   26   Conn. 

32Libby  v.   Hopkins,    104    U.    S.       432;  Jackson  v.  Bailey,  12  111.  159; 


§    2-']G]      CONVENTIONAL    LIQUIDATIONS    ANi^    DLSCH ARGKS.        711 

nor  will  the  direction  of  the  latter  be  overruled  or  changed  in 
eqnity.^^  After  a  debtor  has  made  application  of  a  payment 
he  cannot  himself  revoke  it,  and  apply  it  otherwise,  without  the 
creditor's  consent.^®  He  will  be  held  to  the  application  made, 
thongh  it  was  made  for  interest  on  a  debt  not  bearing  interest;  " 
to  a  debt  on  which  the  statute  of  frauds  does  not  allow  an 
action  to  be  brought ;  ^*  or  to  an  illegal  claiuL^^  But  where 
usurious  interest  has  been  paid  it  is  deemed  an  extortion  and  tlie 
payment  may  be  recovered  or  applied  to  the  principal  debt.*" 


Forolander  v.  Hicks,  G  Ind.  448; 
Semmes  v.  Boykin,  27  Ga.  47;  Hall 
V.  Marston,  17  Mass.  575;  Solomon 
V.  Dreschler,  4  Minn.  278;  Tayloe 
V.  Sandiford,  7  Wheat.  13,  20  L.  ed. 
384;  Bonaffe  v.  Woodberry,  12 
Pick.  463;  Hussey  v.  Manufactur- 
ers,' etc.  Bank,  10  Pick.  415;  Blood- 
worth  V.  Jacobs,  2  La.  Ann.  24; 
Adams  v.  Bank,  3  id.  351;  Robson 
V.  McKoin,  18  id.  544;  Treadwell 
V.  Moore,  34  Me.  112;  Black  v. 
Shooler,  1  McCord,  293;  Martin  v. 
Draher,  5  Watts,  544;  Mitchell  v. 
Dall,  2  Har.  &  G.  159;  McDonald 
V.  Pickett,  2  Bailey  617;  Reed  v. 
Boardman,  20  Pick.  441 ;  McKee  v. 
Stroup,  1  Rice,  291 ;  Moorehead  v. 
West  Branch  Bank,  3  W.  &  S.  550; 
Jones  V.  Perkins,  29  Miss.  139; 
Smith  V.  Wood,  1  N.  J.  Eq.  74; 
Cardinell  v.  O'Dowd,  43  Cal.  586. 
See  Bird  v.  Benton,  127  Ga.  371. 

Mere  failure  of  the  debtor  to  ob- 
ject to  an  application  made  otlier- 
wise  than  in  accordance  with  his  di- 
rections will  not  amount  to  ratifi- 
cation of  such  application.  P.  Bal- 
lantine  &  Sons  v.  Fenn,  88  Vt.  166. 

35  Selfridge  v.  Northampton  Bank, 
8  W.  &  S.  320. 

It  has  been  held  that  the  d('I)tor 
cannot  impute  a  payment  to  princi- 
pal when  interest  is  due  there- 
on without  first  paying  the  interest. 
Johnson  v.  Robbing,  20  La.  Ann. 
569.     This   may   be   doubted    if   the 


creditor  receives  the  money.  Un- 
less the  interest  was  due  as  damages 
it  might,  notwithstanding,  be  re- 
covered. See  Williams  v.  Hough- 
taling,  3  Cow.  86;  Pindall  v.  Bank, 
10  Leigh,  484. 

36  Riverside  Milling  &  Power  Co. 
V.  Bank  of  Cartersville,  141  Ga. 
578;  Long  v.  Miller,  93  N.  C.  233; 
York  Trust,  R.  E.  &  D:  Co.  v.  Gal- 
latin, 186  Pa.  150. 

37  Beard  v.  Brooklyn,  31  Barb. 
142. 

38  Haynes  v.  Nice,  100  Mass.  327, 
1   Am.  Rep.  109. 

39  Tomlinson  C.  Co.  v.  Kinsella, 
31  Conn.  268;  Hubbell  v.  Flint,  15 
Gray,  550 ;  Dorsey  v.  Wayman,  6 
Gill,  59;  Richardson  v.  Woodbury, 
12  Cush.  279;  Feldman  v.  Gamble, 
26  N.  J.  Eq.  494;  Caldwell  v.  Went- 
worth,  14  N.  H.  431.  See  Plum- 
mer  v.  Erskinc,  58  Me.  59;  Mueller 
V.  Wiebracht,  47  Mo.  468. 

A  debtor  may  direct  the  applica- 
tion of  a  payment  upon  an  illegal 
item  of  the  account  against  him, 
neither  party  believing  it  to  be 
illegal,  and  the  transaction  involv- 
ing it  not  being  nwliitn  in  sc,  but 
indium  prohibit  tini.  Johnston  v. 
Dahlgren,  48  App.  Div.  (X.  Y.) 
.'-)37,  166  N.  Y.  351. 

40  Wood  v.  Lake,  L]  Wis.  84,  and 
cases  cited;  Gill  v.  Rice,  id.  549; 
Lee  V.  Peckliiim.  17  id.  383;  Fay  v. 
Lovejoy,  20   id.  403;   State  Bank  v. 


712 


SUTUEKI.ANI)    ON    J)A.MA(JKS. 


[§  236 


A  different  rule  prevails  in  Ohio,*^  in  the  District  of 
Columbia,*^  and  in  Illinois.'*^  By  mutual  consent  of  the  debtor 
and  creditor,  where  no  other  parties  are  interested,  the  applica- 
tion of  a  payment  may  be  changed ;  and  in  that  case  the  indebt- 
edness first  discharged  will  be  revived  by  implication,  without 
any  express  promise.**  If  there  are  other  parties  interested  as 
a  surety,**  co-debtor,*^  or  a  subsequent  incumbrancer,*'  their 
consent  is  essential ;  *^  but  a  debtor's  general  creditor  cannot  be 
heard  to  complain.*^ 


Ensiiiingor,  7  Blackf.  105;  Smead 
V.  Green,  5  Ind.  308;  Browning  v. 
Morris,  2  Cow.  700;  Smith  v. 
Bromley,  2  Doug.  695,  note;  Wil- 
liams V.  Hedley,  8  East,  378; 
Wheaton  v.  Hibbard,  20  Johns.  290, 
11  Am.  Dec.  284;  Burrows  v.  Cook, 
17  Iowa,  436;  Stanley  v.  Westrop, 
16  Tex.  200;  Parchman  v.  McKin- 
ney,  12  Sm.  &  M.  631.  See  Second 
Nat.  Bank  v.  Fitzpatrick,  23  Ky. 
L.  Rep.  610;  Citizens'  Nat.,  Bank  v. 
Forman,  23  Ky.  L.   Rep.   613. 

In  an  action  to  recover  payments 
made  on  account  of  usury  the  appli- 
cation to  the  principal  debt  will  be 
made  as  of  the  date  of  the  writ,  if 
the  party  who  made  them  so  re- 
quests. Peterborough  Sav.  Bank  v. 
riodgdon,  62  N.  H.  300. 

41  See  Conant  v.  Seneca  County 
Bank,  1  Ohio  St.  298;  Shelton  v. 
Gill,  11  Ohio,  417;  Graham  v. 
Cooper,  17  id.  605;  Williamson 
V.  Cole,  26  Ohio  St.  207. 

42  Kendall  v.  Vanderlip,  2  Mackey, 
105. 

43  Drake  v.  Lux,  233  111.  522  (un- 
der the  statute  usury  can  Ijc  inter- 
posed only  as  a  defense.) 

44Rundlett  v.   Small,   25  Me.   29. 

Where  by  mutual  agreement  be- 
tween a  debtor  and  creditor  an  ap- 
I)lication  of  payment  is  made 
otlierwise  than  in  accordance  with 
a  prior  agreement  between  them, 
tlie  debtor's  co-debtors,  not  parties 


to  the  prior  agreement  nor  taking 
part  in  the  payment  and  applica- 
tion thereof  have  no  cause  for  com- 
plaint. Riverside  Milling  &  Power 
Co.  V.  Bank  of  Cartersville,  141  Ga. 
578. 

45  P.  Ballantine  &  Sons  v.  Fenn, 
88  Vt.  160;  Columbia  Digger  Co. 
V.  Rector,  215  Fed.  618;  Brock- 
schmidt  v.  Hagebusch,  72  111.  562; 
Ruble  v.  Norman,  7  Bush  532;  Ware 
V.  Otis,  8  Me.  387. 

46  Thayer  v.  Denton,  4  Mich.  192 ; 
Miller  v.  Montgomery,  31  111.  350; 
Brown  v.  Brabham,  3  Oliio,  275. 

47  Chancellor  v.  Schott,  23  Pa. 
08;    Tooke   v.    Bonds,   29    Tex.   419. 

48  In  a  suit  to  foreclose  a  mort- 
gage which  the  defendant  alleged 
had  been  paid,  the  plaintiff  proved 
an  agreement  to  change  the  appro- 
priation of  the  payments,  previous- 
ly stipulated  to  be  applied  to  the 
mortgage  debt,  to  another  debt. 
Held,  that  the  defendant  might 
then  prove  that  the  agreement  to 
change  the  appropriation  was  made 
after  he  had  applied  for  the  benefit 
of  the  insolvent  laws,  and  was 
therefore  invalid.  Richmond  I. 
Works  v.  Woodruff,  8  Gray,  447. 
See  Cremer  v.  Higginson,  1  Mason, 
323;  Bank  v.  Meredith,  2  Wash.  C. 
C.  47. 

49  Whitney  v.  Traynor,  74  Wis. 
289. 


§    238]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        713 

§  237.  Same  subject;  evidence.  Parol  evidence  is  admissi- 
ble to  sliaw  that  at  the  time  a  note  was  given  for  money  lent 
an  agreement  was  made  to  pay  a  certain  sum  as  extra  inter- 
est and  that  all  the  payments  made  were  for  such  interest  and 
not  upon  the  note.^°  A  copy  of  a  letter  addressed  by  a  cred- 
itor to  his  debtor,  contained  in  the  letter  book  of  the  former, 
advising  the  debtor  that  he  had  drawn  on  him  for  the  amount 
of  a  particular  purchase  is  not  evidence  for  such  creditor  in 
an  action  against  a  guarantor  to  establish  that  a  payment  made 
shortly  afterwards  by  the  debtor,  who  was  indebted  on  several 
accounts,  was  made  in  discharge  of  such  purchase,  though  the 
draft  itself  or  evidence  of  its  contents,  if  lost,  accompanied  by 
a  letter  from  the  debtor  to  the  creditor  regretting  his  inabil- 
ity to  meet  the  draft  and  promising  speedy  payment  of  that 
demand,  followed  by  a  payment  a  few  days  after  the  date  of 
such  letter,  is  evidence  to  show  that  it  was  a  payment  made 
in  discharge  of  that  particular  claim. ^^  The  letter  of  a  debtor, 
or  of  his  acknowledged  general  agent  to  his  creditor,  direct- 
ing him  to  which  of  two  debts  a  payment  he  is  about  to  make 
shall  be  applied,  is  the  best  evidence  to  show  on  what  account 
such  payment  was  received  by  the  creditor.*^  Such  an  act  of 
the  debtor  in  an  action  against  his  guarantor  for  one  of  the 
debts,  where  several  were  due,  is  not  considered  as  merely  the 
declaration  of  a  third  person,  but  is  the  act  of  the  party  who 
had  the  legal  right  to  make  the  application.^^  The  creditor's 
receipt  is  not  conclusive  as  to  a  direction  of  the  debtor  concern- 
ing the  application  of  a  payment,^*  and  a  meinoranduiii  by  a 
clerk  of  the  creditor  on  a  note  is  not  conclusive.^^  The  burden 
of  proof  as  to  the  particular  application  of  a  payment  is  ujion 
the  party  asserting  it.®® 

§  238.  By  creditor.  Where  the  debtor  omits  to  make  any 
appropriation  at  the  time  of  payment  the  right  to  make  the 

50  Rohan  V.  Hanson,  11   Gush.  44.  55  Dollar  S.  &  T.  Co.  v.  Crawford, 

51  Mitchell    V.    Dall,    2    H.    &    G.       gQ    w.   Va.     100,     33     L.R.A.(N.S.) 


587. 


159. 

52  Id. 

53  J ^1  56  Van  Rceivcr  v.  King,  17()  INIicli. 


54  Lynn  v.  Bean,  141   Ala.  236.  605. 


714 


SUTHERLAWU    ON    DAMAGES. 


[§  238 


application  devolves  on  the  creditor.  But  its  exercise  is  sub- 
ject to  limitations.  In  one  respect,  however,  it  is  less  restricted 
than  that  of  the  debtor.  The  creditor  is  not  required  to  decide 
at  once  on  receiving  the  money.  Within  what  time  he  must 
exercise  the  choice  has  been  much  discussed.  The  weight  of 
opinion  seems  to  be  that  he  must  make  the  application  within 
a  reasonable  time,  in  view  of  the  circumstances  of  the  particu- 
lar case,  at  the  latest,  before  any  controversy  arises  or  any 
material  change  occurs  in  the  relations  of  the  parties.^'''     The 


57  Van  Scoivor  v.  King,  176  Mich. 
605;  Jackson  v.  Moore  (Okla.)  134 
Pac.  1114;  Boynton  v.  Salinger,  147 
Iowa,  537;  People  v.  Grant,  139 
Mich.  26;  Padgett  v.  Bank,  141  Mo. 
App.  374;  Stone  v.  Pettug,  47  Tex. 
Civ.  App.  14;  American  W.  Co.  v. 
Maaget,  86  Conn.  234;  Compton  v. 
Ahrens  &  0.  Mfg.  Co.,  (Tex.  Civ. 
App.)  151  S.  W.  884;  Applegate  v. 
Koons,  74  Ind.  347;  Robinson  v. 
Doolittle,  12  Vt.  246;  Mills  v. 
Fowkes,  5  Bing.  N.  C.  455;  Philpott 
v.  Jones,  2  Ad.  &  El.  41;  Smith's 
Merc.  L.  650;  Peters  v.  Anderson, 
5  Taunt.  596;  Norris  v.  Beaty,  6 
W.  Va.  477;  Bridenbecker  v.  Low- 
ell, 32  Barb.  9;  Haynes  v.  Waite, 
14  Cal.  446;  Allen  v.  Culver,  3 
Denio,  284;  Parker  v.  Green,  8 
Mete.  (Mass.)  144;  Whetmore  v. 
Murdock,  3  Woodb.  &  M.  390; 
United  States  v.  Kirkpatrick,  9 
Wheat.  720,  6  L.  ed.  199;  Back- 
house V.  Patton,  5  Pet.  160,  8  L.  ed. 
82;  Hill  V.  vSoutherland,  1  Wash. 
(Va.)  128;  Van  Rensselaer  v.  Rob- 
erts, 5  Denio  470;  McCartney  v. 
Buck,   8   Houst.   34. 

In  Marsh  v.  Oneida  Cent.  Bank, 
34  Barb.  298,  it  was  held  that  a  bank 
which  holds  a  note  against  one  of 
its  depositors  is  not  bound  to  apply 
his  deposits  immediately  when  it  be- 
comes due.  If  not  made  then,  and  a 
judgment  is  recovered  en  the  note, 
the  right  to  make  such  application 


is  not  thereby  waived  or  lost,  and 
the  bank  may  afterwards  avail  it- 
self of  the  riglit  against  an  assignee 
of  the  deposit.  See  Long  Island 
Bank  v.  Townsend,  Hill  &  Denio, 
204;  Mayor  v.  Patten,  4  Cranch, 
317,  2  L.  ed.  663. 

In  some  cases  it  is  held  that  an 
application  made  after  an  action 
has  been  begun  is  too  late.  Taylor 
v.  Coleman,  20  Tex.  772;  Sanford 
V.  Van  Arsdall,  53  Hun  70;  Huff- 
stater  v.  Hayes,  64  Barb.  573.  But 
it  has  been  sustained  when  made 
after  suit  brouglit  where  it  harmon- 
ized with  the  intention  of  the  par- 
ties. Bank  v.  Webb,  48  N.  Y. 
Super.  Ct.  175.  It  is  said  in  the 
same  case  (94  N.  Y.  467)  that  the 
application  may  be  made  any  time 
before  the  court  makes  it  unless  the 
debtor  previously  requests  the  cred- 
itor to  exercise  liis  right  of  elec- 
tion. 

In  South  Carolina  the  creditor 
has  until  verdict  or  judgment  to 
apply  the  payments.  Heilbron  v. 
Bissell,  Bailey's  Eq.  *430;  Price  v. 
Hamilton,  12  S.  C.  32;  Thatcher  v. 
Massey,  20  id.  542;  Baum  v.  Tran- 
thara,  42  id.  104,  46  Am.  St.  697. 
These  cases  are  rested  upon  the 
principle  that  until  the  debtor  pays 
the  money  it  is  his,  and  he  has  the 
right  to  control  its  disposition. 
After  the  creditor  receives  it  he 
may  exercise  such  right,  and  it  con- 


§    238]      CONVENTIONAL    LIQUIDATIONS    AND    DISC  JrAi;(i  KS.        Tl") 

bringing-  of  a  snit  may  determine  the  creditor's  election,  as 
where  he  holds  two  notes  and  an  nnappropriatcd  payment 
large  enongh  to  pay  one  of  them  is  made,  his  suit  on  one  of 
the  notes  is  an  election  to  apply  the  money  to  the  payment  of 
the  other. ^*  But  if  he  brings  separate  suits  on  them  he  will  not 
be  allowed  on  the  trial  of  one  to  elect  to  apply  to  the  satisfac- 
tion of  the  other  a  payment  previously  uuide,  and  not  before 
specially  applied  by  either  party.^^  If  there  is  no  })rovision 
given  in  securities,  the  payment  of  which  is  enforced  by  law, 
as  to  the  application  of  their  proceeds  the  creditor  has  no  right 
to  make  an  appropriation  thereof^^"  unless  several  notes  ai-e 
secured  and  the  amount  realized  is  insufficient  to  pay  them  all.^^ 
A  stipulation  in  a  note  that  if  the  maker  became  otherwise 
indebted  to  the  payee  before  its  payment  the  latter  might  apply 
the  first  payment  to  such  claims  as  he  chose  does  not  include 
property  taken  by  virtue  of  a  mortgage  securing  such  note, 
especially  as  against  sureties  on  the  latter.^^  A  creditor  cannot 
appropriate  payments  after  third  persons  have  acquired  rights 
against  the  debtor,  so  as  to  affect  their  rights  if  an  application 
can  be  made  which  will  protect  them,^^  if  their  rights  were 
known  to  the  creditor.®^  In  Arkansas  the  rule  is  that  where 
there  is  a  single  running  account  in  which  third  persons  are 
not  interested,  and  a  general  payment  is  made  without  appliea- 

tinues  until   the   court  has   exerted  Snider   v.    Stone,    78    111.    App.    17; 

its  power  over  the  payment.  Matter   of   Georgi,    21    N.    Y.    Misc. 

Whenever  the  application  is  made  419. 
effect  must  be  given  to  it  as  of  the  It  is  said  in  Sanford  v.  Van  Ars- 

time  the  money  was  received.   Poul-  dall,  53  Hun,  70,  77,  that  payments 

son  v.  Collier,    18    Mo.    App.    583;  made  by  a  third  person,  who  is  not 

Bray  v.  Grain,  59  Tex.  649.  the   debtor's   agent,   are   not   volun- 

58  Allen  V.  Kimball,  23  Pick.  473;  tary,  though  they  were  made  pnrsu- 
Starrett  v.  Barber,  20  Me.  457;  ant  to  arrangement  or  understand- 
Bobe    v.     Stickney,     36    Ala.     492;  ing  between  the  parties. 

Dent  V.  State  Bank,  12  Ala.  275.  61  Avery  Mfg.  Co.  v.  Leathers,  130 

59  Stone  V.  Talbot,  4  Wis.  442.  Mo.  App.  202. 

eoSengel  v.  Patrick,  80  Ark.  384;  62  Barrett  v.  Bass,  105  Ga.  421. 

Citizens'    Sav.    Bank   v.    Wood,    134  63  Willis  v.  Mclntyre.  70  Tex.  34, 

Iowa,  232;   Berner  v.  German  State  R  Am.  St.  574;  Lee  v.  Storz  B.  Co., 

Bank,  125   Iowa,  438 ;  Orleans   Coun-  75  Neb.  212. 

ty  Nat.  Bank  v.  Moore,   112  N.  Y.  64  Thacker  v.  Bullock  L.  Co.,  140 

543,  8  Am.   St.  775,  3  L.E.A.  302;  Ky.  463. 


71G  SUTHERLAND    ON    DAMAGES.  [§    238 

tion  by  the  debtor  the  creditor  has  no  election  to  make  the  ap- 
plication ;  the  law  applies  the  payment  to  the  several  items  of 
the  account  in  the  order  of  their  priority. ^^ 

A  banker  is  not  required  to  apply  a  balance  due  by  him  on 
an  account  current  to  his  depositor  upon  the  liability  of  such 
customer  on  a  note  or  bill.  And  in  a  suit  by  a  banker  against 
the  acceptor  of  a  bill  the  fact  that  the  drawer  had  an  account 
with  the  banker,  and  that  after  protest  of  the  bill  there  were 
balances  in  favor  of  the  drawer  would  not  be  evidence  in  favor 
of  the  acceptor  to  show  a  payment  or  satisfaction  by  the 
drawer.®^  The  proceeds  of  property  received  by  mistake  in  the 
name  of  one  without  right  thereto  cannot  be  applied  to  a  debt 
owing  by  him.^^  A  deposit  made  for  a  special  purpose  or  under 
a  special  agreement  may  not  be  applied  to  a  matured  demand.*^^ 
The  authorities  are  not  agreed  as  to  the  right  of  a  bank  which 
receives  money  from  an  agent,  which  is  credited  to  him  in  his 
own  name  without  notice  of  the  agency,  to  apply  it  to  his  past 
due  debt  with  his  consent.  It  has  been  ruled  that  the  mere  mak- 
ing of  the  deposit  authorizes  the  application  to  meet  an  over- 
draft.^^ A  bank  may  not  apply  a  deposit  to  a  matured  obligation 
of  its  depositor  if  the  money  was  received  after  his  death.'" 
Generally  an  application  acquiesced  in  by  the  debtor  will  bind 
him.'' 

If  a  debtor  owes  his  creditor  several  debts  it  is  generally  said 
that  the  creditor  may  apply  a  payment  which  the  debtor  does 
not  appropriate  to  either  at  his  pleasure.'^     This  is  not  true 

65  Hughes  V.  Johnson,  38  Ark.  69  Kimniel  v.  Bean,  68  Kan.  598, 
295;  Dunnington  v.  Kirk,  57  Ark.  64  L.R.A.  785,  104  Am.  St.  415, 
595.  approving  Smith  v.  Des  Moines  Nat. 

66  Citizens'  Bank  v.  Carson,  32  Bank,  107  Iowa  620,  and  disapprov- 
Mo.  191;  Long  Island  Bank  v.  ing  Davis  v.  Panhandle  Nat.  Bank 
Tovvnsend,  Hill  &  Denio,  204.  But  (Tex.)  29  S.  W.  926;  Cady  v.  South 
see  State  Bank  v.  Armstrong,  4  Omaha  Nat.  Bank,  46  Neb.  756,  49 
Dev.  519;  State  Bank  v.  Locke,  id.  Neb.  125.  The  cases  cited  may  be 
529;  Commonwealth  v.  Wathen,  126  consulted  with  profit. 

Ky.   573.  70  Padgett  v.  Bank,  141  Mo.  App. 

67  McLennan     v.     Farmers'     Sav.       374. 

Bank,   131    Iowa   696,    117   Am.    St.  71  Calvert  Bank  v.  Katz,  102  Md. 

439.  56. 

68  Smith  v.  Sanborn  State  Bank,  72  Payne  v.  Seagars,  13  Ga.  App. 
147  Iowa  G40,  30  L.R.A. (N.S.)   517.  ]0]  ;   Hawkins    v.    Bouic,    121    Md. 


§    23S]      CONVENTIONAL    LUiUIDATIONS    AND    DISCll AKGKS.        71 7 

ill  an  absolute  and  unqualified  sense.  lie  is  not  at  liberty  to 
apply  a  payment  to  a  disputed/'  contingent/*  or  iiiili(|uidated 
demand  in  preference  to  one  admitted,  absolute  or  certain,  nor 
to  one  not  due  in  lieu  of  another  past  due.'^  Where  one  debt 
is  secured  by  mortgage  and  payment  is  made  from  the  proceeds 
of  the  mortgaged  property  it  must  be  applied  to  the  extinguish- 
ment of  the  secured  del>t  unless  the  debtor  consents  to  a  dillerciit 
application. '"^     This  rule  does  not  govern  where  the  moi-tgagor 


147;  Larry  v.  Brown,  1,53  Ala.  4.52; 
Harper  v.  Concrete  Pub.  Co.,  1(5(1 
Mich.  429;  Giles  v.  Vandiver,  91 
Ga.  192;  Skinner  v.  Walker,  98  Ky. 
729;  Coney  v.  Laird,  153  Mo.  408; 
Orr  V.  Nagle,  87  Hun,  12;  Burt  v. 
Butterworth,  19  R.  I.  127;  Perry  v. 
Bozeman,  67  Ga.  643;  Greer  v.  Bur- 
nam,  71  id.  31 ;  Trotter  v.  Grant,  2 
Wend.  413;  Robbing  v.  Lincoln, 
12  Wis.  1;  Peters  v.  Anderson,  5 
Taunt.  596;  Arnold  v.  Johnson,  2 
111.  196;  Brady  v.  Hill,  1  Mo.  225; 
Brewer  v.  Knapp,  1  Pick.  332; 
Holmes  v.  Pratt,  34  Ga.  558;  Wash- 
ington Bank  v.  Prescott,  20  Pick. 
339;  Goddard  v.  Cox,  2  Str.  1194; 
Allen  V.  Kimball,  23  Pick.  473; 
Brooke  v.  Enderby,  2  B.  &  B.  70; 
Bodenham  v.  Purchas,  2  B.  &  Aid. 
39;  Bosanquet  v.  Wray,  6  Taunt. 
597. 

73  Stone  V.  Talbot,  4  Wis.  442. 
See  Ayer  v.  Hawkins,  19  Vt.  26; 
Lee  V.  Early,  44  Md.  80;  McLendon 
V.  Frost,  57  Ga.  448. 

74  Baker  v.  Stackpoole,  9  Cow. 
420,  18  Am.  Dec.  '508;  Cremer  v. 
Higginson,  1  Mason,  338;  Whet- 
more  V.  Murdock,  3  Woodb.  &  M. 
390.  See  Kidder  v.  Norris,  18  N. 
H.  532;  Wright  v.  Laing,  3  B.  &  C. 
165. 

75  McWhorter  v.  Blumenthal,  13() 
Ala.  568;  Cain  v.  Vogt,  138  Iowa, 
631;  Richardson  v.  Coddington,  49 
Mich.  1;  Lamprell  v.  Bellericay  Un- 
ion, 3  Ex.  283;  Baker  v.  Stackpoole, 


sup7-a ;  Early  v.  Flannery,  47  \'t. 
253;  Niagara  Bank  v.  Rosevelt,  9 
Cow.  409;  Bobe  v.  Stickney,  36  Ala. 
482;  Burks  v.  Albert,  4  J.  J.  Marsh. 
97,  20  Am.  Dec.  209;  Meintz  v. 
Cahn,  29  111.  308;  Bacon  v.  Brown, 
1  Bibb,  334,  4  Am.  Dec.  040;  Parks 
V.  Ingram,  22  N.  11.  283,  55  Am. 
Dec.  153;  Cloney  v.  Riciiardson,  34 
Mo.  370;  Smith  v.  Applegate,  1 
Daly,  390.  See  Dedliam  Bank  v. 
Chickering,  4  Pick.  314;  Cass  v. 
Stinson,  3  Sunui.  9!l;  Hunter 
V.  (Jsterhoudt,  11  Barl).  33;  Ellinger 
\.  Henderson,  3  Miss.  449. 

In  Arnold  v.  Johnson,  2  111.  190, 
it  is  held  the  creditor  may  apply 
the  payment  to  any  debt  he  sees 
proper,  unless  there  are  circum- 
stances which  would  render  the 
exercise  of  such  discretion  on  tiie 
part  of  tlie  creditor  unreasonable 
and  enable  him  to  work  injustice  to 
his  debtor.  See  Bridenbecker  v. 
Lowell,  32  Barb.  9;  Lindsey  v. 
Stevens,  5  Dana,  107. 

76Nolen  V.  Farrow,  154  Ala.  209; 
Larry  v.  Brown,  153  Ala.  452,  and 
local  cases  cited:  Lee  v.  ^lanley. 
154  N.  C.  244. 

A  mortgagee  who  holds  real  estate 
mortgages  and  several  chattel  mort- 
gages to  secure  successive  debts  may 
a])ply  the  proceeds  of  the  property 
so  as  to  obtain  the  security  bar- 
gained for,  and  may  realize  on  the 
former  in  satisfaction  of  the  notes 
they  secured  and  waive  his  chattel 


718  SUTHERLAND    ON    DAMAGES.  [§    238 

voluntarily  sells  the  incumbered  property  and  pays  the  proceeds 
to  the  mortgagee  without  giving  direction  as  to  their  applica- 
tion.''^  Money  realized  on  collateral  given  by  a  trustee  must  be 
applied  to  the  claim  secured  thereby  if  sufficient  to  discharge 
it/^  The  holder  of  a  note  secured  by  a  lien  which  has  priority 
as  to  part  of  the  property  subject  to  it,  but  is  subordinate  as  to 
the  remainder,  must  apply  the  proceeds  of  the  property  on  the 
note ;  the  holder  of  the  second  lien  may  object  to  any  other  appli- 
cation.'^^ Money  collected  on  an  execution  should  be  credited 
on  the  writ ;  the  plaintiff  cannot  take  a  part  of  it  and  apply  it  to 
an  unsecured  debt,  though  it  may  be  tliat  it  could  have  been 
applied  to  an  execution  of  older  date  than  that  which  was 
levied.^"  This  principle  does  not  seem  to  be  recognized  in 
Missouri.  In  a  case  where  a  deed  of  trust  secured  two  notes, 
with  different  sureties,  the  proceeds  of  the  foreclosure  sale  be- 
ing sufficient  to  pay  either  note,  but  not  both,  the  creditor  was 
sustained  in  applying  the  money  so  as  to  retain  the  benefit  of 
both  securities,  without  regard  to  the  dates  when  the  notes 
matured.®^  The  test  as  to  whether  the  application  made  is 
valid  or  not,  as  applied  to  payments  for  goods  sold,  is  whether 
the  debtor  could  recover  the  money  paid,  which,  as  a  rule,  can 
only  be  done  where  payment  has  been  made  in  consequence  of 
fraud,  or  under  duress,  or  under  a  mistake  of  fact.  This  princi- 
ple does  not  extend  to  a  case  where  liquors  are  sold  for  the  pur- 
pose of  being  resold  in  violation  of  law.  Hence  the  application 
of  money  paid  to  the  items  of  an  account  covering  such  liquors 
is  valid,  though  no  action  would  lie  to  recover  their  price. *^ 

Where  part  of  a  debt  is  barred  by  the  statute  and  a  part  is 
collectible,  and  the  debtor  makes  a  payment,  requiring  and 
receiving  a  receipt  in  full  of  all  demands,  the  law  will  imply 

security  therefor    in    favor    of    the  77  Cain    v.    Vogt,    138    Iowa    631 ; 

subsequent  chattel  mortgages.   Bank  Mercer  v.  Tift,  79  Ga.  174. 

V.  Ryan,  144  Iowa   725.  78  Mel  son  v.  Travis,  133  Ga.  710. 

The  transferee  of  a  chattel  mort-  79  Davis  v.  Carlisle,  142  Fed.  106, 

gage    and    the    holder    of    a    second  73  C.  C.  A.  330. 

mortgage  both  of  which  provide  for  80  Smith  v.  Smith,  105  Ga.  717. 

the  application   of  payments  there-  81  Sturgeon    Sav.    Bank   v.    Riggs, 

on,  may  apply  payments  equally  to  72  Mo.  App.  239. 

each  mortgage.     Collerd  v.  Tully,  77  82  Mayberry    v.     Hunt,     34     New 

N.  J.  Eq.  439.  Bruns.  628. 


238]      CONVENTIONAT.   J.IQUIDATIONS    AND    DISCIIARGKS.        719 


an  application  of  the  payment  to  the  collectible  portion. ^^  i'.iit 
where  a  debtor  pays  money,  without  any  specific  directions, 
on  acconnt  of  several  debts,  all  of  which  are  barred,  the 
creditor  may  apply  it  to  either  at  his  option;  he  may  apply  it 
to  the  largest  and  thus  revive  it  as  to  a  balance.  I5ut  he  is 
not  at  liberty  to  apply  a  part  of  the  payment  to  each  of  the 
several  demands  and  thereby  revive  them  all.^*  And  it  has 
been  held  that  where  a  payment  made  is  less  than  either  of 
several  distinct  demands  the  creditor  having  a  right  to  apidy 
it  is  not  allowed  to  divide  it  and  apply  a  part  to  each  demand ;  " 
but  in  a  later  case,  the  indebtedness  consisting  of  two  notes  and 
an  account  of  different  dates,  the  creditor  was  sustained  in 
applying  a  general  payment  in  such  manner  as  to  keep  all  the 
debts  alive.®^  This  is  in  accordance  with  the  prevailing  doc- 
trine, none  of  the  debts  being  barred  by  statute." 


83  Berrian  v.  JNIayor,  4  Robert. 
538.  See  Hill  v.  Robbins,  22  Micb. 
475. 

84Ayer  v.  Hawkins,  19  Vt.  20. 
See  contra,  Jackson  v.  Burke,  ] 
Dill.  .311.  See  Armistead  v.  Brooke, 
18  Ark.  521. 

85  Wheeler  v.   House,  27   Vt.  735. 

86  Rowell  V.  Est.  of  Lewis,  72  Vt. 
163;  Beck  v.  Haas,  111  Mo.  264,  33 
Am.  St.  516;  National  D.  Bank  v. 
Mawson,  46  Pa.  Super.  85. 

87  Where  money  is  paid  by  a  debt- 
or to  a  creditor  who  has  several  de- 
mands against  him,  and  no  direc- 
tions are  given  how  he  shall  apply 
it,  the  creditor  may  apply  it  as  he 
pleases;  therefore,  when  he  holds 
two  bonds  of  his  debtor,  both  due, 
and  payable  with  interest,  and 
money  is  so  paid  to  him,  he  may 
apply  it  to  the  part  extinguishment 
of  both  bonds ;  and  he  is  not  bound 
to  apply  it  on  one  bond  until  it  be 
satisfied,  and  the  residue  to  the 
other.  Smith  v.  Screven,  1  McCord, 
368.  See  James  v.  Malone,  1  Bailey, 
334. 

In  Washington  Bank  v.  Prescott, 
20  Pick.  339,  four  notes  were  made 


by  the  same  person,  and  indorsed 
by  the  defendant;  they  were  in  the 
hands  of  the  same  holder;  and  the 
defendant,  before  any  of  them  be- 
came due,  gave  the  holder  an  order 
for  the  payment  of  the  notes  with- 
out expressing  any  priority  out  of 
property  conveyed  by  the  maker  to 
assignees  by  an  indenture  to  wliicli 
the  indorser  was  a  party,  for  the 
payment  of  the  notes  in  full  or  pro- 
portionably,  which  property  proved 
to  be  insufficient.  The  assignees,  in 
pursuance  of  the  order,  made  a  pay- 
ment after  all  the  notes  had  fallen 
due,  and  the  holder  applied  the 
money  to  all  the  notes  pro  rata, 
instead  of  applying  it  wholly  to 
those  which  had  first  fallen  due, 
and  it  Avas  held  that  he  had  a  right 
to  make  such  application.  In  an 
action  on  two  of  the  notes,  it  was 
held  that  the  other  two,  with  the 
indorsements  thereon,  were  admis- 
sible in  evidence  in  order  to  explain 
the  appropriation  of  the  money  paid 
on  the  order.  And  it  was  also  held 
that  the  jury  in  as.sessing  the  dam- 
ages were  not  to  regard  any  div- 
idend which  might  in  the  future  be 


720 


SUTHERLAND    ON    DAMAGES. 


[§  238 


The  rule  of  Clayton's  Case/®  which  is  that,  where  an  account 
current  is  kept  between  parties,  as  a  banking  account,  there  is 
no  room  for  any  other  appropriation  than  that  which  arises 
from  the  order  in  which  the  receipts  and  payments  take  place 
and  arc  carried  into  the  account,  is  not  an  invariable  rule;  the 
circumstances  of  a  case  may  afford  ground  for  inferring  that 
the  transactions  of  the  parties  were  not  intended  to  come  under 
that  rule,  as  where  there  is  no  account  current,  and  no  setting 
off  of  one  item  against  another,  but  credit  is  given  for  the  entire 
sum  paid  at  the  end  of  all  the  items.  In  such  a  case  the  creditor 
may  make  the  application  up  to  the  last  moment,  by  action  or, 
otherwise,  by  intention  expressed,  implied  or  presumed.®^  A 
partial  payment  may  be  applied  to  the  discharge  of  interest  due 
and  the  balance  to  the  principal.^" 

§  239.  Same  subject.  It  has  been  held  that  a  creditor  may 
apply  money  paid  by  the  debtor  without  directions  to  a  debt  on 
A\-hich  the  statute  of  frauds  does  not  allow  an  action  to  be  main- 
tained,^^ or  on  a  bill  void  for  want  of  a  stamp,^^  or  to  one  of 


paid  on  such  order.  See  Blackstone 
Bank  v.  Hill,  10  Pick.  ]29;  Black- 
Tiian  V.  Leonard,  14  La.  Ann.  59; 
White  V.  Trumbull,  15  N.  J.  L.  314, 
29   Am.   Dec.   687. 

In  order  that  the  partial  pay- 
ment of  a  debt  part  of  which  is 
barred  shall  take  it  all  out  of  the 
statute  of  limitations  "there  must 
be  reasonable  evidence  that  the 
debtor  recognized  and  admitted  the 
whole  of  the  indebtedness  to  be  due; 
but  if  he  did  so  admit,  and  made  a 
general  payment  on  account  of  it, 
there  is  no  reason  for  applying  the 
admission  and  payment  to  either  of 
the  notes  rather  than  to  the  others, 
but  it  would  carry  out  the  inten- 
tions of  the  parties  to  apply  the 
acknowledgment  and  payment  to 
each  of  the  notes,  that  is,  to  the 
whole  indebtedness."  Taylor  v.  Fos- 
ter, 132  Mass.  30. 

In  Mills  V.  Fowkes,  5  Bing.  N.  C. 
455,  it  is  ruled  that  a  creditor  may 


apply  a  general  payment  to  a  barred 
debt,  though  he  holds  claims  which 
are  not  barred.  But  see  Reed  v. 
Hurd,  7  Wend.  408 ;  Heath  v.  Gren- 
ell,  61  Barb.  190;  Harrison  v.  Day- 
ries,  23  La.  Ann.  216. 

The  application  of  a  payment  to 
a  barred  note  does  not  show  that 
tlie  debtor  recognized  or  acknowl- 
edged the  debt.  McBride  v.  Noble, 
40  Colo.  372. 

88  Merivale,   585. 

89  Cory  V.  Owners  of  Turkish 
Steamship  Mecca,  [1897]  App.  Cas. 
286. 

90  Dollar  S.  &  T.  Co.  v.  Crawford, 
G9  W.  Va.  109,  33  L.R.A.(N.S.) 
587. 

9iHaynes  v.  Nice,  100  Mass.  327; 
Philpott  V.  Jones,  4  Nev.  &  Man. 
14,  2  A.  &  E.  41;  Eohan  v.  Hanson, 
11  Cush.  44;  Ramsay  v.  Warner, 
97  Mass.  13. 

92  Biggs  V.  Dwight,  1  M.  &  Ry. 
308. 


§    239]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIARGKS.        721 

two  bills,  or  one  of  two  debts  barred  by  tlic  statute  of  limi- 
tations.^^ The  general  rule,  however,  is  that  the  creditor  can- 
not make  an  application  of  moneys  to  any  demand  for  which 
he  could  not  sustain  an  action.^*  He  is  not  permitted  to  ap[)ly 
them  to  an  illegal  demand,  although  a  debtor  may  do  so.®*  A 
more  precise  and  accurate  statement  of  the  rule  in  resjject  to  a 
creditor's  right  to  ajjply  a  payment  not  appropriated  by  the 
debtor  is  that  the  creditor  may  apply  it  on  either  of  several 
demands  at  his  pleasure  where  they  are  all  equally  valid,  pay- 
able absolutely,  liquidated,  due,  and  not  in  fact  contested."" 
A  creditor  will  not  be  allowed  to  make  such  an  application  of 
a  payment  as  the  debtor  might  reasonably  object  to,  or  as  would 
work  injustice  to  him."'    H«  may  not,  by  applying  it  to  a  con- 


93  Mills  V.   Fowkes,   7   Scott,   444, 

5  Bing.  N.  C.  458;  Hopper  v.  Hop- 
per, 61  S.  C.  ]  24,  137.  See  last  note 
to  §  238. 

94  Samuel  v.  Samuel,  151  Ky.  235; 
Citizens'  Nat.  Bank  v.  Donnell,  172 
Mo.  384;  Kidder  v.  Norris,  18  N. 
H.  532;  Wright  v.  Laing,  3  B.  &  C. 
165;  Bancroft  v.  Dumas,  21  Vt. 
456;  Nash  v.  Hodgson,  6  De  G.,  M. 

6  G.  474;  Kuker  v.  Mclntyre,  43 
S.  C.  117  (void  bond  executed  by 
married  woman)  ;  Mullooly  v.  Hua- 
tau,   1   New  Zeal.  L.  R.   151. 

95  Bondy  v.  Hardina,  216  ^Nlass. 
44;  Armour  P.  Co.  v.  Vinegar  Bend 
L.  Co.,  149  Ala.  205 ;  Rohan  v.  Han- 
son, 11  Gush.  44;  Greene  v.  Tyler, 
39  Pa.  361;  Robinson  v.  Allison,  36 
Ala.  525;  Gill  v.  Rice,  13  Wis.  549. 
See  McCarty  v.  Gordon,  16  Kan.  35; 
Fay  V.  Lovejoy,  20  Wis.  407;  Phil- 
lips V.  Moses,  65  Me.  70. 

In  Clark  v.  Mershon,  2  N.  J.  L. 
70,  it  was  held  where  a  tavern- 
keeper  was  indebted  to  his  customer, 
the  items  of  liquor  were  to  be  con- 
sidered as  payment  pro  tanto,  and 
not  a  trtist  or  credit,  within  tlic 
tavern  act. 

In  Adams  v.  Malinken,  41  N.  J. 
Eq.  332,  it  is  held  tluit  creditors 
Suth.  Dam.  Vol.  I.— 46. 


who  hold  a  bond  containing  a  void 
usurious  agreement  and  other  in- 
debtedness unafTc-cted  by  such  agree- 
ment can  only  a])propriate  pay- 
ments so  far  as  they  might  have 
been  recovered.  Edwards  v.  Rumpli, 
48  Ark.  479;  Dunbar  v.  Garrity,  58 
N.  H.  75. 

But  see  Cotton  v.  Beatty,  —  Tex. 
Civ.  App.  — ,  162  S.  W.  1007,  hold- 
ing that  though  payments  be  applii-d 
by  agreement  of  creditor  and  debtor 
to  the  interest  of  a  usurious  loan, 
the  court  will,  in  a  proper  case,  re- 
apply it  to  the  principal. 

96Holloway  v.  White-D.  S.  Co., 
151  Fed.  216,  10  L.R.A.(N.S.)  704, 
80  C.  C.  A.  568,  10  L.R.A.(N.S.) 
704;  Anderson  v.  Griffith,  51  Ore. 
116;  Kelso  v.  Rus.sell,  33  Wash.  474; 
Samuel  v.  Samuel,  supra;  Wellnian 
v.  Miner,  179  III.  326.  See  Stone  v. 
Talbot,  4  Wis.  442. 

97  Belcher  v.  Case  T.  M.  Co.,  78 
Neb.  798;  Bonnell  v.  Wilder,  67  111. 
327 ;  Bridenbecker  v.  Lowell,  32 
Barb.  9;  Taylor  v.  Coleman,  20  Tex. 
772;  Lindsey  v.  Stevens,  5  Dana 
107;  Arnold  v.  Johnson,  2  111.  196; 
Aycr  v.  Hawkins,  19  Vt.  26.  Sec 
Bean  v.  Brown,  54  X.  II.  395;  Gas8 
v.  Stinson,  3  Sunm.  99. 


722 


SUTllERl.AND    ON    DAMAGES. 


[§   239 


tested  claim,  tlimw  the  burden  ii})()n  the  debtor  of  disproving 
tlio  dcniand.^^  An  application  l)v  the  creditor,  contrary  to  the 
debtor's  directions,  but  acquiesced  in  by  him,  will  be  binding.^^ 
It  is  not  necessary  that  the  demands  be  all  of  the  same  grade 
or  dignity;  part  may  be  specialties,  and  part  simple  contract 
debts,  and  the  creditor  has  tlic  choice  on  which  he  will  apply  a 
general  payment.-'  As  between  a  legal  and  equitable  demand 
it  would  seem  that  preference  must  be  given  to  the  legal ;  the 
creditor  is  not  at  liberty  to  pay  a  later  equitable  claim  instead 
of  an  older  legal  debt ;  ^  and  it  is  not  certain  that  he  has  the 
option  to  apply  the  money  to  a  prior  equitable  demand  in  pref- 
erence to  a  later  legal  one.^  He  may  apply  a  payment  to  a 
demand  not  secured  in  lieu  of  one  secured,  or  to  one  the  se- 
curity for  which  is  more  precarious.*  Such  right  is  not  af- 
fected by  a  clause  in  a  chattel  mortgage  to  the  effect  that,  upon 
the  mortgagor's  default,  the  mortgagee  might  sell  the  property 
and  apply  the  net  proceeds  to  the  payment  of  the  debt,  returning 


98  stone  V.  Talbot,  supra. 

99  Pennsylvania  C.  Co.  v.  Blake, 
85  N.  Y.  226;  Flarslieim  v.  Brcst- 
rup,  43  Minn.  298;  Turner  v.  Os- 
born,  —  Miss.  — ,  64  So.  721. 

1  Meggot  V.  Wild,  1  Ld.  Raym. 
287 ;  Mayor  v.  Patten,  4  Cranch, 
;]17,  2  L.  cd.  633;  Peters  v.  Ander- 
son, 5  Taunt.  596;  Hargroves  v. 
Cooke,  ]5  Ga.  321;  Pierce  v.  Knight, 
31  Vt.  701;  Pennypacker  v.  Um- 
berger,  22  Pa.  492;  Heintz  v.  Cahn, 
29  111.  308;  Brazier  v.  Bryant,  2 
Dowl.  P.  C.  477;  Chitty  v.  Naish, 
id.  511. 

2Goddard  v.  Hodges,  1  Cr.  &  M. 
33. 

3  See  Bosanquet  v.  Wray,  6  Taunt. 
597;  Birch  v.  Tebbutt,  2  Starkie, 
74;  2  Pars,  on  Cont.  631. 

4  Payne  v.  Seagars,  13  Ga.  App. 
101;  Bankers'  T.  Co.  v.  Gillespie, 
181  Fed.  448,  —  CCA.—;  Cain 
V.  Vogt,  138  Iowa,  631,  128  Am.  St. 
216;   Philadelphia  Cas.  Co.  v.  Can- 


non &  B.  M.  Co.,  133  Ky.  745;  Lee 
V.  Manley,  154  N.  C.  244;  Chestnut 
St.  T.  &  S.  F.  Co.  V.  Hart,  217  Pa. 
506;  Halsted  v.  Grief  en,  173  111. 
App.  551;  Compton  v.  Ahrens  &  O. 
Mfg.  Co.  (Te.x.  Civ.  App.),  151  S. 
W.  884;  Crane  Co.  v.  United  States 
F.  &  G.  Co.,  74  Wash.  91  ;  Hargroves 
v.  Cooke,  15  Ga.  321;  Waterman  v. 
Younger,  49  Mo.  413;  Jenkins  v. 
Beal,  70  N.  C  440;  Simmons  v. 
Gates,  56  Ga.  609;  Driver  v.  Fort- 
ner,  5  Porter,  9;  Burks  v.  Albert,  4 
J.  J.  Marsh.  97,  20  Am.  Dec.  209; 
Wood  V.  Callaghan,  61  Mich.  402, 
1  Am.  St.  597;  White  v.  Beem,  80 
Ind.  239;  Sweeney  Co.  v.  Fry,  151 
Ind.  178;  Northern  Nat.  Bank  v. 
Lewis,  78  Wis.  475 ;  Haynes  v.  Nice, 
100  Mass.  327,  1  Am.  Rep.  109; 
Henry  Bill  Pub.  Co.  v.  Utley,  155 
Mass.  366;  Risher  v.  Risher,  194 
Pa.  164;  Montague  v.  Stelts,  37  S. 
C.  200,  34  Am.  St.  736;  Hall  v. 
Johnston,  6  Tex.  Civ.  App.  110. 


§    239]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKQES.        723 

the  overplus  to  the  mortgagor.^  Payments  made  on  a  continuous 
account  of  several  items,  the  whole  constituting  but  one  debt, 
Avill  be  applied  to  the  items  in  the  order  of  their  date  though 
some  of  the  items  are  subject  to  a  mechanic's  lien.® 

The  particular  circumstances  may  give  the  creditor  a  right 
to  infer  the  consent  of  the  debtor  to  an  application  not  other- 
wise admissible.  lie  may  apply  an  unap]n-o]>riated  })aymont 
to  a  contingent  liability,  to  a  debt  not  due,  to  one  barred  by 
the  statute  of  limitations,  or  even  to  an  illegal  demand  if  lie 
has  no  other.  The  payment  of  money  under  such  circumstances 
necessarily  implies  a  consent  to  apply  it  to  the  demands  actually 
existing.'^  If  the  debtor  agrees  that  his  creditor  may  ap[)ly  pay- 
ments to  any  indebtedness  due  when  they  are  made,  they  may 
be  a])plied  to  the  satisfaction  of  an  account  due  instead  of  a 
matured  note.^ 

Some  distinctions  have  been  made  in  respect  to  the  creditor's 
right  of  application  between  debts  which  the  debtor  paying 
owes  separately  and  alone  and  those  which  he  owes  jointly 
with  others ;  and  also  between  debts  owing  to  the  person  re- 
ceiving the  payment  alone  and  those  to  which  he  and  others 
are  jointly  entitled.  It  has  been  held  that  if  one  member  of  a 
firm  makes  a  payment  to  a  person  who  has  an  account  against 
him  and  also  against  the  firm  of  which  he  is  a  member,  the 
creditor  must  apply  the  money  to  the  individual  account  un- 
less he  can  show  a  consent  to  have  it  otherwise  applied.^  The 
law  will  appropriate  it  to  the  individual  debt  in  the  absence 
of  any  application  by  the  parties  if  the  money  paid  is  not 
shown  to  have  been  derived  from  the  fund  from  which  the 
joint  liability  was  to  be  met.^"     This  strict  rule  has  not  boon 

5  Baum    V.    Trantham,    42    R.    C.  8  Evcrton  v.  Day,  60  Ark.  T.i. 
104,  46  Am.  St.  697.  9  Johnson  v.  Boone,  2  Harr.  172; 

6  Pond  &  H.  Co.  V.  O'Connor,  70  Gaas  v.  Stinson,  3  Sumn.  98;  Sneod 
Minn.  266.  v.  Wiestor,  2  A.  K.  Marsh.  277. 

7  Hall  V.  Clement,  41  N.  H.  166;  10  Baker  v.  Stackpoole,  9  Cow. 
Bowe  V.  Gano,  9  Hun,  6;  Treadwell  420,  18  Am.  Dec.  508;  Camp  v. 
V.  Moore,  34  Me.  112;  Ayer  v.  Haw-  Smith,  136  N.  Y.  187;  Livermore  v. 
kins,  19  Vt.  26.  See  Rackley  v.  Clarid^e,  33  Mo.  428.  See  Lee- v. 
Pearce,  1  Ga.  241;  Bancroft  v.  Dn-  Foiintaine,  10  Ala.  I'tri,  44  Am.  Dec. 
mas,  21   Vt.  456;    §  238;    Arnold  v.  505. 

Prole  4  M.  &  G.  860.  After  the  dissolution  of  a  partner- 


724 


SUTIU'^RLAND    ON    DAMAGES. 


[§    239 


uiiifornily  recognized.  The  creditor  has  been  given  the  choice, 
in  the  absence  of  directions,  to  apply  it  upon  the  joint  debt." 
Payments  made  by  a  surviving  partner,  while  carrying  on  the 
partnership  business  for  the  joint  benefit  of  himself  and  the 
estate  of  the  deceased  partner,  pursuant  to  a  stipulation  in 
the  partnership  articles,  upon  an  account,  some  items  of  which 
were  contracted  before  and  some  after  the  death  of  the  other 
partner,  must  be  applied  to  the  discharge  of  the  first  items.^^ 
Where  tlie  debtor  making  a  general  payment  owes  a  debt  to 
a  firm,  and  also  one  to  the  member  of  it  to  whom  the  payment 
is  personally  made,  the  receiver  is  precluded  by  his  relation  of 
agent  for  the  firm  from  preferring  his  own  claim.  It  is  implied 
in  the  very  nature  of  an  agent's  or  trustee's  contract  that  he 
will  take  the  same  care,  at  least,  of  the  property  intrusted  to 
him  that  he  does  of  his  own.'^^  Therefore,  he  should  apply  the 
payment  pro  rata  to  both  debts.^*  If  the  debtor  is  a  firm  the 
creditor  cannot  apply  moneys  paid  by  it  to  the  individual  debts 
of  one  or  more  of  the  partners. ^^ 


ship  one  of  its  members  continued 
the  business,  agreeing  to  pay  all  the 
partnership  debts  and  taking  enough 
of  the  firm  property  to  do  so;  he 
added  other  goods  to  the  stock  and 
mortgaged  it  to  secure  both  the 
joint  and  individual  debts.  It  was 
held  that  a  creditor  might  apply 
payments  made  to  the  latter  debt. 
King  V.  Sutton,  42  Kan.  600;  St. 
Louis  T.  F.  Co.  V.  Wisdom,  4  Lea, 
695. 

11  McBride  v.  Noble,  40  Colo.  372, 
disapproving  a  dictum  in  Adams  v. 
Tucker,  6  Colo.  App.  393 ;  Van  Rens- 
selaer V.  Roberts,  5  Denio,  470; 
Boyd  V.  Webster,  59  N.  H.  89. 

12  Stanwood  v.  Owen,  14  Gray, 
195;  Morgan  v.  Tarbell,  28  Vt.  498. 

In  Fairchild  v.  Hoolly,  10  Conn. 
475,  an  account  against  a  partner- 
ship, upon  which  sundry  payments 
had  been  made,  was  entire  and  un- 
balanced; before  any  payments  had 
been  made,  a  secret  partner  had 
withdrawn   from    the    concern,    and 


the  payments  were  made  by  one  of 
the  partners  who  remained.  Held, 
that  the  money  with  which  payment 
was  made  could  not  be  presumed  to 
have  accrued  out  of  the  funds  of 
the  new  firm,  and  to  be  applied, 
therefore,  to  the  benefit  of  the  fund 
from  which  it  had  been  taken;  that 
it  could  not  be  applied  to  the  por- 
tion of  the  account  accruing  after 
the  withdrawal,  on  the  principle 
that  it  should  be  applied  to  the  debt 
for  which  there  was  the  least  se- 
curity, because  it  did  not  appear 
but  that  the  company  was  as  sol- 
vent after  the  withdrawal  as  before ; 
but  that  the  money  so  paid  should 
be  applied  to  the  oldest  items  of 
the  account. 

13  Colby  V.  Copp,  35  N.  H.  434. 

i^Id. ;  Favenc  v.  Bennett,  11  East, 
36 ;  Barrett  v.  Lewis,  2  Pick.  123 ; 
Scott  V.  Ray,  18  id.  360;  Cole  v. 
Trull,  9  id.  325. 

15  Farris  v.  Morrison,  66  Ark. 
318. 


§    240]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        725 

§  240.  Same  subject.  A  creditor  eaimot  apply  a  payment 
made  generally  on  account  of  existing  debts  to  a  new  debt 
subsequently  contracted/^  nor  to  an  instalment  of  the  same 
debt  becoming  due  subsequent  to  the  payment.^'  It  has  been 
held  that  the  creditor's  application  is  not  complete  and  absolute 
until  the  debtor  has  been  notified  of  it.^*  When  such  notice 
has  been  given  the  money  is  appropriated.^^  An  objection  tu 
the  application  made  by  the  debtor  ten  days  after  he  has  been 
informed  of  it  is  too  late.'^" 

If  the  holder  for  collection  of  several  notes  against  one 
debtor,  which  are  owned  by  various  i)ersons,  receives  from  him 
a  sum  less  than  the  amount  of  all  the  notes,  and  the  debtor 
makes  no  application  of  the  payment,  it  is  competent  for  the 
creditors  owning  the  notes  to  direct  the  application  to  any  of 
them.  In  an  action  after  such  payment  upon  one  of  such 
notes,  in  the  absence  of  any  application  up  to  the  time  of  the 
trial,  no  part  will  be  applied  to  the  note  in  suit  if  it  appears 
that  the  plaintiif  has  not  received  part  of  the  money.^^  An 
attorney  holding  several  notes  for  collection,  belonging  to  dif- 
ferent persons,  and  receiving  a  payment  on  account  of  them 
not  appropriated  by  the  debtor,  may  himself  appropriate  it.'^^ 
But  if  an  agent,  having  a  demand  himself  against  the  debtor, 

16  Miles   V.   Ogden,   54   Wis.   573;  Kline  v.  Ragland,  47  Ark.  Ill;  Sey- 
Law   V.    Sutherland,   ^    Gratt.    357;  mour  v.   Sexton,   10  Watts,  255. 
Baker  v.  Stackpoole,  9  Cow.  420,  18  18  Ryan  v.  O'Neil,  49  Mich.  281  ; 
Am.  Dec.  508.  Lano  v.  Jones,  79  Ala.  156;  Sinison 

A.  owed  a  debt  to  B.  payable  on  v.  Ingham,  2  B.  &  C.  65;  Allen  v. 
demand,    for   which    C.   was   surety.       Culver,    3    Denio,    284;    Van    Rens- 

A.  assigned  debts  of  others  to  B.  as       selaer  v.  Roberts,  5  id.  470. 

a  means  of  payment  in  part.     After  19  Id.;    The  Asiatic  Prince,  47   C. 

such  assignment,  but  before  the  as-  C.   A.   325,   108   Fed.   287;    Bopp  v. 

signed  debts  were  collected,  A.  con-  Wittich,  88  Mo.  App.  129;  Mosiman 

tracted  another  debt  to  B.  for  which  v.  Occidental  Mut.  B.  Ass'n,  82  Kan. 

there  was  no   security.     Held,  that  070;    Krebs   v.   Blatz,   134   Ky.  505. 

B.  could  not,  after  collection  of  the  20  Higher  v.  Risher,  194  Pa.  164. 
assigned  debts,  apply  the  same  to  No  change  of  the  application  can 
pay  tlie  debt  contracted  after  the  as-  be  made  after  the  creditor  has  given 
signment,  and  recover  the  first  debt  the  debtor  credit  by  entering  it. 
from  C,  the  surety  for  it.  Donally  Burnett  v.  Sledge,  129  N.  C.  114. 
v.  Wilson,  5  Leigh,  329.  21  Taylor  v.  Jones,  1  Ind.  17. 

17  Gates  v.  Burkett,  44  Ark.  90;  22  Carpenter  v.  Goin,  19  N.  H. 
Heard    v.    Pulaski,    80    Ala.    502;  479. 


726  SUTHERLAND  ON  DAMAGES.  [§  240 

and  also  acting  for  a  principal  who  has  a  demand  against  the 
same  debtor,  receives  an  unappropriated  payment  from  such 
debtor  he  must  apply  it  ratably  to  both.^^ 

The  right  of  appropriation  is  confined  to  the  parties;   no 
third  person  can  insist  on  any  application  which  neither  of 
them  has  made.^*     Thus  the  grantee  of  a  mortgagor  cannot 
insist  that  money  of  the  mortgagor  in  the  mortgagee's  hands 
shall  be  used  to  pay  oft"  the  mortgage  unless  this  was  clearly 
contemplated  by  the  parties,  and  the  grantee  made  his  pur- 
chase upon  that  understanding.^^     Strangers  can  demand  noth- 
ino-  in  this  regard  which  the  parties  have  not  required.^^    Where 
creditors  claim  equities  through  their  debtors  they  are  usually 
estopped  by  what  the  debtors  do;  but  fraud  never  estops  cred- 
itors.    This  doctrine  relative  to  the  application  of  payments 
applies  only  where  the  creditor  has  two  or  more  honest  claims 
against  the  debtor ;  it  does  not  apply  so  as  to  conclude  creditors 
where  there  is  only  one  such.     Therefore  a  subsequent  mort- 
gagee may  object  to  the  application  by  the  holder  of  an  earlier 
mortgage  of  partial  payments  to  usurious  interest  for  the  pur- 
pose of  keeping  alive  that  part  which  is  valid.^'^    As  has  been 
stated,  a  surety  of  a  debtor  who  makes  an  indefinite  payment 
cannot  interfere  with  the  election  of  the  creditor;  nor  will  an 
intention  of  the  debtor  be  presumed  to  apply  it  in  favor  of  the 
surety  so  as  to  exclude  the  right  of  the  creditor  to  make  the  ap- 
plication.^^    But  where,   at  the  inception  of  the  contract  of 

23  Barrett  v.  Lewis,  2  Pick.  123;  Parker  v.  Green,  8  Mete.  (Mass.) 
Cole  V.  Trull,  9  Pick.  325.  137. 

24  Wannamaker  v.  Powers,  102  27  Greene  v.  Tyler,  39  Pa.  361. 
App.  Div.  (N.  Y.)  485;  Harding  v.  See  Chester  v.  Wheelwright,  15 
Tifft,    75    N.    Y.    461;    Feldman    v.  Conn.  562. 

Beier,  78  id.  293;  Coles  v.  Withers,  28  Hanson  v.  Manley,  72  Iowa,  48; 

33   Gratt.    186;    Mack  v.   Adler,  22  Wilson  v.  Allen,  11  Ore.  154. 

Fed.  570;  Jefferson  v.  Church  of  St.  Payments  made  generally  to  the 

Matthew,   41   Minn.   392;    Thorn    &  creditors  on  account  of  a  person  for 

H.'s  L.  &  C.  Co.  V.  Citizens'  Bank,  whom  a  guaranty  is  given  may  be 

158  Mo.  272.  applied  by  them  in  liquidation  of  a 

25  Gordon  v.  Hobart,  2  Story,  243;  balance  existing  against  him  before 
•Backhouse  v.  Patton,  5  Pet.   160,  8  it  was  given,  and  the  guarantor  can- 

L.   ed.   82.  not  insist  on  the  payments  being  ap- 

26  Spring  Garden  Ass'n  v.  Trades-  plied  in  exoneration  of  his  liability, 
men's   L.   Ass'n,   46   Pa.   493.      See      although    at    the    time    of    liis    as- 


§    240]      COJSIVEJSITIONAL    I.IQUIDATIONS    AND    DISC  II  Al{(i  KS.        727 

suretyship,  a  mode  ol"  ])ii_vineiit  was  agreed  upon  iiiid  a  parliciilar 
fund  identified  for  that  purpose,  the  surety  may  insist  (Ui  the 
application  of  that  fund  when  it  is  realized.^^  Thus,  a  factor 
who  lias  accepted  a  bill  drawn  by  his  principal,  as  against  an 
accommodation  drawer  who  becomes  such  on  the  faith  of  a  con- 
signment of  cotton  made  to  meet  it  at  maturity,  cannot  api)ly 
the  ])roceeds  of  the  consignment  to  another  dclit,  and  no  factor's 
lien  for  such  other  debt  will  be  permitted  to  intervene.^°  When 
the  party  having  a  right  to  appropriate  a  payment  has  done  so, 
the  appropriation  is  final,  and  he  cannot  change  it.^^  An  ;iii|ii-o- 
priation  made  by  mutual  agreement  may  not  be  changed  so  as 
to  affect  the  rights  of  a  third  party.^^ 


suming  it  the  -  creditors  did  not 
give  him  notice  that  any  such  bal- 
ance was  then  existing.  Kirby  v. 
Marlborough,  2  M.  &  S.  18.  See 
Merrimack  Co.  v.  Brown,  12  N.  H. 
320. 

It  is  held  in  Gore  v.  Townsend, 
105  N.  C.  228,  8  L.R.A.  443,  that  a 
mortgagee  who  holds  two  mortgages, 
the  older  of  which  was  executed  by 
a  husband  and  his  wife  to  secure 
the  former's  debt,  and  the  latter  of 
which  was  executed  by  him  alone  on 
the  same  property  to  secure  a  sub- 
sequent note,  cannot  appropriate  the 
proceeds  of  personal  property  to  the 
payment  of  the  second  mortgage;  it 
must  go  to  the  payment  of  the  first 
in  exoneration  of  the  wife's  dower 
right,  she  being  a  surety  for  her 
husband. 

29  Barnes  v.  Century  Sav.  Bank, 
149  Iowa,  367. 

30Brander  v.  Phillips,  16  Pet. 
121,  10  L.  ed.  209.  See  Marryatts 
V.  White,  2  Stark.  101,  in  which  se- 
curity having  been  given  by  a  sure- 
ty for  goods  to  be  supplied  and  in 
respect  of  a  pre-existing  debt,  the 
goods  were  supplied,  and  payments 
made  from  time  to  time  by  the 
principal,  in  respect  of  some  of 
which     discount     was     allowed     for 


prompt  payment;  held,  that  it  must 
be  inferred  in  favor  of  the  surety 
that  all  tbese  payments  were  in- 
tended to  be  in  liquidation  of  the 
latter  account;  also  Shaw  v.  Picton, 
7  D.  &  R.  201,  4  B.  &  C.  715,  where 
the  same  agent  had  a  bill  of  account 
with  the  grantor  of  several  annu- 
ities, for  the  payment  of  which  A. 
became  surety  and  in  consequence 
of  a  letter  written  bj'  an  attorney 
in  the  names  of  the  grantees,  at  the 
instance  of  the  agents,  demanding 
payment  of  the  arrears  of  tlie  annui- 
ties from  the  grantor  and  his  sme- 
ty,  a  sum  of  money  was  paid  under 
circumstances  from  which  it  was 
to  be  collected  that  the  money  was 
intended  to  be  specifically  appropri- 
ated to  the  annuity  account,  and  the 
agents  applied  it  to  the  bill  account; 
iield,  that  this  was  a  misapplica- 
tion, and  that  the  money  ougiit  to 
be  appropriated  pro  rata  among  the 
annuitants   in   relief  of   the   surety. 

31  Lichenstein  v.  Lyons,  115  La. 
1051;  People  v.  Grant,  139  Mich. 
26:  Wriglit  v.  Wright,  72  N.  Y. 
149. 

32  Piniiey  v.  French,  07  i\an.  473; 
Mitciicll  V.  Wheeler,  122  Iowa  368, 
13]   Iowa  434. 


728 


SUTllEKLAND    ON    DAMAGES. 


[§   341 


§  241.  Appropriation  by  the  court.  Where  the  parties  have 
not  made  a  specific  appropriation  of  moneys  paid  and  there 
are  several  debts  or  demands  for  which  the  party  paying  the 
money  is  liable  to  the  party  receiving  it,  the  fundamental  rule 
or  principle  is  that  the  law  will  appropriate  it  according  to 
the  justice  and  equity  of  the  case.^^  It  has  been  said  that  in 
law  that  application  is  made  which  is  most  favorable  to  the 
creditor ;  in  equity,  the  payment  is  applied  first  to  the  debt  for 
which  the  security  is  most  precarious.^*  In  applying  the  cardi- 
nal principle  various  subsidiary  rules  have  been  recognized,  in 
respect  to  which  and  in  the  reasons  assigned  therefor  the  de- 
cisions are  not  entirely  in  accord.  Many  cases  proceed  upon 
the  assumption  that  the  intention  of  one  or  both  of  the  parties 
is  to  be  efl'ectuated,  or  that  the  interest  of  one  party  in  prefer- 
ence to  that  of  the  other  is  entitled  to  be  subserved.^^     But 


33  Arkansas  Nat.  Bank  of  Hot 
Springs  v.  Martin,  110  Ark.  578; 
Van  Sceiver  v.  King,  176  Mich.  605 ; 
Marshall  v.  G.  A.  Stowers  Furni- 
ture Co.,  —  Tex.  Civ.  App.  — ,  167 
S.  W.  230;  Indiana  T.  Co.  v.  In- 
ternational B.  &  L.  Ass'n,  36  Ind. 
App.  685;  State  v.  McDermitt,  7'2 
W.  Va.  291;  Martin  v.  Ede,  103  Cal. 
157;  McCartney  v.  Buck,  8  Houst. 
34;  Field  v.  Holland,  6  Cranch  8,- 
3  L.  ed.  3  36;  Souder  v.  Schechterly, 
91  Pa.  83;  Spiller  v.  Creditors,  16 
La.  Ann.  292;  Stone  v.  Seymour,  15 
Wend.  19;  Parker  v.  Green,  8  Mete. 
(Mass.)  144;  Norris  v.  Beaty,  6 
W.  Va.  477 ;  Robinson  v.  Doolittle, 
12  Vt.  246;  Randall  v.  Parramore, 
1  Fla.  409;  Chester  v.  Wheel- 
wright, 15  Conn.  562;  Calvert  v. 
Carter,  IS  Md.  73;  Neidig  v. 
Whiteford,  29  Md.  178;  Haden  v. 
Phillips,  21  La.  Ann.  517;  Upham 
V.  Lefavour,  11  Mete.  (Mass.)  174; 
Seymour  v.  Van  Slyck,  8  Wend.  403 ; 
Hargroves  y.  Cooke,  1 5  Ga.  321 ; 
Leef  V.  Goodwin,  Taney,  460;  Calla- 
han V.  Boazman,  21  Ala.  246;  Bay- 
ley  V.  Wynkoop,  10  111.  449;   Benny 


V.  Rhodes,  18  Mo.  147,  59  Am.  Dec. 
293;  Proctor  v.  Marshall,  18  Tex. 
63;  Oliver  v.  Phelps,  20  N.  J.  L. 
180;  McFarland  v.  Lewis,  3  111.  344; 
White  V.  Trumbull,  15  N.  J.  L.  314, 
29  Am.  Dec.  687;  Carson  v.  Hill, 
1  McMull.  (S.  C.)  76;  Selleck  v. 
Sugar  Hollow  T.  Co.,  13  Conn.  453; 
Rosseau  v.  Cull,  14  Vt.  83;  Star- 
rett  v.  Barber,  20  Me.  457. 

34  Barbee  v.  Morris.  221  111.  382 ; 
Chicago  T.  &  T.  Co.  v.  McGlew,  90 
111.  App.  58. 

35  Conduitt  V.  Ryan,  3  Ind.  App. 
1  ;  McDaniel  v.  Barnes,  5  Bush,  183; 
Allen  V.  Culver,  3  Denio,  284;  Byrne 
V.  Grayson,  15  La.  Ann.  457;  Spil- 
ler V.  Creditors,  16  id.  292;  Cal- 
vert V.  Carter,  18  Md.  73;  Pierce 
V.  Sweet,  33  Pa.  151;  Poindexter 
V.  La  Roche,  7  Sm.  &  M.  699;  Bus- 
sey  V.  Gant,  10  Humph.  238;  Patti- 
son  V.  Hull,  9  Cow.  747;  Dows  v. 
Morewood,  10  Barb.  183 ;  Johnson's 
App.,  37  Pa.  268;  Seymour  v.  Sex- 
ton, 10  Watts,  255. 

In  Johnson's  App.,  supra,  Strong, 
J.,  said:  "The  fact  of  actual  appro- 
priation to  the  earliest  items  of  the 


§    241]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        720 

it  is  believed  that  there  is  no  presumption  of  intention  which 


account  not  being  established,  the 
next  question  is  whctlier  tlie  law  re- 
quires that  the  credits  sliould  be 
thus  applied.  In  the  absence  of 
direction  by  the  debtor,  and  of  act- 
ual application  by  the  creditor,  the 
law  will  make  an  equitable  applica- 
tion, and  in  making  it  will  regard 
the  circumstances  of  the  case,  in 
the  present  case  it  should  make  no 
difference  to  Duncan  whether  his 
credits  were  applied  to  the  earlier 
or  to  the  later  items  of  the  account. 
He  was  equally  a  debtor  for  both 
and  both  carried  interest.  It  is 
true  that  when  payments  are  made 
upon  a  running  account  it  is  one 
of  the  principles  of  legal  applica- 
tion that  they  shall  be  treated  as 
extinguishing  the  earliest  charges  in 
the  account.  But  this  is  not  a  para- 
mount principle.  Another  of  equal 
force  is  that  the  payments  are  to 
be  applied  to  that  debt  which  is 
least  secured.  Both  these  rules  look 
to  the  interest  of  the  creditor,  it 
being  presumed  that  the  debtor  by 
neglecting  to  give  any  direction  con- 
sented to  such  an  application  as 
would  be  most  beneficial  to  the  cred- 
itor. But  to  apply  Duncan's  credits 
to  the  first  items  of  the  account 
*  *  *  against  him  and  thus  ex- 
tinguish the  mortgage  in  the  first  in- 
stance would  be  an  application  not 
beneficial  to  the  debtor,  and  most 
hurtful  to  the  creditor.  It  would 
be  paying  first  the  debt  which  was 
best  secured,  and  leaving  the  later 
advances  without  the  protection  of  a 
factor's  lien  and  without  any  secu- 
rity at  all  as  against  judgments  en- 
tered before  they  were  made.  It 
would  be  reversing  the  fundamental 
rule  of  appropriations."  The  equi- 
table circumstances  stated  abundant- 
ly justify  the  application  whicli  was 


made  without  the  presumption  that 
"tlie  debtor  by  neglecting  to  give 
any  direction  consented  to  sucli  an 
application  as  would  be  most  bene- 
ficial to  the  creditor."  There  would 
seem  to  be  no  more  grouiul  for  sucii 
a  presumption  than  that  the  credit- 
or by  neglecting  to  make  an  actual 
application  of  the  credits  consented 
to  such  an  application  as  would  lie 
most  beneficial  to  tlie  debtor. 

That  there  is  no  such  presumption 
that  the  debtor  consents  to  an  appli- 
cation most  beneficial  to  the  credit- 
or is  evident  from  the  cases  that 
consult  the  interest  of  the  debtor 
where  there  are  no  countervailing 
equities.  Thus,  in  accordance  with 
the  general  course  of  authority,  the 
law  applies  a  payment  to  a  delit 
bearing  interest  in  preference  to  one 
not  bearing  interest.  Seymour  v. 
Sexton,  supra.  Crompton  v.  Prall, 
]05  Mass.  255,  proceeds  on  the  same 
principle.  Dows  v.  Morehead,  10 
Barb.  183,  holds  that  the  law  will 
apply  payments  to  that  debt,  a  re- 
lief from  which  will  be  most  bene- 
ficial to  the  debtor;  as,  for  example, 
acceptances  for  whicli  an  instru- 
ment in  the  shape  of  a  mortgage  or 
pledge  of  personal  property  is  given. 
Poindexter  v.  La  Roche,  7  Sm.  &  M. 
699,  and  Pattison  v.  Hull,  9  Cow. 
747,  are  to  the  same  effect.  But  a 
more  satisfactory  statement  of  tlie 
principle  is  to  be  found  in  Field  v. 
Holland,  G  Cranch,  8,  3  L.  ed.  130, 
where  Marshall,  C.  J.,  says:  "When 
a  debtor  fails  to  avail  himself  of 
tlie  power  he  possesses,  in  conse- 
(juence  of  which  that  power  devolves 
on  the  creditor,  it  does  not  appear 
unreasonable  to  suppose  tiiat  he  ia 
content  witli  the  manner  in  which 
the  creditor  will  exercise  it.  If 
neither  party  avails  himself  of  his 


730 


SUTHERLAND    ON    DAMAGES. 


[§  241 


controls  where  the  law  makes  the  application.^^  If  there  is  evi- 
dence of  intention  it  governs,  of  course,^^  but  the  application 
then  is  not  made  by  the  law,  but  by  the  party  whose  intention 
controls.  And  when  the  interest  of  one  party  is  subserved  it 
is  not  upon  any  invidious  preference,  but  upon  some  special 
ground  of  equity  which  appeals  to  the  conscience  of  the  court 
in  his  behalf.^*  Such  considerations  sometimes  require  a  pro 
rata  distribution  of  the  payment  to  all  of  several  debts;  some- 
times its  appro] (riation  to  one  for  being  the  oldest  or  least 
secured,  to  relieve  the  debtor  from  some  special  hazard  or  hard- 
ship, or  to  absolve  a  surety.^^ 

Where  a  bank  is  protected  against  loss  on  future  overdrafts 


power,  in  consequence  of  which  it 
devolves  on  the  court,  it  would  seem 
reasonable  that  an  equitable  appli- 
cation should  be  made.  It  being 
equitable  that  the  whole  debt  should 
be  paid,  it  cannot  be  inequitable  to 
extinguish  first  those  debts  for 
which  the  security  i*  most  precari- 
ous." See  Langdon  v.  Bowen,  46  Vt. 
512;  Truscott  v.  King,  6  N.  Y.  147; 
VVorthley  v.  Emerson,  116  Mass. 
374;  The  A.  R.  Dunlap,  1  Low.  350; 
Robie  V.  Briggs,  59  Vt.  443,  59  Am. 
Rep.  737. 

In  the  last  case  the  debtor  owed 
an  individual  and  joint  account;  his 
payments  amounted  to  more  than 
the  former;  in  ignorance  of  the  ex- 
act state  of  the  account  the  creditor 
entered  the  whole  sum  paid  to  the 
credit  of  the  individual  account. 
The  court  applied  the  surplus  to  the 
other. 

36  IVIoore  V.  Gray,  22  La.  Ann. 
289. 

It  has  been  presumed  that  a  pay- 
ment made  by  a  tenant  in  common 
was  made  in  fulfillment  of  his 
promise  rather  than  to  relieve  the 
burden  of  a  lien  against  the  estate 
of  joint  tenants,  the  eff"ect  of  that 
application  being  to  toll  the  statute 
of  limitations  against  the  other  ten- 


ant. Weidenhammer  v.  McAdaras, 
52  Ind.  App.  98  citing  Stubblefield 
V.  McAulifT,  20  Wash.  442. 

37  Becker  v.  Hopper,  22  Wyo.  237 ; 
]\IcMillan  v.  Grayston,  83  Mo.  App. 
425;  Paragould  &  M.  R.  Co.  v. 
Smith,  93  Ark.  224;  Bower  v.  Walk- 
er, 220  Pa.  294.  See  Kissick  v. 
Bolton,  134  Iowa  650. 

"In  ease  an  expressed  intention 
cannot  be  found,  one  may  be  implied 
from  the  circumstances  of  the  ease. 
Every  presumption  and  rule  which 
the  courts  have  adopted  in  further- 
ance of  their  purpose  to  discover  the 
'justice  of  each  case'  are  [is]  sub- 
ordinate to  this  rule  of  intention." 
American  W.  Co.  v.  Maaget,  86 
Conn.  234. 

If  the  debtor  pays  with  one  intent 
and  the  creditor  receives  with  an- 
other the  former's  intent  will  be 
given  eff"ect.  Roakes  v.  Bailey,  55 
Vt.  542. 

38  Pierce  v.  Knight,  31  Vt.  701; 
Smith  V.  Loyd,  11  Leigh,  512,  37 
Am.  Dec.  621 ;  2  Greenlf.  Ev.,  §  533. 

39  Marion  W.  Co.  v.  Marion,  121 
Iowa  306;  State  v.  United  F.  G. 
Co.,  81  Kan.  660,  26  L.R.A.(N.S.) 
865;  Columbia  Digger  Co.  v.  Rector, 
215  Fed.  618. 


§    242]      CONVENTIONAI,    MQUIDATIONS    AND    ItlSCll AK'C  i:s.        7?,i 

by  a  [trincipal  his  sureties  arc  eutitlcil  to  have  paymenls  iiuido 
applied  to  the  account  which  they  have  gnarantced.*"  If  the 
money  paid  arises  from  some  property  or  fund  it  will  he  ap- 
plied to  the  discharge  or  reduction  of  the  demand  against  the 
same."  If  several  chattels  arc  bought  at  the  same  time  under 
a  single  contract,  the  promise  to  pay  being  single,  the  court 
will  not  apply  payments  made  on  the  contract  to  the  different 
articles  in  the  order  in  which  they  are  specified  therein;  but 
will  apply  them  to  the  contract^.generally.^'^  Partial  payments 
made  on  a  note  infected  with  usury  will  be  applied  to  the  ex- 
tinguishment of  lawful  interests,  and  then  to  the  principal,*^ 
and  to  earlier  rather  than  later  accounts,  though  sureties  are  con- 
cerned.** If  an  incumbrance  is  void  in  part  only,  payments 
will  be  applied  first  to  the  discharge  of  so  much  as  is  valid.*^ 
The  law  of  the  state  in  which  the  sales  constituting  the  account 
in  question  were  made  governs  the  application  of  payments.*^ 
§  242.  When  payments  applied  pro  rata.  If  an  indefinite 
payment  is  made  where  there  are  several  debts  of  the  same 
nature  and  all  things  equal,  it  is  applied  proportionally.*' 
Moneys  collected  by  judicial  proceedings  founded  on  several 
claims  cannot  be  applied  by  either  party;  the  law  will  apply 

40  Ida  County  Sav.  Bank  v.  Sei-  Payments  made  after  a  cliange  in 
doiisticker,  ]28  Iowa  54,  111  Am.  the  membership  of  a  firm  will  not 
St.  189;  Drake  v.  Sherman,  179  111.       be   applied  to   debts   incurred  prior 

^^2-  thereto.       Eodpors-^^'.     F.     Co.     v. 

41  Day  V.  Ewen,  140  Ky.  498;  ^y^^^  (^^^  q;^  ^pp  )  ^  j56  S.  W. 
Brinckerhoff  v.  Greenan,  85  111.  App.       „  .^ 

253. 

42  Hill  V.  McLaughlin,  158  Mass. 

307. 

da /^  j-i  T)     iA  m        r^-  47  Sniller     v.     Creditors,     16     La. 

43  Cotton  V.  Beatty,  —  Tex.   Civ.  *  t--,  t,.  , 

App.  -,   102   S.  W.   1007;   Haskins  ^^""-  ^^^''  '^""^^  "'■  ^^'^"'''"'  ''  ^"■''• 

V.  Bank,  100  Ga.  216;  Citizens'  Nat.  ^'1-  ^'^'    ^^^'"^  ''■  '^VilHama,  10  Sm. 

Bank  V.  Donnell,  172  Mo.  384;  Mil-  &    ^^-    ^^^'     Tointer    v.    Smith,    7 

ler   V.   Monumental   S.   &   L.    Ass'n,  Heisk.  137. 

57  W.  Va.  437;   Lorentz  v.  Pinnell,  Matured  notes  given  for  the  same 

55  W.  Va.  114   (to  the  principal  in  consideration  and  in  the  hands  of  a 

both  cases).     See  §§  378,  379.  single     person     constitute    but     one 

44  Fremont  County  v.  Fremont  debt ;  and  payments  made  after  their 
County  Bank,  138  Iowa  167.  maturity  are  applicable  to  them  all. 

45Wingatc  v.  Peoples'  B.  &  L.  Egle  v.  Roman  C.  Church,  36  La. 
Sav.  Ass'n,   15  Tex.   Civ.  App.  416.       Ann.   310. 


46  American  W.  Co.  v.  Maaget,  86 
Conn.  234. 


732 


SUTHERLAND    ON    DAMAGES. 


[§  242 


them  pro  rata}^  If  an  insolvent  debtor  assigns  for  the  benefit  of 
those  creditors  who  become  parties  to  the  assignment  and  there- 
by release  their  claims,  and  a  dividend  is  received  by  one  of 
them,  it  must  be  appropriated  ratably  to  all  his  claims  against 
the  debtor,  as  well  to  those  npon  which  other  parties  are  liable, 
or  which  are  otherwise  secured,  as  to  those  which  are  not  se- 
cured.*^ A  general  payment  made  by  the  principal  debtor,  pur- 
suant to  a  compromise  of  several  debts  in  one  lump,  will  be  ap- 
plied pro  rata  to  all  the  claims  against  him  in  an  action  against 
an  indorser  for  part.^°  And  doubtless  the  same  rule  of  appli- 
cation would  be  applied  between  the  debtor  and  creditor  where 
there  has  been  a  general  judgment  pursuant  to  a  compromise 
founded  upon  and  embracing  several  demands.^^ 

A  pro  rata  distribution  of  a  payment  is  made  on  the  equita- 
ble maxim  that  equality  is  equity.  Other  considerations  may 
concur  and  lead  to  the  same  result.  If  a  debtor  creates  a  trust 
or  security  for  the  payment  of  several  demands,  without  prefer- 
ence, money  realized  from  that  source  is  deemed  appropriated 
by  him  to  the  demands  so  provided  for,  and  to  be  proportion- 
ately distributed  thereto ;  and  either  ]^arty  may  insist  on  such 
application.^^  If  a  general  payment  is  made  to  a  person  hav- 
ing two  accounts  against  the  party  paying,  one  due  to  himself 
and  the  other  to  a  third  party,  for.  whom  he  was  acting  as  agent, 
and  no  appropriation  is  made  by  either  it  will  be  applied  ratably 


48  Olds  W.  Works  v.  Bank,  10 
Ky.  L.  Rep.  253;  Orleans  County 
Nat.  Bank  v.  Moore,  112  N.  Y.  543, 
8  Am.  St.  775,  3  L.R.A.  302;  Bos- 
tick  V.  Jacobs,  133  Ala.  344;  Stan- 
difer  v.  Codington,  35  La.  Ann.  896; 
Cowpertliwaite  v.  Sheffield,  1  Sandf. 
416,  3  N.  Y.  243;  Bridenbecker  v. 
Lowell,  32  Barb.  n.  See  Thompson 
V.  Hudson,  L.  R.  6  Ch.  320;  Merri- 
mack County  Bank  v.  Brown,  12  N. 
IL  320. 

Where  a  fund  is  insufficient  to 
satisfy  several  judgments  entered 
the  same  day  they  should  be  paid 
pro  rata,  though  one  was  entered  a 


few  hours  later  than  the  others. 
Tucker  v.  Brackett,  25  Tex.  (Supp.) 
199 ;  Ordinary  v.  McCollum,  .  3 
Strobh.  494;  Van  Aken  v.  Gleason, 
34  Mich.  477;  Stamps  v.  Brown, 
Walker  (Miss.),  526.  See  Mahone 
V.  Williams,  39  Ala.  202;  Jones  v. 
Kilgore,  2  Rich.  Eq.  63;  Baine  v 
Williams,  10  Sm.  &  M.  113. 

49  Commercial    Bank   v.    Cunning- 
ham, 24  Pick.  270,  35  Am.  Dec.  322. 

50  Butchers'  &  D.'s  Bank  v.  Brown, 
1  N.  Y.  Leg.  Obs.  149. 

51  Thompson   v.   Hudson,   L.   R.   6 
Ch.  320. 

52  Id. 


§    242]      COJVVENTIONAJ,    LIQUIDATIONS    AND    DISUJIARGES.        733 

to  both  accounts. ^^  So  where  a  debt  is  payable  by  iiistahneuts, 
or  a  mortgage  is  made  to  secure  a  series  of  notes  payable  at  dif- 
ferent times,  and  a  payment  is  made  after  all  the  instalments 
or  notes  have  become  due,  and  neither  party  makes  any  special 
appropriation  of  it,  according  to  the  weight  of  authority  it  will 
be  applied  by  the  court  ino  rata  to  all  the  instalments  or  notes — 
and  this  whether  they  are  held  by  the  original  creditor  or  a  part 
have  been  transferred  unless  the  assignee  has  specially  acquired 
a  preference  by  the  agreement  of  transfer.^* 

^Vhen  a  debt  is  payable  in  instalments  and  there  arc  sep- 
arate notes  or  other  distinct  evidences  of  debt  payable  at  differ- 
ent times,  all  equally  payable  with  or  without  interest,  and  a 
general  payment  made  is  not  appropriated  by  either  party,  if 
it  exceeds  the  interest  and  principal  due  at  the  time  it  was  made 
it  will  be  applied,  of  course,  first  to  pay  what  is  due  of  interest 
and  principal,  and  the  residue  ratably  on  all  and  each  of  the 
instalments  subsequently  payable,  with  accrued  interest  on  the 
part  thus  extinguished.^^ 


53  Wendt  V.  Ross,  33  Cal.  650. 

54  Cage  V.  Her,  5  Sm.  &  M.  410, 
43  Am.  Dec.  521 ;  Wootcn  v.  Bu- 
chanan, 49  Miss.  386;  Donley  v. 
Hays,  17  S.  &  R.  400;  Cooper  v.  Ul- 
mann,  Walk.  Ch.  251;  Mohlcn's 
App.,  5  Pa.  418,  47  Am.  Dec.  413; 
Henderson  v.  Herrod,  10  Sm.  &  M. 
631;  English  v.  Carney,  25  Mich. 
178;  McCurdy  v.  Clark,  27  id.  445; 
Youmans  v.  Heartt,  34  id.  397;  Betz 
V.  Heebner,  1  P.  &  W.  280;  Smith  v. 
Nettles,  9  La.  Ann.  455;  Bailey  v. 
Bergen,  2  Hun,  520;  Parker  v.  Mer- 
cer, 6  How.  (Miss.)  323;  Cremer  v. 
Higginson,  1  Mason,  323;  Perric  v. 
Roberts,  2  Ch.  Cas.  84.  But  sec 
State  Bank  v.  Tweedy,  8  Blackf. 
447,  46  Am.  Dec.  486;  Murdock  v. 
Ford,  17  Ind.  52;  Stanley  v.  Beatty, 
4  Ind.  134;  Culluni  v.  Erwin,  4  Ala. 
452;  Bank  of  United  States  v.  Cov- 
ert, 13  Ohio,  240;  Turner  v.  Pierce, 
31  Wis.  342. 

55  In    Righter    v.    Stall,    3    Sandf. 


Ch.  608,  a  debtor  owed  a  mortgage 
debt  payable  in  ten  instalments. 
About  two-thirds  of  the  debt  was 
paid  at  a  time  wlicn  a  small  amount 
was  due  for  interest,  and  before  any 
part  of  the  principal  had  fallen  due. 
There  was  no  direction  given  by  the 
debtor  nor  actual  application  of  the 
payment  made  by  the  creditor;  it 
was  held  that  the  law  must  make 
tlie  application,  and  that  after  dis- 
charging tlie  interest  due  the  bal- 
ance must  be  applied  rataljly  in 
exoneration  of  each  and  all  of  the 
instalments. 

In  Jencks  v.  Alexander,  11  Paige 
619,  the  following  rules  are  laid 
down:  1.  Where  the  principal  is 
not  due,  l)ut  the  interest  is  due,  the 
payment  nuist  first  be  applied  to 
pay  the  interest  then  due;  and  the 
residue  towards  that  part  of  tlic 
principal  which  will  first  become  due 
and  payable,  so  as  to  stop  the  inter- 
est, pro  tanto,  from  the  time  of  such 


734 


SUTIIiaU.AND    ON    DAINIAGES. 


[§  243 


§  243.  General  payment  applied  to  oldest  debt.     If  no  other 
paramount   rule  of   appropriation  governs   an   indefinite  pay- 


payment.  2.  When  neither  princi- 
pal nor  interest  has  become  due  at 
the  time  of  the  payment,  the  amount 
paid  should  be  applied  to  the  extin- 
guishment of  principal  and  interest 
ratably;  so  as  to  extinguish  a  part 
of  the  principal  and  the  interest 
which  has  accrued  on  the  part  of 
the  principal  thus  extinguished. 
The  facts  were  that  August  24, 
1833,  a  mortgage  was  given  for 
$650,  payable  in  five  equal  yearly 
payments,  the  first  to  become  due 
on  the  first  of  January  following, 
with  interest  annually.  Five  hun- 
dred dollars  were  paid  and  indorsed 
on  the  day  the  mortgage  was  given. 
On  the  14th  of  the  following  Sep- 
tember a  further  sum  of  $3  was 
paid.  On  the  4th  of  November, 
1835,  proceedings  to  foreclose  were 
commenced  on  a  claim  of  $20.98  of 
delinquent  interest,  and  it  was  held 
that  $20.58  was  then  due.  The 
chancellor  said:  "I  think  the  coun- 
sel for  the  complainants  is  wrong  in 
supposing  that  nothing  had  become 
due  and  payable  upon  the  mortgage 
at  the  time  the  proceedings  to  fore- 
close were  instituted.  It  is  true  a 
sum  much  larger  than  the  two  instal- 
ments of  $130  each,  and  all  interest 
upon  the  residue,  had  been  paid. 
But  the  proper  application  of  the 
payments  was  to  apply  them 
towards  the  satisfaction  of  the 
principal  of  the  debt  at  the  time  of 
such  payments  respectively,  after 
deducting  from  such  payments  the 
interest  which  liad  then  accrued. 
The  payment  of  the  $500  on  the 
day  of  the  date  of  the  mortgage, 
being  applied  in  satisfaction  of  the 
three  first  instalments  of  principal 
and  $]10  of  the  fourth  instalment, 
left  $20  of  the  fourth  and  the  whole 


of  the  fifth  instalments  still  due. 
And  as  by  the  terms  of  the  bond 
and  mortgage  the  interest  on  the 
whole  $650  was  payable  annually, 
the  mortgagee  would  have  been  en- 
titled to  the  annual  interest  on  the 
$150  which  still  remained  due  on 
the  last  two  instalments,  if  there 
had  been  no  subsequent  payment. 
The  payment  of  $3  on  the  14th  of 
September,  1833,  must  be  applied 
towards  the  fourth  instalment  of 
principal,  after  deducting  therefrom 
the  interest  on  the  $3  from  the  24th 
of  the  preceding  August.  In  other 
words,  when  the  principal  is  not 
due,  but  interest  is  due  (a  different 
case),  the  payment  must  first  be 
applied  to  the  extinguishment  of  the 
interest  then  due  and  payable,  and 
the  residue  to  the  extinguishment  of 
that  part  of  the  principal  which  will 
first  become  due,  so  as  to  stop  in- 
terest, pro  tanto,  from  the  time  of 
such  payment.  But  when  neither 
principal  nor  interest  has  become 
due  (the  case  in  hand)  at  the  time 
of  the  payment,  such  payment,  in 
the  absence  of  any  agreement  as  to 
the  ajiplication,  is  to  be  applied  to 
the  extinguishment  of  principal  and 
interest  ratably,  according  to  the 
decision  of  the  supreme  court  in 
the  case  of  Williams  v.  Tlouglital- 
ing,  3  Cow.  86." 

In  Williams  v.  IToughtaling  the 
court  say:  "When,  according  to  the 
terms  of  the  bond  payable  by  instal- 
ments, interest  cannot  be  demanded 
until  the  principal  is  payable  (as  in 
this  case),  payments  made  on  an  in- 
stalment not  due  and  payable 
should  be  applied  to  the  extinguish- 
ment of  principal  and  such  propor- 
tion of  interest  as  has  accrued  on 
the  principal  so  extinguished.     For 


§    243]      CONVENTIONAT>    LIQUIDATIONS    AND    DISCIIAKOES.        735 

ment  made  to  a  person  to  whoin  a  debtor  paying  the  money  owes 
several  debts  will  be  applied  to  that  which  first  accriied.^*^    This 


instance,  an  instalment  on  a  bond 
of  $500  is  due  on  the  1st  of  January, 
3  825,  with  interest  from  1st  of  Jan- 
uary, 1824;  on  the  first  of  July, 
1824,  the  obligor  pays  $207;  the  $7 
should  be  applied  to  pay  the  six 
months'  interest  accrued  on  $200. 
and  tlie  $200  extinguislies  so  niucli 
principal." 

There  is  dictum  in  Jencks  v.  Alex- 
ander apparently  in  conflict  with 
the  text  and  in  conflict  with  Right- 
er  V.  Stall.  The  conclusion  arrived 
at  is  not  in  conflict.  If  the  pay- 
ment of  $500  had  been  ratably  ap- 
plied to  the  five  instalments,  they 
would  have  been  severally  reduced 
to  $30,  and  interest  on  each  annual- 
ly payable  would  be  the  same,  and 
due  at  the  same  time,  as  upon  a 
like  amount  on  the  two  past  instal- 
ments. When  the  payment  of  $3 
was  made  no  interest  or  principal 
was  due.  It  being  paid  on  the  mort- 
gage generally  was  applicable  rat- 
ably towards  paying  the  entire 
principal  and  interest. 

In  Turner  v.  Pierce,  31  Wis.  342, 
there  was  a  land  contract  made  Oc- 
tober 22,  1863,  upon  which  the  pur- 
chase-money was  $5,600,  due  in  six 
annual  instalments,  payable  August 
1,  1865,  to  1870,  with  interest  on 
the  whole  sum  unpaid,  payable  at 
the  time  each  instalment  became 
due — the  purchaser  having  the  op- 
tion to  make  the  payments  on  or 
before  the  times  mentioned,  and  then 
to  pay  interest  only  to  the  time  of 
such  payment.  Before  any  of  the 
principal  became  due  the  purchaser 
made  a  large  payment,  receipted  to 
apply  on  the  land  contract.  On  tlie 
5th  of  March.  1860,  an  action  for 
strict  foreclosure  of  tlie  contract 
was  begun   un   the  groinid    iliat  ilie 


purchaser  was  in  default.  The  title 
had  failed  to  a  part  of  the  lands, 
and  the  court  held  tliat  each  instal- 
ment should  be  reduced  in  the  pro- 
portion that  tlie  value  of  that  part 
($1,832)  bore  to  the  wiioh-  value, 
and  tliat  tlie  defendant  was  entitlfd 
to  have  the  payment  applied  to  the 
instalments  first  becoming  due  at 
such  decreased  rates,  and  tliat  there- 
fore nothing  was  due  when  the  suit 
was  commenced.  See  Starr  v.  Rich- 
mond, 30  111.  276. 

56  Marshall  v.  G.  A.  Stowers  Fur- 
niture Co.,  —  Tex.  Civ.  App.  — , 
167  S.  W.  230;  Larry  v.  Brown,  153 
Ala.  452;  Watson  v.  Appleton,  183 
Ala.  514;  Boynton  v.  Salinger,  147 
Iowa  537;  Brown  v.  Osborne,  136 
Ky.  456;  Sleet  v.  Sleet,  109  La.  302; 
Watson  V.  Parker,  50  Tex.  Civ.  App. 
016;  In  re  Hawks,  204  Fed.  309; 
Pond  v.  Harwood,  139  N.  Y.  Ill; 
Atkins  V.  Atkins,  71  Vt.  422; 
Thompson  v.  St.  Nicholas  Nat. 
Bank,  113  N.  Y.  325;  Northwestern 
L.  Co.  V.  American  Exp.  Co.,  73 
Wis.  656;  The  Mary  K.  Campbell, 
40  Fed.  906;  Sanford  v.  Van  Ars- 
dall,  53  Hun,  70;  Duncan  v.  Thomas, 
81  Cal.  56;  Jefferson  v.  Church  of 
St.  Matthew,  41  Minn.  392;  Moses 
V.  Noble,  86  Ala.  407;  Ashby  v. 
Washburn,  23  Neb.  571:  Marks 
V.  Robinson,  82  Ala.  69;  State 
V.  Chadwick,  10  Ore.  423 ;  Mackey  v. 
Fullerton,  7  Colo.  556;  Bennett  v. 
McCillan,  28  Fed.  411;  McGillin  v. 
Bennett,  132  U.  S.  445,  33  L.  ed. 
422;  Pardee  v.  INIarkle,  111  Pa.  548, 
56  Am.  Rep.  299;  Kline  v.  Ragland, 
47  Ark.  Ill;  Brown  v.  Shirk,  75 
Ind.  266;  McCurdy  v.  Middleton,  82 
Ala.  131  ;  ITammett  v.  DiuBey. 
62  ISld.  151;  llcrsey  v.  Bennett,  28 
Minn.   86,   41    Am.   Kep.   28 1  ;    ilrlm 


"30 


SirrilEKT.AND    Oi\    DAMAOKS. 


[§  243 


rule  is  especially  applicable  to  items  of  debit  and  credit  in  a 
general  account  current.^''  When  both  parties  concur  in  the 
entry  of  the  payments  upon  general  account,  without  specific 
application,  the  law  infers  an  intention  on  the  part  of  both  that 
they  shall  satisfy  the  charges  therein  in  the  order  of  their  entry; 
and  \\wy  will  1)6  so  applied  unless  some  controlling  equity  re- 
quires a  different  disposition.^®  It  has  been  held  that  this  rule 
should  apply  without  reference  to  the  fact  that  one  item  may  be 


V.  Commonwealth,  79  Ky.  67;  Ban- 
croft V.  Holton,  59  N.  H.  141; 
Frost  V.  Mixsell,  38  N.  J.  Eq.  586 ; 
Wagner's  App.,  103  Pa.  185;  Wies- 
enfeld  v.  Byrd,  17  S.  C.  106;  Mili- 
ken  V.  Tufts,  31  Me.  497;  Faireliild 
V.  Holly,  10  Conn.  475;  Smith  v. 
Loyd,  11  Leigh,  512,  37  Am.  Dec. 
621;  Robinson  v.  Allison,  36  Ala. 
526;  Howard  v.  McCall,  21  Gratt. 
205;  Wendt  v.  Ross,  33  Cal.  650; 
Seymour  v.  Sexton,  10  Watts,  255; 
Shedd  V.  Wilson,  27  Vt.  478;  St. 
Albans  v.  Failey,  40  Vt.  448;  Lang- 
don  V.  Bowen,  46  Vt.  512;  Upham  v. 
Lefavour,  11  Mete.  (Mass.)  174; 
Dows  V.  Morewood,  10  Barb.  183; 
Allen  V.  Culver,  3  Denio  284;  Webb 
V.  Dickinson,  11  Wend.  62;  Hollister 
V.  Davis,  54  Pa.  508;  Allen  v. 
Brown,  39  Iowa  330;  Livermore  v. 
Rand,  26  N.  H.  85;  Parks  v.  Ingram, 
22  N.  H.  283;  Thompson  v.  Phelan, 
22  N.  H.  339;  Bacon  v.  Brown,  1 
Bibb  334,  4  Am.  Dec.  640 ;  Sprague  v. 
Hazenwinkle,  53  111.  419;  Clayton's 
Case,  1  Meriv.  585;  United  States 
v.  Kirkpatrick,  9  Wheat.  720,  6  L. 
ed.  199;  Berrian  v.  Mayor,  4  Rob- 
ert. 538;  Home  v.  Planters'  Bank, 
32  Ga.  1;  Mills  v.  Fowkes,  5  Bing. 
N.  C.  455;  Pennell  v.  Deffell,  4  De 
G.,  McN.  &  G.  372;  Harrison  v. 
Johnston,  27  Ala.  445 ;  Postmastc^r- 
General  v.  Furber,  4  Mason,  333; 
Hansen  v.  Tioundsavell,  74  111.  238; 
Sender  v.  Schechterly,  91  Pa.  83; 
Perry   v.   Booth,   67   App.   Div.    (N. 


Y.)  235;  National  Park  Bank  v. 
Seaboard  Bank,  114  N.  Y.  28,  35. 
See  Killorin  v.  Bacon,  57  Ga.  497. 
In  the  case  of  mutual  accounts 
tlie  credits  on  one  side  are  applied 
to  the  extinguishment  of  the  debts 
on  the  other  as  payments  intention- 
ally made  thereon,  and  not  as  the 
set-off  of  one  independent  debt 
against  anotlier.  Sanford  v.  Clark, 
29  Conn.  457.  As  to  the  application 
of  this  rule  between  cestuis  que 
trust,  see  Wood  v.  Stenning,  [1895] 
2  Ch.  433;  Mutton  v.  Peat,  [1899] 
2  Ch.  556. 

57  American  W.  Co.  v.  Maaget,  86 
Conn.  234;  Jamision  v.  Alvarado  C. 
&  W.  Co.,  45  Tex.  Civ.  App.  363; 
Carey-L.  L.  Co.  v.  Hunt,  54  111.  App. 
314;  Winnebago  P.  Mills  v.  Travis, 
56  Minn.  480;  Goetz  v.  Piel,  26  Mo. 
App.  634 ;  Swett  v.  Boyce,  134  Mass. 
38]  ;  Crompton  v.  Pratt,  105  id.  255. 

58  Id.;  Jones  V.  United  States,  7 
How.  681,  12  L.  ed.  870;  Sanford 
V.  Clark,  29  Conn.  457;  Souder  v. 
Schechterly,  91  Pa.  83;  Lodge  v. 
Ainscow,  1  Penne.  327 ;  Conduitt  v. 
Ryan,  3  Ind.  App.  1 ;  Grasser  &  B. 
B.  Co.  V.  Rogers,  112  Mich.  112. 

If  a  trustee  pays  trust  money  on 
his  account  at  his  banker's  and 
mixes  it  with  his  own  funds  and 
draws  checks  against  it  in  the  usual 
manner  for  his  personal  use  he  will 
be  presumed  to  have  drawn  his  own 
and  not  the  trust  money.  Knatch- 
bull  V.  Hallett,  13  Ch.  Div.  696, 
overruling  earlier  cases. 


§    243]      COJMVENTIONAL    LIQUIDATIONS    AKU    DlSOllAKGES.        737 

better  secured  than  another,  since  the  particular  parts,  being 
blended  together  in  one  eonimon  account,  have  no  separate  ex- 
istence ;  the  balance  only  is  considered  as  due ;  ^^  and  a  payment 
made  on  such  account,  without  a  more  specific  appropriation,  is 
treated  by  a  majority  of  the  cases  as  applied  to  the  earliest  items, 
although  for  some  of  these  the  creditor  has  a  lien  or  other  se- 
curity and  has  none  for  the  others.^"  Where  there  is  a  single 
open  account  and  a  general  payment  is  made  by  the  debtor  at 
full  age,  it  is  presumed  to  l)e  in  satisfaction  of  the  earliest  items 
although  they  accrued  during  his  minority.®^  Such  a  payment 
will  not  he  judicially  disturbed. ^^  The  rule  concerning  the  ap- 
plication of  payments  to  the  oldest  item  of  the  account  applies  to 
an  open  running  account  with  a  firm  continued  unchanged  with 
a  member  of  it  who  buys  the  interest  of  his  copartner  and  con- 
tinues the  business.^^  As  between  a  debt  due  and  a  contingent 
liability  a  payment  will  be  applied  to  the  former.^^ 

The  rule  applying  an  indefinite  payment  to  the  debts  which 
first  accrued  applies  not  only  to  the  first  items  of  an  account  but 
to  distinct  debts  contracted  at  different  times.^^  The  rule  is  not 
unjust  or  prejudicial  to  a  debtor;  it  operates,  however,  more 


59  Harrison  -v.  Johnston,  27  Ala. 
445. 

60  Polk  P.  Co.  V.  Smedley,  155 
Mich.  249;  Conduitt  v.  Eyan,  3  Ind. 
App.  1;  Dunnington  v.  Kirk,  57 
Ark.  595;  Worthley  v.  Emerson,  11(5 
Mass.  .374;  Truscott  v.  King,  G  N. 
Y.  147;  The  A.  R.  Dunlap,  1  Low. 
.350;  Moore  v.  Gray,  22  La.  Ann. 
289;  Gushing  v.  Wyman,  44  Me. 
]21;  Hersey  v.  Bennett,  28  :\Iinn. 
86,  41  Am.  Rep.  271;  Miller  v.  Mil- 
ler, 23  Me.  22,  39  Am.  Dec.  597. 
But  see  Pierce  v.  Sweet,  33  Pa.  151; 
Thompson  v.  Davenport,  1  Wasli. 
(Va.)  125;  Schuelenberg  v.  ^Lartin, 
2  Fed.  747.  The  last  case  is  distin- 
guishable because  the  payment  was 
not  a  voluntary  one  a  fact  wliieh 
tlie  court  failed  to  ol)servo. 

eiTliurlow  v.  riilmore,  40  Me. 
378. 

Suth.  Dam.  Vol.   I.— 47. 


62  Pond  &  Hasey  Co.  v.  O'Connor, 
70  Minn.  266. 

63  Schoonover  v.  Osborne,  108 
Iowa,  453;  Morgan  v.  Tarhell,  28 
Vt.  498. 

64  Missouri  Cent.  L.  Co.  v.  Stew- 
art, 78  Mo.  App.  456;  Niagara 
Bank  v.  Rosevelt,  9  Cow.  409. 

65  Van  Sceiver  v.  King,  176  Mich. 
605;  Parks  v.  Ingram,  22  N.  H.  283, 
55  Am.  Dec.  153;  Thompson  v.  Phe- 
ian,  22  N.  H.  339;  McDaniel  v. 
Barnes,  5  Bush,  183;  Robinson  v. 
Allison,  36  Ala.  .526;  Byrne  v.  Cray- 
son,  15  La.  Ann.  457;  Upham  v.  Le- 
favour.  11  Mete.  (Mass.)  174;  Lang- 
don  v.  Howen,  46  Vt.  512;  Smitli  v. 
I.oyd,  11  Leigh  512,  37  Am.  Dec. 
(121  ;  .lones  v.  Lhiited  States,  7  How. 
OKI:  MeKin/.ie  v.  Xevius,  22  Me.  138, 
38  Am.  Dec.  291  ;  Allstan  v.  Contee, 
4  liar.  &  J.  .351;  Draffen  v.  Boon- 
ville,   8   Mo.   395;    Copland   v.   Toul- 


738  SUTHERLAND    ON    DAMAGES.  [§    243 

beneficially  to  the  creditor;  for  it  often  saves  a  debt  from  the 
bar  of  the  statute  of  limitations,  and  closes  the  door  to  the  older 
transactions  which  it  may  be  presumed  are  more  difficult  of 
proof.  But  the  rule  applies  the  payments  in  the  natural  and 
logical  order  of  the  transactions.  It  is  not  supported,  however, 
by  reasons  so  cogent  but  that  it  will  yield  when  there  is  evi- 
dence of  a  contrary  intention,^^  or  where  some  superior  equity 
requires  a  different  application,^'''  as  where  sureties  are  bound 
and  a  general  account  has  been  kept  with  the  principal,  in 
which  case  payments  will  be  applied  so  that  each  set  of  sureties 
will  receive  the  benefit  of  moneys  paid  during  the  time  for  which 
they  were  holden.®*  "Whenever  the  relation  of  the  parties  or 
the  nature  of  the  account  or  transaction  between  them  shows  that 
an  appropriation  of  payments  to  the  earliest  items  of  the  ac- 
count would  do  injustice  between  them  or  fail  to  conform  to 
their  understanding  or  agreement,  another  application  is 
made."  ^^  If  property  is  exempt  from  execution  the  rule  that 
partial  payments  shall  be  so  appropriated  as  to  protect  the 
creditor  does  not  apply  so  as  to  affect  such  property  any  more 
than  such  payments  would  revive  a  debt  barred  by  time.'° 

§  244.  General  payment  applied  to  a  debt  bearing  interest, 
and  first  to  interest.  As  between  debts  bearing  a:nd  those  not 
bearing  interest  the  law  directs  an  indefinite  payment  to  be  ap- 
plied to  the  former.'^  The  reason  generally  assigned  is  that  of 
relieving  the  debtor  in  respect  to  the  debt  which  is  most  burden- 

min,  7  CI.  &  F.  349 ;  Sirason  v.  Ing-  68  First  Nat.  Bank  v.  National  S. 

ham,  2  B.  &  C.  72;  Hooker  v.  Keay,  Co.,  130  Fed.  401,  64  C.  C.  A.  601, 

1  Q.  B.  Div.  178.  gg    L.R.A.    777. 
This  rule  will  not  be  applied  to 

.            ,      ,                           -1  69  Faisst  V.  Waldo,  57  Ark.  270. 

payments    made    by    a    reorganized  ' 

partnership  without  the  consent  of  70  sternberger   v.   Gowdy,   93   Ky. 

its  new  members.  St.  Louis  T.  F.  146;  Shaffer  v.  Chernyk,  130  Iowa, 
Co.  V.  Wisdom,  4  Lea  695 ;  Burland       ggg 

V.  Nash,  2  F.  &  F.  687;   Thompson  _,  „             it              i  ^r         oa 

^  '  >  f  71  Hey  ward  v.  Lomax,  1  Vern.  24; 
V.  Brown,  1  Mood.  &  M.  406;  Roakes 

V.  Bailey,  55  Vt.  542.  «««"  ^-  ^^^^^er,  4  T.  B.  Men.  387; 

66  City  Discount  Co.  v.  McLean,  ^^^"t°"  ^-  ^i^^'  ^  '^-  ^53;  Bacon  v. 
L.  R.  9  C.  P.  692;  Langdon  v.  Brown,  1  Bibb,  334,  4  Am.  Dec. 
Bowen,  46  Vt.  512.  640;    Scott   v.    Cleveland,    33   Miss. 

67  Upham  V.  Lefavour,  11  Mete.  447 ;  Bussey  v.  Gant,  10  Humph. 
(Mass.)    174.  238. 


I 


§    244]      CONVENTIONAL    LIQUIDATIONS    AND    DISGIIARGKS.        789 


some,  or  the  presumed  choice  of  the  debtor.'^  This  may  be 
conceded  to  be  sufficient  for  this  application  and  some  others, 
where  a  particular  one  is  specially  beneficial  to  a  debtor  with- 
out being  attended  with  a  corresponding  loss  to  the  creditor, 
which  the  law  is  equally  solicitous  to  prevent.  Interest  due  is 
first  to  be  satisfied  when  a  general  payment  is  made,  and  if 
there  be  a  surplus  it  is  to  be  applied  to  the  principal.  If  the 
payment  falls  short  of  the  interest  the  balance  of  the  interest 
is  not  to  be  added  to  the  principal,  but  remains  to  be  extin- 
guished by  the  next  payment,  if  it  is  sufficient.'^  This  rule 
yields  to  that  which  requires  that  the  debt  least  secured  shall 
first  be  paid;  hence  if  the  claim  for  interest  is  better  secured 
than  the  principal  the  application  will  be  in  favor  of  the  lat- 
ter ;  '^  and  is  not  to  be  applied  where  the  defendant  in  fore- 
closure appeals  and  gives  a  bond  for  the  payment,  if  the  judg- 
ment be  affirmed,  of  such  interest  as  might  accrue  and  remain 


72  Id.  See  Neal  v.  Allison,  50 
Miss.  175. 

73  Interstate  Trust  &  Banking  Co. 
V.  Young,  135  La.  465;  Wilson  v. 
Ware,  —  Tex.  Civ.  App.  — ,  166  S. 
W.  705;  Bidwell  v.  Douglas  T.  Co., 
183  Fed.  93,  105  C.  C.  A.  385; 
Cicero  v.  Green,  211  111.  241; 
Christie  v.  Scott,  77  Kan.  257 ;  Col- 
lerd  V.  Tully,  77  N.  J.  Eq.  439; 
Bower  v.  Walker,  220  Pa.  294,  14 
Pa.  Dist.  782;  Hinrichs  v.  Brady, 
23  S.  D.  250;  Buck  v.  Mutual  B. 
&  L.  Ass'n,  49  Pa.  Super.  128 ;  Equi- 
table S.  &  L.  Ass'n  V.  Bowes,  70 
Wash.  169;  Weido  v.  St.  Paul,  62 
Minn.  67;  Monroe  v.  Fohl,  72  Cal. 
568;  Morgan  v.  Michigan  A.  L.  R. 
Co.,  57  Mich.  430;  Bradford  Acad- 
emy V.  Grover,  55  Vt.  462;  Case  v. 
Fish,  58  Wis.  56;  Hurst  v.  Kite,  20 
W.  Va.  3  83;  Frazier  v.  Hyland,  1 
Har.  &  J.  98;  Gwinn  v.  Whitaker, 
id.  754;  Bond  v.  Jones,  8  Sm.  &  M. 
368;  Spires  v.  Hamot,  8  W.  &  S. 
17;  Peebles  v.  Gee,  1  Dev.  341; 
Hampton  v.  Dean,  4  Tex.  455; 
Hearn  v.  Cutberth,  10  id.  216;  Mc- 


Fadden  v.  Fortier,  20  111.  509;  Hart 
V.  Dorman,  2  Fla.  445;  Lash  v. 
Edgerton,  13  Minn.  210;  Hammer  v. 
Nevill,  Wright,  169;  Estebene  v. 
Estebene,  5  La.  Ann.  738;  Union 
Bank  v.  Lobdell,  10  id.  130;  Bird 
V.  Lobdell,  id.  159;  Johnson  v.  Rob- 
bins,  20  id.  569;  Moore  v.  Kiff,  78 
Pa.  96;  Williams  v.  Houghtaling,  3 
Cow.  80;  Righter  v.  Stall,  3  Saiidf. 
Ch.  60S;  State  v.  Jackson,  1  Johns. 
Ch.  13,  7  Am.  Dec.  471;  People  v. 
New  York  County,  5  Cow.  331  ; 
Joncks  V.  Alexander,  11  Paige,  610; 
Starr  v.  Richmond,  30  111.  270,  83 
Am.  Dec.  189;  Johnson  v.  Johnson. 
5  Jones'  Eq.  167;  De  Bruhl  v.  Ncuf- 
fcr,  1  Strobh.  426.  Sec  Mercer  v. 
Beale,  4  Leigh,  189. 

If  part  of  the  interest  is  barred 
by  the  statute  an  unappropriated 
payment  will  not  be  applied  to  its 
discharge  because  it  is  not  wholly 
due.  In  re  Fitzmaurice's  Minors, 
15  Irish  Ch.  445. 

74  Smythe  v.  New  England  L.  <5o 
T.  Co.,  12  Wash.  424. 


740  SUTllEULAND    ON    DAMAGES.  [§    244 

otherwise  unpaid  upon  the  decree  from  the  date  thereof.  On 
affirmance  of  such  judgment  the  proceeds  of  the  sale  will  be  ap- 
plied to  meet  the  fees,  costs  and  principal  before  satisfying  the 
interest  on  the  decree;  the  deficiency,  if  any,  will  thereby  be 
secured  by  the  appeal  bond.  "It  would  not  be  in  accordance 
with  natural  justice  or  with  the  rules  which  govern  courts  of 
equity  to  allow^  appellant  to  delay  a  sale  by  his  appeal  and  render 
the  security  inadequate  to  pay  the  accruing  interest,  and  then, 
upon  a  sale,  discharge  the  interest  from  the  proceeds  of  such 
security  and  free  him  from  his  obligation."  '^ 

Where  a  debt  bearing  interest  remains  unpaid  until  interest  is 
due  on  the  interest,  where  that  is  permitted,  general  payments 
are  to  be  applied,  first,  to  such  interest  on  interest ;  second, 
to  interest  on  the  principal ;  and  third,  to  the  principal.'^  And  in 
applying  payments  on  a  sum  secured  by  a  penal  bond,  they  will 
be  applied  to  the  interest  in  the  first  instance,  although  their 
sum  exceeds  the  penalty.''"^  A  payment  of  usury  will  be  applied 
in  law  to  discharge  the  amount  legally  due.''*  Payments  re- 
ceived on  a  debt  bearing  interest  before  either  is  due  should  be 
api)lied  to  pay  the  principal  and  the  interest  accrued  on  that 
part  of  the  principal  so  extinguished.'^    The  rule  which  applies 

75  Monson  v.  Meyer,  190  111.  105,  act  to  recover  usurious  interest  and 
aff'g  92  111.  App.  127.  the  forfeiture  provided  for,  if  occa- 

76  Anketel  v.  Converse,  17  Ohio  sional  settlements  have  been  made 
St.  11;  Dickson  v.  Stewart,  71  Neb.  by  the  parties,  payments  deducted 
424,  115  Am.  St.  59fi.  See  In  re  from  the  principal  and  interest  then 
Swing's  Est.,  103  App.  Div.  (N.  Y.)  due  and  new  notes  given  for  the 
500.  balances,  the  payments  will  be  ap- 

77  Smith  v.  Macon,  1  Hill  Ch.  (S.  plied  pro  rata  to  the  principal  and 
C.)   339.  interest  due  at  the  time.     Kinser  v. 

78  Atlanta  Sav.  Bank  v.  Spencer,  Farmers'  Nat.  Bank,  58  Iowa  728. 
107  Ga.  G29;  Burrows  v.  Cook,  17  79  Righter  v.  Stall,  3  Sandf.  Ch. 
Iowa,  436;  Parchman  v.  McKinney,  608;  Jencks  v.  Alexander,  11  Paige, 
12  Sni.  &  M.  631;  Stanley  v.  West-  619;  Williams  v.  Houghtaling,  3 
rop,  16  Tex.  200;  Bartholomew  v.  Cow.  86;  Miami  E.  Co.  v.  United 
Yaw,  9  Paige,  165;   Gage  v.  Smyth  States  Bank,  5  Ohio,  260. 

M.   Co.,   160   Fed.  425,  87   C.   C.   A.  In  Starr  v.  Richmond,  30  111.  276, 

377;    Western   Bank    &    T.    Co.    v.  83  Am.  Dec.  189,  Walker,  J.,  said: 

Ogden,  42  Tex.  Civ.  App.  465.     See  "It    appears    to    be    more    equitable 

Bramblett  v.  Deposit  Bank,  122  Ky.  and   just  that   when   the  holder  re- 

324,   6  L.R.A.(N.S.)    612;    §   236.  ceives  money  before  it  is  due,  on  a 

In  a  suit  under  the  national  bank  demand  drawing  interest,  it  should 


I 


§    245]       CONVENTIONAL    LIQl' 1 DATIONS     AM)    1  »1S(' II AKGES.         741 

a  general  payment  first  to  interest  dne,  rather  tluiii  principal,  is 
directly  opposite  to  that  wliidi  a[)pli('s  a  payment  on  an  interest- 
hearing  debt  in  preference  to  one  not  l)earing  interest;  it 
does  not  favor  the  debtor,  l)ut  the  creditor;  for  the  law  in  some 
states  allowing  interest  d\w  to  hear  interest  is  exce]»tional. 

§  245.  General  payments  applied  to  the  debt  least  secured; 
comments  on  conflicting  views  of  the  general  subject,  if  one 
debt  be  secured  and  another  not  and  a  general  payment  is 
made,  the  jirevailing  rule  is  that  the  eonrt  will  apply  it  to  the 
,  debt  which  is  not  secured,  or  that  for  which  the  security  is 
most  precarious.^"     The  rule  has  been  applied  to  money  recov- 


be  applied,  in  the  absence  of  an 
agreement  to  the  contrary,  to  the 
principal.  Otherwise,  by  loaning 
the  sum  thus  received,  he  would,  in 
effect,  compound  the  interest,  or 
have  placed  at  interest  before  its 
maturity  a  larger  sum  than  his 
original  claim.  In  other  words,  he 
would  receive  interest  on  the 
maker's  money  as  well  as  his  own. 
After  the  principal  and  interest 
both  become  due  it  would  be  other- 
wise. The  court  below,  we  think, 
erred  in  applying  any  portion  of  the 
payment  made  before  the  maturity 
of  the  note  to  the  extinguisliment 
of  interest,  but  should  have  appro- 
priated tlie  wliole  of  the  payment 
to  the  principal."  McElrath  v. 
Dupuy,  2  La.  Ann.  520;  Fay  v. 
Lovejoy,  20  Wis.  407. 

80  Schmeling  v.  Eockford  A.  Co., 
154  111.  App.  308;  Coles  County  v. 
Haynes,  134  id.  320;  Sawyer  v. 
Stilson,  146  Iowa  707;  Sipe  v.  Tay- 
lor, 106  Va.  231;  Sternberger  v. 
Gowdy,  93  Ky.  146;  Chicago  T.  & 
T.  Co.  V.  McGlew,  90  111.  App.  58; 
Monson  v.  Meyer,  93  111.  App.  94, 
aff'd  190  111.  105;  Gardner  v.  Leek, 
52  Minn.  522;  Price  v.  Merritt, 
55  Mo.  App.  640;  McMillan  v. 
Grayston,  83  id.  425;  Smith  v. 
Lcwlston    S.    Mill,    66    N.    II.    613; 


Pond  V.  Harwood,  13!)  \.  Y. 
Ill;  Popi'  V.  Transparent  I.  Co., 
91  Va.  79;  Poling  v.  Flanagan,  41 
VV.  Va.  191;  The  Katie  O'Neil,  65 
Fed.  Ill;  Garrett's  App.,  TOO  Pa. 
597;  Goetz  v.  Piel,  26  Mo.  App.  634, 
643;  Xicliolas  v.  Knowlea,  3  Mc- 
Crary,  477,  17  Fed.  494;  Sanborn 
v.  Stark,  31  Fed.  IS;  MrCurdy  v. 
Middleton,  82  Ala.  131;  Poulson  v. 
Collier,  18  Mo.  App.  583;  Tlie  D. 
B.  Steelman,  5  Hughes  210:  Hare 
v.  Stegall,  60  111.  380;  Wilhelm  v. 
Schmidt,  84  id.  183;  Plain  v.  Roth, 
107  id.  588;  Frazier  v.  Lanalian,  71 
Md.  131,  17  Am.  St.  516;  Lester  v. 
Houston,  101  N.  C.  605;  North  v. 
La  Flesh,  73  Wis.  .V2():  McDaiiicI 
V.  Barnes,  5  Busli  1S3;  Tlioinas  v. 
Kelsey,  30  Barb.  268;  Blanton  v. 
Rice,  5  T.  B.  Mon.  253;  Field  v.  Hol- 
land, 6  Cranch,  8,  3  L.  ed,  KJC; 
Burks  V.  Albert,  4  J.  J.  Mar.'^h.  97, 
20  Am.  Dec.  209;  Foster  v.  Mc(iraw, 
64  Pa.  464;  Pattison  v.  Hull.  9 
Cow.  747 ;  Dows  v.  Monnvood,  10 
Barb.  183;  Johnson's  App..  37  Pa. 
268;  Langdon  v.  Bowen,  46  Vt. 
512;  Wilcox  v.  Fairhaven  Bank,  7 
Allen,  270;  Hempfield  R.  Co.  v. 
Thornburg,  1  W.  Va.  261 ;  Gaston 
V.  Barney.  11  Ohio  St.  510;  Moss  v. 
Adams,  4  Ired.  Eq.  42;  Ranaour  v. 
Thomas,     10     Ired.     164;     State     v. 


742  SUTIIEKLAND    ON    DAMAGES.  [§    245 

ered  from  a  defaulting  officer  by  his  sureties  and  paid  over  by 
them  to  the  government,  his  defalcation  being  in  excess  of 
their  liability.^^  If,  however,  the  security  of  one  of  the  debts 
is  by  a  surety,  a  general  payment  will  be  applied  to  the  debt 
for  which  he  is  liable  that  he  may  be  relieved. ^^  No  one  ex- 
cept a  surety  will  be  heard  to  contend  for  a  different  application. 
The  court  cannot  go  outside  the  case  to  see  whether  or  not 
C(|uity  requires  that  other  than  the  parties  to  the  record  shall 
be  protected ;  and,  it  seems,  that  in  the  absence  of  fraud  or  impo- 
sition on  the  surety  he  has  no  equity  to  control  the  applica- 
tion of  a  payment  for  which  he  is  bound.  ^^  One  liable  as 
guarantor  for  the  prompt  payment  of  interest  on  a  mortgage 
cannot,  in  an  action  upon  the  guaranty,  after  a  foreclosure  sale 
which  failed  to  bring  the  amount  due  on  principal  and  interest, 
assert  the  right  to  have  the  money  applied  to  the  interest.'*  In 
some  states  the  courts,  carrying  the  rule  first  stated  in  this 
section  to  greater  length,  hold  that  the  application  will  be  made 
to  the  debt  which  bears  heaviest  upon  the  debtor  and  apply  a 
general  payment  so  as  to  discharge  a  debt  for  which  he  has 

Thomas,  11  id.  251;  Jenkins  V.  Beal,  86;    Marryatts   v.   White,   2    Stark. 

70  N.  C.  440;  Sprinkle  v.  Martin,  72  101;  Card  v.  Stevens,  12  Mich.  292, 

id.  92;   Chester  v.  Wheelwright,  15  86   Am.    Dec.    52;     Bridenbecker  v. 

Conn.  562;  Bosley  v.  Porter,  4  J.  J.  Lowell,  32  Barb.   9. 

Marsh.    621 ;    Gordon   v.    Hobart,   2  Where  one  of  several  accoramoda- 

Story,  243;    Taylor  v.   Talbot,  2  J.  tion  makers  of  a  note  has  notified 

J.  Marsh.  49 ;  Sager  v.  Warley,  Rice  the  payee  and  holder   of  his  desire 

Ch.   (S.  C.)   26;  Heilbron  v.  Bissell,  to  terminate  his  liability  he  cannot 

1  Bailey  Eq.  430;   Gregory  v.   For-  claim  in  diminution  thereof  on  ac- 

rester,  1  McCord  Ch.  318;  Smith  v.  count      of      outstanding      advances 

Wood,  1  N.  J.  Eq.  74;  Jones  v.  Kil-  money  paid  to  the  holder  by  the  ac- 

gore,  2  Rich.  Eq.  63;  Baine  v.  Wil-  commodation  payee  after  such  revo- 

liams,  10  Sm.  &  M.  113;  McQuaidc  cation,   such   money  being  the  pro- 

V.  Stewart,    48    Pa.    198;    Smith    v.  ceeds   of  the  business  of  the   payee 

Brooke,  49  id.  147;  Planters'  Bank  conducted    on    money    advanced    on 

v.  Stockman,   1   Freeman's  Ch.  502.  the  credit  of  the  other  accommoda- 

81  Alexander   v.   United   States,   6  tion    makers.      Patterson    v.    Bank, 

C.  C.  A.  602,  57  Fed.  828.  26  Ore.  509. 

szpritchard  V.  Comer,  71  Ga.  18;  83  Richards'    Est.,    185    Pa.    155; 

Pearl  v.  Deacon,  1  De  G.  &  J.  461 ;  Stamford     Bank     v.     Benedict,     15 

Kinnaird   v.   Webster,    10    Ch.    Div.  Conn.  444. 

139;    Berghaus    v.    Alter,    9    Watts  84  Smythe   v.   New   England   L.   & 

386;   Ross  V.  McLauchlan,  7  Gratt.  T.  Co.,  12  Wash.  424. 


§    245]      CONVENTIONAL    LIQUIDATIONS    AND    DISCIIARGLS.        743 

given  security  in  preference  to  an  unsecured  demand  in  order  to 
release  the  collateral.^* 

There  is  a  marked  conflict  of  decision  upon  this  point  relat- 
ing to  the  application  by  the  court  of  indefinite  payments  aris- 
ing, as  before  intimated,  from  the  diverse  judicial  assumptions 
on  the  one  hand,  that  such  payments  are  as  a  general  rule  to 
be  applied  in  the  manner  most  beneficial  to  the  debtor,  and  on 
the  other,  that  they  are  to  be  applied  most  beneficially  to  the 
creditor.*^  No  court,  however,  has  so  far  relied  upon  either 
assumption  as  to  resolve  all  questions  by  it.  As  before  stated, 
neither  assumption,  apart  from  some  special  ground,  is  founded 
in  reason  or  principle.  Neither  party,  by  reason  merely  of 
being  debtor  or  creditor,  has  any  claim  to  be  preferred ;  each  as 
a  general  rule  has  had  an  election  to  appropriate  the  payment, 
and  each  having  waived  it  has  an  equal  claim  to  a  just  appli- 
cation by  the  court.  The  rule  that  the  debt  which  is  least 
secured  should  be  first  paid,  where  there  are  no  special  circum- 
stances, stands  on  very  slight  preponderance  of  equity.  The 
most  that  can  be  said  for  it  was  said  by  Marshall,'  C.  J. :  ''It 
being  equitable  that  the  whole  debt  should  be  paid  it  cannot 
be  inequitable  to  extinguish  first  those  debts  for  which  the  se- 

85  Compound  L.  Co.  v.  Murphy,  as  a  rule  entered  into  the  judgment 
169  111.343;  Frazier  v.  Lanahan,  7]  of  the  courts  that  it  has  been  a 
Md.  131,  17  Am.  St.  516;  Griswold  convenient  resort  for  determining 
V.  Onondaga  County  Sav.  Bank,  93  incidental  questions.  Thus  where 
N.  Y.  301;  Pattison  v.  Hull,  9  Cow.  j^.  ^^^  p^.^^^^  ^j^^^  ^  payment  was 
747;  Dows  v.  Morewood,  10  Barb.  ^^^^  .^^  ^  ^^^.^^j^  ^^^^^  ^^^^  ^.,^^  ^^^^ 
183;  Poindexter  v.  La  Roche,  7  Sm. 
&  M.   699;    Dorsey   v.   Gassaway,   2 

Har.  &  J.  402,  3  Am.  Dec.  557 ;  Mc-  ,  ,     , 

Tavish    V.    Carroll,    1    Md.    Ch.    100  ^'   °^   *^"   ^^'*   ^^^   °^   ^^'^  y^^""'   ^ 

(but  see  Gwinn  v.  Whitaker,  1  Har.  ^^y  "^°«*^  favorable  to  the  creditor. 

&     J.     754)  ;      The     Antarctic,      1  ^yers  v.   Fowler,   14  Ark.   80.     See 

Sprague,    206;    Neal    v.   Allison,   50  Anderson    v.   Mason,    C    Dana    217; 

Miss.  175.     See  Thatcher  v.  Massey,  I^ank  v.  Brown,  22  Me.  295. 

20  S.  C.  542.  If  the  course  of  dealing  between 

Payments  will  be  so  applied  as  to  tlie  parties  indicates  an  understand- 

save    a    debtor's    homestead.      First  ing    that    payment.s    are    to    be    ap- 

Nat.  Bank  v.  Hollinsworth,  78  Iowa  plied  in  tlie  way  most  beneficial  to 

575,   6   L.R.A.    92.  the    creditor     the     court     will     give 

86  So   much   has   this    assumption  effect   to    it.      Gwin   v.    McLean,   62 
of  favoring  one  party  or  the  other  Miss.  121. 


and  month  could  not  be  shown,  the 
court  directed  the  credit  to  be  given 


^44  SUTHERLAND    ON    DAMAGES.  [§    245 

curitj  is  most  precarious ;  "  ^"^  and  it  is  not  surprising  that  the 
humane  consideration  of  relieving  the  debtor  of  the  more  bur- 
densome debt  should  determine  the  application  the  other  way. 
But  the  rule  to  pay  first  the  debt  least  secured  seems  to  be 
supported  by  a  decided  weight  of  authority. 

There  is  also  considerable  contrariety  of  decision  upon  other 
points  relative  to  the  application  of  payments  by  the  court. 
The  cases  agree  that  an  indefinite  payment  is  to  be  applied  to 
the  oldest  debt,  where  no  other  rule  of  apprc^priation  confiicts ; 
but  it  often  occurs  that  another  and  sometimes  several  rules 
do  conflict.  Then  the  relative  force  of  the  conflicting  rules 
and  the  particular  circumstances  must  control  the  application. 
That  rule  is  often  met  by  the  rule  that  the  least  secured  debt 
shall  be  first  paid.  Both  may  be  said  to  operate  in  favor  of 
the  creditor,  but  they  do  not  always  conduce  to  the  same  apj)li- 
cation.  The  latter  is  paramount  when  no  circumstances  exist  to 
increase  the  force  of  the  other.  Where  the  secured  and  unse- 
cured debts  are  by  mutual  consent  items  in  a  general  account 
current,  and  especially  if,  by  like  consent,  the  payment  is  also 
credited  in  the  account,  the  rule  for  applying  the  credit  to  the 
oldest  items  prevails,  notwithstanding  the  partial  security  ^*  but 
not  without  dissent.  Where  the  creditor's  security  consisted  in 
retaining  title  to  the  property  sold,  and  the  purchase  price  of 
the  articles  so  conditionally  sold  constituted  the  earliest  items 
in  the  account,  and  the  payments  were  by  mutual  consent  en- 
tered as  credits  therein,  the  interest  of  the  purchaser  to  perfect 
his  title  to  the  property  was  deemed  to  preponderate  against  the 
interest  of  the  creditor  to  obtain  payment  of  his  unsecured, 
rather  than  his  secured,  claims;  and  the  concurrence  of  the 
parties  in  making  the  transaction  a  matter  of  account  evinced 
their  intention  that  the  payments  should  satisfy  the  charges 
in  the  order  of  their  entry.*^ 

87  Field  V.  Holland,  6  Crancli  8,  in  Alabama  the  slaves  of  several 
3  L.  ed.  L36.  Tennesseans,     and     afterwards     re- 

88  §  243.  ceived  in  Alabama    a    part    of    thcr 

89  Crompton  v.  Pratt,  105  Mass.  hire,  without  any  appropriation  at 
^■''•'J-  the   time  bj'   either   agent   receiving 

In  Pointer  v.  Smith,  7  Heisk.  137.  or  the  debtor  paying.  Held,  that 
A.,  a  Tennessean,  as  agent,  hired  out       tlie   law    of   Ala1)ama    would    govern 


240]      CONVENTIONAL    LUiUlDATJONS    AND    DlSCJl  AKG  KS.        715 

Section  3. 


ACCORD    AND    SATISFACTION. 


§  246.  Definition.  A  claim  or  demand  may  be  satistied  by 
the  party  liable  delivcriiiij;-,  paying  or  doing,  and  the  claimant 
accepting,  something  ditlerent  from  that  which  was  f)wing  or 
claimed,  if  they  so  agree.®"    It  is  a  substituted  payment.     When 


as  to  the  subsuqiiout  appropriation 
of  the  payment;  but  in  tlie  absence 
of  any  proof  as  to  the  law  thereof, 
applicable  to  the  circumstances,  the 
debtor  could  not  make  a  subsequent 
appropriation,  and  it  should  be  dis- 
tributed p7'0  rata. 

In  Smith  v.  Union  Bank,  5  Pet. 
518,  8  L.  ed.  212,  it  was  held  that 
the  right  of  priority  of  payment 
among  creditors  of  an  intestate  de- 
pends on  the  law  of  the  place  where 
the  assets  are  administered,  and 
not  on  the  law  of  the  place  of  the 
contract,  or  of  the  domicile  of  the 
deceased;  and,  therefore,  where  ad- 
ministration was  taken  under  the 
laws  of  Maryland  of  assets  there, 
where  all  debts  are  of  equal  dignity, 
and  the  intestate  was  domiciled  and 
owed  a  bond  debt  in  Virginia,  where 
bond  debts  have  a  preference,  the 
latter  debt  had  no  prior  right  of 
payment  out  of  the  assets  in  Mary- 
land. 

90  Fuller  V.  Smith.  107  Me.  IGl; 
Ikard  v.  Armstrong,  10  Ala.  App. 
657. 

The  amount  tendered  must  be  un- 
conditionally accepted  in  full  settle- 
ment. Grossman  Bros.  &  Rosen- 
baum  V.  Phillips,  83  Misc.  (N.  Y.) 
453 ;  Alabama  City,  G.  &  A.  Ry.  Co. 
V.  Gadsden,  185  Ala.  263. 

The  intention  of  the  parties  con- 
trols. Jacobs  V.  Jacobs,  130  Iowa 
10. 

If  the  amount  due  is  unliquidated 
and   the    party    owing    it    makes    an 


ofler  of  a  less  sum  in  settlement  and 
attaches  thereto  the  condition  that 
if  the  sum  is  taken  at  all  it  must 
be  received  in  full  or  in  satisfaction, 
and  the  other  party  receives  it 
with  knowledge  of  the  condition,  he 
takes  it  subject  thereto,  and  it 
operates  as  a  full  accord  and  satis- 
faction notwithstanding  the  paj'ee, 
at  the  time  of  receiving  it,  declares 
that  he  takes  it  in  satisfaction  pro 
tanto  only.  McDaniels  v.  Bank,  20 
Vt.  230,  70  Am.  Dec.  406;  Preston 
V.  Grant,  34  Vt.  201  ;  Berdell  v.  Bis 
sell,  6  Colo.  162;  Vermont  State 
Baptist  Convention  v.  Ladd,  58  Vt. 
05;  Bull  V.  Bull,  34  Conn.  455;  I'at- 
ten  V.  Douglass,  44  id.  541;  Donal- 
son  V.  Norman,  14  Ga.  App.  146; 
Redmond  &  Co.  v.  Atlanta  &  B.  Air- 
Line  Ry.  Co.,  129  Ga.  133;  Elrod  v. 
M.  C.  Kiser  &  Co.,  13  Ga.  App.  471. 
If  a  party  injured,  with  knowl- 
edge of  all  the  facts,  denuuids  and 
receives  from  the  wrongdoer  a  sum 
of  money  on  account  of  the  injury, 
either  in  whole  or  in  part,  it  is 
presumed  that  it  was  intended  as  a 
full  recompense,  and  it  is  an  ac- 
cord and  satisfaction.  Hinkle  v. 
Minneapolis,  etc.  R.  Co.,  31  Minn. 
434.  But  it  is  otherwise  if  tiie 
party  in  fault  pays  money  volunta- 
rily, and  not  in  response  to  a  claim 
made  by  the  other,  or  if  any  fact 
gives  the  payment  the  character  of 
a  gratuity.  Sobieski  v.  St.  Paul  & 
D.  R.  Co.,  41  Minn.  169,  16  Am. 
Neg.  Cas.  319. 


746 


SLlTIiERLANI)    ON    DAMAGES. 


[§    246 


such  agreement  is  executed — carried  fully  into  effect  ^^ — the 
original  demand  is  canceled,  satisfied,  extinguished.  It  is  thus 
discharged  by  what  the  law  denominates  accord  and  satisfac- 
tion. It  is  a  discharge  of  the  former  obligation  or  liability  by 
the  receipt  of  a  new  consideration  mutually  agreed  upon.^^ 
The  rule  requiring  that  an  accord  be  executed  is  satisfied  if  the 
creditor  accepts  the  promise  of  the  debtor  to  perform  some 
act  in  future  in  satisfaction  of  the  debt,  and  where  that  is  the 
case  the  debt  is  extinguished  without  performance.^^  But 
there  is  an  obvious  distinction  between  an  engagement  to  ac- 
cept a  promise  in  satisfaction  and  an  agreement  requiring  per- 
formance of  the  promise.  In  the  latter  case  a  tender  of  per- 
formance, although  made  promptly  and  in  good  faith,  is  not 
satisfaction.^* 

§  247.  Consideration.  For  the  purpose  of  supporting  such 
an  agreement  and  giving  it  effect  the  law  treats  all  consider- 
ations which  have  value,  without  regard  to  the  extent  of  that 


91  Lamberton  v.  Harris,  112  Ark. 
503;  B.  &  W.  Engineering  Co.  v. 
Beam,  23  Cal.  App.  164;  North 
State  F.  Ins.  Co.  v.  Dillard,  88  Ark. 
473  (service  of  garnishment  process 
does  not  excuse  nonperformance)  ; 
Dreyfus  v.  Roberts,  75  Ark.  354,  69 
L.R.A.  823,  112  Am.  St.  67;  Mayo  v. 
Leighton,  101  Me.  63;  Goodloe  v. 
Empson  P.  Co.,  145  Mo.  App.  574; 
Swofford  D.  G.  Co.  v.  Goss,  65  Mo. 
App.  55 ;  Wenz  v.  Meyersohn,  59 
App.  Div.  (N.  Y.)  130;  First  Nat. 
Bank  v.  Leech,  30  C.  C.  A.  262,  94 
Fed.  310;  Crow  v.  Kimball  L.  Co., 
16  C.  C.  A.  127,  69  Fed.  127;  Hos- 
ier V.  Hursh,  151  Pa.  415;  Omaha 
F.  Ins.  Co.  V.  Thompson,  50  Neb. 
580;  Carpenter  v.  Chicago,  etc.  R. 
Co.,  7  S.  D.  584;  Rogers  v.  Spokane, 
9  Wash.  168. 

An  accord  and  satisfaction  is 
binding  on  a  party  who  after  knowl- 
edge of  mispresentations  in  the  mak- 
ing   thereof     retains    the     benefits, 


Beebe   v.    Worth,    146   N.    Y.    Supp. 
146. 

92  Jackson  v.  Security  Mut.  L. 
Ins.  Co.,  233  111.  161;  Fredonia  G. 
Co.  V.  Elwood  S.  Co.,  71  Kan.  464; 
Neely  v.  Thompson,  68  Kan.  193; 
Richardson  v.  Taylor,  100  Me.  175; 
First  Nat.  Bank  v.  Latham,  37  Okla. 
286;  Vanbebber  v.  Phmkett,  26  Ore. 
562,  569,  27  L.R.A.  811,  quoting 
the  text;  Bush  v.  Abraham,  25  Ore. 
336,  345,  quoting  the  text. 

The  sum  tendered  must  be  offered 
as  full  satisfaction  and  it  must  be 
so  expressed.  Harrison  v.  Hender- 
son, 67  Kan.  194,  62  L.R.A.  760; 
Asher  v.  Greenlcaf,  68  Kan.  29. 

93  Smith  V.  Elrod,  122  Ala.  269; 
Knowles  v.  Knowles,  128  111.  110; 
Potts  V.  Polk  County,  80  Iowa 
401  ;  Averill  v.  Wood,  78  Mich.  342 ; 
Oregon  Pac.  R.  Co.  v.  Forrest,  128 
N.  Y.  83;  Babcock  v.  Hawkins,  23 
Vt.  561 ;  Sharp  v.  Mauston,  92  Wis. 
629.     See  §  252. 

94  Hosier  v.  Hursh,  151  Pa.  415. 


§    248]      CONVENTIONAL    LIQUIDATIONS    AND    DlSCHAllGES.        747 

value,  as  sufficient,  as  it  does  in  all  other  cases  of  contract; — 
inadequacy  is  not  a  valid  objection;  a  court  will  not  consider 
the  disparity,  if  there  is  any,  between  the  value  of  the  liability 
discharged  and  the  thing  done  or  promised  which  forms  the 
consideration,  if  the  latter  is  of  some  value.^^  The  receipt  of 
money  paid  into  court  by  the  defendant  does  not  deprive  the 
plaintiif  of  his  right  to  collect  the  balance  due  unless  the  i)ay- 
nient  was  accompanied  by  a  condition  that  the  sum  must  be 
accepted  in  full  satisfaction.^^ 

§  248.  Payment  of  part  of  a  debt  will  not  support  agreement 
to  discharge  the  whole.  Where  there  is  an  overdue  money  de- 
mand, liquidated  and  not  disputed,  and  a  part  only  of  it  is  paid, 
though  this  is  accepted  as  full  satisfaction,  there  is  only  a  ])art 
performance  of  the  obligation  in  kind;  the  agreement  to  dis- 
charge the  residue  is  void,  for  want  of  consideration.  All  claims 
for  damages,  for  torts  committed,  or  for  contracts  broken,  are 
payable  in  money.  When  a  demand  therefor  is  certain,  or  ren- 
dered certain  by  agreement  or  adjudication,  and  is  no  longer  dis- 
puted, it  cannot  be  satisfied  wdth  any  less  amount  than  the  pre- 
cise sum  owing.  If  a  part  is  paid  there  is  a  partial  performance 
of  the  obligation  of  the  party  liable,  and  no  more.  This  payment 
is  only  a  discharge  yro  tanto.  This  part  payment  may  have  been 
induced  solely  by  the  assurance  that  it  would  be  accepted  as  full 
satisfaction,  and  it  may  have  been  impossible  to  comj^el  pay- 
ment ;  still,  the  party  paying  has  done  in  kind  only  what  he  was 
under  a  legal  obligation  to  do  in  respect  to  the  amount  paid,  and 
the  corresponding  amount  of  the  obligation  is  thereby  satis- 
fied, but  no  more;  therefore  the  agTeement  of  the  creditor  to 

95  Fuller  V.  Smith,   107  Me.   161;  300;  Webster  v.  Wyser,  I  Stew.  184; 

Valley  v.  Boston  &  M.  R.  Co.,  103  Davis  v.  Noaks,  3  J.  J.  Alarsli.  407 ; 

Me.  106;  Savage  V.  Everman,  70  Pa.  Wood    v.    Roberts,    2    Stark.    417; 

315,  10  Am.  Rep.  676;  Hartman  v.  Boothby   v.   Sowilon,   3   Camp.    175; 

Banner,  74  Pa.  33;  Very  V.  Levy,  13  Bradley     v.     Gregory,     2     id.     383; 

How.  345,  14  L.  ed.  173;   Hardman  j,^^^,^    ^     Abraham,     25     Ore.     336; 

V.  Bellhouse,  9  M.  &  W.  596;  Sibree  ^^^.^^,^  ^   Creighton,  61  Mo.  App.  1  ; 

V.  Tripp,  15  id.  23;  Booth  v.  Smith,  ^^^^^^^^  ^    ^^^^^^^^    ^^    g^^,,     ^,,^ 


3  Wend.  66;  Kellogg  v.  Richards, 
14  id.  116;  Steinman  v.  Magnus,  11 
East,   390;    Lewis  v.   Jones,  4   B.  &  96  Cooley    v.    Kinney,     11!)    Mich. 


See  §  249. 
9( 
C.    506;    Blinn   v.    Chester,    5    Day,       377 


748 


SinillCRLAISTD    ON    DAMAGES. 


L§  248 


discharge  the  residue  is,  in  a  legal  sense,  gratuitous  and  not  bind- 
ing ^"^  as  between  the  parties,  although  it  may  be  binding  as  to 


97  Louisiana  Lumber  Co.  v.  J.  W 
Farrier  Lumber  Co.,  9  Ala.  App 
383;  Abercrombie  v.  Goode,  187  Ala 
310;  Baccaria  v.  Landers,  84  Misc 
(X.  Y.)  396;  National  Art  Co.  v 
Ellery  —  Misc.  (N.  Y.)  — ,  145  N 
Y.  Supp.  277;  Schumacher  v.  Mof 
fitt,  71  Ore.  79;  Johnson  v.  Hoover 
&  Lyons,  —  Tex.  Civ.  App.  — ,  165 
S.  W.  900:  Scott  v.  Rawls,  159  Ala. 
399 ;  Schlessinger  v.  Schlessinger,  39 
Colo.  44,  8  L.R.A.(N.S.)  863; 
Phinizy  v.  Bush,  129  Ga.  479;  Stew- 
art V.  Stephens,  7  Ga.  App.  453; 
Farmers  &  M's.  L.  Ass'n  v.  Caine, 
224  111.  599;  Cartan  v.  Tackaberry, 
139  Iowa  586;  New  York  L.  Ins.  Co. 
V.  Van  Meter,  137  Ky.  4,  136  Am. 
St.  282;  Commercial  &  F's.  Nat. 
Bank  v.  McCormick,  97  Md.  703; 
Gilman  v.  Gary,  198  Mass.  318; 
Proctor  V.  Cable  Co.,  145  Mich. 
503;  Goldsmith  v.  Lichtenberg,  139 
Mich.  163;  Wherley  v.  Rowe,  106 
Minn.  494;  Demeules  v.  Jewel  T. 
Co.,  103  Minn.  150,  123  Am.  St. 
315,  14  L.R.A.(N.S.)  954;  Hoidale 
V.  Wood,  93  Minn.  190;  Debuhr  v. 
Thompson,  134  Mo.  App.  21;  Crilly 
V.  Rule,  87  Neb.  367;  Crawford  v. 
Darrow,  87  Neb.  494;  Castelli  v. 
Jereissati,  80  N.  J.  L.  295;  Eckert 
V  Wallace,  75  N.  J.  L.  171,  citing 
local  cases;  Schuller  v.  Robison,  139 
App.  Div.  (N.  Y.)  97;  Parker  v. 
Mayes,  85  S.  C.  419;  Hagen  v. 
Townsend,  27  S.  D.  457;  Siegele 
V.  Des  Moines  Mut.  Hail  Ins. 
Ass'n,  28  S.  D.  142;  Nixon  v. 
Kiddy,  66  W.  Va.  355;  Bor- 
den V.  Vinegar  Bend  L.  Co.,  2 
Ala.  App.  354;  Same  v.  Same,  7 
Ala.  App.  335;  Rogers  v.  Union  I. 
&  F.  Co.,  167  Mo.  App.  228;  Wolf 
V.  Humboldt  County,  36  Nev.  26,  45 
L.R.A.(N.S.)    762;   Bergman  P.  Co. 


V.  Brown  (Tex.  Civ.  App.),  156  S. 
W.  1102;  Smoot  v.  Checketts,  41 
Utah  211;  Swoflford  D.  G.  Co.  v. 
Goss,  65  Mo.  App.  55;  Morrill 
V.  Baggott,  157  111.  240;  Hart  v. 
Strong,  183  111.  348;  Pottlitzer  v. 
Wesson,  8  Ind.  App.  472;  Jennings 
V.  Durflinger,  23  Ind.  App.  673; 
Stengel  v.  Preston,  11  Ky.  L.  Rep. 
976;  Leeson  v.  Anderson,  99  Mich. 
247;  Wetmore  v.  Crouch,  150  Mo. 
671;  Griffith  v.  Creighton,  61  Mo. 
App.  1;  Howe  V.  Robinson,  13  N. 
Y.  Misc.  256;  Jones  v.  Rice,  19  N. 
Y.  Misc.  357;  Toledo  v.  Sanwald,  13 
Ohio  C.  C.  496  (applying  the  rule 
to  a  judgment)  ;  Mt.  Holly  W.  Co. 
V.  Mt.  Holly  Springs,  10  Pa.  Super. 
Ct.  162;  Commonwealth  v.  Cum- 
mins, 155  Pa.  30;  Chicago,  etc.  R. 
Co.  V.  Clark,  35  C.  C.  A.  120,  92 
Fed.  968  (the  opinion  of  Lacombe, 
C.  J.,  reviews  many  cases)  ;  Hodges 
V.  Truax,  19  Ind.  App.  651;  Rued 
V.  Cooper,  119  Cal.  463;  Gurley  v. 
Hiteshue,  5  Gill,  217;  Markel  v. 
Spitler,  28  Ind.  488;  Dederick 
V.  Leman,  9  Johns.  333 ;  Harris  v. 
Close,  2  id.  448,  3  Am.  Dec.  244; 
Seymour  v.  Minturn,  17  Johns.  169, 
8  Am.  Dec.  380;  White  v.  Jordan, 
27  Me.  370;  Latapee  v.  Pecholier, 
2  Wash.  C.  C.  180;  Warren  v.  Skin- 
ner, 20  Conn.  559;  Campbell  v. 
Booth,  8  Md.  107;  Curtiss  v.  Mar- 
tin, 20  111.  575;  Donohue  v.  Wood- 
bury, 6  Cusb.  150;  Bryant  v.  Proc- 
tor, 14  B.  Mon.  451;  Williams  v, 
Langford,  15  id.  566;  Conkling  \ 
King,  10  Barb.  372,  10  N.  Y.  440; 
Keeler  v.  Salisbury,  33  N.  Y.  648; 
Fellows  V.  Stevens,  24  Wend.  299; 
Harper  v.  Graham,  20  Ohio,  105; 
Fell  v.  McHenry,  42  Pa.  41;  Pier- 
son  V.  McCahill,  21  Cal.  122;  Irvine 
v.  Millbank,  56  N.  Y.  635 ;  Hinckley 


§    248]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       749 

third  persons.^^  The  actual  vahie  of  a  doht  nv  dciiiand  depends  on 
the  probability  of  voluntary  payment,  or  the  possibility  of  collec- 
tion by  legal  process.  Where  a  debt  is  doubtful  a  creditor  may 
obtain  a  part  of  the  nominal  amount  by  discharging  the  residue 
and  thus  realize  all  that  it  is  actually  worth,  and  perhaps  more. 
For  this  reason  the  rule  stated  has  been  regarded  by  the  courts 
as  only  a  technical  one ;  and  they  have  satisfied  it  on  nice  dis- 
tinctions ;  ^^  or,  as  has  been  judicially  said,  "they  have  seemed 


V.  Arey,  27  Me.  362;  Riley  v.  Kcr- 
shan,  52  Mo.  224;  Peterson  v. 
Wheeler,  45  id.  369;  Rose  v.  Hall, 
26  Conn.  392,  68  Am.  Dec.  402; 
Bailey  v.  Day,  26  Me.  88;  Redfield 
V.  Holland  P.  Ins.  Co.,  56  N.  Y.  354, 
15  Am.  Rep.  424;  Lewis  v.  Jones,  6 
D.  &  R;  567,  4  B.  &  C.  513;  Ogborn 
V.  Hoffman,  52  Ind.  439;  Keen  v. 
Vaughan,  48  Pa.  477;  Carrington  v. 
Crocker,  37  N.  Y.  336;  Cumber  v. 
Wane,  1  Str.  426;  Sibree  v.  Tripp, 
35  M.  &  W.  23;  Fitch  v.  Sutton,  5 
East,  230;  Pinnell's  Case,  5  Rep. 
117;  Lynn  v.  Bruce,  2  H.  Bl.  317 
Thomas  v.  Heathorn,  2  B.  &  C.  477 
Mitchell  V.  Cragg,  10  M.  &  W.  367 
Skaife  v.  Jackson,  3  B.  &  C.  421 
Graves  v.  Key,  3  B.  &  Ad.  313 
Straton  v.  Rastall,  2  T.  R.  366 
Churchill  v.  Bowman,  39  Vt.  518 
Hardey  v.  Coe,  5  Gill  189;  Smith  v 
Bartholomew,  1  Mete.  (Mass.)  276 
35  Am.  Dec.  365;  Arnold  v.  Park,  8 
Bush  3;  Tyler  v.  Odd  Fellows'  Mut. 
Relief  Ass'n,  145  Mass.  134;  Smith 
V.  Chilton,  84  Va.  840;  Martin  v. 
Frantz,  127  Pa.  389,  14  Am.  St. 
859;  Hayes  v.  Massachusetts  Mut. 
L.  Ins.  Co.,  125  111.  626,  1  L.R.A. 
303;  Sheibley  v.  Dixon  County,  61 
Neb.  409;  Helling  v.  United  Order 
of  Honor,  29  Mo.  App.  309;  Em- 
mittsburg  R.  Co.  v.  Donoghue,  67 
Md.  383,  1  Am.  St.  396;  St.  Louis, 
etc.  R.  Co.  V.  Davis,  35  Kan.  464; 


Foakes  v.  Beer,  9  App.  Cas.  605,  11 
Q.  B.  Div.  221;  Eldred  v.  Peterson, 
80  Iowa,  264,  20  Am.  St.  416. 

In  Gordon  v.  Moore,  44  Ark.  349, 
355,  51  Am.  Ri-p.  606,  it  is  held 
"that  an  agreement  by  a  creditor  to 
accept  a  smaller  sum  in  satisfaction 
of  a  debt,  carried  into  effect  by  the 
receipt  of  the  money,  and  the  execu- 
tion of  a  formal  and  positive  re- 
lease, with  all  other  acts  essential 
to  an  absolute  relinquishment  of 
his  right,  is  a  valid  and  irrevocable 
act." 

98  Ebert  v.  Johns,  206  Pa.  395. 

99Knowlton  v.  Black,  102  Me. 
503;  Kellogg  v.  Richards,  14  Wend. 
116;  Smith  v.  Ballou,  1  R.  I.  496; 
Harper  v.  Graham,  20  Ohio  105; 
Brooks  V.  White,  2  Mete.  (Mass.) 
283,  37  Am.  Dec.  95;  McDaniels  v. 
Lapham,  21  Vt.  222.  See  Wey- 
mouth V.  Babcock,  42  Me.  44;  Milli- 
ken  V.  Brown,  1  Ravvle  391;  Lamb 
V.  Goodwin,  10  Ired.  320;  McDaniels 
V.  Bank,  29  Vt.  230;  Mathis  v. 
Bryson,  4  Jones  509;  Brink  v.  Gar- 
land, 58  Mo.   App.  350. 

In  Woolfolk  V.  McDowell,  9  Dana, 
268,  a  creditor  accepted  liis  own 
note  outstanding  in  tlie  hands  of  a 
third  person,  in  satisfaction  of  a 
larger  amount  against  his  debtor, 
but  worth  less  because  the  debtor 
was  unable  to  pay  it.  Judge  Mar- 
shall said :  "We  think  his  accept- 
ance   is    sullieient    to    establish    tlie 


750  SUTHERLAND  ON  DAMAGES.  [§  248 

to  seize  with  avidity  upon  any  consideration  to  support  the 
agreement  to  accept  the  lesser  sum  in  satisfaction  of  the  larger, 
or,  in  other  words,  to  extract  if  possible  from  the  circumstances 
of  each  case  a  consideration  for  the  new  agreement  in  place 
of  the  old,  and  thus  to  form  a  defense  to  the  action  brought  upon 
the  old  agTeement."  ^ 

§  248a.  Same  subject.  In  a  recent  case  the  Mississippi  court 
refused  to  recognize  the  rule  stated  in  the  last  section,  not- 
withstanding it  had  been  applied  there.  In  a  strong  opinion 
Woods,  C.  J.,  argues  that  the  case  in  Coke  ^  which  is  relied  upon 
as  the  foundation  of  the  rule  decided  no  such  question.  "An 
examination  of  that  mischievous  and  misleading  reported  case 
will  make  it  appear  at  once  that  the  question  before  us  was 
not  in  any  way  involved.  PinneFs  plea  was  that,  before  the 
maturity  of  his  bond  for  the  larger  sum,  plaintiff  had  accepted  a 
lesser  sum  agreed  upon  between  the  parties,  in  full  satisfaction 
of  the  original  debt.  JSTow,  all  the  authorities,  American  and 
English,  including  Coke  himself,  agree  that  this  was  a  good 
defense,  and  that  the  plaintiff  was  bound  by  it,  if  defendant 
should  properly  plead  it  to  a  suit  for  the  entire  original  debt. 
But  the  hapless  Pimiel,  in  that  remote  period  when  courts  were 
almost  as  zealous  for  the  observance  of  technical  rules  of  special 
pleading  as  for  the  execution  of  justice  according  to  right,  was 
adjudged  to  pay  the  whole  debt,  the  plaintiff  having  judgment 
against  him  because  of  his  'insufficient  pleading,  for,'  says  Coke, 
'he  did  not  plead  that  he  had  paid  the  51.  2s.  2d.  in  full  satis- 
faction (as  by  law  he  ought),  but  pleaded  the  payment  of  part 
generally,  and  that  the  plaintiff  accepted  it  in  full  satisfac- 

adequacy    of    the    satisfaction.      It  liquidated  sum  is  due,  the  payment 

cannot   be   said   that   there  was   no  of  part  only,   although  accepted  in 

consideration  for  giving  up  any  part  satisfaction,  is  not,  for  want  of  con- 

of   the    debt   of   the   defendant,   be-  gideration,  a  discharge  of  the  entire 


indebtedness,  is  not  looked  upon 
with  favor,  and  is  confined  strictly 
to    cases    falling    within    it."      Bac- 


cause  although  the  value  of  the  en 
tire     consideration     given     can     be 
measured,    there   is   no   measure   of 
the  value  of  the  debt  which  the  de- 
fendant could  not  pay."  ^^'"'''^  ^-  Landers,  84  Misc.    (N.  Y.) 

1  Jaffray  v.  Davis,  124  N.  Y.  164,       306;  Jackson  v.  Volkening,  81  App. 
n  L.R.A.  710.  Div.  (N.  Y.)  36,  aff'd  178  N.  Y.  562. 

"While    the    rule    that    where    a  2  Pinnel's    Case,   5    Co.    Rep.    117. 


§    248aJ      CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.      751 

tion.'  "  After  showing  that  the  courts  of  this  country  generally 
adopted  the  rule  supposed  to  be  so  laid  down,  the  writer  conies 
to  the  question  of  consideration,  the  absence  of  which  is  usually 
given  as  the  reason  for  the  rule :  "The  absurdity  and  unreason- 
ableness of  the  rule  seem  to  be  generally  conceded,  but  there 
also  seems  to  remain  a  wavering,  shadowy  belief  in  the  fact, 
falsely  so  called,  that  the  agreement  to  accept,  and  the  actual 
acceptance  of,  a  lesser  sum  in  the  full  satisfaction  of  a  larger 
sum,  is  without  any  consideration  to  support  it — that  is,  that 
the  new  agreement  confers  no  benefit  upon  the  creditor.  How- 
ever it  may  have  seemed  three  hundred  years  ago  in  England, 
when  trade  and  commerce  had  not  yet  burst  their  swaddling 
bands,  at  this  day  and  in  this  country,  where  almost  every  man 
is  in  some  way  or  other  engaged  in  trade  or  commerce,  it  is  as 
ridiculous  as  it  is  untrue  to  say  that  the  payment  of  a  lesser 
part  of  an  originally  greater  debt,  cash  in  hand,  without  vex- 
ation, cost,  and  delay,  or  the  hazards  of  litigation  in  an  effort  to 
collect  all,  is  not  often — nay,  generally — greatly  to  the  benefit 
of  the  creditor.  Why  shall  not  money — the  thing  sought  to  be 
secured  by  new  notes  of  third  parties,  notes  whose  payment  in 
money  is  designed  to  be  secured  by  mortgage,  and  even  nego- 
tiable notes  of  the  debtor  himself — why  shall  not  the  actual 
payment  of  money,  cash  in  hand,  be  held  to  be  as  good  con- 
sideration for  a  new  agreement,  as  beneficial  to  the  creditor, 
as  any  mere  promises  to  pay  the  same  amount,  by  whomsoever 
made  and  howsoever  secured  ?  And  why  may  not  men  make 
and  substitute  a  new  contract  and  agreement  for  an  old  one, 
even  if  the  old  contract  calls  for  a  money  payment?  And 
why  may  one  accept  a  horse  worth  one  hundred  dollars  in  full 
satisfaction  of  a  promissory  note  for  one  thousand  dollars,  and 
be  bound  thereby,  and  yet  not  be  legally  bound  by  his  agree- 
ment to  accept  nine  hundred  and  ninety-nine  dollars,  and  his 
actual  acceptance  of  it,  in  full  satisfaction  of  the  one  thousand 
dollar  note  ?  JSTo  reason  can  be  assigned,  except  that  just  ad- 
verted to,  and  this  rests  upon  a  mistake  in  fact.  And  a  rule  of 
law  which  declares  that  under  no  circumstances,  however  favor- 
able and  beneficial  to  the  creditor,  or  however  hard  and  full 
of  sacrifice  to  the  debtor,  can  the  payment  of  a  less  sum  of 


752 


SUTIIEKI.AND    ON    DAMAGES. 


[§  248a 


money  at  the  time  and  place  stipulated  in  the  original  obligation, 
or  afterwards,  for  a  greater  sum,  thongh  accepted  by  the  cred- 
itor in  full  satisfaction  of  the  whole  debt,  ever  amount  in  law 
to  satisfaction  of  the  original  debt,  is  absurd,  irrational,  un- 
supported by  reason  and  not  founded  in  authority,  as  has  been 
declared  by  courts  of  the  highest  respectability,  and  of  last 
resort,  even  when  yielding  reluctant  assent  to  it."  ' 

§  249.  Any  other  act  or  promise  which  is  a  new  consideration 
will  suffice.  If  there  be  any  benefit  or  even  legal  possibility  of 
benefit  *  to  the  creditor  thrown  in  the  additional  weight  will 
turn  the  scale  and  render  the  consideration  sufficient  to  sup- 
jlort  the  agreement.*  Payment  at  a  different  place  ^  or  l>efore 
the  original  debt  is  due  '  is  sufficient.  So  if,  instead  of  oifering 
payment  of  a  less  sum,  the  debtor  procures  a  third  person  to 


3  Clayton  v.  Clark,  74  Miss.  499, 
60  Am.  St.  521,  37  L.R.A.  771,  modi- 
fying or  overruling  Jones  v.  Per- 
kins, 29  Miss.  139;  Pulliam  v.  Tay- 
lor, 50  id.  251,  and  Burrus  v.  Gor- 
don, 57  id.  93.  To  much  the  same 
effect  as  the  principal  case  are  Har- 
per V.  Graham,  20  Ohio,  105,  and 
Frye  v.  Hubbell,  74  N.  H.  358,  7 
L.R.A. (N.S.)  1197  (a  full  discus- 
sion). See  Dreyfus  v.  Roberts,  75 
Ark.  354,  112  Am.  St.  67,  69  L.R.A. 
823;  Shelton  v.  Jackson,  20  Tex. 
Civ.  App.  443. 

*  "What  is  called  'any  benefit,  or 
even  any  legal  possibility  of  bene- 
fit,' is  not  that  sort  of  benefit  which 
a  creditor  may  derive  from  getting 
payment  of  part  of  the  money  due 
to  him  from  a  debtor  who  might 
otlierwise  keep  him  at  arm's  length, 
or  possibly  become  insolvent,  but  is 
some  independent  benefit,  actual  or 
contingent,  of  a  kind  which  might 
in  law  be  a  good  and  valuable  con- 
sideration for  any  other  sort  of 
agreement  not  under  seal."  Foakes 
V.  Beer,  9  App.  Cas.  605  (1884), 
11  Q.  B.  Div.  221.  Compare  the 
preceding   section. 


5  Grayson's  App.,  108  Pa.  581; 
Hcndrick  v.  Thomas,  106  Pa.  327; 
Tyson  v.  Woodruff,  108  Ga.  368;  1 
Smith,  Lead.  Cas.  600;  Steinman  v. 
Magnus,  2  Camp.  124;  Bradley  v. 
Gregory,  id.  383 ;   Wood  v.  Roberts, 

2  Stark.  417;   Boothby  v.   Snowden, 

3  Camp.  175;  Sibree  v.  Tripp,  15 
M.  &  W.  23;  Bidder  v.  Bridges,  37 
Ch.  Div.  406. 

6  Smith  v.  Brown,  3  Hawks,  580 ; 
Harper  v.  Graham,  20  Ohio  105; 
Austin  v.  Dorwin,  21  Vt.  39;  Spann 
V.  Baltzell,  1  Fla.  302,  46  Am.  Dec. 
346;  Arnold  v.  Park,  8  Bush,  3; 
Milliken  v.  Brown,  1  Rawle,  391. 

7  Singer  S.  M.  Co.  v.  Lee,  105 
Md.  663;  Weiss  v.  Marks,  206  Pa. 
513;  Baldwin  v.  Daly,  41  Wash. 
416;  Russell  v.  Stevenson,  34  Wash. 
166;  Sonnenberg  v.  Riedel,  16 
Minn.  83;  Goodnow  v.  Smith,  18 
Pick.  414,  29  Am.  Dec.  200;  Brooks 
V.  White,  2  Mete.  (Mass.)  283,  37 
Am.  Dec.  95;  Levy  v.  Very,  12  Ark. 
148;  Boyd  v.  Moats,  75  Iowa  151; 
Schwoider  v.  Lang,  29  Minn.  254; 
Ricketts  v.  Hall,  2  Bush  249,  43 
Am.  Rep.  302;  Smith  v.  Brown,  3 
Hawks,  580. 


§    249]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       V53 

become  security  either  by  engaging?  liis  personal  credit  or  pledg- 
ing his  property  for  the  i)ayment  of  a  smaller  sum ;  ^  or  the 
payment  of  such  sum  by  a  third  person ;  '  or  if  the  debtor  alone 
gives  negotiable  paper  for  a  smaller  sum  to  satisfy  a  larger  (Ic])t 
not  in  negotiable  form ;  "  or  if  one  of  several  joint  dcl)tors, 
whether  in  partnership  or  not,  does  so,  and  the  note  or  bill,  and 
not  the  payment  of  it,  is  accepted  as  satisfaction,  it  is  valid; 
giving  such  security  is  a  new  consideration,  for  it  may  be  more 
advantageous  than  the  debt  in  its  previous  form."  Giving  notes 
for  smaller  sums  than  the  amount  of  the  indebtedness  which  A\as 
represented  by  a  single  note,  so  that  the  creditor  may  sue  on 


8  Lincoln  Sav.  Bank  &  S.  D.  Co. 
V.  Allen,  27  C.  C.  A.  87,  82  Fed. 
148;  Keeler  v.  Salisbury,  33  N.  Y. 
648;  Brooks  v.  White,  supra;  Bab- 
cock  V.  Dill,  43  Barb.  577;  Le  Page 
V.  McCrea,  1  Wend.  164,  19  Am. 
Dec.  469 ;  Harrison  v.  Close,  2 
Johns.  448,  3  Am.  Dec.  444;  Sey- 
mour V.  Minturn,  H  Johns.  169,  8 
Am.  Dec.  380;  Conkling  v.  King,  10 
N.  Y.  440;  Welby  v.  Drake,  1  C.  & 
P.  557;  Belshaw  v.  Bush,  11  C.  B. 
191 ;  James  v.  Isaacs,  12  id.  791 ; 
Steinman  v.  Magnus,  11  East,  390; 
Henderson  v.  Stobart,  5  Ex.  99 ;  Dias 
V.  Wanmaker,  1  Sandf.  469;  Sey- 
mour V.  Goodrich,  80  Va.  303;  Bid- 
der V.  Bridges,  37  Ch.  Div.  406; 
Roberts  v.  Brandies,  44  Hun  468; 
Varney  v.  Conery,  77  Me.  527; 
Laboyteaux  v.  Swigart,  103  Ind. 
596.  See  Warburg  v.  Wilcox,  7 
Abb.  Pr.  336. 

9  Cunningham  v.  Irwin,  182  Mich. 
629;  Gilson  v.  Nesson,  198  Mass. 
598,  17  L.R.A.{N.S.)  1208;  Part- 
ridge V.  Moynihan,  59  N.  Y.  Misc. 
234;  Hirachand  Punanchand  v. 
Temple,  [1911]  2  K.  B.  330;  Fow- 
ler V.  Smith,  153  Pa.  639;  Clark  v. 
Abbott,  53  Minn.  88,  39  Am.  St. 
577;  Laboyteaux  v.  Swigart,  103 
Ind.  596;  Varney  v.  Conery,  77  Me. 
527;    Welby    v.    Drake,    1    C.    &    P. 

Suth.  Dam.  Vol.  I.— 48. 


557;  Cordon  v.  Moore,  44  Ark.  349, 
51  Am.  Rep.  606;  Pettigrew  Mach. 
Co.   V.   Harmon,   45   Ark.  290. 

10  JafTray  v.  Davis,  124  N.  Y.  164, 
11  L.R.A.  710,  distinguishing  or  dis- 
approving Keeler  v.  Salisbury,  73 
N.  Y.  653,  and  Platts  v.  Walrath, 
Lalor's  Supp.  59;  Meciianics'  Bank 
V.  Houston,  11  W.  N.  C.  388  (Pa. 
Sup.  Ct.)  ;  Curlewis  v.  Clark,  3  Ex. 
375;  Cooper  v.  Parker,  15  C.  B. 
825;  Sihree  v.  Tripp,  15  M.  &  W. 
23;  Goddard  v.  O'Brien,  9  Q.  B. 
Div.  37;  American  Seeding  Mach. 
Co.  V.   Baker,  55  Ind.  App.  625. 

11  Smith  V.  Pitts,  167  Ala.  461; 
Thompson  v.  lY'rcival,  5  B.  &  Ad. 
925;  Sheehy  v.  Mandeville,  6 
Cranch,  253,  3  L.  ed.  215;  Mason 
V.  Wickersham,  4  W.  &  S.  100; 
Cole  V.  Sackett,  1  Hill  516;  Way- 
dell  V.  Luer,  5  id.  448,  3  Denio  410; 
Arnold  v.  Camp,  12  Johns.  409,  7 
Am.  Dec.  328;  I^dge  v.  Dicas,  3  B. 
&  Aid.  611;  Pearson  v.  Thomason, 
15  Ala.  700,  50  Am.  Dec.  159;  Rus- 
sell V.  Lytle,  6  Wend.  390,  22  Am. 
Dec.  537;  Barron  v.  Vandvert,  13 
Ala.  232;  Webb  v.  Goldsmith,  2 
Duer,  413;  Cartw  right  v.  Cooke,  3 
B.  &  Ad.  701:  Evans  v.  Powis.  1 
Ex.  601;  Kinsler  v.  Pope,  5  Strobh. 
126;  Evans  v.  Drummond,  4  Esp. 
89;   Reed  v.  White,  5  id.  122;   Lyth 


754 


SUTIIEBLAND    ON    DAMAGES. 


[§   249 


tliein  in  justice's  court,  is  a  sufficient  consideration.^^  An  ac- 
cord and  satisfaction  moving  from  a  stranger  or  a  person  having 
no  pecuniary  interest  in  the  subject-matter,  if  accepted  in  dis- 
charge of  the  debt,  constitutes  a  good  defense  to  an  action  to 
enforce  the  liability  against  the  debtor.^^  He  sufficiently  adopts 
it  by  taking  advantage  of  it  by  plea.''*  There  must  be  something 
received  to  which  the  creditor  was  not  before  entitled.^*  And 
it  must  possess  some  value  or  by  legal  possibility  be  of  benefit  to 
him.^®  The  extent  of  the  value  is  not  material."  Part  of  a 
claim  may  be  satisfied  by  withdrawal  of  the  defense  of  infancy 
to  the  residue.^^  Suspension  or  abandonment  of  a  suit  is  a 
sufficient  consideration.^^     If  there  is  a  new  consideration  of 


V.  Ault,  7  Ex.  669;  Bedford  v. 
Deakin,  2  Stark.  178.  See  Ricketta 
V.  Hall,  2  Bush,  249;  Keeler  v. 
Salisbury,  27  Barb.  485,  33  N.  Y. 
648;  Conkling  v.  King,  10  Barb. 
372. 

In  Bowker  v.  Harris,  30  Vt.  425, 
a  wife's  note  was  held  sulficient 
consideration,  she  having  paid  it, 
though  it  was  void  when  made. 
See  also,  Kirwan  v.  Kirwan,  4 
Tyrwh.  491;  Hart  v.  Alexander,  2 
M.  &  W.  484;  Powles  v.  Page,  3 
C.  B.  16. 

12  In  re  Dixon,  2  McCrary,  556. 

13  Jones  V.  Broadhurst,  9  C.  B. 
173;  Leavitt  v.  Morrow,  6  Ohio  St. 
71,  67  Am.  Dec.  334;  Harrison  v. 
Hicks,  1  Port.  423,  27  Am.  Dec. 
638;  Daniel  v.  Hallenbeck,  19 
Wend.  408;  Clow  v.  Borst,  6  Johns. 
37 ;  Stark  v.  Thompson,  3  Mon. 
296 ;  Woolfolk  v.  McDowell,  9  Dana, 
268;  Belshaw  v.  Bush,  11  C.  B. 
19J;  Jackson  v.  Pennsylvania  R. 
Co.  66  N.  J.  L.  319;  Armstrong  v. 
School  Dist.,  28  Mo.  App.  169; 
Beebe  v.  Worth  (Misc.),  146  N.  Y. 
Supp.   146. 

14  Chicago,  etc.  R.  Co.  v.  Brown, 
70  Neb.  696;  Bolshaw  v.  Bush,  su- 
pra;  Snyder  v.  Pharo,  25  Fed.  398; 
Bennett  v.  Hill,  14  R.  I.  322. 


15  Thurber  v.  Sprague,  17  R.  I. 
634;  Bryant  v.  Proctor,  14  B.  Mon. 
451  ;  Hethcoate  v.  Crookshanks,  2 
T.  R.  24;  Harper  v.  Graham,  20 
Ohio,  105;  Good  v.  Cheesman,  2  B. 
&  Ad.  328;  Fitch  v.  Sutton,  5  East, 
230;  Acker  v.  Phcenix,  4  Paige, 
305 ;  Commonwealth  v.  Miller,  5 
Mon.  205;  Riley  v.  Kershan,  52  Mo. 
224;  Rose  v.  Hall,  26  Conn.  392, 
68  Am.  Dec.  402;  Bartlett  v.  Rog- 
ers, 3  Sawyer,  62;  Brooklyn 
Heights  R.  Co.  v.  Brooklyn  City  R. 
Co.,  151  App.  Div.    (N.  Y.)   465. 

l6Blinn  v.  Chester,  5  Day,  360; 
Booth  V.  Smith,  3  Wend.  66;  Web- 
ster v.  Wyser,  1  Stew.  184;  Keeler 
V.  Neal,  2  Watts,  424;  Davis  v. 
Noaks,  3  J.  J.  Marsh.  494.  See 
§  247;  Foster  v.  Dawber,  6  Ex.  839. 

17  Id.;  Pinnel's  Case,  5  Co.  Rep. 
117;  Andrew  v.  Boughney,  1  Dyer 
75a. 

18  Cooper  v.  Parker,  15  C.  B.  822. 

19  Daly  V.  Busk  Tunnel  R.  Co., 
129  Fed.  513,  64  C.  C.  A.  87;  Rob- 
erts V.  Banse,  78  N.  J.  L.  57 ;  Suth- 
erlin  v.  Bloomer,  50  Ore.  398; 
Snohomish  River  B.  Co.  v.  Great 
Northern  R.  Co.,  57  Wash.  693; 
Smith  V.  Monteith,  13  M.  &  W.  427; 
Lewis   V.   Donohue,   27   N.  Y.   Misc. 


§    249]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       755 

some  value,  it  is  enough,  though  it  is  of  much  less  value  than 
the  del)t  discharged.^"  The  voluntary  acceptance  by  an  injured 
railroad  employee  of  the  benefits  provided  for  in  his  contract  of 
membership  in  the  relief  department  maintained  by  his  employ- 
er, knowing  the  effect  of  such  acceptance,  bars  a  suit  to  recover 
for  the  injury  sustained.^^  It  is  otherwise  if  such  benefits  are 
accepted  because  of  the  unperformed  promise  of  the  employer.^^ 
Where  a  debtor  pays  part  of  a  debt  for  which  the  creditor  holds 
a  note,  upon  an  agreement  that  such  part  payment  shall  be  full 
satisfaction,  and,  in  pursuauL'C  of  such  agreement,  the  note  is 
surrendered  or  canceled,  the  transaction  will  amount  to  full 
accord  and  satisfaction.^^  The  surrender  is  equivalent  to  a 
release.^*  If  the  principal  and  surety  in  a  bond  given  to  secure 
the  performance  of  a  contract  which  involves  matters  uncertain 
in  their  nature  are  insolvent,  payment  of  less  than  the  face  of 
the  bond  is  a  good  consideration  for  its  discharge.^^  An  agree- 
ment between  grantor  and  grantee,  subsequent  to  a  conveyance, 
in  pursuance  of  which  the  former  places  a  sum  of  money  in  the 
hands  of  a  third  person  to  be  forfeited  to  the  grantee  in  full 
satisfaction  of  all  damage  he  may  sustain  by  reason  of  the  breach 
of  the  former's  covenant,  is  a  good  accord  and  satisfaction.^^ 

An  accord  and  satisfaction  by  one  of  several  jointly  liable 
is  a  discharge  of  all.^'^  At  common  law  an  accord  and  satisfac- 
tion to  one  of  two  obligees  of  a  common  money  bond  was  good 

514.     But  compare   Brush   H.   Mfg.  23  Wheeler    v.    Baker,    L32    Mich. 

Co.  V.  Abeles,  45  Pa.  Super.  Ct.  243.  507;  Ellsworth  v.  Fogg,  35  Vt.  355; 

20  ]  Smith's  Lead.  Gas.  pt.  1,  Draper  v.  Hitt,  43  Vt.  439,  5  Am. 
*445;  Kellogg  v.  Richards,  14  Rep,  202;  Beach  v.  Endress,  51 
Wend.  116;  Jones  V.  Bullitt,  2  Litt.  Barb.  570;  Kent  v.  Reynolds,  8 
49;      Brooks     v.     White,     2     Mete.  flun,  559. 

(Mass.)  283;  Harper  V.  Graham,  20  24  id. 

Ohio    105;    Boyd    v.    Hitchcock,    20  25  Shelton    v.    Jackson.    20    Tex. 

Johns.  76,  11  Am.  Dec.  247;  Le  Page  Civ.  App.  443. 

V.    McCrea,    1    Wend.    164,    19    Am.  26  Reichel  v.  Jeffrey,  9  Wash.  250. 

Dec.  469 ;   Sanders  v.  Branch  Bank,  27  Clabaugh    v.    Southern    W.    G. 

13  Ala.  353.  Ass'n,    181    Fed.    706;     Chicago    v. 

21  Eckman  V.  Chicago,  etc.  R.  Co.,  Babcock,  143  111.  358;  Atwood  v. 
169  111.  312,  38  L.R.A.  750,  aff'g  64  Brown,  72  Iowa  723;  Turner 
111.  App.  444.     See  §  6.  v.  Hitchcock,  20  Iowa  .nO;   Metz  v. 

22  Wacksmuth  v.  Atlantic  C.  L.  Soule,  40  id.  236 ;  Long  v.  Long, 
R.  Co.,  157  N.  C.  34.  57    id.    497;    Gosa    v.    Ellison.    136 


756  SUTHERLAND  ON  DAMAGES.  [§  249 

because  they  were  considered  as  having  a  joint  interest  in  tiie 
debt,  with  its  incident  of  survivorship,  and  the  satisfaction 
to  one  of  them  of  the  full  amount  due  to  all  put  an  end  to  the 
bond.^®  But  in  equity  the  general  rule  with  regard  to  money 
lent  by  two  persons  to  a  third  was  that  they  were  prima  facie 
regarded  as  tenants  in  common,  and  not  as  joint  tenants,  both 
of  the  debt  and  of  any  security  held  for  it.  "Though  they  take 
a  joint  security,  each  means  to  lend  his  own  money  and  to  take 
back  his  own."  ^^  This  is,  however,  but  a  presumption,  and 
may  be  rebutted.  The  accord  is  good  as  to  the  obligee  who  re- 
ceived his  share.^" 

§  250.  Composition  with  creditors.  There  is  no  want  of  con- 
sideration in  agreements  for  composition  between  a  debtor  and 
two  or  more  of  his  creditors:  the  engagement  of  one  is  a  suf- 
ficient consideration  for  that  of  the  others.^^  The  fact  that  a 
creditor  whose  claim  was  disputed  was  not  a  party  to  the  agree- 
ment does  not  invalidate  it,  no  such  contingency  being  provided 
for.'*^  When  an  unliquidated  or  disputed  demand  is  the  sub- 
ject of  accord  and  a  certain  sum  is  paid  and  accepted  as  full 
satisfaction,  the  consideration  is  manifest. 

§  251.  Compromise  of  disputed  claim.  The  settlement  of 
compromise  of  a  disputed  or  doubtful  claim  is  a  good  consid- 

Mass.    503;    Coonley    v.    Wood,    36  392;  Ricketts  v.  Hall,  2  Bush,  249; 

Hun,  559.  Tuckerman    v.    Newhall,    17    Mass. 

The  discharge  of  one  not  a  wrong-  5.S1 ;  Diermeyer  v.  Hackman,  52  Mo. 

doer    will    not    affect    the    right    of  282;  Reay  v.  Whyte,  3  Tyrwh.  596; 

action  against  the  other  defendants.  Boyd  v.  Hind,  1  H.  &  N.  938 ;  Cutter 

Warden  v.  McConnell,  25  Neb.  558.  v.  Reynolds,  8  B.  Mon.  596;   Booth- 

28  Ely  V.  Ely,  70  N.  J.  L.  31;  by  v.  Sowden,  3  Camp.  174;  Bradley 
Wallace  v.  Kelsall,  7  M.  &  W.  264.  v.  Gregory,  2  id.  383;  Wood  v. 
See  Leafgreen  v.  Telford,  169  111.  Roberts,  2  Stark.  417;  Cockshott  v. 
App.    582.  Bennett,    2    T.     R.     765;     Hale    v. 

29  Morley  v.  Bird,  3  Ves.  631 ;  Holmes,  8  Mich.  37 ;  Hartle  v.  Stahl, 
Matson  v.  Dennis,  10  Jur.  (N.  S.)  27  Md.  157.  See  Case  v.  Gerrish,  J5 
461,  12  Week.  Rep.  926.  Pick.  49. 

30  Steeds  v.  Steeds,  22  Q.  B.  Div.  32  Crawford  v.  Krueger,  201  Ba. 
537.  348.      See    Norton    v.    Clayton    II. 

31  Pierson    v.    McCahill,    21    Cal.  Ass'n,  149  Ala.  248. 

122;    Fellows  v.   Stevens,  24  Wend.  An    agreement    or    understanding 

292;  Steinman  v.  Magnus,  11  East,  among  the  creditors  must  exist  to 

390;     Keeler    v.    Salisbury,    33    N.  bind  any  of  them.     Smoot  v.  Check- 

y.  648;  Way  v.  Langley,  15  Ohio  St.  etts,  68  Utah,  21]. 


§    251]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       757 

eration  for  a  promise.^'  The  claim  must  be  a  real  one  and  the 
parties  must  regard  their  rights  concerning  it  as  in  fact  or  in 
law  doubtful,  and  the  compromise  must  be  made  bona,  fide.^*  A 
mere  statement  that  the  amount  of  a  claim  was  in  dispute  is 


33  Heath  v.  Totlatch  L.  Co.,  18 
Idaho,  42;  Kiler  v.  Wohlctz,  79 
Kan.  716,  L.R.A.19ir)B,  11;  Bull  v. 
Ilepworth,  159  Mich.  GC2;  Broekley 
V.  Brockley,  122  Pa.  1;  Schaben  v. 
Brunning,  74  Iowa,  102;  Zimmer  v. 
Becker,  66  Wis.  527;  Stewart  v. 
Ahrenfeldt,  4  Denio,  189;  Wehrum 
V.  Kuhn,  61  N.  Y.  623;  Hammond 
V.  Christie,  5  Robert.  160;  United 
States  V.  Clyde,  13  Wall.  35,  20  L. 
ed.  479;  Same  v.  Child,  12  Wall. 
232,  20  L.  ed.  360;  Same  v.  Justice, 
14  W^all.  535,  20  L.  ed.  753;  Brett 
V.   Universalist   Soc.    63    Barb.    610. 

But  the  payment  of  an  amount 
concededly  due  and  owing,  even 
when  made  by  a  check  stating  that 
payment  is  thereby  made  in  full  set- 
tlement will  not  amount  to  an  ac- 
cord and  satisfaction  of  another 
claim  over  which  a  dispute  exists. 
Dunn  V.  Lippard-Stewart  Motor  Car 
Co.,  144  N.  Y.  Supp.  349 ;  and  so  in 
ease  of  like  payment  of  an  undis- 
puted part  of  a  claim.  Whittaker 
Chain  Tread  Co.  v.  Standard  Auto 
Supply  Co.,  216  Mass.  204,  51  L.R.A. 
(N.S.)    315. 

34  B.  &  W.  Engineering  Co.  v. 
Beam,  23  Cal.  App.  104;  Dana  v. 
Gulf  &  S.  I.  R.  Co.,  —  Miss.  — ,  64 
So.  214;  Missouri,  K.  &  T.  Ry.  Co. 
of  Texas  v.  Morgan,  —  Tex.  Civ. 
App.  — ,  163  S.  W.  902;  Robinson  v. 
Leatherbee  T.  &  L.  Co.,  120  Ga. 
901;  People  v.  Parker,  231  111.  478; 
Stein  v.  Automatic  E.  Co.,  152  111. 
App.  392;  Midereich  v.  Rank,  40 
Ind.  App.  393;  Wherley  v.  Rowe, 
106  Minn.  494;  New  Amsterdam 
Cas.  Co.  v.  Mesker,  128  Mo.  App. 
183;    Canadian   F.   Co.  v.  McSiiane, 


80  Neb.  551,  14  L.R.A.  (N.S.)  443, 
127  Am.  St.  791;  Fremont  F.  &  M. 
Co.  V.  Norton,  3  Neb.  (Unof.)  804; 
Cornell  v.  Taylor,  137  App.  Div. 
(N.  Y.)  496;  Silander  v.  Gronna, 
15  N.  D.  552,  125  Am.  St.  610.  See 
Laroe  v.  Sugar  Loaf  1).  Co.,  180  N. 
Y,  367;  Biddlecom  v.  General  Ace. 
Assur.  Co.  167  ^lo.  App.  581 ;  Snioot 
v.  Checketts,  68  Utah  211;  Thayer 
v.  Harbican,  70  Wa.sh.  278;  Walil  v. 
Barnum,  116  N.  Y.  87,  5  L.R.A.  623; 
Zoebisch  v.  Von  Minden,  120  N.  Y. 
406;  Moon  v.  Martin,  122  Ind.  211  ; 
Gilliam  v.  Alford,  69  Tex.  267; 
Grandin  v.  Grandin,  49  N.  J.  L. 
508,  60  Am.  Rep.  642;  Cook  v. 
Wright,  1  B.  &  S.  559;  Callisher  v. 
Bischoffsheim,  L.  R.  5  Q.  B. 
449;  Ockford  v.  Barrelli,  20  Week. 
Rep.  116;  Miles  v.  New  Zealand  Al- 
ford Est.  Co.,  32  Ch.  Div.  266;  De- 
mars  V.  Musser-S.  L.  Co.,  37  Minn. 
418;  Anthony  v.  Boyd,  15  R.  I.  495; 
Headley    v.    Hackley,    50    IMich.    43. 

In  Miles  v.  New  Zealand  Alford 
Est.  Co.,  supra,  the  court  dissents 
from  some  observations  made  by 
Lord  Eslier,  M.  R.,  in  Ex  parte  Ban- 
ner, 17  Ch.  Div.  480,  490,  to  the 
effect  that  it  was  not  only  necessary 
to  the  validity  of  a  settlement  that 
the  plaintifi"  believed  he  had  a  good 
cause  of  action,  but  that  the  circum- 
stances must  in  fact  raise  some 
doubt  whether  there  was  or  was  not 
a  good  cause  of  action. 

The  contention  as  to  the  claim 
must  be  known  to  the  agent  of  the 
party  to  wliom  payment  is  made. 
Bergiiiiin  P.  Co.  v.  Brown  (Tex. 
Civ.  App.),  156  S.  W.  1102. 

The  merit  of  the  claim  is  not  ma- 


758 


SUTHERLAND    ON    DAMAGES. 


[§  251 


not  enough  to  show  that  there  was  a  consideration  for  accepting 
less  than  was  due ;  ^*  but  it  is  sufficient  if  the  controversy  be 
real  and  the  issue  respecting  it  be  considered  by  the  parties  as 
doubtful/®  and  there  is  a  mutual  yielding  of  claimants.''^ 
Whether  the  compromise  amount  be  received  or  a  promise 
to  pay  it,  the  original  claim  is  exting-uished  if  the  parties 
so  agi-ee  and  there  is  a  sufficient  consideration.^^     Inequality 


tirial.  Gardner  v.  Ward,  99  Ark. 
588 ;  Kress  v.  Moscowetz,  105  Ark. 
038.  Compare  Biddlecom  v.  Assur. 
Co.,  supra. 

35  Waller  v.  Stevens,  12  Cal.  App. 
779;  Kelley  v.  Hopkins,  105  Minn. 
155;  Emmittsburg  R.  Co.  v.  Donog- 
hue,  67  Md.  383,  1  Am.  St.  396. 

It  was  observed  in  Edwards  v. 
Baugli,  11  M.  &  W.  641:  ''The  dec- 
laration alleges  that  certain  dis- 
putes and  controversies  were  pend- 
ing between  the  plaintiff  and  the 
defendant  whether  the  defendant 
was  indebted  to  the  plaintiff  in  a 
certain  sum  of  money.  There  is 
notliing  in  the  use  of  the  word  'con- 
troversy' to  render  this  a  good  alle- 
gation of  consideration.  The  con- 
troversy merely  is  that  the  jjlaintilT 
claims  the  debt  and  the  other  de- 
nies it." 

36  San  Juan  v.  St.  John's  G.  Co., 
195  U.  S.  510,  49  L.  ed.  299  (dispute 
as  to  medium  of  payment)  ;  Gardner 
v.  Ward,  99  Ark.  588;  Satclifield  v. 
Laconia  Levee  Dist.,  74  Ark.  270; 
Baugh  V.  Fist,  84  Kan.  740;  Howard 
V.  Straight  Creek  C.  Co.,  140  Ky. 
700;  Galusha  v.  Sherman,  105  Wis. 
263,  47  L.R.A.  417. 

As  applied  to  the  subject  of  ac- 
cord and  satisfaction  a  demand  is 
not  liquidated,  even  if  it  appears 
tliat  something  is  due,  unless  it  ap- 
pears how  much  is  due,  and  when  it 
is  admitted  that  one  of  two  specific 
sums  is  due,  but  there  is  a  real 
difference  as  to  wliich  is  the  proper 


amount,  the  demand  is  unliquidated. 
Nassoiy  v.  Tomlinson,  148  N.  Y. 
326,  51  Am.  St.  095. 

An  account  cannot  be  considered 
as  liquidated  so  as  to  prevent  the 
receipt  of  a  less  amount  than  is 
claimed  from  being  a  satisfaction 
if  there  is  a  controversy  over  a  set- 
off and  the  amount  of  the  balance. 
Ostrander  v.  Scott,  161  111.  339.  See 
Bingham  v.  Browning,  197  111.  122, 
aff'g  97  111.  App.  442. 

37  Red  Cypress  L.  Co.  v.  Beall,  5 
Ga.  App.  202. 

38  Wilder  v.  St.  Johnsbury,  etc.  R. 
Co.,  65  Vt.  43;  Grandin  v.  Grandin, 
49  N.  J.  L.  508,  60  Am.  Rep.  642; 
Korne  v.  Korne,  30  W.  Va.  1 ;  Tuttle 
V.  Tuttle,  12  Mete.  (Mass.)  551, 
46  Am.  Dec.  701;  Peace  v.  Sten- 
net,  4  J.  J.  Marsh.  449;  Jones 
V.  Bullitt,  2  Litt.  49;  Reid  v. 
Hibbard,  6  Wis.  175;  Pulling  v. 
Supervisors,  3  Wis.  337;  Calkins 
V.  State,  13  Wis.  389;  Metz  v. 
Soule,  40  Iowa,  236 ;  Ogborn  v.  Hoff- 
man, 52  Ind.  439;  Riley  v.  Kershan, 
52  Mo.  224;  Merry  v.  Allen,  39 
Iowa,  235 ;  Gates  v.  Shutts,  7  Midi. 
127 ;  Converse  v.  Blumrich,  14  id. 
109,  90  Am.  Dec.  230;  Mayliew  v. 
Phoenix  Ins.  Co.,  23  Mich.  105; 
Hooper  v.  Hooper,  26  id.  435;  Bow- 
en  v.  Lockwood,  id.  441 ;  Hull  v. 
Swarthout,  29  id.  249;  Campbell  v. 
Skinner,  30  id.  32;  Reithmaier  v. 
Beckwith,  35  id.  100;  Neary  v.  Bost- 
wick,  2  Hilt.  514;  Wallner  v.  Chi- 
cago Con.  T.  Co.,  245  111.  148;  South 


§    251]         CONVENTIONAL    LIQUIDATIONS    ANJ)    DISCJIAKOKS.      759 

of  consideration  will  not,  of  itself,  a\'oi(l  a  settlement. ^^  Tlie 
adjustment  of  anv  iinli(|iii(late(l  demand,  wlietlicr  in  dis- 
pute or  not,  stands  on  a  similar  iDrinci2)le.'**'  Stated  accounts 
and  settlements  are  treated  with  favor,  and  are  conclusive  unless 
there  is  proof  of  mistake  or  fraud.*^  A  definite  sum  paid  or 
agreed  to  be  paid,  and  adopted  by  the  parties  as  an  adjustment 
and  comijensation  for  either  a  doubtful  and  disj)uted  demand,  or 
one  which  is  uncertain  and  unliquidated,  constitutes  a  sutiiciont 
consideration  for  the  discharge  of  such  original  demand.  And 
upon  such  adjustment,  by  which  a  definite  sum,  paid  or  to  be 
paid,  is  substituted  for  the  claim  as  it  formerly  existed,  the  lat- 


Side  C.  Co.  v.  Gross,  157  111.  App. 
218;  Western  &  S.  L.  Ins.  Co.  v. 
Quinn,  130  Ky.  397;  Hillestad  v. 
Lee,  91  Minn.  335;  Ogilvic  v.  Lee, 
158  Mo.  App.  493;  Simons  v.  Amer- 
ican Legion  of  Honor,  178  N.  Y. 
263;  Du  Moulin  v.  Board  of  Educa- 
tion —  Misc.  (N.  Y.)  — ,  124  N.  Y. 
Supp.  901 ;  Ravenswood  P.  M.  Co. 
V.  Dix,  61  N.  Y.  Misc.  235;  Segbel 
V.  Metz,  120  App.  Div.  (N.  Y.) 
291;  Aydlett  v.  Brown,  153  N.  C. 
334;  Ramsey  v.  Browder,  136  N. 
C.  251;  Philadelphia,  etc.  R.  Co. 
V.  Walker,  45  Pa.  Super.  524; 
Gulf,  etc.  R.  Co.  V.  Harriett,  80 
Tex.  73;  Laughman  v.  Sun  P.  L. 
Co.,  52  Tex.  Civ.  App.  485;  Cahaba 
C.  Co.  V.  Hanby,  7  Ala.  App.  282; 
Waterbury  Co.  v.  Maryland  C.  Co. 
—  Misc.  (N.  Y.)  — ,  134  N.  Y. 
Siipp.  564. 

39Beel)c  V.  Worth  146  X.  Y.  Misc. 
146;  Bunel  v.  O'Day,  125  Fed. 
303;  Minor  v.  Fike,  77  Kan.  806; 
Worcester  L.  Co.  v.  Heald,  78  N.  J. 
L.  172;  Bowers  H.  D.  Co.  v.  Hess, 
71  N.  J.  L.  327;  Baines  v.  Coos  Bay 
N.  Co.,  49  Ore.  192;  Melroy  v.  Kem- 
merrer,  218  Pa.  381,  11  L.R.A. 
(N.S.)  1018,  120  Am.  St.  888;  Ga- 
lusha  V.  Sherman,  supra. 

40  Republic   Iron    &    Steel    Co.    v. 


Sturges  &  Burn  Mfg.  Co.,  181  111. 
App.  304;  Brady  v.  New  Jersey  Fi- 
delity Ins.  Co.,  180  Mo.  App.  214; 
Hand  L.  Co.  v.  Hall,  147  Ala.  561  ; 
Canton  Union  C.  Co.  v.  Parlin,  215 
111.  244;  Kelly  v.  Homer  C.  Co., 
110  La.  983;  Weber  v.  Board  of 
Com'rs,  93  Minn.  320;  Missouri  & 
I.  C.  Co.  V.  Consolidated  C.  Co.,  127 
Mo.  App.  320;  Noyes  v.  Young,  32 
Mont.  226;  Sanford  v.  Abrams,  24 
Fla.  181;  Donohue  v.  Woodbury,  6 
Cush.  148,  52  Am.  Dec.  777;  Bate- 
man  V.  Daniels,  5  Blackf.  71 ;  Harris 
V.  Story,  2  E.  D.  Smith,  363 ;  Long- 
ridge  V.  Dorvillc,  5  B.  &  Aid.  117; 
Watters  v.  Smith,  2  B.  &  Ad.  889; 
Haigh  V.  Brooks,  10  A.  &  E.  309; 
Wilkinson  v.  Byers,  1  id.  100; 
Wright  V.  Acres,  6  id.  726 ;  Atlee  v. 
Backhouse,  3  M.  &  W.  633;  Sibree 
V.  Tripp,  15  id.  23;  Llewellyn  v. 
Llewellyn,  3  Dowl.  &  L.  318;  Allis 
V.  Billing,  2  Cush.  19;  Durham  v. 
Wadlington,  2  Strobh.  Eq.  258;  Ab- 
bott V.  Wilmot,  22  Vt.  437;  Ellis 
V.  Bitzer,  2  Ohio,  295. 

41  Id.;  Wilde  v.  Jenkins,  4  Paige, 
481  ;  Lockwood  v.  Thornc,  11  N.  Y. 
170;  Pulliam  v.  Booth,  21  Ark.  420. 
Sec  Purtel  v.  Morehead,  2  Dev.  & 
Bat.  239;  Galusha  v.  Sherman,  105 
Wis.  263,  47  L.R.A.  417. 


7G0 


SUTllEKLAND    ON    DAMAGES. 


[§  251 


ter  is  extinguished  on  the  principle  of  accord  and  satisfaction.*^ 
An  unquestioned  judgment  may  l)e  satisfied  hy  the  payment  of 
less  than  its  face  in  the  settlement  of  a  disputed  matter  collateral 
to  it.*^  An  infant's  action  for  damages  is  barred  by  the  ac- 
ceptance, in  full  satisfaction  from  the  party  liable  therefor,  of 


48  Neubacher  v.  Perry,  57  Ind. 
App.  362 ;  Read  Printing  Co.  v.  J.  J. 
Little  &  Ives  Co.  (Misc.  [N.  Y.]), 
146  N.  Y.  Supp.  194;  Beebe  v.  Wortli, 
146  N.  Y.  Supp.  146;  Marx  v.  White 
Co.  (Misc.),  148  N.  Y.  Supp.  262; 
Schumacher  v.  Moffitt,  71  Ore.  79; 
United  States  B.  &  S.  Co.  v.  This- 
sell,  137  Fed.  1,  69  C.  C.  A.  651; 
Sims  V.  Three  States  L.  Co.,  135 
Fed.  1019,  68  C.  C.  A.  413;  In  re 
D.  H.  McBride,  132  Fed.  285;  Daly 
V.  Busk  Tunnel  R.  Co.,  129  Fed.  513, 
64  C.  C.  A.  87;  Cunningham  C.  Co. 
V.  Rauch-D.  G.  Co.,  98  Ark.  269; 
Willinham  v.  Jordan,  75  Ark.  266; 
Creighton  v.  Gregory,  142  Cal.  34; 
Harvey  v.  Denver,  etc.  R.  Co.,  44 
Colo.  258,  130  Am.  St.  120;  Red- 
mond V.  Atlanta  &  B.  R.  Co.,  129 
Ga.  133;  Snow  v.  Triesheimer,  220 
111.  106;  New  York  L.  Ins.  Co.  v. 
Chittenden,  134  Iowa  613,  11  L.R.A. 
(N.S.)  233,  120  Am.  St.  444;  Bea- 
ver V.  Porter,  129  Iowa  41  ;  Howard 
V.  Straight  Creek  C.  Co.,  140  Ky. 
700;  Cunningham  v.  Standard  C. 
Co.,  134  Ky.  198;  Scheffenacker  v. 
Iloopes,  113  Md.  Ill,  29  L.R.A. 
(N.S.)  205;  Cooper  v.  Yazoo,  etc.  R. 
Co.,  82  Miss.  634;  Knapp  v.  Pepsin 
S.  Co.,  137  Mo.  App.  472;  Bahren- 
burg  v.  Schopp  F.  Co.,  128  Mo.  App. 
526;  Rauh  v.  Wolf,  59  N.  Y.  Misc. 
419;  Le  Page  v.  Lalence  &  G.  Mfg. 
Co.,  98  App.  Div.  (N.  Y.)  179;  La- 
roe  V.  Sugar  Loaf  D.  Co.,  85  App. 
Div.  (N.  Y.)  585;  Seeds  G.  &  H. 
Co.  V.  Conger,  83  Ohio  169,  32 
L.R.A.  (N.S.)  380;  Laughead  v. 
Frick  C.  Co.,  209  Pa.  368,  103 
Am.  St.  1014;  Powers  v.  Har- 
ris,   42    Tex.    Civ.    App.    250;    Bor- 


den V.  Vinegar  Bend  L.  Co.,  2  Ala. 
App.  354;  Olson  v.  Burton  (Tex. 
Civ.  App.),  ]41  S.  W.  549;  Storch 
V.  Dewey,  57  Kan.  370;  Maack  v. 
Schneider,  51  Mo.  App.  92;  Lapp  v. 
Smith,  183  111.  179;  Home  F.  Ins. 
Co.  V.  Bredehoft,  49  Neb.  152;  Bing- 
ham v.  Browning,  197  HI.  122; 
Ilousatonic  Nat.  Bank  v.  Foster,  85 
Hun,  376;  Bennett  v.  Hudson,  174 
111.  App.  229;  Lafrontz  v.  Cavanagh, 
166  111.  App.  306;  Sunset  Orchard 
L.  Co.  v.  Sherman  N.  Co.,  121  Minn. 
5;  Brewster  v.  Silverstein,  78  N.  Y. 
Misc.  123;  Daly  I.  S.  &  M.  Co.  v. 
United  States  M.  &  Mfg.  Co.,  76  N. 
Y.  Misc.  574;  Metropolitan  Shirt 
Waist  Co.  v.  Kamioner  (Misc. 
[N.  Y.]),  138  N.  Y.  Supp.  1067; 
Saks  v.  Drake  (Misc.  [N.  Y.]),  138 
N.  Y.  Supp.  631;  Polin  v.  Weisbrot, 
52  Pa.  Super.  Ct.  312. 

Payment  on  account  of  a  claim 
filed  against  a  city  is  presumed  to 
be  in  full.  Bowman  v.  Ogden  City, 
33  Utali,  196. 

Subsequent  negotiations  by  the 
payor  may  show  that  an  accord  and 
satisfaction  was  not  made.  Beattie 
Mfg.  Co.  v.  Heinz,  120  Mo.  App. 
465. 

The  satisfaction  of  a  cause  of  ac- 
tion for  personal  injury  made  by  the 
person  injured  bars  his  representa- 
tives after  his  death  from  asserting 
any  claim  because  of  the  act  of  neg- 
ligence for  which  satisfaction  was 
made.  Read  v.  Great  Eastern  R. 
Co.,  L.  R.  3  Q.  B.  355;  Dibble  v. 
New  York  &  E.  R.  Co.,  25  Barb. 
183;    §   1260. 

48  Mann  v.  Haley,  79  Vt.  66. 


§    251]        CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.      701 

a  sum  of  money  which  is  undisposed  of  and  not  returned,  not- 
withstanding an  offer  to  credit  it  on  any  judgment  that  might 
be  obtained.**  If  a  receipt  for  money  paid  contains  anything 
in  the  nature  of  an  agreement  upon  the  compromise  or  settle- 
ment of  a  disputed  chiim  that  the  payee  accepts  and  receives  the 
sum  designated  in  it  in  satisfaction  and  discharge  of  his  chiim, 
it  is  a  contract  and  cannot  be  varied  or  contradicted  by  paroh** 
Where  money  is  due  and  there  is  an  agreement  to  accept 
something  else  in  lieu  of  it,  and  that  something  else  is  deliv- 
ered and  accepted,  the  agreement  cannot  be  said  to  be  without 
consideration,  though  the  thing  so  delivered  and  accepted  is 
of  less  value  than  the  nominal  amount  of  the  debt.  Anything  of 
legal  value,  whether  a  chose  in  possession  or  in  action,  ac- 
tually received  in  full  satisfaction  of  a  debt  is  good  for  that 
effect.*^  Nor  is  the  adequacy  of  the  consideration  affected  be- 
cause the  value  of  the  collateral  thing  received  in  satisfaction 
was  fixed  by  agreement  of  the-  parties  at  a  less  sum  than  the 
amount  of  the  debt.  Thus,  where  a  larger  sum  than  $7r)()  was 
owing  and  actually  due  in  money,  an  agreement  to  receive 
$750  worth  of  salt  and  the  actual  reception  of  it  in  discharge  of 
the  whole  debt  was  held  to  have  that  effect.*''  The  right  to 
compromise  a  suit  may  be  exercised  by  the  person  who  is  au- 

44  Lane  v.  Dayton,  etc.  Co.,  101  Wend.  G6;  Boyd  v.  Hiti-lR-opk.  2t) 
Tenn.  581.  Johns.  76,  11  Am.  Dec  247;  Lo  Page 

45  Komp  V.  Raymond,  42  App.  Div.  v.  McCrea,  1  \Vend.  KU;  Sanders  v. 
(N.  Y.)  32,  9  Am.  Neg.  Cas.  587;  Branch  Bank,  13  Ala.  353;  Blinn  v. 
Coon  V.  Knapp,  8  N.  Y.  402,  59  Am.  Cliester,  5  Day,  359;  Watkinson  v. 
Dec.  502;  Ryan  v.  Ward,  48  N.  Inglesby,  5  Johns.  386;  Eaton  v.  Lin- 
Y.   204.  coin,    13    Mass.    424;     Musgrove    v. 

46  Missouri-Am.  E.  Co.  v.  Hamil-  Gihbs,  1  Dall.  210,  1  L.  ed.  107;  Ar- 
ton-B.  S.  Co.,  165  Fed.  283,  91  C.  C.  noid  v.  Post,  8  Bush,  3;  Ciiurehill  v. 
A.  251;  Schagun  v.  Rcott  Mfg.  Co.,  Bowman,  39  Vt.  518;  Caviu  v.  Aii- 
162  Fed.  209,  89  C.  C.  A.  189;  Kauf-  nan,  2  Cal.  494. 

man  V.  Sorrels,  164  111.  App.  324;  1  47  Jones    v.    Bullitt,    2    Litt.    49; 

Smith's    Lead.    Cases,    pt.    1,    445;  Woolfolk  v.  McDowell,  9  Dana  268; 

Jones  V.  Bullitt,  2  Litt.  49;  Brooks  GafTney  v.  Chapman,  4  Robert.  275. 

V.   White,  2  Mete.    (Mass.)    283,  37  But  see  Howard  v.  Norton,  65  Barb. 

Am.  Dec.  95;  New  York  State  Bank  161. 

V.  Fletcher,  5  Wend.  85;    Frishie  v.  In     Platts     v.     Wulratli,     Hill     & 

Larned,  21  id.  451  ;  Bullen  v.  McOil-  Denio,  59,  it  was  held  that  giving  a 

licuddy,   2   Dana,  90;    Pope  v.   Tun-  mortgage  for  a  debt,  less  a  certain 

stall,  2  Ark.  209;  Booth  v.  Smith,  3  deduction  agreed  to  lu'  niadr  in  con- 


'62 


SUTirERLAND    ON    DAMAGES, 


[§    251 


tliorized  to  bring  it  in  the  first  instance,*^  and  a  compromise 
made  by  one  plaintiff  will  bind  his  co-plaintiffs  if  it  appears 
that  the  amount  paid  was  received  as  full  satisfaction  for  the 
whole  injury.*^  Where  a  statute  gives  the  widow  the  prior 
right  to  sue  for  the  death  of  her  husband  she  may  compromise 
her  suit  over  the  objections  of  her  children  and  without  let  or 
hindrance  from  any  one.^°  She  may  also  compromise  the  whole 
right  of  action  before  suit  is  brought,  and  a  payment  to  her  of 
the  sum  agreed  upon  will  discharge  the  wrong-doer.^^  But  if 
the  suit  is  brought  by  an  administrator  on  behalf  of  the  widow 
and  children  she  cannot  compromise  without  the  plaintiff's  con- 
sent or  the  concurrence  of  the  other  beneficiaries.^^ 

§  252.  Agreement  must  be  executed.  The  agreement  or  ac- 
cord must  be  fully  executed.^^  But  if  the  agreed  satisfaction 
consists  of  an  agreement  rather  than  the  performance  of  it,  the 


sideration  of  the  security,  is  not 
payment  of  the  debt  so  that  a  note 
subsequently  given  for  the  sum  de- 
ducted will  be  deemed  without  con- 
sideration. 

48  Stephens  v.  Nashville,  etc.  R., 
10  Lea  448;  Sweeney  v.  Nassaii 
Elec.  R.  Co.,  84  Misc.  (N.  Y.)  557, 
sustaining  the  plaintiff's  settlement 
of  a  personal  injury  suit  over  his 
attorney's  objection  that  his  lien  for 
services  under  the  statute  was  there- 
by ignored. 

49Pogel  V.  Meilke,  60  Wis.  248; 
Ellis  V.  Esson,  50  Wis.  138,  36  Am. 
Rep.  830. 

50  Webb  V.  Railway  Co.,  88  Tenn. 
119,  12  Am.  Neg.  Cas.  593. 

51  Holder  v.  Railroad,  92  Tenn. 
141,  36  Am.  St.  77. 

52  Railroad  v.  Acuif,  92  Tenn.  2G. 

A  compromise  between  an  em- 
ployer and  a  contractor  is  not  bind- 
ing upon  a  subcontractor  though  the 
contract  between  the  latter  and  liis 
principal  is  similar  to  that  between 
the  two  former  parties.  Expanded 
Metal  Fire-Proofing  Co.  v.  Noel 
Const.  Co.,  87  Ohio  St.  428. 


53  Crouch  V.  Quigley,  258  Mo. 
651;  Cooke  v.  McAdoo,  85  N.  J.  L. 
692;  Eichelberger  v.  Mann,  115  Va. 
774;  Hearn  v.  Kiefe,  38  Pa.  147,  80 
Am.  Dec.  472;  Green  v.  Lancaster 
County,  61  Neb.  473;  Williams  v. 
Stanton,  1  Root,  426;  Pope  v.  Tun- 
stall,  2  Ark.  209;  Hall  v.  Smith,  10 
Iowa,  48;  Flack  v.  Garland,  8  Md. 
191;  Woodward  v.  Miles,  24  N.  H. 
289;  Coit  v.  Houston,  3  Johns.  Cas. 
243;  Watkinson  v.  Inglesby,  5 
Johns.  386;  Russell  v.  Lytle,  6 
Wend.  390,  22  Am.  Dec.  537;  Bank 
v.  De  Grauw,  23  Wend.  342,  35  Am. 
Dec.  569 ;  Peytoe's  Case,  9  Coke  77 ; 
Walker  v.  Seaborne,  1  Taunt.  526; 
Fitch  v.  Sutton,  5  East,  230;  Tuck- 
erman  v.  Newhall,  17  Mass.  581; 
Spruneberger  v.  Dentler,  4  W^atts, 
126;  Rising  v.  Patterson,  5  Whart. 
316;  Daniels  v.  Hatch,  21  N.  J.  L. 
391,  47  Am.  Dec.  169;  Bayley  v. 
Homan,  3  Ring.  N.  C.  915;  Allies  v. 
Probyn,  5  Tyrwh.  1079;  Edwards  v. 
Chapman,  1  M.  &  W.  231 ;  Colling- 
bourne  v.  Mantell,  5  id.  292;  Ga- 
briel V.  Dresser,  15  C.  B.  622; 
Brown  v.  Perkins,  1  Hare,  564;  Hoi- 


I 


§    252a]      CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.      763 


accord  is  executed  when  the  agTcement  which  is  the  considera- 
tion of  the  discharge  is  entered  into,  whether  it  is  ever  per- 
formed or  not.**  Formerly  to  an  action  on  a  hond,  accord  and 
satisfaction  conkl  be  |)leaded  hy  deed  only,  for  an  obligation 
nnder  seal  conkl  not  be  discharged  bnt  by  an  instrument  of 
equal  dignity.*^  Ijut  this  rule  is  not  now  followed  if  there  has 
been  actual  performance*'^ 

§  252a.  Rescission  or  exoneration  before  breach,  lioscission 
of  an  executory  contract  or  exoneration  before  breach  is  not 
accord  and  satisfaction."  After  breach,  however,  when  the 
demand  becomes  due  for  damages,  whatever  may  be  the  grade 


ton  V.  Noble,  83  Cal.  7;  Gulf,  etc. 
R.  Co.  V.  Gordon,  70  Tex.  80;  Bur- 
gess V.  Denison  P.  Mfg.  Co.,  79  Me. 
266;  Sanford  v.  Abrams,  24  Fla. 
]81;  Hoxsie  v.  Empire  L.  Co.,  41 
Minn.  548;  Johnson  v.  Hunt,  81  Ky. 
321;  Schlitz  v.  Meyer,  61  Wis.  418; 
Fink  V.  Joseph,  2  New  Mex.  138; 
Brooklyn  Heights  R.  Co.  v.  Brook- 
lyn City  R.  Co.,  151  App.  Div. 
(N.  Y.)  465;  Montgomery  v.  Shir- 
ley, 159  Ala.  239;  Grimmett  v.  Ous- 
ley,  78  Ark.  304;  Kaufman  v.  Shaw, 
10  Cal.  App.  572;  Prest  v.  Cole,  183 
Mass.  283;  Henderson  v.  McRac,  148 
Mich.  324;  Burr's  D.  T.  Works  v. 
Peninsular  T.  Mfg.  Co.,  142  Mich. 
417;  Wherley  v.  Rowe,  106  Minn. 
494;  Carter  v.  Chicago,  etc.  R.  Co., 
136  Mo.  App.  719;  Frederick  v. 
Moran,  90  Neb.  86;  Goffe  v.  Jones, 
132  App.  Div.  (N.  Y.)  864;  King 
V.  Atlantic  C.  L.  R.  Co.,  157  N.  C. 
44,  48  L.R.A.(N.S.)  450;  Houston 
V.  Wagner,  28  Okla.  367;  Berry  v. 
Virginia  State  Ins.  Co.,  83  S.  C.  13: 
Boston  &  M.  R.  v.  Union  :Mut.  V. 
Ins.  Co.,  83  Vt.  554.  See  Boston 
V.  Ocean  S.  S.  Co.,  197  Mass.  561; 
§  246. 

In  Johnson  v.  Charleston  &  S.  R. 
Co.,  58  S.  C.  488  and  Petty  v. 
Brunswick  &  W.  R.  Co.,  109  Ga. 
666,  partial  payment  in  accordance 
witli  tli(;  plaintiff's  stipiilation,  was 


Iield  to  be  an  accord.  To  the  con- 
trary is  Pennsylvania  Co.  v.  Chap- 
man, 220  111.  428. 

54Byrd  P.  Co.  v.  Whitaker  P. 
Co.,  135  Ga.  865;  Woodward  v. 
Miles,  24  N.  H.  289;  Watkinson 
V.  Inglesby,  5  Johns.  386 ;  Eaton  v. 
Lincoln,  13  Mass.  424;  Seaman  v. 
Haskins,  2  Johns.  Cas.  195;  lieaton 
V.  Angier,  7  N.  11.  397,  28  Am.  Dec. 
353;  Good  v.  Checsman,  2  B.  &  Ad. 
328;  Reeves  v.  Hearne,  1  M.  &  W. 
323;  Buttigieg  v.  Booker,  9  C.  B. 
689;  Kromer  v.  Heim,  75  N.  Y. 
574,  31  Am.  Rep.  491;  McCrcery  v. 
Day,  119  N.  Y.  1,  16  Am.  St.  793,  6 
L.R.A.  503;  Bennett  v.  Tlill,  14  R. 
I.  432. 

55  Levy  V.  Very,  12  Ark.  148; 
Ligon  V.  Dunn,  6  Ired.  133. 

56Mc('reory  v.  Day,  119  \.  V. 
1,  16  Am.  St.  793,  6  L.R.A.  503: 
Capital  City  Mut.  F.  Ins.  Co.  v. 
Detwilcr,  23  Til.  App.  656:  Hastings 
V.  Lovpjoy,  140  Mass.  261,  54  .\m. 
Rep.  462. 

57Barelli  v.  O'Connor,  6  Ala.  617. 
It  is  said  to  be  a  general  rule  tiiat 
a  simple  contract  may,  before 
breach,  be  waived  or  discharged 
without  deed  and  without  considera- 
tion; but  after  breach  there  can  be 
no  discharge  except  by  deed  or  upon 
suflicient'  consideration.  I'>\  lis  (ni 
Bills,    168.      See    Foster    v.    Dawl.cr, 


764 


SUTIIKKLAND    ON    DAMAGES. 


[§  252a 


of  the  contract  which  is  broken,  it  may  be  satisfied  by  matter 
in  pais  and  is  subject  to  the  defense  of  accord  and  satisfaction. 
That  is  a  good  defense  to  an  action  for  breach  of  covenant.^' 
And  the  modern  doctrine  is  that  it  is  good  to  an  action  on  a 
judgment.®^ 

Section  4. 


RELEASE. 


§  253.  Definition.         A  release  of  a  chose  in  action  is  an  im- 
mediate technical  discharge  of  it  by  deed.^°     It  operates  di- 


6  Ex.  838;  Dobson  v.  Espei,  2  H. 
&  N.  79.  This  is  doubtless  true  of 
contracts  mutually  executory.  In 
such  contracts  mutual  waiver  is  a 
rescission.  See  1  Smith's  Lead. 
Cas.  *465.  If  the  consideration  be 
executed  on  one  side  the  executory 
obligation  of  the  other  party  found- 
ed thereon  cannot  be  waived  without 
consideration,  or  such  act  of  renun- 
ciation as  would  amount  to  a  re- 
lease, unless  it  has  been  acted  upon. 
See  upon  this  general  subject, 
Blood  V.  Enos,  12  Vt.  625;  Johnson 
V.  Reed,  9  Mass.  78,  6  Am.  Dec.  36; 
Rogers  v.  Atkinson,  1  Ga.  12;  Rich- 
ardson V.  Cooper,  25  Me.  450 ;  Cuff  v. 
Penn,  1  M.  &  S.  21 ;  Goss  v.  Nugent, 
5  B.  &  Ad.  58 ;  Cummings  v.  Arnold, 
3  Mete.  (Mass.)  486,  37  Am.  Dec. 
155;  Weld  v.  Nichols,  17  Pick.  538; 
Ward  v.  Walton,  4  Ind.  75;  Low  v. 
Forbes,  18  111.  568;  Crowley  v. 
Vitty,  7  Ex.  322;  Grafton  Bank  v. 
Woodward,  5  N.  H.  99,  20  Am.  Dec. 
566;  Payne  v.  New  South  Wales  C. 
Co.,  10  Ex.  291;  Kellogg  v.  Olm- 
sted, 28  Barb.  96 ;  Hunt  v.  Barfield, 
19  Ala.  117;  Thurston  v.  Ludwig,  6 
Ohio  St.  1;  Adams  v.  Nichols,  19 
Pick.  275,  31  Am.  Dec.  137;  McKee 
V.  Miller,  4  Blackf.  222;  Harrison 
V.  Close,  2  Johns.  448,  3  Am.  Dec. 
444;  Sard  v.  Rhodes,  1  M.  &  W. 
155;  Crawford  v.  Millspaugh,  13 
Johns.  87;  Seymour  v.  Minturn,  17 


id.  169,  8  Am.  Dec.  380;  Foster  v. 
Dawber,  6  Ex.  839;  King  v.  Gillett, 
7  M.  &  W.  55;  Langden  v.  Stokes, 
Cro.  Car.  383. 

The  technical  distinction  between 
a  satisfaction  before  or  after  the 
breach  is  disregarded,  and  a  new 
parol  agreement  followed  by  its 
actual  performance,  whetlier  made 
or  executed  before  or  after  the 
breach,  is  a  good  accord  and  satis- 
faction of  a  covenant.  McCrcery  v. 
Day,  119  N.  Y.  1,  16  Am.  St.  793,  6 
L.R.A.  503,  and  cases  cited;  Hast- 
ings v.  Lovejoy,  140  Mass.  261,  54 
Am.  Rep.  462. 

58  Payne  v.  Barnet,  2  A.  K. 
Marsh.  312;  Strang  v.  Holmes,  7 
Cow.  224;  Keeler  v.  Salisbury,  33 
N.  Y.  648;  United  States  v.  Howell, 
4  Wash.  C.  C.  620. 

59  Savage  v.  Everman,  70  Pa.  315, 

10  Am.  Rep.  676;  Jones  v.  Ransom, 
3  Ind.  327;  Reid  v.  Hibbard,  6  Wis. 
175;  Farmers'  Bank  v.  Groves,  12 
How.  51;  McCullough  v.  Franklin 
C.  Co.,  21  Md.  256;  Campbell  v. 
Booth,  8  Md.  107;  Le  Page  v.  Mc- 
Crea,  1  Wend.  164,  19  Am.  Dec.  469 ; 
Brown  v.  Feeter,  7  Wend.  301; 
Evans  v.  Wells,  22  id.  324,  341; 
Boyd    V.    Hitchcock,    20    Johns.    76, 

11  Am.  Dec.  247;  Witlierby  v.  Mann, 
11  -Johns.  518;  Baum  v.  Buntyn,  62 
Miss.  10;   §  251. 

60  A    parol    release    of    a    money 


§    253]       CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKGES.       765 

rectly  upon  the  deimind  to  extinguish  it,  and  must  1x3  pleaded 
as  a  release.®^  i]ut  a  release  implies  a  consideration,  and  there- 
fore the  demand  is  inferentially  satisfied.^'^  The  cancelment  of 
a  released  demand,  however,  is  not  the  conseciuence  of  the 
supposed  satisfaction,  but  the  direct  effect  of  the  release.  The 
release  is  not  merely  evidence  of  the  extinguishment,  but  is 
itself  the  extinguisher.^^  Though  it  recites  onlv  a  nouiiual 
consideration,^*  or,  under  statutes  allowing  the  consideration 
of  sealed  instruments  to  be  in(]uired  into,  it  is  proved  to  be  only 
nominal,  the  release  will  still  operate  to  extinguish  the  claim  to 
which  it  relates.®*  An  agi-eement  by  one  of  several  defendants 
not  to  defend  a  suit  supports  a  release  as  to  him.®®  A  release 
is  binding  notwithstanding  the  party  released  does  not  keep  his 
promise  to  give  the  other  employment,  that  being  part  of  the 
consideration  for  the  release,®'  or  to  pay  notes  given  in  consid- 


judgment  in  consideration  of  the 
receipt  of  a  less  sum  than  it  calls 
for  is  invalid,  though  the  release  be 
indorsed  upon  the  execution  issued 
in  the  original  action.  Weber  v. 
Couch,  134  Mass.  26,  45  Am.  Rep. 
274. 

Voluntary  declarations  by  a  cred- 
itor of  an  intention  to  release  a 
debtor,  unless  accompanied  by  some 
act  which  amounts  to  a  release  at 
law,  will  not  operate  as  an  equitable 
release.  Irwin  v.  Johnson,  36  N.  J. 
Eq.  347,  overruling  Leddel  v.  Starr, 
20  id.  274. 

As  every  person  signing  an  in- 
strument becomes  thereby  a  party 
thereto  one  signing  a  release  in 
a  representative  capacity  need  not 
be  mentioned  as  such  in  the  body 
of  the  instrument.  Hemmick  v. 
Baltimore  &  O.  S.  W.  R.  Co.,  263 
111.  241. 

61  riorbett  V.  Lucas,  4  McCord, 
323. 

62  Warner  v.  Durham,  Hill  & 
Denio,  206;  Matthews  v.  Chicopoe 
Mfg.  Co.,  3  Robert.  711;  McAlloster 
V.    Sprague,    34    Me.    296;    King   v. 


Atlantic  C.  L.  R.  Co.,  1,57  N.  C.  44, 
48  L.R.A.(N.S.)    450. 

A  release  under  seal  is  presumed 
to  be  founded  upon  a  consideration. 
Hemmick  v.  Baltimore  &  0.  S.  W. 
R.  Co.,  263  111.  241. 

63  McCrea  v.  Purmort,  16  Wend. 
460,  474 ;  Galveston,  H.  &  S.  A.  Ry. 
Co.  V.  Walker,  —  Tex.  Civ.  App.  — , 
163  S.  W.  1038. 

64  Wilt  V.  Franklin,  1  Bin.  502, 
2  Am.  Dec.  474;  Morse  v.  Shattuck, 
4  N.  H.  229,  17  Am.  Dec.  419; 
Gully  V.  Grubbs,  1  J.  J.  Marsh.  387 ; 
Maclary  v.  Rcznor,  3  Del.  Ch.  445. 

65  Ecknian  v.  Chicago,  etc.  R.  Co., 
169  111.  312,  38  L.R.A.  750;  Stearns 
V.  Tappen,  5  Duer,  294.  See  Davis 
V.  Bowker,  2  Nev.  487;  Green  v. 
Langdon,  28  Mich.  222. 

A  cause  of  action  may  bo  released 
upon  a  consideration  coming  from 
a  third  person.  Compton  v.  Elliott, 
48  X.  Y.  Super.  Ct.  211. 

66  McClung  v.  Mabry,  2  Tenn.  Cas. 
91. 

67  Szymanski  v.  Cliapnuin,  45  App. 
Div.   (N.  Y.)   369. 


766 


SUTHERLAND    ON    DAMAGES. 


[§  253 


eratioii  of  the  release ;  ®^  and  so  if  the  contract  re-employing  an 
injured  servant  does  not  fix  the  time  the  employment  shall  con- 
tinue, the  fault  being  his  and  he  is  discharged.^^  If  there  are 
two  debts  in  existence,  established  and  known,  the  payment  of 
one  is  not  a  consideration  for  the  release  of  the  other.'''°  A  re- 
lease procured  by  fraud  or  undue  influence  of  the  defendant  or 
his  agent  will  be  treated  as  a  nullity.'^ 

§  254,  Differs  from  accord  and  satisfaction.  A  seal  is  not 
necessary  to  render  a  release  and  discharge  of  a  liability  ef- 
fectual if  the  agreement  embraces  the  demand  and  is  upon  a 
sufficient  consideration.  It  can  operate  to  extinguish  the  de- 
mand by  way  of  accord  and  satisfaction,'^  and  in  this  form  a 


68  Galveston,  H.  &  S.  A.  Ry.  Co. 
V.  Walker,  —  Tex.  Civ.  App.  — ,  163 
S.  W.  1039. 

69  Texas  Midland  R.  v.  Sullivan, 
20  Tex.  Civ.  App.  50;  East  Line, 
etc.  R.  Co.  V.  Scott,  72  Tex.  70,  13 
Am.  St.  753;  Aderholt  v.  Seaboard 
A.  L.  R.,  152  N.  C.  411. 

The  consideration  is  sufficient 
though  the  agreement  for  employ- 
ment provides  therefor  only  so  long 
as  the  employer  shall  be  satisfied. 
Tindall  v.  Northern  Pac.  R.  Co.,  58 
Wash.  118  (disapproving  Missouri, 
etc.  R.  Co.  v.  Smith,  98  Tex.  47,  107 
Am.  St.  607,  66  L.R.A.  741)  ;  Cleve- 
land, etc.  R.  Co.  V.  Hilligoss,  171 
Ind.  417,  131  Am.  St.  258;  Forbes  v. 
St.  Louis,  etc.  R.  Co.,  107  Mo.  App. 
661. 

70  Fire  Ins.  Ass'n  v.  Wickham, 
141  U.  S.  564,  580,  35  L.  ed.  860. 

A  release  given  under  a  misappre- 
hension as  to  the  extent  of  the  in- 
jury done  to  property  does  not  affect 
the  right  to  recover  for  a  later  in- 
jury to  the  same  property.  Adkins 
V.  Indianapolis  S.  R.  Co.,  165  111. 
App.  300. 

71  St.  Louis,  I.  M.  &  S.  R.  Co.,  v. 
Reilly,  110  Ark.  182;  Pierson  v. 
Kingman  Milling  Co.,  91  Kan.  775; 
New  Bell  Jellico  Coal  Co.  v.  Oxen- 


dine,  155  Ky.  840;  Interstate  Coal 
Co.  v.  Trivett,  155  Ky.  825 ;  Wiscon- 
sin Steel  Co.  v.  Dixon,  159  Ky.  488; 
Petterson  v.  Butler  Bros.,  123  Minn. 
516;  Causey  v.  Seaboard  Air  Line 
R.  Co.,  166  N.  C.  5;  Texas  &  P.  Ry. 
Co.  v.  Hubbard,  —  Tex.  Civ.  App. 
— ,  169  S.  W.  1058;  Western  U.  Tel. 
Co.  v.  Walck,  —  Tex.  Civ.  App.  — , 
101  S.  W.  902;  Texas  Cent.  R.  Co. 
V.  Neill,  —  Tex.  Civ.  App.  — ,  159 
S.  W.  1180;  Missouri,  K.  &  T.  Ry. 
Co.  of  Texas  v.  Maples,  —  Tex.  Civ. 
App.  — ,  162  S.  W.  426;  Mattson  v. 
Eureka  Cedar  Lumber  &  Shingle 
Co.,  79  Wash.  266.  But  see  Gal- 
veston, H.  &  S.  A.  Ry.  Co.  v.  Walker, 
—  Tex.  Civ.  App.  — ,  163  S.  W. 
1038. 

A  mere  expression,  by  the  defend- 
ant's agent,  of  an  erroneous  opinion 
as  to  the  happening  of  a  future 
event  will  not  render  a  release  void. 
Wingfield  v.  Wabash  R.  Co.,  257 
Mo.  347. 

72Earle  v.  Berry,  27  R.  I.  221,  1 
L.R.A.  (N.S.)  867;  Farmers'  Bank 
V.  Blair,  44  Barb.  641;  Corbett  v. 
Lucas,  4  McCord,  323;  Coon  v. 
Knap,  8  N.  Y.  402,  59  Am.  Dec. 
502;  Lewiston  v.  Junction  R.  Co.,  7 
Ind.  597. 


§    255]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       7Ci7 

debtor  may  avail  himself  of  a  release  made  by  an  agent  in  his 
own  name.'^  A  mere  receipt  may  have  such  an  effect;  but  it 
is  only  prima  facie  evidence  of  payment.'*  In  Connecticut  a 
receipt  approximates  in  its  effect  to  a  release.'^  The  general 
rule,  however,  is  that  a  mere  receipt  is  but  evidence  of  the 
payment  which  it  states,  and  is  open  to  contradiction.'^  A  re- 
lease not  under  seal,  and  without  consideration,  is  void.''  Nor 
will  equity  compel  a  creditor  to  affix  a  seal  to  a  release  not 
founded  on  a  consideration,  even  upon  an  averment  that  tlie 
seal  was  omitted  by  mistake.'® 

§  255,  Extrinsic  evidence  and  construction.  Extrinsic  proof 
is  not  allowed  to  restrict  a  release  of  all  demands  by  showing 
it  was  not  intended  to  cover  particular  ones  within  its  terms ;  '^ 
but  according  to  some  authorities  this  rule  is  operative  only  be- 
tween the  parties  to  the  contract,  and  a  joint  tort-feasor  is  not 
a  party  to  a  release  given  his  co-wrongdoer  and  may  contradict 


73  Evans  v.  Wells,  22  Wend.  324. 

74  Thompson  v.  Fausate,  1  Pet.  C. 
C.  182;  Maze  v.  Miller,  1  Wash.  C. 
C.  328. 

75  Hurd  V.  Blackman,  19  Conn. 
]77;  Bishop  v,  Perkins,  id.  300; 
Tucker  v.  Baldwin,  13  id.  136,  33 
Am.  Dec.  384;  Bonnell  v.  Chamber- 
lin,  26  Conn.  487. 

76Danziger  v.  Hoyt,  46  Hun  270; 
Coon  V.  Knap,  8  N.  Y.  402,  59 
Am.  Dec.  502;  Egleston  v.  Knick- 
erbacker,  6  Barb.  458;  Houston 
V.  Shindler,  11  id.  36;  White  v. 
Parker,  8  id.  48;  Thompson  v.  Max- 
well, 74  Iowa,  415;  Grant  v.  Frost, 
80  Me.  202;  Hart  v.  Gould,  62  Mich. 
262;  Elsbarg  v.  Myrman,  41  Minn. 
541 ;  McFadden  v.  Missouri  Pac.  R. 
Co.,  92  Mo.  343,  1  Am.  St.  721; 
Shoemaker  v.  Stiles,  102  Pa.  549; 
Bulwinkle  v.  Cramer,  27  S.  C.  376, 
13  Am.  St.  645;  Hill  v.  Durand,  58 
Wis.  160;  2  Jones  on  Evidence, 
§§  502  et  seq. 

77  Gulf,  etc.  R.  Co.  V.  Minter,  42 
Tex.    Civ.    App.    235;    Crawford    v. 


Millspaugh,  13  Johns.  87;  Seymour 
v.  Minturn,  17  id.  169,  8  Am.  Dec. 
380;  Dewey  v.  Derby,  20  Johns.  402; 
Barnard  v.  Darling,  11  Wend.  28. 

78  Jackson  v.  Stackhouse,  1  Cow. 
122,  13  Am.  Dec.  514. 

79  Green  v.  Chicago,  etc.  R.  Co., 
35  C.  C.  A.  68,  92  Fed.  873;  Denver, 
etc.  R.  Co.  v.  Sullivan,  21  Colo.  302, 
13  Am.  Neg.  Cas.  536;  Deland  v. 
Amesbury  Mfg.  Co.,  7  Pick.  244; 
West  Boylston  Mfg.  Co.  v.  Searle, 
15  id.  225;  Rice  v.  Woods,  21  id. 
30.  See  Van  Brunt  v.  Van  Brunt. 
3  Edw.  Ch.  14;  Hoes  v.  Van  Hoesen, 
1  Barb.  Ch.  379.  See  also  Swin- 
burne V.  Swinburne,  36  R.  I.  255. 

But  a  release  of  all  demands 
against  the  defendant,  reserving  a 
riglit  of  action  against  another  as 
trustee  of  slock  claimed  l)y  tlie 
plaintilf,  will  not  bar  an  action 
against  such  defendant  where  he  lias 
secretly  received  a  transfer  of  the 
stock  unknown  to  the  plaintiff. 
Lane  v.  Weiitworth,  60  Ore.  242. 


768  SUTIIEKLAND    ON    DAMAGES.  [§    255 

it  by  parol  evidence.^"  The  weight  of  authority  seems  to  be 
against  the  exception  to  the  general  rule."  A  release  may 
extinguish  a  particular  demand,  although  it  was  not  in  the 
minds  of  the  parties  at  the  time  of  its  execution.  It  will  be 
held  to  embrace  demands  which  are  within  its  terms,  whether 
contemplated  or  not.^*^  But  under  a  statute  to  the  effect  that 
a  general  release  does  not  extend  to  claims  which  the  creditor 
does  not  know  or  suspect  to  exist  in  his  favor  at  the  time  of 
executing  the  release,  which  if  known  by  him  must  have  ma- 
terially affected  his  settlement  with  his  debtor,  a  release  does 
not  extend  to  claims  of  which  the  debtor  was  ignorant  through 
his  ignorance  of  law.®^  In  construing  releases,  however,  general 
words,  and  even  those  the  most  comprehensive,  may  be  limited 
to  particular  demands,  where  it  appears  by  the  consideration, 
the  recitals  and  the  nature  and  circumstances  of  the  demands, 
to  one  or  more  of  which  it  is  proposed  to  apply  the  release,  that 
such  restriction  was  intended  by  the  parties.®*  And  even  where 
the  word  "release"  is  used,  and  the  instrument  is  under  seal, 
if  it  be  apparent  from  the  whole  of  it  and  the  circumstances  that 
the  parties  did  not  intend  a  release,  such  intention  as  may  ap- 

80  Johnson  v.  Von  Scholley,  218  leased.  Miller  v.  Schloss,  159  App. 
Mass.  454;  O'Shea  v.  New  York,  etc.       Div.   (N.  Y.)  704. 

R.   Co.,   44   C.   C.  A.  601,   105   Fed.  83  Rued   v.   Cooper,   119   Cal.   463. 

559,  13  Am.  Neg.  Rep.  520.  84  Jeffreys     v.     Southern     R.     Co., 

It  may  be  shown  by  parol  whctli-  127    N.    C.    377;    Rich    v.    Lord,    18 

er   the   delivery   of   a   lease  was    in-  Pick.  322. 

tended  to  be  absolute  or  conditional.  A  release  will  be  construed  from 

Stiebel  v.  Grosberg,  202  N.  Y.  266,  the  standpoint  occupied  by  the  par- 

36  L.R.A.  (N.S.)    1147.  ties  to  it  when  it  was  executed;   in 

81  Brown  v.  Cambridge,  3  Allen,  order  to  do  this  extrinsic  evidence  is 
474;  Goss  v.  Ellison,  136  Mass.  503;  admissible  to  show  the  circumstan- 
Denver,  etc.  R.  Co.  v.  Sullivan,  21  ces  then  existing  and  the  nature  of 
Colo.  302,  13  Am.  Neg.  Cas.  536.  the  transaction.      The    words    used 

82  Quebec  v.  Gulf,  etc.  R.  Co.,  98  must  not  be  added  to  or  taken  from. 
Tex.  6,  66  L.R.A.  734;  Houston,  etc.  Rowe  v.  Rand,  111  Ind.  206.  If 
R.  Co.  V.  McCarty,  94  Tex.  298,  53  only  general  words  are  used  the  in- 
L.R.A.  507,  86  Am.  St.  854;  San  strument  will  be  construed  most 
Antonio,  etc.  R.  Co.  v.  Polka  (Tex.  strongly  against  its  maker.  Ibid. 
Civ.  App.),  124  S.  W.  226;  Hyde  v.  It  will  not  be  given  retroactive 
Baldwin,  17  Pick.  307.  effect    unless    its   terms    require    it. 

But  demands  originating  at  the  Hughson  v.  Richmond  &  D.  R.  Co., 
time  the  release  is  given  are  not  re-       2  App.  Cas.    (D.  C. )    98. 


§    S'Sn]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       7G9 

pear  will  prevail,  and  the  instrunient  may  be  construed  simply 
as  an  agreement  not  to  charge  the  person  to  whom  it  is  executed." 
Where  the  release  for  personal  injuries  specified  the  injuries  and 
expressed  that  it  also  covered  all  manner  of  actions,  causes  of 
action,  claims  and  demands  whatever  from  the  beginning  of  the 
world  to  this  day,  the  particular  recital  was  a  qualification  of  the 
general  words,  and  these  were  limited  by  the  specific  recital  of 
the  injuries  that  the  payment  was  made  to  cover;  hence  an  in- 
jury unknown  to  both  parties  when  the  release  was  made  was 
not  included  in  it.*^  Reservations  embodied  in  a  release  but  not 
alleged  in  the  complaint  as  a  basis  of  action  will  be  treated 
as  surplusage.®''^  A  release  of  all  claims  for  damages  by  rea- 
son of  the  construction  of  a  railroad  upon  the  lands  of  the  re- 
leasor cuts  off  his  right  and  any  right  of  his  lessee  or  grantee 
to  recover  for  injuries  resulting  from  the  careful  and  skilful 
construction  of  the  road,  and  carries  with  it  to  the  company 
the  right  to  do  all  incidental  acts  essential  to  the  enjoyment  of 
the  right  granted ;  *®  and  an  agreement  on  the  part  of  the  land- 
owner to  sell  a  railroad  company  a  right  of  way  across  his 
land  covers  all  damages  for  which  the  vendor  is  entitled  to 
compensation,®^  unless  they  result  from  negligence  and  occur 
after  the  release  is  given.^°    A  covenant  to  discontinue  a  pend- 

85  Solly  V.  Forbes,  2  Brod.  &  Bing.  tion,'  a  contract  exempting  the  dc- 
46;  1  Par  on  Cont.  28.  See  Jack-  fendant  from  liability,  'excepting 
son  V.  Stackhouse,  1  Cow.  122,  13  such  injury,  loss,  or  damage  as  may 
Am.  Dec.  514;  Mclntyre  v.  William-  be  directly  occasioned  by  the  gross 
son,  1  Edw.  34;  Kirby  v.  Turner,  negligence'  of  the  defendant,  is  not 
Hopk.  309;  Matthews  v.  Chicopee  fatally  variant  from  the  averments 
Mfg.  Co.,  3  Robert.  711.  of  the   plea."     Atlantic   Coast  Line 

86  Texas  &  P.  R.  Co.  v.  Dashiell,  R.  Co.  v.  Waucliula  Manufacturing 
198  U.  S.  521,  49  L.  ed.  1150;  Union  &  Timber  Co.,  67  Fla.  27. 

Pac.   R.   Co.   V.    Artist,   9    C.   C.   A.  88  Denver  U.  &  P.  R.  Co.  v.  Barsa- 

14,    60    Fed.    365,    23    L.R.A.    581;  loux,  15  Colo.  297 ;  Burrow  v.  Torre 

Lumley  v.  Wabash  R.  Co.,  22  C.  C.  Haute  &   L.   R.   Co.,   107   Ind.   432; 

A.  60,  76  Fed.  66.     See  McCarty  v.  Hoffedltz   v.   Railroad   Co.,    129   Pa. 

Houston,   etc.   R.   Co.,   21    Tex.   Civ.  264;     Updegrove     v.     Pennsylvania. 

App.  568,  13  Am.  Neg.  Rep.  516.  etc.   R.   Co.,    132   Pa.   540,   7    L.R.A 

87  "Where  mere  negligence  is  al-  213.  Compare  St.  Louis,  etc.  R.  Co. 
leged,   and    the    plea    avers   a   valid  v.  Hurst,  25  111.  .App.  98. 

release  'from   all  liability     *     *     *  89  KcMiip   v.   Pennsylvania  R.,   156 

caused  by  the  negligence  of  said  de-  Pa.  430. 

fendant  as  alleged  in   said  declara-  90  Brown    v.    Pine    Creek    R.    Co., 
Suth.  Dam.  Vol.  I.— 49. 


770 


SUTIIEKLAND    ON    DAMAGES. 


[§   255 


ing  action  at  law  and  to  release  all  claim  or  right  of  action  for 
present  or  future  damages  arising  from  a  specified  cause  bars 
all  judicial  proceedings  for  that  cause — a  suit  for  an  injunction 
as  well  as  an  action  for  damages.^^  In  determining  the  scope 
to  be  given  a  release  the  consideration  for  it  will  have  great 
influen<'e;  if  that  is  nominal  or  small  as  compared  with  the 
rights  surrendered,  and  the  generality  of  the  language  used  in- 
dicates that  it  aifects  rights  of  which  the  party  who  executed 
it  was  ignorant,  equity  will  restrict  its  effect  to  that  intended.^^ 
The  obligation  imposed  upon  a  railroad  company  to  fence  its 
road  cannot  be  got  rid  of  by  any  release  it  may  obtain  from  the 
owner  of  the  land  over  which  the  road  is  constructed.^^ 

§  256.  Who  may  execute.  A  release  will  be  eifectual  to  dis- 
charge a  debt  or  liability  within  its  terais  although  it  is  not 
executed  by  all  in  whom  the  right  of  action  is  vested,  and  though 
it  is  to  only  one  of  several  persons  jointly  liable.  Where  several 
must  join  as  plaintiffs  in  bringing  an  action  a  release  of  the  cause 
of  action  by  one  of  them  is  a  bar.^*  One  partner  may,  without 
being  specially  authorized  thereto,  bind  his  firm  by  a  sealed 
release  of  a  partnership  claim.^^  The  right  to  execute  a  release 
cannot  be  exercised  to  the  detriment  of  third  persons.     If  a 


183  Pa.  38;  Missouri,  etc.  R.  Co.  v. 
Hopson,  15  Tex.  Civ.  App.  126.  Sec 
§  1090. 

siKennerty  v.  Etiwan  P.  Co.,  17 
S.  C.  41],  43  Am.  Rep.  607. 

82  Blair  v.  Chicago  &  A.  R.  Co., 
80  Mo.  383;  Lusted  v.  Chicago  &  N. 
R.  Co.,  71  Wis.  391;  Kirchner  v. 
New  Home  S.  Mach.  Co.,  59  Hun, 
186.  See  also,  Mattson  v.  Eureka 
Cedar  Lumber  &  Shingle  Co.,  79 
Wash.  266. 

It  cannot  be  shown  that  a  release 
executed  pursuant  to  an  accord  and 
satisfaction  was  without  other  con- 
sideration than  it  acknowledged. 
Harvey  v.  Denver,  etc.  R.  Co.,  44 
Colo.  258,  130  Am.  St.  120. 

93  Cincinnati,  etc.  R.  Co.  v.  Hild- 
reth,  77  Ind.  504. 

94  Osborn    v.    Martha's    Vineyard 


R.  Co.,  140  Mass.  549;  Pattison  v, 
Skillman,  43  N.  J.  Eq.  392;  Wallace 
v.  Kelsall,  7  M.  &  W.  264;  Clark 
V.  Dinsmore,  5  N.  H.  136;  Kimball 
V.  Wilson,  3  id.  96, 14  Am.  Dec.  342; 
•Austin  V.  Hall,  13  Johns.  286,  7 
Am.  Dec.  376;  Decker  v.  Living- 
ston, 15  Johns.  479;  Sherman  v. 
Ballou,  8  Cow.  304;  Pierson  v. 
Hooker,  3  Johns.  68,  3  Am.  Dec. 
467;  Napier  v.  McLeod,  9  Wend. 
]20;  Bulkley  v.  Dayton,  14  Johns. 
387;  Murray  v.  Blatchford,  1  Wend. 
583,  19  Am.  Dec.  537.  See  Gram 
V.  Cadwell,  5  Cow.  489;  Bruen  v. 
Marquand,  17  Johns.  58;  Halsey  v. 
Fairbanks,  4  Mason  206;  Wiggin 
V.  Tudor,  23  Pick.  434;  Wilkinson 
V.  Lindo,  7  M.  &  W.  81;  Gibson  v. 
Winter,  5  B.  &  Ad.  96. 

95  Allen  V.  Cheever,  61  N.  H.  32. 


§    257]       CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAKGES.       771 

grantee  by  a  covenant  in  a  deed  has  assumed  the  payment  of  a 
mortgage  npon  the  premises  the  grantor  cannot,  after  the  mort- 
gagee has  accepted  the  grantee  as  his  security  and  without  the 
mortgagee's  assent,  release  the  grantee.*^  The  person  who  is 
entitled  to  the  damages  resulting  from  the  death  of  another  may 
release  the  right  of  action  therefor."  If  a  ward,  after  attaining 
majority,  makes  a  settlement  with  his  guardian  without  the 
intervention  of  the  court,  and  after  having  received  the  amount 
agreed  to  be  coming  to  him  gives  a  release  to  the  guardian,  he 
cannot  thereafter  trouble  either  court  or  guardian  unless  he 
shows  that  he  has  been  prejudiced  by  the  guardian's  frnud.^' 

§  257.  Effect  when  executed  by  or  to  one  of  several  claiming 
or  liable.  One  of  several  joint  creditors  may  receive  ])ayment 
or  satisfaction  and  discharge  the  entire  obligation,  and  the  others 
will  be  bound.^^  But  the  case  must  be  free  from  fraud  on  the 
co-creditors  who  do  not  join.^  Where,  however,  the  release  on 
its  face  purports  to  be  a  satisfaction  of  only  the  portion  of  the 
debt  or  claim  belonging  to  the  party  executing  it,  it  will  have 
effect  only  to  that  extent.  The  demand  wall  then  be  deemed 
severed  with  the  debtor's  consent,  and  a  separate  action  may  be 
brought  for  the  residue  by  the  creditors  entitled  thereto.^  Aud 
such  is  the  effect  of  a  general  release  by  one  of  two  plaintiffs  of 

96Gifford  V.  Corrigan,  117  N.  Y.  foat  an  action  at  law,  in  wliicli  all 

257,  15  Am.  St.  508,  6  L.R.A.  610.  the   joint   creditors    must    join,     it 

97Stuebing  v.  Marshall,  10  Daly,  does  not  follow  that  a  recovery  in 

406;  Hemmick  v.  Baltimore  &  0.  S.  equity,   where    no    such    joinder   is 

W.   R.   Co.,   263   111.   241.     See  §   6.  necessary,   may   not    be    had.      Sec 

98Luken's   App.    7    W.    &    S.    48;  Emerson  v.  Baylies,  19  Pick.  55;   3 

Alexander's  Est.,  156  Pa.  368.  p^r.  on  Cont.  617  and  note. 

99  Hall  V.  Gray,  54  Me.  230;  Pier-  gin  Holland  v.  Weld,  4  Me.  255, 

son  V.  Hooker,  3  Johns  68   (N.  Y.)  y^^^j.^^   ^^.^^   ^   c-oiitract   by   one   wjtli 

3  Am.  Dec.  467;  Kimball  v.  Wilson,  ^^^^^,  persons    that    he    would  clear 

3  N.  H.  96,  14  Am.  Doc.  342;  Lum-  ^^^^_^.^    obstructions    from    a    river. 

bermen's  Tns.   Co.  v.  Preble,  50  111.  ^^^^^^^,^,^1,  „„,  ^f  the  four  executed 

'^"^"-  ,,    .  ,  „    .  o  to  him   a   release  from   all   liability 

lid        In     llpiohn     v.     Ewing,     i  ,  i  •         ii  i  „„. 

./^•'      ,    ,,  ^,     ,  to    such    partv,    making    the    release 

Ohio  St.  13,  it  was  hold  that  one  or  ''"     '         '        -  '  ^   .      ,   . 

v^uiu  cu.  JO,  ,   .   .    ,  ,.,  for  any  damage  sustained  in  consc- 

less  than  all  of  several  joint  credit-  ^"^  '^"^^    .  ^         t  4. 

,         v-  fiiicnco  of  any   past   or   future  non- 

ors,   between   whom    no   partnership  'I'lc  ncc  01   .im.>    1 

e-xists,   cannot   release   the   common  performance.      Mellon,   C.   J.,   said: 

debtor,    so    as    to    coneludo    the    co-  -'This     release,     in     its    terms,    dis- 

creditors  who  do  not  assent  to  such  charges  Weld  from  his  liabilities  to 

release.     Though  they  may  thus  de-  Austin   only,   for  any   damage   bus- 


772 


SUTJIEKLAND    ON    DAMAGES. 


[§  257 


all  actions,  debts,  claims  and  demands  which  the  plaintiff  has 
against  the  defendant.^  A  release  by  the  nominal  creditor  is 
not  good  against,  but  a  frand  on,  the  real  party  in  interest.  If 
the  party  taking  it  and  seeking  to  avail  himself  of  it  was  aware 
that  the  releasor  had  no  interest  in  the  demand  released  the 
instrument  will  be  disregarded.*  Where  damages  sustained  by 
a  wife  because  of  personal  injuries  become  community  property 
on  recovery,  she  may  not  release  them  without  the  concurrent 
action  of  her  husband.^ 

A  release  of  one  of  several  joint  or  joint  and  several  debtors 
or  wrong-doers  discharges  all.  The  deed  is  taken  most  strongly 
against  the  releasor,  and  is  conclusive  evidence  that  he  has  been 
satisfied,^  though  the  intention  not  to  release  some  of  them  is 


tained  by  him.  To  give  it  any  more 
broad  and  extensive  operation  would 
be  contrary  to  the  expressed  inten- 
tion of  both  of  the  parties.  Accord- 
ing to  Cole  V.  Knight,  3  Mod.  277, 
and  Lyman  v.  Clark,  9  Mass,  235,  a 
release  should  be  confined  to  the 
object  which  was  in  view,  and  on 
which  it  was  plainly  the  intention 
of  all  that  it  should  operate.  The 
contract  was  originally  joint;  and 
had  no  release  been  given  by  Austin, 
an  action  must  necessarily  have 
been  brought  in  tlie  name  of  all  the 
four  against  the  defendant;  but  as 
he  has  accepted  the  release  and 
availed  himself  of  it  so  far  as  he 
was  once  liable  to  Austin,  he  has  by 
this  act  converted  the  joint  contract 
into  a  several  one;  and  he  must 
now  permit  the  plaintiff  and  the 
other  two  promisees  to  consider  the 
contract  in  that  light  and  assert 
their  claims  against  him  according- 
ly. This  course  is  manifestly  just 
and  sanctioned  by  settled  princi- 
ples." Baker  v.  Jewell,  6  Mass.  460, 
4  Am.  Dec.  162;  Carrington  v. 
Crocker,  37  N.  Y.  336;  Parmalee  v. 
Lawrence,  44  111.  405. 

3  Crafts  v.  Sweeney,  18  R.  I.  730; 
Boston  &  M.  R.  v.  Portland,  etc.  R. 


Co.,    119    Mass.    498,    20    Am.    Rep. 
338. 

4  Gram  v.  Cadwell,  5  Cow.  489; 
Legh  v.  Legh,  1  Bos.  &  P.  447;  1 
Par.  on  Cont.  27;  2  id.  617,  and 
note;   Timan  v.  Leland,  5  Hill,  237. 

A  surety  paying  the  debt  may  be 
subrogated  notwithstanding  a  legal 
release  of  it;  and  an  intention  to 
be  subrogated  will  be  presumed  from 
the  mere  act  of  paying.  Neilson  v. 
Fry,  16  Ohio  St.  552;  Dempsey  v. 
Bush,  18  id.  376. 

5  Justis  V.  Atchison,  etc.  R.  Co., 
]2  Cal.  App.  639. 

6  Galveston,  H.  &  S.  A.  Ry.  Co. 
V.  Walker,  —  Tex.  Civ.  App.  — ,  163 
S.  W.  1038;  J.  I.  Case  Threshing 
Machine  Co.  v.  Bridger,  133  La.  754; 
The  St.  Cuthbert,  157  Fed.  799; 
Cleveland,  etc.  R.  Co.  v.  Hilligoss, 
171  Ind.  417,  131  Am.  St.  258; 
Huber  Mfg.  Co.  v.  Silvers,  85  Neb. 
760,  133  Am.  St.  689;  Smith  v. 
South  &  W.  R.  Co.,  151  N.  C.  479; 
Duck  V.  Mayeu,  (1892)  2  Q.  B. 
513;  Reynolds  v.  McLean,  9  West 
Aust.  L.  R.  89;  Hale  v.  Spaulding, 
145  Mass.  482,  1  Am.  St.  475  (the 
words  used  were  ''in  full  satisfac- 
tion for  his  liability")  ;  McClung 
v.  Mabry,  2  Tenn.  Cas.  91;   O'Shca 


§    257J       CONVENTIONAT,    LIQUIDATIONS    AND    DISCHARGES,       7713 


disclosed  in  the  release.'  The  i;-encral  rule  ajtplies  lo  wi'oiii:-- 
doers  though  there  was  no  concert  of  action  among-  them,  if  the 
injury  was  single,^  and  tlie  effect  is  the  same  in  some  jurisdic- 
tions though  a  claim  is  made  against  one  who  was  not  in  fact 
liable  if  he  has  given  a  consideration  for  a  release,^  and  was 


V.  New  York,  etc.  R.  Co.,  44  C.  C. 
A.  601,  13  Am.  Neg.  Rep.  520,  10") 
Fed.  559;  Denver,  etc.  R.  Co.  v.  Sul- 
livan, 21  Colo.  302,  13  Am.  Nog. 
Cas.  536;  Hartigan  v.  Dickson,  81 
Minn.  284,  13  Am.  Neg.  Rep.  578; 
Clark  V.  Mallory,  185  111.  227;  De- 
long  v.  Curtis,  35  Hun  04;  Urton 
V.  Price,  57  Cal.  270;  Ellis  v.  Esson, 
50  Wis.  138,  36  Am.  Rep.  830;  Laml) 
V.  Gregory,  12  Neb.  506  (joint  judg- 
ment debtors)  ;  Chapin  v.  C.  &  E. 
I.  R.  Co.,  18  111.  App.  47,  11  Am. 
Neg.  Cas.  435;  Gunthcr  v.  Lee,  45 
Md.  60,  24  Am.  Rep.  504 ;  Coke  Litt. 
232;  Bac.  Abr.,  Release  9;  Bron- 
son  V.  Fitzhugh,  1  Hill  185;  Row- 
ley v.  Stoddard,  7  Johns.  207 ;  Cats- 
kill  Bank  v.  Messenger,  9  Cow.  37; 
Hoffman  v.  Dunlop,  1  Barb.  185; 
Parsons  v.  Hughes,  9  Paige  591; 
Ward  V.  Johnson,  13  Mass.  148; 
Tuckerman  v.  Newhall,  17  id.  581; 
Wiggin  v.  Tudor,  23  Pick.  434; 
Houston  V.  Darling,  16  Me.  413; 
Ruble  V.  Turner,  2  Hen.  &  M.  39; 
Cornell  v.  Masten,  35  Barb.  157; 
Matthews  v.  Chicopee  Mfg.  Co.,  3 
Robert.  711;  Mottram  v.  Mills,  2 
Sandf.  189;  Bloss  v.  Plymale,  3  W. 
Va.  393,  100  Am.  Dec.  752;  Brown 
V.  Marsh,  7  Vt.  320;  Armstrong  v. 
Hayward,  6  Cal.  183;  Frink  v. 
Green,  5  Barb.  455;  Rice  v.  Web- 
ster, 18  111.  321 ;  Prince  v.  Lynch,  38 
Cal.  528;  Hunt  v.  Terril's  Pleirs,  7 
Marsh.  68;  Dean  v.  Newhall,  8  T. 
R.  168;  Hutton  v.  Eyre,  6  Taunt. 
289;  Lacey  v.  Kinaston,  1  Ld. 
Raym.  088,  12  Mod.  551;  .Tohnson 
v.  Collins,  20  Ala.  435;  McAllister 
V.  Dennin,  27  Mo.  40.     Sec  as  to  the 


effect  of  a  release  to  one  of  two 
joint  tort-feasors  under  tiie  statutt; 
of  Kansas,  Hager  v.  McDonald,  65 
Fed.  200;  Smith  v.  Wliite,  73  Kan. 
607. 

7  Ducey  v.  Patterson,  37  Colo. 
210,  9  L.R.A.(N.S.)  1006,  119  Am. 
St.  284. 

Pleading  guilty  and  paying  a  fini- 
under  an  agreement,  by  one  of  sev- 
eral tort  feasors  will  release  a  civil 
liability  as  to  the  others.  Bryant 
V.  Rich's  Grill,  210  Mass.  344. 

But  it  is  otlierwise  in  Kentucky 
where  by  statute,  the  jury  may 
assess  joint  or  several  dainages 
against  several  tort  fea.-^ors.  Cifv 
of  Covington  v.  Westbay,  15(i  Ky. 
839. 

8  Stone  v.  Dickinson,  5  Allen,  29, 
81  Am.  Dec.  727 ;  Brown  v.  Cam- 
bridge, 3  Allen,  474;  Goss  v.  Elli- 
son, 136  Mass.  503;  Aldrich  v.  I'ar- 
nell,  147  id.  409;  Seither  v.  I'liihi- 
delphia  T.  Co.,  125  Pa.  397,  4  L.R.A. 
54;  Tompkins  v.  Clay  St.  R.  Co..  6ti 
Cal.  163,  11  Am.  Neg.  Cas.  181; 
Shank  v.  Koen,  10  Ohio  N.  P.  (N. 
S.)  513.  Compare  Arkansas  Nat. 
Bank  of  Hot  Springs  v.  .Martin.  IIH 
Ark.  578,  holding  that  wliere  a 
check  fraudulently  procured  fmrn 
the  plaintiff  is  paid  by  a  bank,  witii 
notice  of  the  fraud,  a  release  of  the 
parties  guilty  of  the  fraud  does  not 
release  the  bank,  it  not  being  a 
joint  wrongdoer. 

9  Brewer  v.  Casey,  190  Mass.  384: 
Borehanlt  v.  People's  I.  Co.,  106 
Minn.  134;  Leddy  v.  Barney.  1.39 
Mass.  394;  Seither  v.  Philadelphia 
T.  Co.,  Tompkins  v.  Clay  St.  H.  Co., 


774 


SUTllEKLAND    ON    DAMAGES. 


[§  257 


subject  to  suit  for  tlic  joint  liability.^"  But  if  a  release  is  giveu 
witiiout  the  payment  of  any  part  of  the  damages  sustained  to 
one  who  is  not  a  joint  wrong-doer  it  will  not  necessarily  release 
another  who  may  have  had  some  connection  with  the  wrong.^^ 
A  release  is  to  be  construed  according  to  the  intention  of  the 
l)arties,  and  if  it  or  the  facts  and  circumstances  connected  with 
it  show  that  no  satisfaction  was  given  or  received  by  or  from 
those  released,  that  the  intention  was  simply  to  discharge  them 
from  the  action  because  they  were  not  liable,  it  will  not  affect 
the  rights  of  the  injured  party  against  him  who  was  in  fact 
liable,  the  fact  that  it  was  not  intended  to  release  him  being  so 
shown.^^     As  to  this,  however,  the  authorities  are  not  in  ac- 


snpra;  Hartigan  v.  Dickson,  81 
Minn.  284;  Miller  v.  Beck,  ]08 
Iowa  575,  Contra,  Wardell  v.  Mc- 
Connell,  25  Neb.  558;  Missouri,  etc. 
R.  Co.  V.  McWherter,  59  Kan.  345, 
citing  liloss  v.  Plymale,  3  W.  Va. 
3!K3;  Wilson  v.  Reed,  3  Johns.  175; 
Snow  V.  Chandler,  10  N.  H.  92; 
Bell  V.  Perry,  43  Iowa,  368;  Owen 
V.  Brockschmidt,  54  Mo.  285;  Pogel 
V.  Meilke,  GO  Wis.  248;  Kentucky 
&  I.  B.  Co.  V.  Hall,  125  Ind.  220, 
14  Am.  Neg.  Cas.  555. 

But  in  Kentucky  such  a  release 
does  not  release  another  lialjlc  as 
a  tort  feasor  and,  further,  the 
amount  paid  in  condemnation  for 
such  release  Avill  be  deducted  from 
the  judgment  recovered  from  such 
tort  feasor.  City  of  Louisville  v. 
Nicholls,  158  Ky.  53  6. 

10  Pickwick  V.  McCauluif,  193 
Mass.   70. 

11  Shippey  v.  Kansas  City,  254 
Mo.  1  ;  Pittsburgh  R.  Co.  v.  Chap- 
man, 145  Fed.  886,  76  C.  C.  A.  418; 
Cleveland,  etc.  R.  Co.  v.  Hilligoss, 
171  Ind.  417,  131  Am.  St.  258;  Sex- 
ton Rice  &  I.  Co.  v.  Sexton,  48  Tex. 
Civ.  App.  190;  Miller  v.  Beck,  108 
Iowa,  575,  582;  Ellis  v.  Esson,  50 
Wis.  138,  36  Am.  Rep.  830;  Chicago 
V.    Babcock,    143    111.    358;    Long   v. 


Long,  57  Iowa,  497 ;  Knapp  v. 
Roche,  94  N.  Y.  729. 

"A  voluntary  dismissal  by  the 
plaintiff  as  to  one  whom  she  had 
alleged  to  be  a  debtor  in  solido 
with  a  second  alleged  debtor,  when 
there  was  really  no  debt  due  the 
plaintiff  by  the  former,  is  not  a  re- 
mission or  conventional  discharge, 
which  releases  the  second  alleged 
debtor  in  solido."  Hall  v.  Allen 
Mfg.  Co.,  133  La.  1079;  Vredenburg 
v.  Behan,  33  La.  Ann.  627. 

12  Bloss  v.  Plymale,  3  W.  Va.  393, 
100  Am.  Dec.  752;  Borchardt  v. 
People's  I.  Co.,  106  Minn.  134;  Mil- 
ler V.  Fox,  111  Tenn.  336;  Atchison, 
etc.  R.  Co.  V.  Classin  (Tex.  Civ. 
App.),  134  S.  W.  358;  Bailey  v. 
Delta  E.  L.,  P.  &  Mfg.  Co.,  86  Miss. 
634 ;  Derosa  v.  Hamilton,  3  Pa.  Dist. 
Rep.  404.  The  opinion  of  Simonton, 
P.  J.,  contains  the  result  of  a  care- 
ful examination  of  English  and 
American  cases  on  the  question  of 
effectuating  the  intent  of  the  parties 
giving  releases. 

An  express  reservation  of  the 
right  of  action  against  joint  wrong- 
doers, co-defendants  with  those  re- 
leased, is  effectual  against  those 
not  released.  Edens  v.  Fletcher, 
79  Kan.   139,   19  L.R.A.fN.S.)    018. 


§    257]       CONVENTIOXAI,    LIQUIDATIONS    AND    DISOIIAROES.       775 

cord."  The  general  rule  that  the  release  of  one  of  several 
joint  or  joint  and  several  debtors  or  wronu-docrs  dischari>'(>s  all 
applies  where  one  is  discharged  by  law,  as  in  bankruptcy,  at 
the  instance  or  with  the  consent  of  the  creditor  or  the  party  in- 
jured." The  release  of  one  of  several  joint  debtors,  if  it  does 
not  increase  the  original  responsibilities  of  the  others,  will  not 
work  a  dissolution  of  the  contract  to  those  not  released. ^^  This 
is  the  case  where  parties  are  only  separately  liable;  \\wvo  the 
discharge  of  one  does  not  discharge  any  other."  The  ]i1:iiiitin', 
however,  is  entitled  to  only  one  satisfaction;  and  if  the  manner 
of  releasing  one  involves  satisfaction  in  whole  or  in  ])art  of  the 
claim  it  will  inure  to  the  discharge,  pro  iaulo,  of  all  who  are 
liable  therefor,"  and  this  has  been  held  to  be  so  though  the 
snm  paid  was  a  gratnity,  it  having  been  paid  on  account  of  the 


A  dismissal  of  the  action  as  to 
one  joint  tort-feasor  after  verdict, 
but  prior  to  the  formal  entry  of 
judgment,  is  not  a  satisfaction  by 
all  the  defendants.  Ronald  v. 
Pacific  T.  Co.,  65  Wash.  430. 

iSMcBride  v.  Scott,  132  Mich. 
376,  61  L.R.A.  445,  102  Am.  St.  41G, 
citing  Ruble  v.  Turner,  2  Hen.  & 
M.  38;  Ellis  v.  Bitzcr,  2  Ohio,  Sn, 
15  Am.  Dec.  534;  Brogan  v.  Hanan, 
55  App.  Div.  (N.  Y.)  02;  Brown 
V.  Kueeheloe,  3  Cold.  192,  and  dis- 
tinguishing Ellis  V.  Esson,  infra. 
The  argument  in  the  principal  case 
is  disapproved  in  Musolf  v.  Duluth 
Edison  E.  Co.,  108  Minn.  309,  24 
L.R.A.  (N.S.)    451. 

.14  Robertson  v.  Smith,  18  Johns. 
459,  9  Am.  Dec.  227;  1  Par.  on 
Cont.  29. 

l5Mortland  v.  Himes,  8  Pa.  205. 

The  release  of  an  infant  cosigner 
of  a  note  after  he  has  repudiated 
his  liability  on  attaining  his  major- 
ity and  reconvcyed  his  interest  in 
the  land  which  was  tbe  considera- 
tion for  the  note  does  not  discharge 
the  other  maker.  Young  v.  Currier, 
03  N.  H.  419. 


The  defense  of  a  release  by  opera- 
tion of  law  is  ])urely  personal  ami 
tlie  instrument  is  not  cause  for  set- 
ting aside,  at  tlie  instance  of  anotiicr 
creditor,  a  confession  of  judgment 
by  the  person  who  has  been  dis- 
charged for  the  amount  due  on  the 
obligation  covered  by  the  release. 
Thomas  v.  Mueller,  100  111.  30. 

16  Bank  v.  Ibbotson,  5  Hill,  401: 
Van  Rensselaer  v.  Chadwick,  24 
Barb.  333;  Mathewson  v.  Lydiate, 
Cro.  Eliz.  408,  470;  Bac.  Abr.,  Re- 
lease (G.)  ;  Krbcl  v.  Krbcl,  84  Neb. 
160. 

17  St.  Louis,  etc.  R.  Co.  v.  Bass 
(Tex.  Civ.  App.),  140  S.  W.  860. 
See  Walsh  v.  New  York  Cent.,  etc. 
R.  Co.,  140  App.  Div.  (N.  Y.)  1; 
Ellis  V.  Esson,  50  Wis.  138,  30  Am. 
Rep.  830;  Lord  v.  Tiffany,  98  X.  Y. 
412,  50  Am.  Rep.  689;  Kasson  v. 
People,  44  Barb.  347. 

In  Babcock  &  W.  Co.  v.  Pii.nr.r 
I.  Works,  34  Fed.  338,  the  Mil 
charged  the  joint  infringement  of  a 
patent  by  P.  and  S.,  by  the  manu- 
facture by  P.  for  sale  by  S.  of  tlie 
patented  articb-.  A  scttb'iiient  was 
made   between   complainant   and    P., 


'G 


SUTllEKLAND    ON    DAMAGES. 


[§   257 


injury  sustained  by  the  plaintiff.^*  The  settlement  which  will 
release  parties  jointly  liable  must  entirely  discharge  him  with 
whom  it  was  made.^^  Where  two  are  separately  liable  for  the 
same  debt  and  stand  in  such  relation  to  each  other  that  in  case 
of  payment  by  one  there  is  a  right  to  reimbursement  or  contri- 
bution from  the  other,  a  release  of  the  party  bound  to  reimburse 
or  liable  to  contribute  has  been  held  to  be  a  discharge  of  both. 
The  reason  the  release  of  one  joint  obligor  discharges  the  other 
is  that  if  either  pays  the  debt  the  other  is  liable  to  contribution, 
which  would  be  defeated  if  it  were  permitted  to  exonerate  only 
the  party  to  whom  it  is  made.  Thus,  where  stockholders  are 
personally  liable,  jointly  and  severally,  for  the  debts  of  a  corpo- 
ration the  discharge,  by  release  under  seal,  of  one  stockholder 
was  a  discharge  not  only  of  all  the  others  but  also  of  the 
corporation. ^° 


the  money  paid  by  him  "to  cover 
the  costs  of  complainant  in  this  suit 
against  P.  and  all  damages  for  the 
infringement  by  said  P.  of  the  let- 
ters patent  sued  on;"  all  claims  and 
demands  against  S.  were  expressly 
reserved.  Held,  that  the  stipulation 
released  S.  from  liability  for  both 
costs  and  damages.  See  Gunther  v. 
Lee,  45  Md.  60,  24  Am.  Rep.  504. 

18  Atchison,  etc.  R.  Co.  v.  Classin 
(Tex.  Civ.  App.),  134  S.  W.  353. 

19  Home  Sav.  Bank  v.  Oterbach, 
135  Iowa,  157,  124  Am.  St.  267; 
Louisville  &  E.  M.  Co.  v.  Barnes, 
117  Ky.  860,  64  L.R.A.  574.  The 
opinion  in  this  case  and  that  in 
Ellis  V.  Esson,  supra,  cite  the  cases 
and  fully  discuss  the  question. 

20  Prince  v.  Lynch,  38  Cal.  528. 
Sawyer,  C.  J.,  said:  "If  not  jointly 
liable  in  the  strict  sense  of  that 
term,  as  has  been  suggested,  the 
legal  incidents,  as  between  the  cor- 
poration and  stockholders,  to  the  ex- 
tent of  their  personal  liability,  are, 
it  seems  to  us,  precisely  the  same. 
The  stockholder  is  not  a  surety  in 
any  sense  of  the  term.     He  is  under 


the  constitution  and  statute  pri- 
marily liable  in  the  same  sense  as 
the  corporation  is  primarily  liable. 
The  same  identical  act  which  casts 
the  liability  on  the  corporation  also 
casts  it  on  the  stockholder.  Tliere 
are  not  separate  contracts.  The 
stockholder  does  not  stand  in  the 
position  of  an  indorser  or  guarantor. 
An  indorser  or  guarantor  is  -not 
liable  on  the  same  contract.  His 
contract  is  a  separate  and  distinct 
one  of  his  own,  to  which  the  prin- 
cipal is  no  party.  It  is  founded 
upon  the  principal  contract,  and 
finds  its  consideration  only  in  that 
contract ;  but  it  is  a  separate  and 
distinct  contract,  nevertheless,  and 
the  terms  are  different.  Each  is 
liable  on  his  own  particular  con- 
tract, but  there  is  no  joint  contract 
or  joint  obligation.  The  maker  and 
indorser  or  guarantor  of  a  note  may 
be  sued  jointly,  it  is  true,  but  this 
does  not  resvilt  from  the  fact  that 
there  is  a  single  joint  contract. 

"It  is  suggested  that  the  reason 
the  release  of  one  joint  obligor  dis- 
charges  the  other   is,    that    if    one 


§    258]       CONVENTIONAL    LIQUIDATIONS    AND  '  DISCHARGES.        777 

§  258.  What  will  operate  as  a  release.  A  simple  contract  can- 
not operate  as  a  release  nor  be  pleaded  as  such ;  therefore 
such  an  agreement  for  the  dischariic  of  one  of  several  parties 
jointly  or  jointly  and  severally  liable  must,  as  stated,  be  of 
such  character  as  to  discharge  all  by  way  of  accord  and  satis- 


pay  s  the  debt  the  otlier  is  liuV)lp  to 
contribution,  which  would  be  de- 
feated by  the  release  if  it  were  per- 
mitted to  exonerate  only  the  party 
to  whom  it  is  made.  On  tliis  ground 
it  is  said  to  be  held  to  extinguish 
the  debt.  Now  this  incident  at- 
tends the  relation  in  question,  and 
this  principle  is  as  applicable  to  it 
as  to  the  case  of  two  joint  makers 
of  a  note. 

"Suppose  the  corporation  is  sued 
and  a  recovery  had ;  the  stockhold- 
er released  must  contribute  his 
share,  for  the  corporation  can  levy 
an  assessment  on  all  the  stockhold- 
ers, according  to  their  respective 
shares,  to  raise  funds  to  pay  the 
judgment.  The  corporation  must 
pay  it,  unless  it  too  is  discharged, 
and  the  other  shareholders  are  en- 
titled to  have  him  contribute  his 
share.  Or,  suppose  the  corporation 
is  in  funds,  and  pays  without  an 
assessment,  it  takes  from  the  stock- 
holder released  his  pro  rata  share 
of  the  fund  which  would  otherwise 
go  to  him  in  dividends,  and  thus 
he  is  made  to  contribute  notwith- 
standing his  release.  So,  suppose 
McClelland  had  sued  other  stock- 
holders of  the  corporation  and  re- 
covered and  collected  from  them 
the  whole  amount  of  his  debt;  the 
stockholder  or  stockholders  so  com- 
pelled to  pay  would  have  a  claim 
for  contribution  against  Lynch  for 
his  share,  and  thus  either  the  right 
to  contribution  of  the  stockholder 
who  has  been  compelled  to  pay,  or 
the  release  of  Lynch,  must  be  de- 
feated.     Suppose,    again,    that   Mc- 


Clelland siiould  discharge  all  the 
stockholders  from  personal  liabil- 
ity, as  has  been  suggested,  and  the 
corporation  itself  sliould  still  re- 
main liable,  each  stockholder  would 
still  be  liable  to  contribute  his  pro 
rata  share,  either  in  tlie  form  of  an 
assessment  levied  by  the  corpora- 
tion to  pay  the  debt,  or  by  a 
diminution  of  dividends,  and  the 
release  would  be  defeated,  or  the 
corporation  deprived  of  power  to 
protect  its  property.  One  of  two 
results  must  inevitably  be  reached. 
Either  the  debt  is  extinguished  as 
to  all  by  the  release,  or  the  release 
is  wholly  inoperative  as  to  all. 
Thus  the  incidents  and  consequences 
are  the  same  as  between  joint  debt- 
ors and  joint  obligors  in  any  other 
form.  We  think,  therefore,  tliat  tlie 
case  is  within  the  rule,  and  that  a 
valid  release,  under  seal,  discharges 
the  corporation  and  other  stockhold- 
ers, as  well  as  the  stockholder 
released.  The  releases  to  the  defend- 
ant. Lynch,  referred  to  in  the  find- 
ings, were  in  due  form  and  under 
seal,  and  we  think,  to  the  extent  of 
tlie  amount  released,  discharged  tlie 
corporation  as  well  as  Lynch.  But 
we  think  the  court  erred  in  holding 
that  the  whole  $416.66,  due  McClel- 
land, was  released.  The  language 
of  the  release  is:  'I  hereby  relea.se 
and  discharge  said  Francis  Lynch 
from  his  proportion  of  said  com- 
pany's said  indebtedness  to  me.' 
The  release  by  its  express  terms, 
then,  is  only  'from  hia  proportion 
of  said  company's  said  indebtedness 
to  me;'  not  from  the  whole.     ^And 


78 


SUTllEKl^AND    ON    DAMAGES. 


[§  258 


faction.  If  the  agreement  embraces  the  entire  cause  of  action 
and  purports,  upon  sufficient  consideration,  to  discharge  it,  it 
will  have  that  effect  as  to  all  the  parties  liable  though  made 
with  only  one.^^  But  a  simple  contract  to  discharge  one  of 
several  who  are  liable  will  not  have  that  elfcct  by  force  of  the 
agreement,  as  a  release  operates,  but  only  by  force  thereof 
based  upon  a  sufficient  consideration  for  satisfaction  of  the  en- 
tire demand.^^  Hence  a  conventional  discharge  which  has  been 
o-iven  to  onlv  one  of  several  who  are  bound,  in  order  to  have 
the  effect  of  a  release  as  to  all  and  to  be  pleadable  as  such,  must 
be  a  technical  release  under  seal.^^ 

No  special  form  of  words  is  necessary  if  the  intention  is 


this  shall  be  said  Lynch' s  receipt 
in  full,  to  date,  for  his  p^-oportion 
and  share  of  all  indebtedness  to  me 
by  said  company,  and  a  bar  to  any 
and  all  suits  against  said  Lynch 
for  the  same;'  that  is  to  say,  for 
his  proportion  and  share.  It  is 
manifest  that  McClelland  did  not  in- 
tend to  release  his  whole  demand, 
but  only  Lynch's  share.  Although 
Lynch  might  be  liable  under  the  act 
to  pay  McClelland  the  whole  de- 
mand against  the  company,  as  held 
in  Larrabee  v.  Baldwin,  35  Cal.  155, 
if  the  amount  of  the  aggregate  debts 
of  the  corporation  upon  which  he 
was  personally  responsible  was 
sufficient;  yet,  the  whole  would  not 
be  his  share  of  the  indebtedness,  be- 
cause he  would  be  entitled  to  re- 
cover the  excess  paid  by  him  over 
his  share  from  the  corporation,  and 
to  call  upon  his  co-stockholders, 
who  were  personally  liable,  to  con- 
tribute. The  fact  that  he  might  be 
liable  personally,  under  the  statute, 
in  the  first  instance,  to  pay  the 
whole  to  the  creditor,  does  not  in- 
crease or  diminish  or  in  any  way 
affect  the  amount  of  his  share  of  the 
demand." 

21  Ellis  V.  Esson,  50  Wis.  138,  56 
Am.   Rep.   830;    Eastman   v.   Grant, 


34  Vt.   390;    Matthews  v.   Chicopee 
Mfg.  Co.,  3  Robert.  711. 

22  Fitzgerald  v.  Union  S.  Co.,  89 
Neb.  393,  33  L.R.A.(]Sr.S.)  983;  El- 
lis V.  Esson,  supra;  Walker  v.  Mc- 
Culloch,  4  Me.  421 ;  McAllester,  v. 
Sprague,  34  id.  296;  Rowley  v.  Stod- 
dard, 7  Johns.  207;  Harrison  v. 
Close,  2  id.  449,  3  Am.  Dec.  444; 
Farmers'  Bank  v.  Blair,  44  Barb. 
641;  Shaw  v.  Pratt,  22  Pick.  305; 
Smith  V.  Bartholomew,  1  Mete. 
(Mass.)  276,  35  Am.  Dec.  365.  See 
Honegger  v.  Wettstein,  47  N.  Y. 
Super.  Ct.  125. 

23  Bloss  V.  Plymale,  3  W.  Va.  393, 
100  Am.  Dec.  752;  Frink  v.  Green, 
5  Barb.  455;  De  Zeng  v.  Bailey,  9 
Wend.  336;  Rowley  v.  Stoddard,  7 
Johns.  207;  McAllester  v.  Sprague, 
34  Me.  290;  Bronson  v.  Fitzhugh, 
1  Hill,  185;  Shaw  v.  Pratt,  22 
Pick.  305;  McAllister  v.  Dennin, 
27  Mo.  40;  Berry  v.  Gillis,  17 
N.  H.  9,  43  Am.  Dec.  584;  Hillas 
v.  Fuller,  143  N.  Y.  Supp.  15; 
Blackmer  v.  McCabe,  86  Vt.  303; 
Commercial  &  F's.  Nat.  Bank  v. 
McCormick,  97  Md.  703;  Valley 
Sav.  Bank  v.  Mercer,  97  Md.  458. 
See  Home  Tel.  Co.  v.  Fields,  150 
Ala.  306. 

In  Mitchell  v.  Allen,  25  Hun  543, 


§    258]       CONVENTIONAL    LTQUIDATIONS    AND    niRCH  AKd  KS.        770 

clear  to  discliargc  the  (k'l)t.^*  X'iii-ioiis  nets  will  have  tlic  cUVct 
of  a  release.*^*  Tlio  act  of  siirroiulorina'  a  note  or  otlicr  cvidoiico 
of  debt  will  work  that  resiilt.^^  Tint  a  couditional  release  does 
not  take  effect  until  the  fnlfilment  of  the  condition.^'  A  be- 
quest of  the  debt  to  the  debtor;^'  the  interinarriai-e  of  the 
debtor  and  creditor;  ^^  api)()iiitinoiit  of  the  (U'htor  cxcciitorv,^" 
and  the  intentional  destruction  of  the  evidence  of  indebted- 
ness,^^ will  ])roduce  tlie  same  result.  So,  takiiii!,-  judi^inent 
against  one  of  several  jointly  bound  \vitlH)ut  issuing  process 
against  the  others  releases  those  not  sued  ;  ^^  and  so  does  laking 
the  body  of  the  debtor  or  one  of  several  on  execution ''  and  dis- 
charging him  or  them  from  custody.  Under  a  statute  which 
authorizes  any  surety  to  require  a  creditor  or  obligee  fiu-thwith 
to  institute  an  action  upon  the  accrual  of  the  right  to  do  so  and 
which  provides  that  if  it  is  not  done  within  a  reasonable  time 
the  surety  shall  be  discharged,  only  such  sureties  as  have  civen 
the  notice  required  are  released  by  the  neglect  to  sue.'^  A  re- 
lease of  damages  by  a  widow  whose  husband  was  killed  is  not  in- 
valid because  it  w\as  executed  in  order  that  anotlier  person,  who 


an  unsealed  instrument  acknowl- 
edged the  payment  of  money  fi'om 
one  of  several  persons  liable  for  the 
releasor's  injuries;  it  expressly  pro- 
vided that  it  was  not  to  affect  the 
other  defendants,  and  that  the 
claims  against  them  were  retained. 
It  was  held  that  the  discharge  of 
all  was  a  necessary  legal  result 
of  the  satisfaction  and  discharge  of 
one.  The  court  approved  "Ruble  v. 
Turner,  2  Hen.  &  Munf.  (Va.)  .18, 
where  three  persons  were  sued  for 
an  assault  and  battery;  pending  suit 
an  unsealed  stipulation  acknowl- 
edged satisfaction  from  one  of  them 
and  provided  that  it  was  not  to  af- 
fect the  liability  of  the  others.  Tt 
was  held  to  work  a  discharge  of  all. 

24  2  Par.  on  Cont.  71.3. 

25  See   Rockefeller   v.    Wedge,    14!) 
Fed.  1.30,  70  C.  C  A.  20. 

26  Reach  v.  Endress,  .'il  Barb.  .')7n ; 


Vanderbeck  v.  Vanderbeck,  30  N.  J. 
Eq.  205;  Kelly  v.  Protected  Homo 
Circle,  1.52  HI.  App.  18.3. 

27Stowc  v.  United  States  Exp. 
Co.,  179  Mich.  349. 

28Hobart  v.  Stone,   10  Pick.  21."). 

29  Curtis  V.  Brooks,  37  Barb.  470; 
Smiley  v.   Smiley,   18  Ohio  St.  r)43. 

30  Thomas  v.  Thompson,  2  .Tohna. 
470;  Eichelberger  v.  Morris,  0 
Watts,  42;  Fishcl  v.  Fishel,  7  id.  44; 
Raab's  Est.,  10  Oiiio  St.  274. 

31  Booth  V.  Smitli,  3  Woods,  10. 

32  IMitchell  V.  Brewster,  28  Til, 
103;  Anderson  v.  Levan,  1  W.  &  R. 
334;  .Tones  v.  .Tohnson,  3  id.  270,  78 
.\m.  Y)cc.  700;  Stewart's  -Apjt.,  3 
Watts,  476. 

33  Gould  V.  Could,  4  X.  TT.  173; 
Palethorpc  V.  T>eslier,  2  Uawle,  272; 
Sliarp  V.  Speckenagie,  3  S.  &  R.  404, 

34  Cochran  v.  Orr,  04  Tnd.  433. 


780  SUTHERLAND    ON    DAMAGES.  [§    258 

was  named  by  him  as  the  beneficiary  in  a  mutual  insurance  i)oli- 
cy  on  his  life,  might  realize  the  amount  due,  a  condition  of  it 
being  that  any  employee  of  a  designated  railway  company  who 
was  a  member  of  the  society  should  release  the  company  from 
all  liability  for  injuries  to  him.^^  An  agreement  by  the  owner 
of  property  which  has  been  seized  under  a  writ  against  a  third 
person  that  it  may  be  sold  and  the  proceeds  retained  in  its 
place  does  not  release  a  cause  of  action  for  the  taking  and  sell- 
ing.^^  A  contract  between  master  and  servant  which  gives  the 
latter,  when  physically  injured,  whether  as  the  result  of  his  own 
negligence  or  not,  or  when  he  is  sick,  the  right  to  pecuniary  aid 
and  other  valuable  benefits,  and  which  make  the  acceptance  of 
these  operate  as  a  release  of  the  master,  is  not  contrary  to  public 
policy. ^''^  An  unsealed  order  for  the  payment  of  money  is  not 
a  release  if  it  has  not  been  collected  or  negotiated. ^^ 

§  259.  Covenant  not  to  sue.  A  covenant  with  a  sole  debtor 
or  all  the  debtors  never  to  sue  or  not  to  sue  without  any  limi- 
tation of  time,  will,  on  the  principle  of  avoiding  circuity  of 
action,  have  the  effect  of  a  release.^^     For  the  same  reason  a 

35  state  V.  Baltimore  &  0.  K.  Co.,  Bank,    7    Har.   &   J.   92;    Parker  v. 

36   Fed.   655.     See   Fuller  v.   Balti-  Holmes,    4    N.    H.    97;    Hodges    v. 

more  &  0.  Relief  Ass'n,  67  Md.  433.  Smith,      Cro.      Eliz.      623;      Cuyler 

36Sartwell    v.    Moses,    62    N.    H.  v.  Cuyler,  2  Johns.   186;   Arnold  v. 

355.  Park,  8  Bush,  3;  2  Saund.  47s,  note 

37  Petty  V.  Brunswick  &  W.  R.  (1);  Deux  v.  Jefferies,  Cro.  Eliz. 
Co.,   109   Ga.  666.     See   §   6.  353;   Ford  v.  Beach,  11  Q.  B.  842; 

But  in  the  absence  of  such  a  con-  Willis  v.  DeCastro,  4  C.  B.   (N.  S.) 

tract  the  receipt  of  benefits  such  as  216;   Badeley  v.  Vigurs,  4  El.  &  B. 

are  usually  paid  to  injured  employ-  71;    Giles   v.   Spencer,   3   C.   B.    (N. 

ees  Avill  not  support  a  release  nor  S.)  244;  Phelps  v.  Johnson,  8  Johns, 

require  the  tender  back  thereof  be-  54;    Clark    v.    Bush,    3    Cow.    151; 

fore    a     suit    can     be     maintained.  Brown   v.   Williams,   4   Wend.   360; 

Tweeten  v.  Tacoma  Railway  &  Pow-  Hosack    v.    Rogers,    8    Paige,    229; 

er  Co.,  127   C.  C.  A.   378,  210  Fed.  Hastings  v.  Dickinson,  7  Mass.  ]55, 

828.  5  Am.  Dec.  34;    Shed  v.  Pierce,  17 

38  Boston  V.  Ocean  S.  S.  Co.,  197  Mass.  623;  Williamson  v.  McGinnis, 
Mass.  561.  11   B.  Mon.   74,   52   Am.   Dec.   561; 

39  Chicago  &  A.  R.  Co.  v.  Averill,  Lane  v.  Owings,  3  Bibb,  247 ;  Har- 
224  111.  516;  McChesney  v.  Bell,  59  vey  v.  Harvey,  3  Ind.  473;  Reed  v. 
111.  App.  84;  White  v.  Richmond  Shaw,  1  Blackf.  245;  Jackson  v. 
&  D.  R.  Co.,  110  N.  C.  456;  Ken-  Stackhouse,  1  Cow.  122,  13  Am.  Dec. 
nerty  v.  Etiwan  P.  Co.,  17  S.  C.  411,  514;  Garnett  v.  Macon,  G  Call,  .SOS; 
43  Am.  Rep.  607;  Clopper  v.  Union  Lacy  v.  Kynaston,  2   Salk.  575,   12 


§    259]       CONVENTIONAL    LIQUIDATIONS    AND    DISOHAEGES.       781 


covenant  by  the  creditor  to  iuJcninify  the  debtor  against  the 
particular  debt  is  a  release.*"  Hut  a  covenant  not  to  sue  one  of 
several  joint  debtors,  joint  obligors,  or  joint  tort  feasors  or  to 
indemnify  him,  is  not  a  release;  the  covenantee's  only  remedy 
is  by  action  on  the  covenant,*^  because  it  cannot  be  inferred 
from  such  a  covenant  that  it  was  the  intention  to  discharge  the 
debt.*^  It  cannot  avail  as  an  estoppel  in  order  to  avoid  circuity 
of  action.  It  is  said  by  high  authority  that  a  covenant  contain- 
ing no  words  of  release  has  never  been  construed  as  a  release 
unless  it  gave  the  party  claiming  the  benefit  of  tliat  constnic- 
tron  a  right  of  action  which  would  precisely  countervail  that 
to  which  he  was  liable ;  and,  unless,  also,  it  was  the  intention  of 


Mod.  {548,  1  Ld.  Rayni.  688;  Dean 
V.  Newhall,  8  T.  R.  168.  See  Row- 
ing V.  Manly,  2  Abb.  Pr.  (N.  S.) 
377. 

MConnop  V.  Levy,  11  Q.  B.  769; 
Clark  V.  Bush,  3  Cow.  151. 

«  Balsley  v.  Hetzel,  182  111.  App. 
136;  Johnson  v.  Von  Scholley,  218 
Mass.  454;  Chicago  v.  Babcock,  143 
111.  358;  Benton  v.  Mullen,  61  N. 
H.  125;  Tuckerman  v.  Newhall,  17 
Mass.  581;  Miller  v.  Fenton,  11 
Paige,  18;  Harrison  v.  Close,  2 
Johns.  448,  3  Am.  Dec.  444;  Cats- 
kill  Bank  v.  Messenger,  9  Cow.  37; 
Rowley  v.  Stoddard,  7  Johns,  207; 
Bank  v.  Osgood,  4  Wend.  607; 
Couch  V.  Mills,  21  id.  424;  Shed  v. 
Pierce,  17  Mass.  623;  Goodnov.'  v. 
Smith,  18  Pick.  414,  29  Am.  Dec. 
600;  Aylesworth  v.  Brown,  31  Ind. 
270;  Carondelet  v.  Desnoyer,  27  Mo. 
36 ;  Walker  v.  McCulloch,  4  Me.  421 ; 
Williamson  v.  McGinnis,  11  B.  Mon. 
74,  52  Am.  Dec.  561;  Lane  v.  Ow- 
ings,  3  Bibb.  247;  Frink  v.  Green,  5 
Barb.  455;  Snow  v.  Chandler,  10  N. 
H.  92,  34  Am.  Dec.  140;  Mason  v. 
Jouett,  2  Dana,  107;  Berry  v.  Gillis, 
17  N.  H.  9,  43  Am.  Dec.  584;  Durell 
V,  Wendell,  8  N.  H.  369;  Parker  v. 
Holmes,  4  id.  97;  Smith  v.  Maple- 
back,  1  T.  R.  441;  Hutton  v.  Eyre, 


6  Taunt.  289;  Gib.son  v.  Gibson,  15 
Mass.  112;  Ward  v.  Johnson,  6 
Munf.  6,  8  Am.  Dec.  729;  Thimble- 
by  V.  Barron,  3  M.  &  W.  210;  Dow 
V.  Tuttle,  4  Mass.  414,  3  Am.  Dec. 
226;  Aloff  V.  Scrimshaw,  2  Salk. 
573:  Hoffman  v.  Brown,  6  N.  J.  L. 
429;  Fullman  v.  Valentine,  11  Pick. 
159;  Garnett  v.  Macon,  6  Call,  308; 
Lacy  V.  Kynaston,  2  Salk.  575,  12 
Mod.  548,  1  Ld.  Raym.  688;  Dean 
V.  Newhall,  8  T.  R.  168;  Carey  v. 
Bilby,  129  Fed.  203,  63  C.  C.  A. 
361 ;  Texarkana  Tel.  Co.  v.  Pember- 
ton,  86  Ark.  .329;  Chicago  &  A.  R. 
Co.  V.  Averill,  224  111.  516;  Musolf 
V.  Duluth  Edison  E.  Co.,  108  Minn. 
369,  24  L.R.A.(N.S.)  451;  Robertson 
V.  Tranimell,  98  Tex.  364.  37  Tex. 
Civ.  App.  53. 

42  1(1.  Ruggles  V.  Patton,  8  Mass. 
480;  Sewall  v.  Sparrow,  16  id.  24; 
Shed  V.  Pierce,  17  id.  623;  Snow  v. 
Chandler,  10  N.  H.  92,  34  Am.  Dec. 
140:  Walker  v.  :McCulloch,  4  Me. 
421;  Durell  v.  Wendell,  8  N.  H. 
360;  Kropidlouski  v.  Pfister  &  V.  L. 
Co.,  ]49  Wis.  42],  39  L.R.A.(N.S.) 
509  ;  Walsh  v.  New  York,  etc.  R.  Co., 
204  N.  Y.  58,  37  L.R.A.(N.S.)  1137; 
Himmclberger-TT.  L.  Co.  v.  Dallas, 
infra. 


7Si 


SUTHEELAND    ON    DAMAGES. 


[§  259 


43 


the  parties  that  the  last  instrument  should  defeat  the  first 
And  where  two  are  jointly  and  severally  bound  or  liable  a  cove- 
nant not  to  sue  one  does  not  amount  to  a  release  of  the  other,** 
unless,  perhaps,  tlie  covenant  be  given  after  a  suit  had  been 
brought  separately  against  one,  and  the  creditor  had  by  that 
action  chosen  to  consider  the  covenantee  the  sole  debtor.*^  The 
amount  paid,  however,  upon  the  demand  by  way  of  partial  dis- 
charge as  a  consideration  for  such  a  covenant  will  be  regarded 
as  satisfaction  to  that  extent.*^  Nor  will  a  covenant  with  a 
debtor  not  to  sue  for  a  limited  time  sus]iend  the  right  of  action.*' 
The  release  of  the  principal  debtor  will  absolve  the  sureties, 
and  the  release  of  a  primary  security  will  discharge  collaterals.** 
But  it  is  competent  to  provide  otherwise  and  to  reserve  a  right 
to  resort  to  securities.*^  And  a  release  may,  by  express  provi- 
sion, discharge  one  of  several  who  are  liable  and  exempt  others 


43Garnett  v.  Macon,  6  Call,  308. 
See  Berry  v.  Gillis,  supra. 

44  Louisville  Times  Co.  v.  Lancas- 
ter, 142  Ky.  122;  Commercial  &  F's. 
Nat.  Bank  v.  McCormick,  97  Md. 
703;  St.  Louis,  etc.  R.  Co.  v.  Bass 
—  Tex.  Civ.  App.  — ,  140  S.  W. 
860;  Sexton  Rice  &  I.  Co.  v.  Sexton, 
48  Tex.  Civ.  App.  190;  Duck  v. 
Mayeu,  [1892]  2  Q.  B.  511;  Nicker- 
son  V.  Suplee,  174  111.  App.  136; 
Chicago  V.  Babcock,  supra;  Batos 
V.  Wills  Point  Bank,  11  Tex.  Civ. 
App.  73 ;  Lacy  v.  Kynaston,  12  Mod. 
548,  551;  Ward  v.  Johnson,  supra; 
Tuckerman  v.  Newhall,  17  Mass. 
581;  Hutton  V.  Eyre,  6  Taunt.  289. 

«  Shed  V.  Pierce,  17  Mass.  623. 

46  Snow  V.  Chandler,  10  N.  H.  92, 
34  Am.  Dec.  140;  Himmelbergcr-H. 
L.  Co.  V.  Dallas,  165  Mo.  App.  49. 

47  Id.  Durbin  v.  Northwestern  S. 
Co.,  36  Ind.  App.  123;  Guard  v. 
Whiteside,  13  111.  7;  Foster  v. 
Purdy,  5  Mete.  (Mass.)  442;  How- 
land  V.  Marvin,  5  Cal.  501 ;  Clark 
v.  Russel,  3  Watts  213;  Hamaker 
V.  Eberley,  2  Binn.  510;  Berry  v. 
Bates,  2  Blackf.  118;  Reed  v.  Shaw, 


1  id.  245;  Thalman  v.  Barbour,  5 
Ind.  178;  Lowe  v.  Blair,  6  Blackf. 
282;  Pearl  v.  Wells,  0  Wend.  291; 
Chandler  v.  Herrick,  19  Johns.  129; 
Winans  v.  Huston,  6  Wend.  471; 
Perkins  v.  Oilman,  8  Pick.  229; 
Couch  V.  Mills,  21  Wend.  424.  But 
see  Clopper  v.  Union  Bank,  7  Har. 
&  J.  92,  16  Am.  Dec.  294:  Blair 
V.  Reid,  20  Tex.  310;  Morgan  v. 
Butterfiold,  3  Mich.  615, 

48  United  States  v.  Knabe,  147 
Fed.  802;  Jackson  v.  Stackhouse, 
1  Cow.  122,  13  Am.  Dec.  514;  Mot- 
tram  V.  Mills,  2  Sandf.  189;  New- 
comb  v.  Raynor,  21  Wend.  108,  34 
Am.  Dec.  219;   Brown  v.  Williams, 

4  Wend.  360. 

A  release  by  an  acceptor  of  the 
drawer,  discharging  him  from  any 
claim  for  damages,  etc.,  as  drawer 
of  a  bill,  will  not  bar  an  action  by 
the  acceptor  for  money  paid  to  take 
up  the  bill  for  the  drawer's  accom- 
modation. Pearce  v.  Wilkins,  2  N. 
Y.  469,  afhrming  Wilkins  v.  Pearce, 

5  Denio,   541. 

49  Faneuil  Hall  Nat.  Bank  v.  Me- 
loon,  183  Mass.  66,  97  Am.  St.  416; 


§    259]       CONVENTIONAL    LIQUIDATIONS    AND    DlSCllAUGKS.        783 

from  its  opcratiou.  In  such  case  the  action  may  be  brought 
against  all  for  the  purpose  of  recovery  against  those  not  re- 
leased.^" Such  a  reservation  or  limitation  cannot  be  made  by 
parol. *^  When,  however,  the  debtor  or  one  of  several  debtors 
jointly  bound  stipulates  that  his  discharge  shall  not  prevent  a 
recovery  against  other  parties  it  is  implied  that  he  will  not  set 
it  up  against  them  when  they  have  paid  the  demand  and  call  on 
him  for  reimbursement  or  contribution.*^  A  release  cannot 
take  effect  in  futuro  or  upon  a  future  right  of  action,  but  only 
upon  some  present  right  either  complete  or  inchoate;  it  may  be 
so  framed  as  to  cut  off  a  conditional  or  contingent  liability,  as 
for  example  that  of  an  indorser.*^ 


Pierce  V.  Sweet,  33  Pa.  151;  Bruen 
V.  Marquand,  17  Johns.  58;  Stew- 
art V.  Eden,  2  Cai.  121,  2  Am.  Dec. 
222;  Sohier  v.  Loring,  6  Cush.  537; 
Hutchins  v.  Nichols,  10  id.  299; 
Seymour  v.  Minturn,  17  Johns.  109 ; 
Keeler  v.  Bartine,  12  Wend.  110; 
Hubbell  V.  Carpenter,  5  N.  Y.  171. 
See  Matthews  v.  Chicopee  Mfg.  Co., 
3  Robert.  711. 

50  Northern  Ins.  Co.  v.  Potter,  63 
Cal.  157;  Pettigrew  Mach.  Co.  v. 
Harmon,  45  Ark.  290;  Twopenny  v. 
Young,  3  B.  &  C.  211;  Lancaster  v. 
Harrison,  4  M.  &  P.  561,  6  Bing. 
726;  Solly  v.  Forbes,  2  Brod.  & 
Bing.  38;  North  v.  Wakefield,  13 
Q.  B.  538.  Contra,  Louisville  & 
N.  R.  Co.  V.  Allen,  67  Fla.  257. 

SlBronson  v.  Fitzhugh,  1  Hill, 
185;  Brooks  v.  Stuart,  9  A.  &  E. 
854. 

52  1  Par.  on  Cont.  285 ;  Hubbell  v. 
Carpenter,  5  N.  Y.  171;  Pitman  on 
Pr.  &  Surety,  181-2,  189.  See  1 
Brandt  on  Suretyship  (2d  ed.),  § 
147. 

53  Reed  v.  Tarbell,  4  IMetc. 
(Mass.)  93;  Nichols  v.  Tracy,  1 
Sandf.  278;  Pierce  v.  Parker,  4 
Mete.  (Mass.)  80;  Hastings  v. 
Dickinson,  7  Mass.  153,  5  Am.  Dec. 


34;  Gibson  v.  Gibson,  15  Mass.  110, 
8  Am.  Dec.  94. 

Parsons  says  (2  Par.  on  Cont. 
714)  :  "A  release,  strictly  speaking, 
can  operate  only  on  a  present  right, 
because  one  can  give  only  what  lie 
has,  and  can  only  promise  to  give 
what  he  may  have  in  future.  But 
where  one  is  possessed  of  a  distinct 
right,  which  is  to  come  into  effect 
and  operation  hereafter,  a  release  in 
words  of  the  present  may  discharge 
this  right." 

In  Martin  v.  Baltimore  &  O.  R. 
Co.,  41  Fed.  125,  an  employee  of  de- 
fendant became  a  member  of  a  relief 
association,  and  as  a  condition  of 
membership  and  in  consideration  of 
funds  paid  by  defendant  to  said 
association  and  its  guarant}-  of  tlie 
payment  of  the  benefits  promised  by 
the  association  signed  a  contract  re- 
leasing defendant  from  any  liability 
to  him  by  reason  of  accident  whih; 
in  its  service.  Bond,  J.,  charged  the 
jury  that  if,  prior  to  the  plaintiff's 
employment,  he  signed  such  contract 
and  received  the  benefits  arising 
therefrom  before  and  after  suit 
brought,  and  gave  receipts  for  the 
money  paid,  which  receipts  released 
and  discharged  the  defendant,  he 
could  not  recover.     Sec  §  6. 


784 


SUTllEKLAND    ON    DAMAGES. 

Section  5. 


[§  260 


TENDER. 


§  260.  Right  to  make.  Though  a  tender,  not  accepted,  does 
not  go  to  the  extent  of  liquidation  it  is  so  connected  with  the 
subject  of  payment  as  to  justify  some  consideration  of  it  in 
this  connection.  A  debtor  has  the  right  at  common  law,  before 
suit,  to  tender  the  amount  due  to  his  creditor  upon  a  certain 
and  licpiidated  demand  and  thereby  save  himself  from  the  pay- 
ment of  subsequent  interest  and  costs. 

§  261.  On  what  demands  it  may  be  made.  It  seems  that  a 
tender  may  be  made  on  a  quantum  meruit,^^  but  not  on  a  claim 
for  unliquidated  damages.^*  It  may  be  pleaded  in  an  action  on 
a  bare  covenant  for  the  payment  of  money.^^  In  an  action  for 
breach  of  contract  the  court  cannot  compel  the  acceptance  in 
mitigation  of  damages  of  the  property  for  the  nondelivery  of 
which  the  action  is  brought  on  a  tender  of  it  being  made  on  the 
trial." 

§  262.  When  it  may  be  made.  At  common  law  the  tender 
must  be  made  before  the  commencement  of  the  suit,^®  but  this 


54  Johnson  v.  Lancaster,  1  Str. 
576.  See  Dearie  v.  Barrett,  2  A.  & 
E.  82. 

55  Id.;  Green  v.  Shurtliff,  19  Vt. 
592;  Gregory  v.  Wells,  62  111.  232; 
Cilley  V.  Hawkins,  48  111.  S08;  Mc- 
Dowell V.  Keller,  4  Cold.  258;  Davys 
V.  Richardson,  21  Q.  B.  Div.  202; 
Kaw  Valley  F.  Ass'n  v.  Miller,  42 
Kan.  20;  Gamus  v.  Tew,  163  Ala. 
358. 

If  a  tender  for  such  damages  is 
authorized  by  statute,  it  must  be 
kept  good.  Dunbar  v.  DeBoer,  44 
111.  App.  615.  Contra.  McPherson 
V.  James,  69  id.  337. 

56  Johnson  V.  Clay,  7  Taunt.  486, 
1  Moore,  200.  See  Mitchell  v.  Greg- 
ory, 1  Bibb,  449;  §  383. 

57  Colby  V.  Reed,  99  U.  S.  560,  25 
L.  ed.  484. 

68  Levan  v.  Sternfeld,  55  N.  J.  L. 


41 ;  Colby  v.  Reed,  99  U.  S.  560,  25 
L.  ed.  484;  Bac.  Abr.,  Tender;  Fish- 
burne  v.  Sanders,  1  N.  &  McC.  242; 
Reed  v.  Woodman,  17  Me.  43; 
Knight  V.  Beach,  7  Abb.  Pr.  (N.  S.) 
241;  Suffolk  Bank  v.  Worcester 
Bank,  5  Pick.  106;  Jackson  v.  Law, 
5  Cow.  248;  Retan  v.  Drew,  19 
Wend.  304. 

In  Sweetland  v.  Tuthill,  54  111. 
215,  Walker,  J.,  said:  "It  is  first 
urged  that  our  practice  does  not 
warrant  the  payment  of  money  into 
court,  so  as  to  escape  the  payment 
of  the  costs  of  tlie  suit.  This  may 
be  true,  but  we  deem  it  unnecessary 
to  determine  that  question  in  this 
case.  The  law  does  clearly  authorize 
a  debtor  to  make  a  tender  of  the 
amount  he  owes  his  creditor,  and 
thus  relieve  himself  from  costs  if  a 
suit    shall    afterwards  .  be    brought. 


§    262]       CONVJKNTIOJNAL    LIQUIDATIONS    AND    DISCHARGES.       785 

limitation  has  long  since  been  generally  abrogated  by  statute. 
It  is  no  answer  to  a  plea  of  tender,  before  the  coniniencenient 
of  the  suit,  that  the  plaintiff  had,  before  such  tender,  retained 
an  attorney  and  instructed  him  to  sue  out  a  writ  against  the 
defendant  and  the  attorney  had  accordingly  a|)plied  for  such 
writ  before  the  tender,  and  it  was  afterwards  sued  out.^^  Jn 
strictness  the  plea  of  tender  is  a})plicable  only  to  cases  where 
the  part}^  pleading  it  has  never  been  guilty  of  any  breach  of 
his  contract,  and  therefore  it  is  not  good  if  made  after  the  day 
fixed  for  payment.^"  But  this  rigid  rule  is  not  adhered  to  in 
this  country  and  in  many  of  the  states  the  right  of  tender  at  any 
time  after  the  debt  is  due  is  recognized.®^  Tender  of  the  sum 
due  on  a  mortgage  any  time  before  foreclosure  discharges  the 
lien,®^  and  under  a  statute  authorizing  the  redemption  of  mort- 
gaged chattels  any  time  before  foreclosure  the  mortgagor  may 
so  make  a  tender  notwithstanding  the  mortgagee  has  taken  pos- 
session of  the  property  under  the  mortgage  after  condition 
broken.®^  Where  goods  have  been  sold  and  title  reserved  as 
security  for  the  unpaid  portion  of  the  price  and  payments  have 
been  received  after  the  time  fixed  for  full  payment  the  vendor 
cannot  retake  the  goods  without  notice  and  demand.  A  tender  on 
demand  is  sufficient  to  protect  the  vendee's  right  of  possession.*^* 

And   no   reason   is   perceived  why  a  61  Dillinf^hani  v.   Kerr    (Tex.   Civ. 

debtor  may  not,  even  after  a  suit  is  App.),    ]39    S.    W.    911;    Gnttschalk 

brought,  and  at  any  time  before  the  v.   Meisenheimer,    62    Wash.   290;    2 

trial,  make  a  sufficient  tender  and  Par.  on  Cont.  642. 

relieve   himself   from   future  costs."  A  tender  will  be  ineffectual  if  not 

See  Thurston  v.  Marsh,  14  How.  Pr.  made     within     a     reasonable     time. 

572.  Eliot  Five  Cent  Sav.  Bank  v.  Com- 

59  Briggs  v.  Calverly,  8  T.  R.  629.  mercial  Union  Assur.  Co.,  142  Mass. 
See  Kirton  v.  Braithwaite,  1  M.  &  142;  Union  Inst.  v.  Phoenix  Ins.  Co., 
W.  310;  Hull  v.  Peters,  7  Barb.  331.  196  Mass.  230,  14  L.B.A.(X.S.)   4.')9. 

60  Hume  V.  Peploe,  «  East,  168;  62  Murray  v.  O'Brien,  56  Wasb. 
Poole  V.  Tumbridge,  2  M.  &  W.  223;  361,  28  L.R.A.(N.S.)  998  (before 
Dobie  V.  Larkan,  10  Ex.  776;  City  suit)  ;  Thomas  v.  Seattle  B.  &  M. 
Bank  v.  Cutter,  3  Pick.  414;  Suffolk  Co.,  48  Wash.  560,  15  L.R.A.(N.S.) 
Bank  v.  Worcester  Bank,  5  id.  106;  1164,  125  Am.  St.  945;  Kortright 
Dewey  v.  Humphrey,  id.  187;  Fraz-  v.  Cady,  21  N.  Y.-343,  78  Am.  Dec. 
ier  V.  Cushman,  12  Mass.  277;  Rose  145. 

v.   Brown,   Kirby,   293,    1    Am.   Dec.  63  Davies  v.  Dow,  80  Minn.  223. 

22;    Tracy  v.   Strong,  2   Conn.   659;  64  Pooph-'s  F.  &  C.  Co.  v.  Crosby, 

Ashburn  v.  Poultcr,  35  id.  .'')53.  57  Neb.  282,  73  Am.  St.  504,  citing 
Suth.  Dam.  Vol.  I.— 50. 


78(3 


iSUTllERLAND    ON    IJAMAGES. 


[§  262 


A  tender  by  the  defeudant  to  the  plaintiff  pending  an  appeal 
by  the  latter  from  a  judgment  in  his  favor,  if  refused,  stops 
interest.^^  If  payment  is  required  to  be  made  within  a  certain 
period  which  ends  on  Sunday  a  tender  the  next  day  is  in  time.^^ 
It  may  be  made  on  an  interest-bearing  debt  before  it  is  due, 
tendering  the  amount  which  would  be  due  at  maturity.^'  Some 
doubt  has  been  expressed  whether  a  tender  is  good  of  a  debt  not 
bearing  interest  before  it  is  due.®^  A  vendor  cannot  be  placed 
in  default  by  a  tender  of  the  purchase-money  before  the  stip- 
ulated time  for  payment;  ®®  nor  can  a  premature  tender  affect 
the  security  for  a  debt ;  '^°  nor  any  other  right  of  the  creditor.'''^ 
A  tender  on  a  past-due  obligation  is  good  though  preliminary 
notice  of  it  is  not  given.'''^  The  necessity  of  such  notice  in 
England  when  a  post  diem  tender  of  the  money  due  upon  a 
mortgage  is  made  rests  entirely  on  custom.'''^ 

In  computing  the  time,  after  entry  for  condition  of  a  mort- 
gage broken,  within  which  a  mortgagor  may  redeem  the  day  of 
entry  is  to  be  excluded.'*     And  where  payment  must  be  made, 


O'Rourkc  V.  Hadcock,  IM  N.  Y,  541 ; 
Taylor  v.  Finley,  48  Vt.  78;  New 
Home  S.  M.  Co.  v.  Bothane,  70  Midi. 
44.'?. 

65Fcrrea  v.  Tubbs,  125   Cal.  687. 

66  Sands  v.  Lyon,  18  Conn.  18. 

67  Eaton  V.  Emerson,  14  Me.  335 ; 
Tillou  V.  Britton,  9  N.  J.  L.  120; 
Saunders  v.  Frost,  5  Pick.  259;  Ba- 
con V.   Hooker,  153  Mass.   554. 

A  tender  of  the  amount  due  on  a 
promissory  note  is  good  if  made  at 
the  time  fixed  for  payment,  though 
before  the  expiration  of  the  days  of 
grace,  interest  for  such  days  being 
included.  Wyckoff  v.  Anthony,  9 
Daly,  417.  On  appeal  this  question 
was  not  passed  upon,  it  being  held 
that  the  right  to  object  to  the  ten- 
der at  the  time  it  was  made  was 
waived.  Wyckoff  v.  Anthony,  90 
N.  Y.  442. 

68  2  Par.  on  Cont.  642.  See  Mc- 
Hard  v.  Whetcroft,  3  Har.  &  McH. 
85. 


69Rhorer  v.  Bila,  83  Cal.  51; 
Reed  v.  Rudman,  5  Ind.  409 ;  Cogan 
V.  Cook,  22  Minn.  137. 

70Noyes  v.  Wyckoff,  114  N.  Y. 
204. 

71  Moore  v.  Kime,  43  Neb.  517; 
Burns  v.  True,  5  Tex.  Civ.  App.  74; 
Abshire  v.  Corey,  113  Ind.  484.  * 

72  Sharp  V.  Wyckoff,  39  N.  J.  Eq. 
376.  Compare  Caldwell  v.  Kim- 
brough,  91  Miss.  877. 

73  Browne  v.  Lockhart,  10  Sim. 
420,  424. 

74  Wing  V.  Davis,  7  Me.  31. 

The  necessity  of  a  tender  for 
such  purpose  is  denied.  Quin  v. 
Brittain,  Hoff.  Ch.  353;  Beach 
V.  Cooke,  14  N.  Y.  508;  Casserly  v. 
Witherbee,  119  N.  Y.  522,  especially 
if  the  person  seeking  to  redeem  does 
not  know,  because  of  the  mort- 
gagee's fault,  the  sum  due.  Aust  v. 
Rosenbaum,  74  Miss.  893. 


§    262]       CONVENTIONAL    LTQITTDATIONS    AND    DISCHARGES.       7S7 

as  in  such  a  ease  within  a  enrtain  ))orio(l,  it  has  Ixhmi  made  a 
question  at  what  time  of  the  last  day  the  riiilit  of  payment  or 
tender  expires.  In  the  old  cases  it  is  held  that  payinent  should 
he  made  at  a  convenient  time  in  which  the  money  may  he 
counted  before  sunset^*     It  is  probable  tliat   the  courts  would 


75  In  Wade's  Case,  5  Coko,  114a, 
it  was  said :  "Although  the  last 
time  of  payment  of  tlie  money  hy 
force  of  the  condition  is  a  conven- 
ient time  in  which  the  money  may 
be  counted  before  sunset,  yet,  if  the 
tender  be  made  to  him  who  ought  to 
receive  it  at  the  place  specified  in 
the  condition,  at  any  time  of  the 
day,  and  he  refuse  it,  the  condition 
is  forever  saved,  and  the  mortgagor 
or  obligor  need  not  make  a  tender 
of  it  again  before  tlie  last  instant." 
See  Coke  Litt.  202. 

In  Wing  v.  Davis,  7  Me.  31,  the 
validity  of  a  tender  made  late  in  the 
evening  of  the  last  day  to  redeem 
after  entry  for  condition  broken  was 
in  question.  Mellen,  C.  J.,  said:  'In 
Hill  V.  Grange,  1  Plowd.  178,  the 
condition  was  to  pay  rent  within 
ten  days  after  certain  feasts,  in 
which  case  the  justices  imanimously 
held  that  the  lessee  had  liberty 
within  the  ten  days;  and,  therefore, 
they  observe  'the  lessee  is  in  no 
danger  as  long  as  he  has  time  to 
come  and  pay  it;  and  he  has  time 
to  come  and  pay  it  as  long  as  the 
tenth  day  continues,  and  tlie  tenth 
day  continues  until  the  night  comes ; 
and  when  the  night  is  come,  then  his 
time  elapses.  So  that  his  time  to 
pay  continues  until  the  separation 
of  day  and  night.  And  in  arguing 
this  point,  Robert  Brook,  chief  jus- 
tice, and  Saunders,  said  that  if  the 
rent  reserved  was  a  great  sum,  as 
£500  or  £1,000,  the  lessee  ought  to 
be  ready  to  pay  it  in  such  convenient 
time  before  sunset  in  which  the 
money   might   be   counted;    for   the 


lessor  is  not  bound  to  count  it  in 
the  night,  after  sunset,  for  if  so  he 
might  be  dt^ceived ;  for  Brook  said: 
'Qui  ambtilat  in  trnchria  nesrit  qua 
vadit.''  The  language  of  the  court 
in  tlie  case  of  Greeley  v.  Thurston 
does  not  advance  a  different  princi- 
ple. Tlie  question  is,  wliat  is  tlic 
whole  day  in  relation  to  a  tender  in 
contracts  of  this  eluiracter.  We  are 
not  aware  that  modern  decisions 
have  clianged  the  law  as  established 
by  the  old  cases;  or  the  facts  neces- 
sary to  be  proved  to  support  a  plea 
of  tender,  except  so  far  as  the  con- 
duct of  the  creditor  may  in  certain 
cases  amount  to  a  waiver  of  objec- 
tions against  the  formality  of  the 
tender,  or  in  case  of  his  artful 
avoidance  or  evasion.  In  the  case 
before  us  there  is  nothing  like  a 
waiver  as  to  tlie  unseasonableness 
of  the  hour;  in  fact,  this  was  the 
objection  made  by  the  defendants 
at  the  time  of  the  alleged  tender, 
which  was  attempted  to  be  made  not 
long  before  midniglit,  when  tlie  de- 
fendants and  th(!ir  families  were 
asleep,  and  all  the  lights  extin- 
guished. No  reason  has  been  as- 
signed why  a  payment  or  a  tender 
was  delayed  to  so  unusual  an  hour; 
and  if  a  loss  to  the  plaintiff  is  llic 
consequence  of  this  strange  delay, 
he  must  thank  his  own  imprudence. 
We  do  not  decide  that  a  tender  may 
not,  in  any  circumstances,  be  good, 
though  made  after  the  departure  of 
daylight;  it  is  not  necessary  to  inti- 
mate any  opinion  on  the  point.  Our 
decision  is  founded  on  the  facts  of 
this  case;  and  the  tender  not  having 


•88 


SUTHERLAND    ON    DAMAGES. 


[§   262 


not  now  recognize  the  rule  as  a  fixed  and  arbitrary  requirement, 
without  regard  to  circumstances  necessitating  a  tender  while 


been  made  in  due  season,  we  need 
not  inquire  as  to  the  sufficiency  of 
the  sum  which  was  offered." 

In  Greeley  v.  Thurston,  4  Me.  479, 
]6  Am.  Dec.  285,  the  question  was 
when  the  default  of  the  maker  of  a 
promissory  note  occurred,  he  claim- 
ing that  he  had  the  whole  of  the 
last  day  in  which  to  pay  it,  and 
that  until  that  day  is  passed  he  can- 
not be  said  to  have  broken  his  con- 
tract. Weston,  J.,  said:  "There  is 
no  question  that  with  regard  to 
bonds,  mortgages  and  instruments 
in  writing,  other  than  notes  of  hand 
or  bills  of  exchange,  the  party  who 
engaged  to  pay  money,  or  to  perform 
any  other  duty,  fulfills  his  contract, 
if  he  does  so  on  any  part  of  the 
day  appointed.  Unless  the  case  of 
negotiable  paper  forms  an  exception 
to  the  general  rule  which  attaches 
to  other  written  contracts,  the 
maker  of  a  negotiable  note  of  hand 
and  the  acceptor  of  a  bill  of  ex- 
change are  not  liable  to  be  sued 
until  the  day  after  these  instrvi- 
ments  become  due  and  payable.  In 
the  case  of  Leftey  v.  Mills,  4  T.  R. 
170,  we  have  the  opinion  of  Mr.  Jus- 
tice Buller,  given  in  strong  terms, 
although  the  decision  was  finally 
placed  upon  another  ground,  that 
the  general  rule  before  intimated 
does  not  apply  to  bills  of  exchange. 
In  that  case  a  clerk  called  with  the 
bill,  upon  which  the  question  arose, 
at  the  house  of  the  defendant,  the 
acceptor,  on  the  day  it  became  due, 
and,  not  finding  him  at  home,  left 
word  where  the  bill  might  be  found, 
that  the  defendant  might  send  and 
take  it  up;  this  not  being  done  at 
six  o'clock  in  the  evening  it  was 
noted  for  nonpayment.  Between 
seven    and    eight    o'clock    the    same 


clerk  called  again  on  the  defendant 
with  the  bill,  who  then  offered  to 
pay  the  amount  of  it,  but  refused  to 
pay  an  additional  half-crown  for  the 
notary.  Lord  Kenyon  was  of  opin- 
ion, at  the  trial,  that  the  tender  was 
sufficient,  and  directed  a  verdict  for 
the  defendant.  A  rule  was  obtained 
to  show  cause  why  the  verdict 
should  not  be  set  aside  and  a  new 
trial  granted.  The  court  said,  in 
granting  the  rule,  that  the  main 
question  was  whether  the  acceptor 
had  the  whole  day  to  pay  the  bill  in, 
or  whether  it  became  due  on  demand 
at  any  time  on  the  last  day.  After 
argument.  Lord  Kenyon  stated  in 
this,  as  in  other  contracts,  the  ac- 
ceptor had  the  whole  day;  but  said, 
if  there  were  any  difference  between 
bills  of  exchange  and  other  contracts 
in  this  respect,  the  claim  of  the  no- 
tary could  not  be  supported,  this 
being  an  inland  bill  payable  fourteen 
days  after  sight,  and  the  statute  of 
William,  which  first  authorized  a 
protest, upon  inland  bills,  giving  it 
only  upon  such  bills  as  were  payable 
a  certain  number  of  days  after  date. 
Upon  this  last  ground  Buller,  J., 
concurred;  and  he  added:  'I  cannot 
refrain  from  expressing  my  ^dissent 
to  what  has  fallen  from  my  lord  re- 
specting the  time  when  the  payment 
of  bills  of  exchange  may  be  enforced. 
One  of  the  plaintiff's  counsel  has  cor- 
rectly stated  the  nature  of  the  ac- 
ceptor's undertaking,  which  is  to 
pay  the  bill  on  demand  on  any  part 
of  the  third  day  of  grace;  and  that 
rule  is  now  so  well  established  that 
it  will  be  extremely  dangerous  to 
depart  from  it.  With  regard  to 
foreign  bills  of  exchange,  all  the 
books  agree  that  the  protest  must  be 
made  on  the  last  day  of  grace;  now 


§    262]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       789 

the  dayliglit  lasts.  There  is  some  reason  for  holding  a  tender 
unseasonable  which  is  made  late  at  night  if  the  creditor  has 
gone  to  bed,  and  declines  to  consider  it  on  that  ground,  where 
no  cause  for  so  delaying  it  exists.'^^  A  late  judicial  exposition 
of  the  question' is  to  the  effect  that,  where  no  place  is  named  in 
the  agreement  for  the  making  of  payment,  or  no  established 
usage  prevails  to  the  contrary,  as  in  the  case  of  notes  and  bills, 
the  payer  has  the  whole  of  the  day,  at  any  place  where  he  may 
meet  the  payee,  and  both  may  have  the  proper  means  and  op- 
portunity of  making  and  receiving  the  tender.  The  party 
bound  must  do  all  that,  without  the  concurrence  of  the  other,  he 
can  do  to  make  the  payment  or  perforin  the  act,  and  that  at  a 
convenient  time  before  midnight,  such  time  varying  according 
to  the  quantum  of  payment  or  the  nature  of  the  act  to  be  done. 
If  he  is  to  pay  money  it  must  be  tendered  at  a  sufficient  time 
before  midnight  for  the  tenderee  to  receive  and  count  it.'" 
This  rule  may  well  be  qualified  by  adding  a  condition  that  the 
tender  shall  be  made  at  such  time  as  will  give  the  creditor  an 
opportunity  to  ascertain  the  state  of  the  account  between  him 
and  his  debtor;  because  he  is  not  bound  to  know  at  his  peril  at 
all  times  the  exact  sum  due  him ;  ''^  and  besides  the  law  will 
doubtless  take  account  of  the  fact  that  business  men  are  not  at 

that  supposes  a  default  in  payment,  ler,  and  it  is  our  opinion  that  bills 

for  a  protest  cannot  exist  unless  de-  of    exchange    and    negotiable    notes 

fault  be  made.    But  if  the  party  has  should  be  paid  on  demand,  if  made 

until  the  last  moment  of  the  day  to  at   a    reasonable   hour,   on   the   day 

pay  the  bill,  the  protest  cannot  be  they  fall  due;  and  if  not  then  paid, 

made   on   that  day.     Therefore   the  ^^^^^^  ^^e  acceptor  or  maker  mav  be 

usage  on  bills  of  exchange  is  estab-  ^^^^  ^^  ^j^^^  ^^^^  ^^^  t,,^,  indorser 

lished;    they   are   payable  any  time  ^^^  ^j^.^^^^  ^j^^^  .^^^^^^  ^^^i^^  ^,i^.^„ 

on  the  last  day  of  grace,  on  demand,  ^^  forwarded."     Shed  v.  Brett, 

provided  that  demand  be  made  with-  ^  ^.^^^^  ^^^  _   ^..^^  ^^^^^^  ^,_  ^^^^^^^_  3 


in  reasonable  hours.     A  demand  at 


Pick.  414. 


a   very   early   hour   of   the    day,   at 

,             XT,          ,  1     ,    •     +1            ■  ■„„  76  Wing  V.  Davis,  7  Me.  n. 

two  or  three  oclock  in  the  morning,  => 

would  be  an  unreasonable  hour;  but,  '^  «""«'  ^-  ^^'^'to"'  •'  "«"«*.  141, 

on  the  other  hand,  to  say  that  the  following   Startup   v.   Macdonahl,   6 

demand   should   be   postponed   until  M.    &   G.    593,   624,   46   Eng.    C.    L. 

midnight   would    be    to    establish    a  623. 

rule  attended  with  mischievous  con-  '8  Root  v.   Bradley,  49  Mich.  27 ; 

sequences.'     Upon  consideration  we  Waldron  v.  Murphy,  40  Mich.  608; 

adopt  the  views  of  Mr.  .Justice  Bui-  Chase  v.  \\'el8h,  45  .Mich.  345. 


790 


SUTHERLAND    ON    DAMAGES. 


[§    262 


all  times  prepared  to  surrender  the  evidences  of  their  claims 
against  their  debtors.  (Commercial  paper  being  payable  on  the 
day  of  maturity  at  any  reasonable  hour  when  demanded,  a 
breach  of  the  contract  to  pay  may  occur  whenever  such  demand 
is  made.  In  the  jibsence,  however,  of  any  demand,  the  debtor 
upon  such  paper  undoubtedly  has  the  same  time  on  the  last 
day  to  fulfill  his  promise  as  when  he  is  indebted  in  any  other 
form.'^ 

§  263.  In  what  money.  The  offer  must  be  made  in  legal 
tender  money  of  the  country  if  it  is  demanded.®"  But  where 
bank  or  treasury  notes  which  circulate  as  money,  though  not 
made  a  legal  tender,  are  offered  the  objection  that  they  are  not 
legal  tender  is  deemed  one  of  form  and  waived  if  not  specially 
made,  or  if  objection  is  rested  on  some  other  ground ;  ®^  for  to 
invalidate  a  tender  or  to  divest  an  offer  to  pay  of  the  legal 


79  Sweet  V.  Harding,  19  Vt.  587. 

80  Wilson  V.  McVey,  83  Ind. 
108;"  Collier  v.  White,  07  Miss. 
133;  Wharton  v.  Morris,  1  Dall.  124; 
Moody  V.  Mahiirin,  4  N.  H.  29G; 
Lee  V.  Biddis,  1  Dall.  175;  Long  v. 
Waters,  47  Ala.  G24 ;  Hallowell  &  A. 
Eank  v.  Howard,  13  Mass.  235; 
Lango  V.  Kohne,  1  McCord,  115; 
Smith  V.  Keels,  15  Rich.  318;  Ma- 
graw  V.  McGlynn,  2G  Cal.  420;  Mar- 
tin V.  Bott,  17  Ind.  App.  444  (a 
finding  that  a  tender  was  made  of 
the  "lawful  sum  in  money"  is  not  a 
finding  that  it  was  made  in  legal 
tender).  See  Tate  v.  Smith,  70  N. 
C.  085;  Graves  v.  Hardesty,  19  La. 
Ann.  180;  Parker  v.  Broas,  20  id. 
107;  Harris  v.  Jex,  55  N.  Y.  421, 
14  Am.  Rep.  285. 

Statutes  may  affect  the  rule,  as 
where  they  provide  that  demands 
again.st  counties  shall  be  paid  by 
warrants,  in  which  event  they  must 
be  accepted  wliether  worth  their  face 
or  not.  Thompson  v.  St.  Charles 
County,  227  Mo.  220. 

Tlie  identical  money  received  "need 


not  be  tendered.    Louisville  &  N.  R. 
Co.  V.  Helm,  121  Ky.  045. 

siKoehler  v.  Buhl,  94  Mich.  490; 
Cooley  V.  Weeks,  10  Yerg.  141 ; 
Ball  V.  Stanley,  5  id.  199,  20  Am. 
Dec.  203 ;  Fosdick  v.  Van  Husan,  21 
Mich.  567 ;  Curtiss  v.  Greenbanks, 
24  Vt.  530;  Warren  v.  Mains,  7 
Johns.  470;  Holmes  v.  Holmes,  12 
Barb.  137 ;  Wheeler  v.  Knaggs,  8 
Ohio,  172;  Lockyer  v.  Jones,  Peake, 
180n.:  Wright  v.  Reed,  3  T.  R. 
554;  Brown  v.  Saul,  4  Esp.  207; 
Polglass  V.  Oliver,  2  Cr.  &  J.  15; 
Tiley  v.  Courtier,  id.  IGn. ;  Saun- 
ders V.  Graham,  Gow,  121;  Brown  v. 
Dysinger,  1  Rawle,  408;  Snow  v. 
Perry,  9  Pick.  539 ;  Towson  v.  Havre 
de  Grace  Bank,  0  H.  &  J.  53;  Wil- 
liams V.  Rorer,  7  Mo.  555;  Seawell 
V.  Henry,  0  Ala.  220;  Noe  v.  Hodges, 
3  Humph.  162;  Cummings  v.  Put- 
nam, 19  N.  H.  569;  Brown  v.  Si- 
mons, 44  id.  475;  Snow  v.  Perry,  9 
Pick.  539 ;  Stahr  v.  Hickman  G.  Co., 
132  Ky.  496;  Thompson  v.  St. 
Charles  County,  227  Mo.  220.  Com- 
pare Holland  v.  Mutual  F.  Co.,  8 
Ga.  App.  714. 


§    liO-'J]       CONVKNTIONAL    J-U^UlDATlOiNS    AND    DlSCll AlUi KS.        791 

effect  of  a  tender,  if  tlie  objection  is  to  the  medium  or  cnrrcncy 
and  not  to  tlio  sum  oilered,  the  iiround  of  it  must  lie  staled  (tr 
the  right  to  object  in  that  res})ect  will  be  waived,  and  it  caii- 
uot  afterwards  be  taken  advantage  of  in  court  on  the  score  of 
the  tender  not  being  legal ;  in  other  words,  an  objection  on  a 
point  of  fact  works  a  waiver  of  an  objection  on  points  of  hiw.*^ 
It  is  a  general  rule  that  if  a  tender  is  refused  on  a  specified 
gronnd  of  objection  no  other  can  afterwards  be  relied  upon.*' 
This  aj)plies,  however,  m\]y  to  such  objections  as  could  be  ob- 
viated, and  not  to  a  tender  made  before  a  debt  is  due."  An 
offer  of  depreciated  bank  notes,  without  any  explanation,  is  in 
legal  effect  but  an  offer  of  compromise  or  of  accord  and  satis- 
faction, and  not  a  legal  tender, ^^  unless  they  are  tendered  to  the 
l)ank  which  issued  theni.^®  Even  a  cheek  for  money  handed  the 
payee  or  sent  by  a  letter  is  a  good  tender,  where  no  objection  is 
made  on  that  ground,  but  only  to  the  amount.*^  But  when  the 
party  entitled  to  payment  is  not  present  and  has  no  op])ortunity 
to  urge  the  objection  he  cannot  be  presumed  to  have  waived  it 
by  his  silence.^^     A  note  for  dollars  payable  in  gold  and  silver 


82Neal  V.  Finley,  136  Ky.  346; 
Bunte  V.  Schumann,  46  N.  Y.  Misc. 
593;  Polglass  v.  Oliver,  2  Cr.  &  J. 
15;  Gradle  v.  Warner,  140  111.  123. 
See  Waldron  v.  Murphy,  40  Mich. 
668,  and  §  270. 

83McGrath  v.  Gegner,  77  Md. 
331,  39  Am.  St.  415. 

In  Moynahan  v.  Moore,  9  Mich. 
9,  it  was  said  to  be  "a  well  estab- 
lished principle,  that  an  objection 
made  at  the  time  of  tender  precludes 
all  others,  and  if  that  be  not  well 
grounded  the  tender  will  be  held 
good."  See  Perkins  v.  Dunlap,  5 
Me.  268,  271;  Hull  v.  Peters,  7 
Barb.  331;  Carman  v.  Pultz,  21  X. 
Y.  547;  Keller  v.  Fisher,  7  Ind. 
718;  Stokes  v.  Recknagle,  38  N.  Y. 
Super.  Ct.  368;  §  270. 

84  Mitchell  V.  Cook,  29  Barb.  243. 

85  Newberry  v.  Trowbridge,  13 
Mich.  263. 

A    certified    check    was    tendered 


and  returned  for  insufficiency  in 
amount,  but  tlie  court  found  it  was 
sufficient;  tlie  ciieck  was  tiien  de- 
posited in  court  and  wliile  there  de- 
posited, th(;  bank  on  wliidi  it  was 
drawn  failed.  It  was  lield  that  the 
check,  if  accepted,  would  liave  been 
only  conditional  payment,  and  the 
loss  resulting  from  its  nonpayment 
must  be  borne  by  tiic  drawer.  Lar- 
sen  V.  Brecne,  12  Colo.  480. 

86  Northampton  Bank  v.  Baliict, 
8  W.  &  S.  311,  42  Am.  Dec.  297. 

87  Jennings  v.  Alendenhall,  7  Ohio 
St.  258;  Jones  v.  Artliur,  8  Dowl. 
P.  C.  442;  Sliipp  v.  Stacker,  8 
Mo.  145;  Petrie  v.  Smith,  1  Bay, 
115;  Wyckoff  v.  Antliony,  9  Daly, 
417;  ITarriman  v.  Meyer,  45  .\rk. 
37:  Kitchell  \.  Schneider.  ISO  hid. 
5S!t ;  Owens  v.  C'limmonwealtii  Trust 
Co.,  183   III.  App.  6(t5. 

88Sl„an    V.     Petri.',     10    HI.    262; 


good 


792  SUTHEELAND    ON    DAMAGES.  [§    263 

is  payable  in  money,  and  neither  bullion,  nor  gold  and  silver  in 
any  other  form  than  money  is  a  legal  tender.^^  In  an  action 
for  the  breach  of  a  covenant  of  seizin  a  tender  of  the  amount 
paid  by  the  grantee  and  of  the  unpaid  notes  and  mortgage  exe- 
cuted by  him  to  secure  the  balance  of  the  purchase  price  is 

90 

§  264.  By  whom.  Of  course  it  may  be  made  by  an  author- 
ized agent.^^  Where  the  tender  is  mad©  in  behalf  of  the  debtor 
strict  authority  at  the  time  does  not  seem  to  be  requisite;  it 
being  for  his  benefit  and  in  his  name  it  may  be  effectual  with- 
out such  agency  as  would  enable  the  person  making  it  to  do  any 
act  which  would  bind  the  debtor.  Thus,  a  tender  made  for  an 
infant  by  his  uncle  has  been  held  good  though  he  was  not  at 
that  time  his  guardian.^^  So  when  an  agent  was  sent  to  tender 
a  sum  less  than  that  demanded  and  he  added  of  his  own  funds 
to  the  sum  furnished  by  his  principal  and  tendered  the  full 
amount  required,  it  was  good.^^  A  tender  made  by  an  inhab- 
itant of  a  school  district  to  one  having  a  claim  against  it  was 
held  good,  though  such  inhabitant  was  not  regularly  authorized 
to  do  so.^^  A  corporation  appointed  three  agents  to  tender  a 
sum  to  B.  and  obtain  from  him  a  reconveyance  of  a  certain 
estate  conveyed  to  him  by  the  corporation  as  security  for  a 
debt;  one  of  the  three  made  the  tender  and  it  was  held  good.®* 
A  person  having  no  interest  in  the  tender  has  no  right  to  make 
it  in  his  own  behalf.^®  He  should  make  it  in  behalf  of  the 
debtor  and  so  inform  the  creditor.®'^  The  creditor  must  object 
on  the  ground  of  a  want  of  authority  or  the  right  to  do  so  is 
waived.®^     If  a  tender  is  made  by  the  debtor's  prior  authority 

Hubbard  v.  Chenango  Bank,  8  Cow.  94  Kincaid  v.  School  Dist.,  11  Me. 

88;  Ward  v.  Smith,  7  Wall.  447.  188. 

89  Hart  V.  Flynn,  8  Dana,  190.  95  St.   Paul   Division   No.   1,   Sons 

90  Conrad    v.    Trustees    of    Grand  of  Temperance  v.  Brown,   11   Minn. 
Grove,  64  Wis.  258.  356. 

9lEslow    V.    Mitchell,    26    Mich.  96  Mahler  v.  Newbaur,  32  Cal.  108, 

500.  91  Am.  Dec.  571. 

92  Brown    v.    Dysinger,    1    Rawle,  97  Id. ;    McDougald   v.   Dougherty, 
408.     See  Coke  Litt.  2066.  llGa.  570. 

93  Read   v.   Goldring,    2    M.    &   S.  98  Lampley  v.  Weed,  27  Ala.  021. 


§    264]     CONVENTIOTs^AT.  IJQUIDATTONS  AND  DISCHARGES,  703 

or  is  subsequently  ratified  it  is  good.''  Any  person  may  make 
a  tender  for  an  idiot. ^  A  tender  of  the  amount  due  one  ^vllo 
has  purchased  land  at  a  tax  sale  is  not  good  if  it  is  made  by 
several  persons,  one  of  whom  has  no  right  to  redeem.^  A  mort- 
gagee may  refuse  a  tender  of  the  amount  due  him  made  by  one 
who  is  a  stranger  to  him  and  to  the  mortgagor,  and  who  is  not 
acting  in  the  interest  or  at  the  request  of  the  latter  though  he 
had  tax  titles  on  the  mortgaged  property,  they  not  being  subject 
to  the  mortgage.^  One  who  has  purchased  mortgaged  premises 
and  mortgaged  chattels  thereon  from  the  mortgagor,  the  former 
subject  to  existing  liens,  has  no  authority  to  make  a  tender  of 
the  amount  due  on  the  latter,  the  debt  accrued  thereby  being 
payable  on  demand  and  none  being  made.*  But  it  is  otherwise 
where  a  tender  is  made  by  the  mortgagor's  grantee  after  the 
debt  is  due,  the  creditor  having  knowledge  of  the  transfer.*  A 
tender  of  the  amount  of  a  mortgage  lien  by  the  assignee  in 
insolvency  of  the  mortgagor  has  the  same  effect  as  if  made  by 
the  latter;  ®  and  so  of  a  tender  by  the  vendee  of  chattels/  aud 
by  any  person  interested  in  the  property  respecting  which  the 
tender  was  made.*  A  tender  by  a  subsequent  grantee  of  the 
equity  of  redemption  is  good.'  An  executor  has  no  authority 
to  make  a  tender  to  a  legatee  in  a  jurisdiction  in  which  his 
foreign  letters  have  not  been  recognized  although  the  funds 
tendered  were  realized  from  the  personal  property  of  the  testa- 
tor situated  in  the  jurisdiction  in  which  the  tender  was  made. 
A  tender  so  made  is  not  validated  by  the  subsequent  issuance 
of  letters  from  a  court  in  the  jurisdiction  in  which  the  legatee 
was  at  the  time  it  was  made.'^" 

99  Forderer   v.   Schmidt,   154   Fed.  5  Yeager  v.  Groves,  78  Ky.  278. 

475,   84   C.   C.   A.   426;    Harding   v.  6  Davies  v.  Dow,  80  Minn.  223. 

Davies,    2    C.    &    P.    77;     Mclniffe  7  Thomas  v.  Seattle  B.  &  M.  Co.. 

V.  Wheelock,  1  Gray,  600;  Eslow  v.  ^g  ^^^^   ^^^^  j^  L.R.A.(N.S.)  1164, 

Mitchell,  26  Mich.  500.  -,2.-,  ^,„   gt.  945;  Flanigan  v.  Seelye, 

1  Coke  Litt.   2066;    Brown   v.   Dy-  j.^  Minn    23 

singer,  1  Rawle,  468.  .  „     ,    _     .    ..     ^  -..  ,  ,,  , 

°^  '  '         ,^    .   ,     ,„„  8  Kent  B.  &   L.  Co.  v.  Middleton, 


2  Bender  v.  Boan,  52  Ark.  132. 

3  Sinclair    v.    Learned,    51     Mich 
335. 


112  Md.  10. 

9  Kortright  v.  Cady.  21  N.  Y.  343. 


4Noyes  v.  Wyckoff,  114  N.  Y.  204,  10  Welch  v.  Adams,  152  ^Vlass.  74. 

30  Hiin,  466.  0  L.K.A.  244. 


704  StTTIIEKLAND    ON    DAMAGES.  [^   265 

§  265.  To  whom.  A  tender  should,  in  general,  be  made 
direct  to  the  creditor.^^  But  it  may  be  made  to  his  attorney  ^^ 
or  authorized  agent,"  although  such  attorney  falsely  denies  his 
authorit}^,^*  or  such  agent  has  been  instructed  not  to  receive  it.-^* 
A  tender  to  an  agent  is  good  though  it  was  made  on  the  sup- 
position that  he  continued  to  be  the  party  in  interest.^^  An 
attorney,  having  a  demand  for  collection,  wrote  the  debtor  re- 
questing him  to  pay  it  at  the  attorney's  office;  the  debtor  sub- 
sequently made  a  tender  in  the  absence  of  the  attorney  to  his 
clerk  in  his  office,  and  it  was  held  good.'^''^  Such  a  request  of 
payment  gives  the  debtor  a  right  to  treat  any  person  having 
charge  of  such  office  in  the  absence  of  the  attorney  as  author- 
ized to  receive  the  money.'^*  But  a  letter  from  the  attorney, 
demanding  payment  to  him  instead  of  at  his  office,  will  not 
warrant  a  tender  to  a  writing  clerk  there  who  disclaims  and 
has  not  authority  to  receive  it.^^ 

When  an  instrument  is  payable  at  a  bank  and  is  lodged  there 
for  collection  the  bank  becomes  the  agent  of  the  payee  to  receive 
payment.     The  agency  extends  no  further,  and  without  special 

11  Cassville  R,  M.  Co.  v.  ^tna  Ins.  15  Muffatt  v.  Parsons,  1  Marsh. 
Co.,  105  Mo.  App.  146;   Southwest-       55,  5  Taimt.  307. 

ern  Tel.  &  T.  Co.  v.  Luckett    (Tex.  16  Conrad    v.    Trustees    of    Grand 

Civ.  App.),  127   S.  W.  856;   Briede  Grove,  64  Wis.  258. 

V.   Babst,   131   La.   159;    Hornby   v.  n  Wihiiot    v.    Smith,    3    C.    &    P 

Cramer,  12  How.  Pr.  400;   Smith  v.  453;    Kirton    v.    Braithwaite,    1    M. 

Smith,  2  Hill,  351.  &  W.  310. 

A  tender  pending  appeal   is  good  18  Watson   v.    Hotherington,    1    C. 

if   made   to   the    opposite    party    in  &    K.    36;    Kirton    v.    Braithwaite, 

person.     Ferrea  v.  Tub))s,   125   Cal.  supra. 

Qgj  19  Bingham    v.    Allport,    1    N.    & 

12  Salter  v.  Sliove,  60  Minn.  483;        ^^-  ^98. 

Brown  v.  Mead,  68  Vt.  215;  Billiot  ^    tender    to    an    attorney    with 

whom  a  demand  is  lodged  for  collec- 


V.  Robinson,  13  La.  Ann.  529;  Wil- 
mot  V.  Smith,  3  C.  &  P.  453. 

13  Louisville  &  N.  R.  Co.  v.  Helm, 


tion,   before  suit  is  brought,   is  un- 
availing;  if  made  after  suit  is  com- 
menced tlie  costs  must  be  tendered. 
121    Ky.    645;    Hargous   v.    Lahens.       Thurston  v.  Blaisdall,  8  N.  H.  367. 

3  Sandf.  213;  Goodland  v.  Blewith,  j^^  pj^^j^  ^  Boning,  4  C.  P.  Div. 
1  Camp.  477;  Anonymous,  1  Esp.  ;,43^  the  judges  disagreed  as  to  the 
349 ;   Continental  Ins.  Co.  v.  Miller,       effect  of  a  disclaimer  by  a  solicitor's 

4  Ind.  App.  553.  cleric    who    said    the    solicitor    was 
l*McTniffe  v.    Wheelock,   1    Gray,       out  of  the  office  and  he,  the  clerk, 

^•00.  had  no  instructions. 


§    205]      COWVEJN'TIO-NAL    LH^UIDATIOWS  AND  DISCUAKUKS.  7'J5 

authority  such  agent  can  only  receive  payment  of  the  dchl  duo 
his  principal  in  the  legal  currency  of  the  country,  or  in  hills 
which  pass  as  money  at  their  par  value  by  the  consent  of  the 
community.^"  A  tender  nuiy  he  ni;id(>  to  a  (dcrk  in  a  store  for 
goods  there  purchased  and  it  will  be  ccpiivalent  to  a  tender 
made  to  the  principal,  even  though  prior  thereto  the  claim  has 
been  lodged  with  an  attorney  for  suit.  Such  clerk  can  also 
waive,  either  by  implication  or  expressly,  any  objection  to  the 
validity  of  the  tender  on  the  ground  of  its  being  in  bank  bills 
and  not  in  specic.^^  Where  there  is  no  general  agency  to  col- 
lect, but  power  simjily  to  receive  the  sum  dcnumded,  a  tender 
of  a  less  sum  to  such  special  agent  is  invalid;  as  where  the 
plain tiif  sent  his  son  to  demand  a  specific  amount  for  an  un- 
liquidated claim  it  was  held  that  an  offer  to  him  of  a  less  sum 
could  not  be  considered  as  a  tender  to  the  ijlaintilT.^^  Where 
an  agent  of  the  defendants  had  been  notified  not  to  receive  a 
tender,  but  to  refer  the  i^laintiff  to  a  third  person  named,  of 
which  the  plaintiff  had  notice,  the  latter  was  at  liberty  to  seek 
the  person  to  whom  he  had  been  so  referred  or  the  defendants, 
at  his  election,  and  could  make  the  tender  to  either. ^^  A  tender 
made  to  the  holder  of  a  note  is  good  though  he  subsequently 
assigns  it;^*  but  it  is  otherwise  as  to  a  tender  to  the  original 
payee  if  he  has  transferred  the  obligation. ^^  A  mortgagor  (u* 
his  assignee  must  make  tender  to  the  mortgagee  or  person  claim- 
ing under  him ;  it  cannot  be  made  to  the  assignee  of  the  con- 
tract secured  by  the  mortgage.^^  Money  due  to  a  ccsltii  i/iic 
trust  should  be  tendered  to  the  trustee.^'  Ihit  a  tender  lo  :in 
executor  while  in  another  state,  before  he  had  acted  or  quali- 
fied, will  not  stop  interest.^^  If  a  tender  is  made  to  a  clerk, 
agent,  or  other  representative  of  the  creditor  it  must  be  shown 
that   he   had   authority   to   receive   the   moncy.^''      A    debt   duo 

20  Ward  V.  Smitli,  7  Wall.  447,  10  seSmitii  v.  Kdlcy.  '27  Mf.  •i:i7.   Hi 

L.  cd.  207.     Bcc  §  231.  Am.  Doc  .505. 

21Hoyt  V.  Byrni'S,  11   Mo.  475.  27  Clialioon    v.    ilolii'iil.ack.    IC    S. 

22Chipman  v.  Bates,  5  Vt.  14:5.  &  K.  425,  16  Am.  Deo.  587;  Cook  v. 

23  Hoyt  V.  Hall,  3  Bosw.  42.  Krlley,    9    Bosw.    .358;    Ilayward    v. 

24Al)shire  v.  Corey,  113  Ind.  484.  Mimjrcr.   14  Jowa,  51(i. 

25  Burns  v.  True,  5  Tex.  Civ.  App.  28  '|„,l(l  v.   Parker,  1  N.  .1.  L.  45. 

74.  29Jlargou8    v.    Laliens,    .3    Saiidf. 


'96 


SUTHERLAND    ON    DAMAGES. 


[§  265 


jointly  to  several  persons  may  be  tendered  to  either,  but  should 
be  pleaded  as  tendered  to  all.^"  If  no  place  has  been  appointed 
for  payment  a  tender  to  the  creditor  wherever  he  may  be  found 
is  good,^^  but  if  it  is  made  without  notice  at  an  unusual  or  unfit 
place  it  may  be  declined  if  it  is  necessary  for  the  creditor  to 
examine  the  account  between  him  and  his  debtor.^^  On  the 
refusal  of  an  actual  tender  by  the  creditor  of  a  city,  money 
placed  in  the  hands  of  its  treasurei  as  a  special  fund  and  which 
is  available  to  the  creditor  at  will  does  not  draw  interest. ^^ 

§  266.  It  must  be  sufficient  in  amount.  The  tender  must  in- 
clude the  full  amount  due.  A  tender  of  part  of  a  debt  is 
inoperative.^*     The  creditor  is  not  obliged  to  receive  it.     The 


213 ;  Goodland  v.  Blewith,  1  Campb. 
477 ;  Anonymous,  1  Esp.  349 ;  Jewett 
V.  Earle,  53  N.  Y.  Super.  Ct.  349. 
And  if  he  states  he  has  no  author- 
ity to  receive  it  and  says  he  will 
speak  to  one  who  has,  the  tenderer 
must  wait  a  reasonable  time  to 
learn  whether  the  tender  has  been 
accepted  or  rejected.  Sisson  v. 
Barnum,  157  App.  Div.  (N.  Y.)  149. 

30Wyckoff  V.  Anthony,  9  Daly, 
417;  Douglas  v.  Patrick,  3  T.  R. 
683;  Southard  v.  Pope,  9  B.  Mon. 
264;  Beebe  v.  Knapp,  28  Mich.  53; 
Flanigan  v.  Seelye,  53  Minn.  23. 
See  Dawson  v.  Ewing,  16  S.  &  R. 
371. 

31  Slingerland  v.  Morse,  8  Johns. 
474;  Hunter  v.  Le  Conte,  6  Cow. 
728.     See  §  214. 

32Waldron  v.  Murphy,  40  Mich. 
668;  Chase  v.  Welsh,  45  id.  345; 
Root  V.  Bradley,  49  Mich.  27. 

33Eau  Claire  v.  Eau  Claire  W. 
Co.,  137  Wis.  517.     See  §  274,  note. 

34Kitchell  V.  Schneider,  180  Ind. 
589 ;  Browning,  King  &  Co.  v. 
Chamberlain,  210  N.  Y.  270;  Oakes 
V.  Buckman,  87  Vt.  187 ;  Ebersole  v. 
Addington,  156  Ala.  575;  Wood 
V.  Howland,  127  Iowa,  394 ;  Crook  v. 
New  York  L.  Ins.  Co.,  112  Md. 
268;     Kingsley    v.     Anderson,     103 


Minn.  510;  Schwantowsky  v.  Dy- 
kowsky  (Tex.  Civ.  App.),  132  S.  W. 
373;  Foxley  v.  Rich,  35  Utah,  162; 
Hackett  v.  Van  Dusen,  132  Wis. 
204;  San  Pedro  L.  Co.  v.  Reynolds, 
111  Cal.  588;  Ilelphrey  v.  Chicago, 
etc.  R.  Co.,  29  Iowa,  480 ;  Louisiana 
M.  Co.  V.  Le  Sassier,  52  La.  Ann. 
2070;  Hoppe  &  S.  B.  Co.  v.  Sacks, 
11  Ohio  C.  C.  3;  Elderkin  v.  Fel- 
lows, 60  Wis.  339;  Dixon  v.  Clark, 
5  C.  B.  365;  Baker  v.  Gasque,  3 
Strobh.  25;  Patnote  v.  Sanders,  41 
Vt.  66,  98  Am.  Dec.  564;  Boyden 
V.  Moore,  5   Mass.  365. 

In  the  last  case  Parsons,  C.  J., 
said:  "It  is  a  well-known  rule  that 
the  defendant  must  take  care  at  his 
peril  to  tender  enough ;  and  if  he 
does  not,  and  if  the  plaintiff  re- 
plies that  there  is  more  due  than 
is  tendered,  which  is  traversed,  the 
issue  will  be  against  the  defendant, 
and  it  will  be  the  duty  of  the  jury 
to  assess  for  the  plaintiff  the 
amount  due  on  the  promise;  and  if 
not  covered  by  the  money  tendered, 
he  will  have  judgment  for  the  bal- 
ance. ...  In  calculating  there 
may  be,  and  probably  must  arise, 
fractions  not  to  be  expressed  in  the 
legal  money  of  account;  these  frac- 
tions are  trifles,  and  may  be  reject- 


§    266]      CONVENTIONA].    I-IQUIDATIONS  AND    I  )1  S( '  II  A  KGIiS.  7l)7 

debtor  must,  at  his  peril,  tender  enoiigli ;  if  his  tender  is  less 
it  will  be  of  no  avail,  though  the  deficiency  is  small  and  occurred 
by  mistake.^^  If  a  tender  is  made  after  suit  it  must  cover  the 
costs  and  interest  due.^^  Tlic  fact  that  the  ])]aintitf  did  not  in- 
form the  defendant  that  he  had  sunnnoned  witnesses  was  of  no 
importance.  If  the  defendant  desired  any  information  as  to 
the  amount  of  the  plaintiff's  costs  from  him  he  should  have  in- 
quired, for  he  knew  a  suit  had  been  brought  and  some  costs  had 
accrued,  and  if  he  chose  to  make  a  tender  without  inquiry  the 
plaintiff  certainly  was  not  in  fault.^'  Tender  of  the  amount 
due  on  a  note  must  include  attorney's  fees  when  the  note  stip- 
ulates for  their  payment  and  is  in  the  hands  of  an  attorney  for 
collection,  and  there  is  a  dispute  as  to  the  amount  due.^^     But 


ed.  ...  If  any  sum  large  enougli 
to  be  discharged  in  the  current  coin 
of  the  country  is  a  trifle  which,  al- 
though due,  the  jury  are  not 
obliged  to  award  to  the  plaintiff, 
the  creditor,  it  will  be  difficult  to 
draw  a  line  and  say  how  large  a 
sum  must  be  not  to  be  a  trifle.  The 
law  fixes  no  such  rule."  See  next 
note. 

Under  the  code  of  California  a 
tender  is  not  ineffectual  because  it 
is  insufficient  in  amount  vmless  it 
is  objected  to  for  that  reason  at 
the  time  it  is  made.  Oakland  Bank 
V.  Applegarth,  67  Cal.  86. 

35  Bolton  V.  Gifford,  45  Tex.  Civ. 
App.  140;  Kleeb  v.  Mclnturff,  71 
Wash.  419. 

In  Harris  v.  Jex,  55  N.  Y.  421, 
14  Am.  Rep.  285,  a  tender  was  made 
upon  a  debt  contracted  prior  to 
the  passage  of  the  legal  tender  law 
of  1862 ;  and  this  tender  was  made 
in  legal  tender  notes  after  the  deci- 
sion in  Hepburn  v.  Griswold,  8 
Wall.  603,  19  L.  ed.  513,  and  before 
the  reversal  of  that  case  in  Knox 
V.  Lee,  12  Wall.  457,  20  L.  ed.  287; 
it  was  refused  because  it  was  not 
the  currency   payable.      And   it   was 


licld  tliat  the  plaintiff  was  justified 
in  refusing  tlie  tender;  he  had  a 
right  to  refuse  on  the  decision  of 
the  highest  judicial  tribunal  in  the 
land;  that  decision,  for  tlie  time 
being,  was  the  law,  and  not  mere- 
ly tlie  evidence  of  it;  but  it  was 
intimated  that  if  the  tender  had 
been  kept  good  it  would  have  been 
a  defense  to  interest  and  costs,  after 
the  decision  of  Knox  v.  Lee. 

The  failure  to  tender  the  inter- 
est for  three  days  after  the  ma- 
turity of  a  note  and  prior  thereto  is 
immaterial.  Matzger  v.  Page,  02 
Wash.  170.  And  so  of  the  failure 
to  tender  one  and  one  quarter  centa 
due  as  interest.  Milligan  v.  Mar- 
shall, 38  Ba.  Super.  60. 

86  Browning,  King  &  Co.  v.  Cham- 
berlain, 210  N.  Y.  270;  Donaldson 
v.  Severn  River  G.  Co.,  138  Fed. 
691;  O'Meara  v.  Cardiff  C.  Co.,  154 
111.  App.  321  ;  Smith  v.  Wilbur,  35 
Vt.  133;  Briede  v.  Babst,  131  La. 
159. 

37  Rouyer  v.  Miller,  16  Ind.  App. 
519.  See  Haskell  v.  Brewer,  11  Me. 
258;  Xelson  v.  R<il)son,  17  Minn. 
284. 

38Smitli  v.  Pilcher,  130  Ga.  350. 


798  sutiiji;klawd  on  damages.  [§  266 

if  the  payee  refuses  to  give  information  concerning  the  fees  or 
the  maker  be  ignorant  of  the  employment  of  an  attorney,  or 
the  tender  be  refused  upon  other  grounds  and  the  maker  be 
thereby  misled  the  court  would  protect  him  in  making  the 
tender.^^  The  necessity  of  tendering  the  whole  sum  due  does 
not  require  the  debtor  to  tender  a  sum  to  cover  all  demands  his 
creditor  may  have  against  him.  He  may  tender  for  the  pay- 
ment of  any  one  of  several  debts  which  is  distinct  and  sep- 
arable.*" A  tender  of  a  gross  sum  upon  several  demands,  with- 
out designating  the  amount  tendered  upon  each,  is  sufficient." 
Where,  however,  there  are  several  separate  demands  sued  for, 
and  there  has  been  a  tender  made  of  a  less  sum  than  the  amount 
demanded  for  the  whole,  but  not  specifically  applied  to  any 
separable  })ortion  of  it,  it  has  been  held  that  it  cannot  be  ap- 
plied in  pleading  to  either.*^  A  tender  of  the  amount  justly 
due  by  the  condition  of  a  bond  is  good  although  less  than  the 
penalty.*^  The  penalty  is  only  nominally  the  debt,  and  the 
tender  of  that  sum  which  if  paid  would  satisfy  the  bond  will  be 

39  Emerson  v.  White,  10  Gray,  niand,  D.  may  plead  this  tender  in 
351;  People  v.  Banker,  8  How.  Pr.  bar  of  an  action  on  the  joint  de- 
258;  Collier  v.  White,  67  Miss.  133.       mand,  and  should  state  it  as  a  ten- 

But  a  tender  made  before  defend-  dor   to   A.,   B.   and   C.      Douglas   v. 

ant  was  served  with  process  is  good  Patrick,    3     T'.     R.     683.       But   see 

though  costs  are  not  included.    Ash-  Strong    v.     Harvey,    3     Bing.     304, 

burn  V.  Poultcr,  25  Conn.  553.  where  it  is  held  that  if  a  party  has 

40  Wright  V.  Robinson,  84  Hun,  separate  demands  for  unequal  sums 
172;  North  Chicago  St.  R.  Co.  v.  against  several  persons,  an  offer  of 
Le  Grand  Co.,  95  111.  App.  435;  one  sum  for  the  debts  of  all  will 
Hurt  V.  Cook,  151  Mo.  417 ;  East  not  support  a  plea  stating  that  a 
Tennessee,  etc.  R.  Co.  v.  Wriglit,  7G  certain  portion  of  this  sum  was  ten- 
Ga.  532;   2  Par.  on  Cont.  641.  dered  for  the  debt  of  one. 

41  Johnson  v.  Cranage,  45  Mich.  It  was  held  in  Hampshire  Manuf'a 
14;  Thetford  v.  Hubbard,  22  Vt.  Bank  v.  Billings,  17  Pick.  89,  that 
440.  a   tender   of   the   amount   due   on   a 

42  Hardingham  v.  Allen,  5  C.  B.  joint  and  several  promissory  note 
793.  If  A.,  B.  and  C.  have  a  joint  by  a  surety  while  an  action  brought 
demand,  and  C.  has  a  separate  dc-  by  a  holder  against  the  principal 
mand  against  D.,  and  D.  offers  A.  to  was  pending  will  not  discharge  the 
pay  him  both  the  debts,  which  A.  surety  from  his  liability  unless  he 
refuses,  without  objecting  to  the  offers  to  indemnify  the  holder 
form  of  the  tender,  on  account  of  against  the  costs  of  such  action, 
being  entitled  only  to  the  joint  de-  43  Tracy  v.  Strong,  2  Conn.  659. 


§    266]      CONVENTTONAT.  T.TQITTDATTONS  AND  DTSOirAROKS. 


•00 


effectual.**  If  money  lias  been  paid  in  ('oni])roiiiiso  and  settle- 
ment of  a  claim  fraudulently  effected  it  is  sufficient  to  tend(M- 
the  sum  received;  interest  on  it  need  not  be  added,  nor  tiie 
money  voluntarily  expended  for  tbe  benefit  of  tlie  ])arty  mak- 
ino-  the  tender.**  A  tender  is  not  invalidntcd  liy  licin^-  of  a 
larger  sum  than  the  amount  it  is  offered  to  pay  or  is  demanded 
even  though  change  is  requested,  unless  objection  is  made  to  it 
on  that  account.**^ 


44  See  Fraser  v.  Little,  13  Mich. 
395;  Spencer  v.  Perry,  18  Mich.  394. 

«  Louisville  &  N.  R.  Co.  v.  Helm, 
121  Ky.  645. 

46  North  Chicago  St,  R.  Co.  v.  Le 
Grand  Co.,  95  111.  App.  435. 

In  Dean  v.  James,  4  B.  &  Ad. 
546,  it  was  held  that  a  tender  of 
201.  9s.  Qd.  in  bank  notes  is  sufficient 
to  support  a  plea  of  tender  of  201. 
Taunton,  J.,  referring  to  Watkins 
V.  Robb,  2  Esp.  710,  said:  "There 
the  defendant  tendered  a  5i.  note 
and  demanded  Grf.  cliange,  whicli  tlie 
defendant  was  not  bound  to  give." 
Betterbee  v.  Davis,  3  Camp.  71. 
Littledale,  J.,  said :  "This  case  falls 
within  the  third  resolution  in 
Wade's  Case,  5  Co.  115,  that  if  a 
man  tender  more  than  he  ought  to 
pay  it  is  good,  for  omne  majiis  coti- 
tinet  in  se  minus,  and  the  other  is 
bound  to  accept  so  mucli  of  it  as  is 
due  to  him."  The  argument  against 
the  tender  was  that  a  subsequent 
demand  must  be  of  the  specific  sum 
tendered,  and  if  that  sum  is  more 
than  the  plaintiff's  demand,  it  would 
be  inapplicable.  Referring  to  this 
Littledale,  J.,  continues:  "As  to  re- 
plying a  demand  it  is  not  the  plain- 
tiff's business  to  demand  more  tlian 
is  actually  due ;  it  is  enough  if  in 
his  replication  lie  admits  that  the 
sum  due  was  tendered,  but  alleges 
that  he  afterwards  demanded  that 
and  it  was  refused." 

Lord   Abinger   said    in    Bevans   v. 


Rees,  5  M.  &  W.  300:  "1  am  pre- 
pared to  say  that  if  (he  creditor 
knows  the  amount  due  to  him,  and 
is  offered  a  larger  sum,  and  witliout 
any  objection  of  a  want  of  change 
makes  quite  a  collateral  objection, 
that  will  be  a  good  tender."  Black 
v.  Smith,  Peake,  88;  Cadman  v. 
Lubbuck,  5  D.  &  Ry.  289;  Hubbard 
v.  Chenango  Bank,  8  Cow.  89;  Pat- 
terson V.  Cox,  25  Ind.  261;  Douglas 
V.  Patrick,  3  T.  R.  683;  Dean  v. 
James,  4  B.  &  Ad.  546;  Astley 
V.  Reynolds,  2  Str.  916;  Strong  v. 
Harvey,  3  Bing.  304;  Robinson  v. 
Cook,  6  Taunt.  336;  Blow  v.  Rus- 
sell, 1   C.  &   P.  365. 

Cadman  v.  Lubbuck,  5  D.  &  Ry. 
289.  Wliere  the  defendant,  who 
owed  the  plaintiff  lOS/.  for  princi- 
pal and  interest  on  two  promissory 
notes,  in  consequence  of  an  applica- 
tion from  the  plaintiff's  attorney  for 
the  amount  sent  a  person  to  the  at- 
torney, who  told  such  attorney  tluit 
he  came  to  settle  the  amount  due 
on  the  notes,  and  desired  to  he  in- 
formed what  was  due,  and  laid 
down  150  sovereigns  on  a  desk,  out 
of  which  he  desired  the  attorney  to 
take  what  was  duo  for  sudi  princi- 
pal and  interest,  but  the  attorney 
refused  to  do  so,  unless  a  shop  ac- 
count due  from  the  plaintiff  to  the 
defendant  was  fixed  at  a  certain 
amount,  held  1o  he  a  good  tender. 
Bevans  v.  Rees,  5  M.  &  W.  30(5.  A 
tender  has  been  held  vitiated  by  de- 


800 


SUTHERLAND    ON    DAMAGES. 


[§   267 


§  267.  Same  subject.  The  creditor  is  entitled  to  payment  in 
money  made  legal  tender  by  law,  and  the  debtor  has  a  right  to 
make  payment  in  that  currency.  Debts  made  payable  in  the 
denominations  of  the  legal  tender  currency  are  solvable  in  that 
currency  at  par  without  regard  to  when  or  where  they  were  con- 
tracted, or  the  relative  value  of  the  denominations  in  that  cur- 
rency at  and  after  the  contract  was  made.  The  legal  tender 
currency  for  the  time  being,  when  the  contract  is  performed  or 
enforced,  is  the  currency  applicable  to  it.*'  If  money  be  pay- 
able in  the  legal  currency  of  another  country  the  legal,  rather 
than  the  market,  equivalent  is  the  amount  to  be  paid.  A  con- 
tract to  pay  in  ^'dollars"  may  require  payment  in  either  coin  or 
legal  tender  currency  provided  by  the  government  according  to 
the  intention  of  the  parties.  Treasury  notes,  commonly  called 
^'greenbacks,"  are  the  currency  payable,  unless  the  contract  it- 
self indicates  the  intention  that  the  debt  be  paid  in  coin."     A 


livering  a  counter-claim  at  the  same 
time.  Thus,  where  a  defendant  ten- 
dered seven  sovereigns  in  payment 
of  a  demand  of  61.  lis.  6d.,  and  said 
to  the  plaintiff,  "There,  take  your 
demand,"  and  at  the  same  time  de- 
livered a  counter-claim  upon  the 
plaintiff  of  1^  5s.,  who  said  you 
must  go  to  my  attorney :  Held,  not 
a  good  tender  to  an  action  for  the 
61.  17s.  6d.  Brady  v.  Jones,  2  D. 
&  R.  305;  and  see  Holland  v.  Phil- 
lips, 6  Esp.  46.  See  Laing  v. 
Meader,  1  C.  &  P.  257. 

In  Saunders  v.  Frost,  5  Pick.  259, 
269,  there  was  a  tender  of  a  mort- 
gage debt  which  was  not  due,  and 
bearing  interest,  and  of  which  only 
interest  was  due.  Objection  was 
made  by  counsel  that  the  tender  was 
made  of  a  debt  not  due.  The  tender 
was  of  a  sum  equal  to  the  interest 
and  the  principal.  Parker,  C.  J., 
said :  "But  it  appears  to  us  that, 
in  order  to  avail  himself  of  this  ob- 
jection, the  defendant  ought  to  have 
shown  a  willingness  to  take  what 
was  due  and  to  have  stated  that  lie 


claimed  to  hold  possession  only  for 
the  nonpayment  of  interest."  Odom 
V.  Carter,  36  Tex.  281. 

A  tender  of  $5  by  a  street-car 
passenger  who  has  no  smaller  money, 
is  reasonable,  and  his  ejection  from 
the  car  thereafter  is  unlawful.  Bar- 
rett V.  Market  St.  C.  R.  Co.,  81  Cal. 
296,  8  Am.  Neg.  Cas.  69,  15  Am.  St. 
61,  6  L.R.A.  336. 

47  Story  on  Prom.  Notes,  §  390 
and  note;  George  v.  Concord,  45  N. 
H.  434;  Wood  v.  Bullens,  6  Allen, 
516;  Pong  v.  De  Lindsey,  1  Dyer, 
82a;  Dooley  v.  Smith,  13  Wall.  604, 
20  L.  ed.  547;  Legal  Tender  Cases, 
12  id.  457;  Trebilcock  v.  Wilson,  id. 
687;  Vorges  v.  Giboney,  38  Mo.  458; 
Warnibold  v.  Schlichting,  16  Iowa, 
243 ;  Murray  v.  Harrison,  47  Barb. 
484;  Wilson  v.  Morgan,  4  Robert. 
58;  Strong  v.  Farmers,'  etc.  Bank, 
4  Mich.  350;  Wills  v.  Allison,  4 
Heisk.  385;  Bond  v.  Greenwald,  id. 
453;  Caldwell  v.  Craig,  22  Gratt. 
340. 

48  Trebilcock  v.  Wilson,  supra. 


§    267]       CONVENTIONAL    LTQTITDATIONS    AND    DTSCITAROES.       ROl 

contract  to  pay  in  "dollars"  in  fi;old  aiul  silxci-  is  a  contract  for 
the  direct  payment  of  money;  neither  huUioii,  irold  dust,  gold 
and  silver  bars,  old  spoons  and  rings,  are  a  proper  tender  in 
satisfaction.*^  But  current  bank  notes,  which  pass  as  money, 
offered  in  payment  and  not  objected  to  on  that  ground,  will 
constitute  a  good  tender.^"  When  a  debtor  tenders  a  bank 
check  in  payment  of  a  debt  and  the  creditor  expi-essly  waives 
all  objection  to  that  mode  of  payment  and  only  objects  on  some 
other  ground,  it  is  good ;  ^^  but  not,  as  a  rule,  othcrwise.^^ 
If  numerous  payments  have  been  made  by  the  debtor  to 
the  creditor  by  checks  and  no  objection  to  them  has  been 
raised,  a  tender  by  cheek  is  sufficient,  though  it  would  be 
otherwise  if  the  creditor  informed  his  debtor  of  an  objection 
to  continue  receiving  them.®^  If  a  check  is  objected  to  on  any 
other  ground  than  that  it  is  not  money  the  effect  of  the  tender 
can  only  be  got  rid  of  by  a  personal  demand  and  a  refusal  to 
pay.^*  Where  a  note  is  payable  to  a  bank  in  which  the  debtor 
has   a    deposit   his   check   on    snch    bank    is    a   good    tender,^^ 


49  Hart  V.  Flynn,  8  Dana,  190. 
See  Lang  v.  Waters,  47  Ala.  024; 
McCune  v.  Erfort,  43  Mo.  134. 

50  Brown  v.  Simons,  44  N.  II.  475; 
Ball  V.  Stanley,  5  Yerg.  199,  20  Am. 
Dec.  203;  Noe  v.  Hodges,  3  Hnmpli. 
102;  Seawell  v.  Henry,  0  Ala.  226; 
Cummings  v.  Putnam,  19  N.  H.  569; 
Williams  v.  -Rorer,  7  Mo.  556; 
Cooley  V.  Weeks,  10  Yerg.  141; 
Snow  V.  Perry,  9  Pick.  539 ;  Wheeler 
V.  Knaggs,  8  Ohio,  169;  Foadick  v. 
Van  Husan,  21  Mich.  567;  Curtiss 
V.  Greenbanks,  24  Vt.  536;  Petrie 
V.  Smith,  1  Bay,  115;  Brown  v.  I)y- 
singer,  1  Rawle,  408.  See  Ward  v. 
Smith,  7   Wall,  447,   19  L.  ed.  207. 

^1  Kollitz  V.  Equitable  Mut.  F. 
Ins.  Co.,  92  Minn.  234;  Dale  v. 
Richards,  21  D.  C.  312;  Jennings 
V.  Mendenhall,  7  Ohio  St.  258. 

The    court    say    in    the    last    case 

cited:     "On    a    somewliat    extensive 

examination   of   the   cases,   it   seems 

to   us   that   mere  silence   is   held   to 

Suth.  Dam.  Vol.   1—51. 


he  a  waiver  of  objection  in  the  case 
of  current  bank  notes,  for  the  rea- 
son that  they  constitute  the  com- 
mon currency  of  the  country,  and 
are  by  all  classi's  paid  out  and  re- 
ceived as  money,  wliich  is  a  reason 
that  does  not  fully  apply  to  l)ank 
checks.  .All  tlie  cases,  however,  pro- 
ceed on  tlie  principle  that  where 
all  ol)jcctioii  to  tlie  proposed  medium 
of  payment  is  waived,  (he  tender  is 
good,  tlioiigii  not  made  in  coin ;  and 
tlie  only  dill'erence  lietween  tliem  i.-J 
on  the  question  as  to  wliat  siiall  In- 
held  to  he  conclusive  of  sucli 
waiver." 

52  Te  Poel  v.  Sliutt,  57  Xeb.  592. 

53  Wright  V.  Robinson.  84  Iliin, 
172;  Mitdiell  v.  Vermont  (".  M.  Co., 
67  N.  Y.  280;  McCrath  v.  Cegner. 
77  Md.  331.  39  Am.  St.  415. 

54  Daly  V.  Fgaii,  I-!  \iet.  L.  H 
SI. 

5BSiiipp  V.  stacker.  8  Mo.   145. 
"Lawful     current     money"     of     a 


802 


SUTHEELAND    ON    DAMAGES. 


[§  267 


but  a  note  or  other  obligation  of  the  creditor  is  not  a  legal 
tender.  A  tender  for  part  of  an  entire  demand  and  set-off  for 
the  residue  cannot  be  pleaded.^^ 

§  268.  How  made.  iVs  a  general  rule  the  money  must  be 
actually  produced  and  placed  within  the  power  of  the  creditor 
to  receive  it  unless  he  dispense  with  its  production  by  express 
declaration  or  other  equivalent  act."  A  mere  verbal  offer  to 
pay  a  certain  sum  does  not  constitute  a  tender. ^^  The  cases 
concur  in  the  foregoing  rule,  but  differ  somewhat  in  its  appli- 
cation. Where  there  is  a  verbal  offer  of  a  particular  sum  and 
the   creditor   insists   on   more   being   due   in   such   manner   as 


state  means  money  issued  by  con- 
gress. Wharton  v.  Morris,  1  Dall. 
124,  1  L.  ed.  65;  McChord  v.  Ford, 
3  T.  B.  Mon.  ]66.  "Current  lawful 
money"  is  the  same.  Lee  v.  Biddis, 
1  Dall.  175,  1  L.  ed.  88.  But  "cur- 
rency," where  bank  notes  are  the 
only  currency,  does  not  mean  money. 
McChord  v.  Ford,  supra;  Lange  v. 
Kohne,  1  McCord,  115. 

A  tender  in  confederate  money 
was  not  good  although  it  was  at 
the  time  the  circulating  currency  in 
the  community.  Graves  v.  Hard- 
esty,  19  La.  Ann.  186.  See  Parker 
V.  Broas,  20  id.  167 ;  but  see,  also, 
Phillips  V.  Gaston,  37  Ga.  16;  Tate 
V.  Smith,  70  N.  C.  685. 

56Cary  v.  Bancroft,  H  Pick.  315, 
25  Am.  Dec.  393;  Hallowell  &  A. 
Bank  v.  Howard,  13  Mass.  235; 
Searles  v.  Sadgrove,  85  Eng.  C.  L. 
639,  5  El.  &  Bl.  639. 

57  Pinney  v.  Jorgenson,  27  Minn. 
26;  Deering  H.  Co.  v.  Hamilton,  80 
Minn.  162;  Te  Poel  v.  Shutt,  57 
Neb.  592;  Brown  v.  Gilmore,  8  Me. 
107,  22  Am.  Dec.  223;  Ladd  v.  Pat- 
ten, 1  Cranch  C.  C.  263;  Thomas  v. 
Evans,  10  East,  101  ;  Liebrandt  v. 
Myron  Lodge,  61  111.  81  ;Dickinaon 
v.  Shee,  4  Esp.  68;  Walker  v. 
Brown,  12  La.  Ann.  266;  Sands  v. 
Lyon,  18  Conn.  18;  Strong  v.  Blake, 


46  Barb.  227;  Matheson  v.  Kelly, 
24  Up.  Can.  C.  P.  598;  Holmes  v. 
Holmes,  12  Barb.  137;  Bakeman 
V.  Pooler,  15  Wend.  637;  Breed  v. 
Hurd,  6  Pick.  356;  Gilmore  v.  Holt, 
4  id.  258 ;  Eastland  v.  Longshorn,  1 
N.  &  McC.  194;  Southworth  v. 
Smith,  7  Cush.  391;  Lohman  v. 
Crouch,  19  Gratt.  331;  Dunham 
V.  Jackson,  6  Wend.  22;  Mclntire  v. 
Clark,  7  id.  330;  Sargent  v.  Gra- 
ham, 5  N.  H.  440,  22  Am.  Dec.  469. 
See  Champion  v.  Joslyn,  44  N.  Y. 
653;  Hill  v.  Place,  5  Abb.  Pr.  (N. 
S.)  ]8,  7  Robert.  389;  Borden  v. 
Borden,  5  Mass.  67,  4  Am.  Dec.  32; 
Slingerland  v.  Morse,  8  Johns.  474 ; 
Blight  V.  Ashley,  1  Pet.  C.  C.  15; 
Thayer  v.  Brackett,  12  Mass.  450; 
Gary  v.  Bancroft,  14  Pick.  315,  25 
Am.  Dec.  393;  Moore  v.  Brown,  46 
Tex.  Civ.  App.  523. 

58  Shank  v.  Groff,  45  W.  Va.  543 
De  Wolfe  v.   Taylor,   71  Iowa  648 
Eastman   v.   Rapids,   21   Iowa   590 
Camp  V.  Simon,  34  Ala.  126;  Steele 
v.    Biggs,    22    111.    643;    Hornby. v. 
Cramer,  12  How.  Pr.  490;  Sheredine 
V.  Gaul,  2  Dall.   190,   1   L.  ed.  344; 
Bacon    v.    Smith,    2    La.    Ann.    441 ; 
Hunter  v.  Warner,  1  Wis.  141.     See 
Harris  v.  Mulock,  9  How.  Pr.  402; 
Hill    V.    Place,    7    Robert.    389;    Lee 
V.  Hill,  92  S.   C.   114. 


§    2G^i  I       CONVKNTIONAL    T,I(iU  I HATIONS    AND    DISCHARGES.       803 

amounts  to  a  declaration  that  the  olVered  .sum  woiilil  not  l)e  re- 
ceived, the  aetual  production  of  the  money  is  not  necessary.^' 
Tlie  immediate  doj);irture  of  tlic  creditor  on  sncli  an  oH'cr  hcinir 
made  or  any  intentional  evasion  of  the  dehtor,  would  seem  to 
be  equivalent  to  an  express  refusal  of  it,  and  ccpially  to  excuse 
the  production  of  the  money.®"  So  on  a  verbal  offer  of  a  speci- 
iied  sum  in  leoal  tender  notes  in  which  the  debt  miiihl  ho  ])aid, 
a  declaration  by  the  creditor  that  he  would  receive  nothing  but 
gold  or  silver  would  dispense  with  the  actual  production  of  the 
offered  money."  An  absolute  refusal  to  receive  the  amount 
or,  in  case  of  mutual  executory  contracts,  to  do  the  act  in  con- 
sideration of  which  it  is  to  be  paid,  is  a  waiver  of  production.®^ 
But  the  debtor  must  have  the  money  to  immediately  comply 


59  Smitli  V.  Old  Dominion  B.  &  L. 
Ass'n,  119  N.  C.  -iril ;  Bradford  v. 
Foster,  87  Tcnn.  11;  Johnson  v. 
Garlichs,  63  Mo.  App.  578;  Graham 
V.  Frazier,  49  Neb.  90;  Bender  v. 
Bean,  52  Ark.  132;  Pinney  v.  Jor- 
genson,  27  Minn.  26;  Black  v. 
Smith,  Peake,  88;  Jackson  v.  Jacob, 
3  Bing.  N.  C.  869;  Sands  v.  Lyon, 
18  Conn.  18;  Read  v.  Goldring,  2 
M.  &  S.  86;  Finch  v.  Brook,  1  Scott, 
70;  Ex  parte  Danks,  2  De  Gex,  M. 
&  G.  936;  Murray  v.  Roosevelt, 
Anth.  101;  Vaupell  v.  Woodward,  2 
Sandf.  Ch.  143;  Stone  v.  Sprague, 
20  Barb.  509;  Dana  v.  Fiedler,  1 
E.  D.  Smith,  463;  Slingerland  v. 
Morse,  8  Johns.  474;  Everett  v. 
Saltus,  15  Wend.  474;  Warren 
V.  JNIains,  7  Jolins.  470;  State  v. 
Spicer,  4  Houst.  100;  Hazard  v. 
Loring,  10  Gush.  267;  Strong 
V.  Blake,  46  Barb.  227;  Appleton  v. 
Donaldson,  3   Pa.  381. 

In  Dunham  v.  Jackson,  6  Wend. 
22,  it  was  held  that  a  hesitating  re- 
fusal, based  on  a  claim  of  more  than 
is  due,  will  not  dispense  with  the 
actual  production  of  the  money. 
Sargent  v.  Graham,  supra;  Harding 
v.  Davies,  2  C.  &  P.  77. 


60  Continental  Ins.  Co.  v.  Miller, 
4  Ind.  App.  553;  Adams  Exp.  Co.  v. 
Harris,  120  Ind.  73,  16  Am.  St.  315, 
7  L.R.A.  214;  West  v.  Avorill  G. 
Co.,  109  Iowa,  488;  Hurt  v.  Cook, 
151  Mo.  417;  Schayer  v.  Common- 
wealth L.  Co.,  163  Mass.  322;  Gil- 
more  V.  Holt,  4  Pick.  257;  South- 
worth  V.  Smith,  7  Cush.  391;  Judd 
V.  Ensign,  6  Barb.  258;  Houbie  v. 
Volkening,  49  How.  Pr.  169;  Sands 
V.  Lyon,  18  Conn.  IS;  Raines  v. 
Jones,  4  Humph.  490;  Littel 
V.  Nichols,  Hard.  66;  Holmes  v. 
Holmes,  12  Barb.  137.  But  sec 
Leatlicrdale  v.  Sweepstone,  3  C.  & 
P.  342;  Knight  v.  Abbott,  30  Vt. 
577;  Thorne  v.  Moshcr,  20  N.  J.  Eq. 
267,  36  Am.  Rep.  542. 

61  Chinn  v.  Bretches,  42  Kan.  316; 
Hanna  v.  Ratekin,  43  111.  462;  Hay- 
ward  V.  Plunger,  14  Iowa  510; 
Wynkoop  v.  Cowing,  21  111.  570. 

62  Murray  v.  Roosevelt.  .\nth. 
101;  Hazard  v.  Loring,  10  Cush. 
267;  Vaupell  v.  Woodward,  2  Sandf. 
Ch.  143;  Strong  v.  Blake,  46  Barb. 
227;  Stone  v.  Sprague,  20  id.  509; 
Appleton  v.  Donaldson,  3  Pa.  381; 
Dana  v.  Fii^dler,  1  E.  D.  Smith  463 ; 
Slingerland  v.  Morse,  8  Johns.  474; 


80-i 


SUTHERLAND    ON    DAMAGES. 


[§  268 


with  his  ort'er;  having  it  in  a  bag  is  no  objection.^'  In  some 
cases  it  is  held  that  snch  a  refusal  will  not  dispense  with  the 
actual  production  of  the  money;  that  there  must  be  some  dec- 
laration or  equivalent  act  to  the  effect  that  the  debtor  need  not 
offer  it.®*  The  sight  of  the  money  may  tempt  the  creditor  to 
accept  it.®^  The  question  whether  the  production  has  been 
dispensed  with  is  for  the  jury,  and  if  they  find  the  facts 
specially  and  do  not  find  the  fact  of  dispensation  the  court  will 
not  infer  it.®®  The  money  must  be  actually  at  hand  and  ready 
to  be  produced  immediately  if  it  should  be  accepted.  It  is  not 
enough  that  a  third  person  has  it  on  the  spot  and  is  willing  to 
loan  it  unless  he  actually  consents  to  do  so  for  the  purpose  of 
the  tender,®'  At  an  interview  between  the  plaintiff  and  the 
defendant  the  latter  was  willing  to  pay  £10,  and  a  third  person 
offered  to  go  up-stairs  and  fetch  that  sum,  but  was  prevented 
by  the  plaintiff"  saying  "he  cannot  take  it."  Such  offer  was  a 
good  tender.®^     A  tender  made  by  holding  an  unstated  sum  in 


Everett  v.  Saltus,  15  Wend.  474; 
Warren  v.  Mains,  7  Johns.  476; 
Tliompson  v.  Lyon,  40  W.  Va.  78. 

63  Conway  v.  Case,  22  111.  327; 
Breed  v.  Hurd,  6  Pick.  356;  Davis 
V.  Stonestreet,  4  Ind.  101;  Harding 
V.  Davies,  2  C.  &  P.  77;  Borden  v. 
Borden,  5  Mass.  67,  4  Am.  Dec.  32; 
Sucklinge  v.  Coney,  Noy,  74;  Be- 
Iialy  V.  Hatch,  Walk.  (Miss.)  360, 
12  Am.  Dec.  570.  Compare  Sharp 
V.  Todd,  38  N.  J.  Eq.  234. 

64  Catterson  v.  Ireland,  60  Wash. 
208;  Thomas  v.  Evans,  10  East, 
101;  Douglas  v.  Patrick,  3  T.  R. 
683;  Dickinson  v.  Shee,  4  Esp.  68; 
Finch  v.  Brook,  1  Bing.  N.  C.  253; 
Leatherdale  v.  Swecpstone,  3  C.  & 
P.  342;  Firth  v.  Purvis,  5  T.  R. 
432;  Kraus  v.  Arnold,  7  Moore,  50; 
Brown  v.  Gilmore,  8  Me.  107,  22 
Am.  Dec.  223;  Bakeman  v.  Pooler, 
15  Wend.  637. 

65  Finch   V.   Brook,  supra. 

86  Id.;  2  Greenlf.  Ev.,  §  603. 

The   burden   of   proving  readiness 


and  ability  to  pay  is  upon  the 
debtor.  Ladd  v.  Mason,  10  Ore. 
308;  Park  v.  Wiley,  67  Ala.  310. 

67  Sargent  v.  Graham,  5  N,  H. 
440,  22  Am.  Dec.  469;  Bakeman 
v.  Pooler,  15  Wend.  637;  Breed  v. 
Hurd,  6  Pick.  356;  Eastland  v. 
Longshorn,   ]    N.  &  McC.   104. 

68  Harding  v.  Davies,  2  C.  &  P. 
77.  But  in  Kraus  v.  Arnold,  7 
Moore,  59,  the  defendant  ordered  A. 
to  pay  the  plaintiff  £7  12s.,  and  the 
clerk  of  the  plaintiff  demanded  £8, 
on  which  A.  said  he  was  only  or- 
dered to  pay  £7  12s.,  which  sum 
was  in  the  hands  of  B.,  and  B.  put 
his  hand  to  his  pocket  with  a  view 
to  pulling  out  his  pocketbook  to 
pay  £7  12s.,  but  did  not  do  so,  by 
the  desire  of  A.;  but  B^  could  not 
say  whether  he  had  that  sum  about 
him,  but  swore  he  had  it  in  his 
house,  at  the  door  of  which  he  was 
standing  at  the  time.  Held,  not  a 
legal  tender,  because  the  money  was 
not  produced. 


§    268]       CONVENTIOJS*AL    LIQUH^ATIONS    AND    DISCHARGES.       805 


hiiiid,  pereiii})t()rily  rejected  willioiil  iiKpiifv  :i.s  to  itmnniit,  is 
good.^^  To  make  a  valid  tender  under  a  statute  pntvifliii-i  that 
an  offer  in  writing-  to  pay  a  jiarticular  siiiu  of  nioiicy  is,  if 
not  accei)ted,  equivalent  to  the  actnal  production  and  tender 
of  the  money,  the  party  must  have  the  ability  to  pro<Jiice  the 
money  and  must  act  in  good  laith.  Siidi  an  olfcr  does  not 
deprive  the  creditor  of  the  right  to  a  reasonable  time  in  which 
to  ascertain  the  amount  due  and  to  determino  whether  he  will 
accept.'" 

And  in  Glasscott  v.  Day,  5  Esp. 
48,  it  was  held  the  tender  was  not 
good  because  the  money  was  not  in 
sight;  the  witness  supposed  it  was 
in  the  desk,  but  never  saw  it  pro- 
duced; and  it  did  not  appear  that 
if  the  creditor  had  been  willing  to 
accept  the  money  it  could  be  im- 
mediately paid;  the  money  should 
be  at  hand  and  capable  of  immedi- 
ate delivery. 

In  Breed  v.  Hurd,  6  Tick.  350,  a 
witness  told  the  plaintiff  that  the 
defendant  had  left  money  with  him 
to  pay  his  bill,  and  that  if  the 
plaintiff  would  make  it  right  by  do- 
ducting  a  certain  sum  he  would  pay 
it,  at  the  same  time  making  a  mo- 
tion with  his  hand  towards  his  desk, 
at  which  he  was  then  standing;  he 
swore  that  he  believed,  but  did  not 
know,  that  tliere  was  money  enougli 
in  his  desk;  but  if  there  was  not, 
he  would  have  obtained  it  in  five 
minutes  if  the  plaintiff  would  have 
made  the  deduction;  but  the  plain- 
tiff replied  that  he  would  deduct 
nothing.     Held,  not  a  tender. 

69  State  V.  Spicer,  4  Iloust.  TOO. 
It  appeared  in  this  case  that  the 
parties  met,  and  the  debtor,  in  his 
wagon,  which  stopped  on  meeting 
the  creditor,  said:  "I've  got  the 
money  to  pay  you,"  specifying  the 
claim,  and  put  his  hand  into  his 
pocket   to   take   out  the   bag   whicli 


contained  the  money;  while  he  was 
doing  tliis  tlie  creditor  said,  "I  want 
nothing  to  do  with  sucli  a  cut 
throat  as  you,"  and  walked  rapiilly 
away.  The  jury  found  that  tlie 
debtor  was  thereby  prevented  from 
producing  the  money  and  ollcriii;^ 
it  to  the  creditor,  and  it  was  lirld 
a  good  tender.  Sands  v.  i-ynn,  IS 
Conn.  18. 

In  Knight  v.  Al)l)ott,  :?n  Vt.  .'.77, 
the  defendant,  desiring  to  make  u 
tender,  said  to  the  jjlaintiff  as  lie 
was  passing  in  a  wagon,  i  want  to 
tender  you  tliis  money  for  lalmr  ynu 
have  don(>  for  inc."  at  tlic  same 
tinn'  holding  a  sum  in  liis  liand 
ecjual  to  his  indebtediifss.  l)nt  imt 
mentioning  any  an:onnt;  the  plain- 
tiff did  not  reply,  nor  stop  his  team. 
Held,  not  a  good  teiuier. 

In  Thorne  v.  Moslur.  20  N.  .1.  V->\. 
257,  A.  offered  to  pay  nmney  to  !>.. 
Iiohling  lier  )iurse  in  her  hand  in 
siglit  of  1?.,  will)  saw  tlie  |inrse.  but 
not  tlie  bills.  .\.  oj.ened  tlie  purse, 
and  was  in  the  act  of  takinj,'  (iiit 
the  bills,  hut  stopped  on  Hecounf  nf 
the  refusal  of  B.  to  receive  tin- 
money.  Held,  tliat  the  offer  was 
neither  payment  nor  tender,  but  the 
refusal  was  an  excvise  for  not  mak- 
ing a  tender. 

70  Flyams   v.   Bamberger,   10   Itah 

1. 


80  G 


SirniKKLAND    ON     DAMAGES. 


[§   2G9 


§  269.  Where  to  be  made.  If  a  debt  is  payable  at  a  partic- 
ular place  the  creditor  lias  a  right  to  receive  the  money  there.'^ 
When  payable  at  a  bank  the  designation  of  place  imports  a  stip- 
ulation that  the  holder  will  have  the  instrument  on  which  the 
money  is  payable  at  the  bank  to  receive  payment  and  that  the 
debtor  will  have  the  funds  there  to  pay  it ;  and  it  is  the  general 
usage  in  such  cases  to  lodge  the  instrument  with  the  bank  for 
collection.  If  the  instrument  is  not  there  lodged  and  the  debtor 
is  there  at  maturity  with  the  necessary  funds  to  pay  it  he  so 
far  satisfies  the  contract  that  he  cannot  he  made  responsible  for 
any  future  damages,  either  in  costs  of  suit  or  interest  for  the 
delay.'^  Having  money,  however,  in  a  bank  where  a  note  is 
payable  is  not  a  tender  unless  it  is  in  some  way  appropriated 
to  the  note.'^  A  tender  to  the  cashier  of  the  amount  of  a  note 
payable  at  his  bank,  coupled  with  a  demand  of  the  note,  is  not 
good,  it  not  being  there  at  the  time  and  the  money  not  being 
deposited  nor  afterwards  offered.'*  Where  no  place  of  payment 
is  appointed  the  debt  is  payable  anywhere,  and  it  is  the  duty 
of  the  debtor  to  seek  the  creditor  if  within  the  state. '''^     If  the 


71  Glover  v.  Central  I.  Co.,  133 
Ga.  62;  Redman  v.  Murrcll,  117  La. 
516;  United  States  v.  Gurney,  4 
Cranch,  333,  2  L.  ed.  638;  Adams 
V.  Rutherford,  13  Ore.  78.  See 
§  214. 

72  Ward  V.  Smith,  7  Wall.  447,  19 
L.  ed.  207;  Cheney  v.  Bilby,  20  C. 
C.  A.  291,  74  Fed.  52. 

73  Myers  v.  Byington,  34  Iowa, 
205.    . 

74  Balme  v.  Wambaiigh,  16  Minn. 
116;  Hill  V.  Place,  7  Robert.  389. 
See  Rowe  v.  Young,  2  Brod.  &  Bing. 
165;  Bacon  v.  Dyer,  12  Me.  19; 
Wallace  v.  McConnell,  13  Pet.  136; 
Sterling  v.  Head  Camp,  28  Utah 
526. 

75Prest  V.  Cole,  183  Mass.  283; 
Littell  V.  Nichols,  Hardin,  66; 
Houbie  v.  Volkening,  49  How.  Pr. 
169;  Harris  v.  Mulock,  9  id.  402. 

In  the  last  case  it  appeared  that 
the    creditor    went   to    the    debtor's 


office  to  receive  payment.  While  in 
the  act  of  counting  one  of  several 
packages  of  bank  bills  delivered  to 
him  by  the  debtor  as  payment,  he 
suddenly  left  the  office  by  reason  of 
insulting  language  addressed  to  him 
by  the  latter.  It  was  held  that  the 
money  not  being  current  coin,  it 
would  not  be  a  tender  if  the  creditor 
objected  to  it  for  that  reason ;  there- 
fore to  constitute  that  money  a 
tender,  the  debtor  was  obliged  to 
give  the  creditor  time  sufficient  to 
ascertain  whether  the  money  was 
such  as  he  would  be  willing  to  re- 
ceive instead  of  coin;  and  the  cred- 
itor having  cause  to  leave  on 
account  of  the  insulting  language 
before  such  examination  was  com- 
pleted, the  tender  was  not  sufficient; 
the  debtor  must  seek  the  creditor 
for  that  purpose.  See  Math  is  v. 
Thomas,  101  Ind.  119;   §  214. 


§    270]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        807 

creditor  is  without  the  state  the  tciuler  is  dispensed  with  and  no 
rights  are  lost  by  inability  to  make  it.'^  The  publication  of  a 
notice  of  a  change  in  the  place  designated  for  i)avniont  of  the 
principal  of  bonds  does  not  alfect  tlieir  hohU'rs  withDiit  actiinl 
notice  of  such  change.'' 

§  270.  Must  be  unconditional.  A  ton(h'r  must  hv  uncondi- 
tional/* or  at  least  cannot  be  clogged  bv  any  condition  to  which 
the  creditor  can  have  reasonable  objection  ;  '^  so  tliat  if  lie  takes 
the  money  and  there  is  more  due  he  may  still  bring  an  action 
for  the  residue.*"  An  offer  of  a  certain  sum  in  full  of  a  dcinand 
is  not  a  good  tender.*^     But  a  tender  is  not  vitiated  liy  licing  an 


76Buckner  v.  Finley,  2  Pet.  587, 
7  L.  ed.  329;  Smith  v.  Smith,  25 
Wend.  405;  Hale  v.  Patton,  60  N. 
Y.  233,  19  Am.  Rep.  168;  AUshouse 
V.  Ramsay,  6  Whart.  331,  37  Am. 
Dec.  417;  Gill  v.  Bradley,  21  Minn. 
15;  Gage  v.  McSwepney,  74  Vt.  370. 

77  Kelley  v.  Phenix  Nat.  Bank,  17 
App.  Div.  (N.  Y.)  496.  See  Wil- 
liamson County  V.  Farson,  101  111. 
App.  328,  aff'd  1"J9  111.  71. 

78  Barnes  v.  Ilill  City  Lumber  Co., 
34  S.  D.  158;  Leischner  v.  Kaiser, 
156  111.  App.  123;  Crane  v.  Ren- 
ville State  Bank,  73  Kan.  287; 
Southwick  V.  Himmelman,  109 
Mich,  76;  Dunbar  v.  Springer,  256 
111.  53;  Rose  v.  Duncan,  49  Ind. 
269;  Jennings  v.  Major,  8  C.  &  P. 
61;  Holton  v.  Brown,  18  Vt.  224, 
46  Am.  Dec.  148;  Wagenblast  v. 
McKean,  2  Grant's  Cas.  393;  Coth- 
ren  v.  Scanlan,  34  Ga.  555 ;  Pulsifer 
V.  Shepard,  36  111.  513;  Shaw  v. 
Sears,  3  Kan.  242;  Hunter  v.  War- 
ner, 1  Wis.  141;  Gibson  v.  Lyon, 
115  U.  S.  4,39,  29  L.  ed.  440. 

79  Connecticut  Mut.  L.  Ins.  Co. 
V.  Stinson,  86  111.  App.  668;  Bovaiis 
V.  Rees,  5  M.  &  W.  .'i06 :  Richardson 
V.  Jackson,  8  id.  298;  Wheelock  v. 
Tanner,  39  N.  Y.  481 ;  Foster  v. 
Drew,  39  Vt.  51  ;  Dedekani  v.  Vose, 
3   Blatchf.     44.       See    :\lovnalian    v. 


Moore,  9  Mich.  9;  Hepburn  v.  Auld, 
1  Cranch,  .321,  2  L.  ed.  122. 

80  Moore  v.  Xorman,  52  Minn.  83, 
38  Am.  St.  520,  18  L.R.A.  .359; 
Beckman  v.  Birchard,  48  Nob. 
805 ;  Te  Poel  v.  Sluitt,  57  Neb.  592 ; 
Mitchell  V.  King,  6  C.  &  P.  237: 
Hartings  v.  Thorley,  8  id.  573; 
Jennings  v.  Major,  id.  01  ;  IVacot'k 
V.  Dickcrson,  2  id.  .')lii.;  lU'iikard 
V.  Babcock,  27  How.  Pr.  391;  Hen- 
wood  V.  Oliver,  1  G.  &  D.  25,  1  Q. 
B.  409;  Bowen  v.  Owen,  11  id.  130; 
Wood  V.  Hitchcock,  20  Wend.  47; 
Loring  v.  Cooke,  3  Pick.  48;  Roose- 
velt V.  Bull's  Head  Bank,  45  Barb. 
579. 

A  conditional  tender  becomes  ab- 
solute on  paying  the  money  into 
court.  Tilden  v.  Gordon,  34  Wasii. 
92. 

81  Mann  v.  Roberts,  120  Wis.  142; 
Taylor  v.  Scott,  178  111.  App.  487: 
Sliiland  v.  Loeb,  58  App.  Div.  (N. 
Y.)  505:  L'Hommedieu  v.  The  11.  L. 
Dayton,  38  Fed.  92(i;  Noyes  v. 
Wyckoir,  114  X.  Y.  204:  T..m|»kins 
V.  Batie.  1  1  X.li.  I  17.  :ts  Am. 
Ri-p.  301;  I'ouHon  v.  .Moore.  14 
Ffd.  922;  Sluick  v.  Cbieago,  et.-. 
R.  Co.,  73  Iciwa  3.1:!:  Crillitli 
v.  Hodges,  1  C.  \  I'.  419;  Strong 
V.  Harvey.  3  Hing.  .304:  Che- 
niinant  v.  Thornton,  2  ('.  iS:   P.  50; 


808 


SUTHERLAND    ON    DAMAGKS. 


[§   270 


offer  of  payment  under  protest.     If  the  debtor  absolutely  offers 
to  pay  he  does  not  vitiate  the  offer  by  protesting, ^^     There  have 


Thayer  v.  Brackett,  12  Mass.  450; 
Mitchell  V.  King,  6  C.  &  P.  237; 
Wood  V.  Hitchcock,  20  Wend.  47. 

In  the  last  case  Cowen,  J.,  said: 
"It  was  clearly  a  tender  to  be  ac- 
cepted as  the  whole  amount  due, 
which  is  holden  to  be  bad  by  all  the 
books.  The  tender  was  also  bad  be- 
cause the  defendant  would  not  allow 
that  he  was  ever  liable  for  the  full 
amount  of  what  he  tendered.  His 
act  was  within  the  rule  which  says 
he  shall  not  make  a  protest  against 
his  liability.  He  must  also  avoid 
all  counter-claim,  as  of  set-off 
against  part  of  the  debt  due.  That 
this  defendant  intended  to  impose 
the  terms,  or  raise  the  inference 
that  the  acceptance  of  the  money 
should  be  in  full  and  thus  conclude 
the  plaintiff  against  litigating  all 
further  or  other  claim,  the  referees 
were  certainly  entitled  to  say.  That 
the  defendant  intended  to  question 
his  liability  to  part  of  the  amount 
tendered  is  equally  obvious,  and  his 
object  was  at  the  same  time  to 
adjust  his  counter-claim.  It  is  not 
of  the  nature  of  a  tender  to  make 
conditions,  but  simply  to  pay  the 
sum  tendered  as  for  an  admitted 
debt.  Interlarding  any  other  object 
will  always  defeat  the  effect  of  tlie 
act  as  a  tender.  Even  demanding 
a  receipt  or  an  intimation  that  it 
is  expected,  as  by  asking,  'Have  you 
got  a  receipt?'  will  vitiate.  The 
demand  of  a  receipt  in  full  would 
of  course  be  inadmissible." 

The  reason  of  this  rule  is  obvious 
where  the  debtor  does  not  in  fact 
tender  all  that  is  due;  for  if  a  debt- 
or tenders  a  certain  sum  as  all  that 
is  due,  and  the  creditor  receives  it, 
under  these  circumstances  it  might 
compromise  his  rights  in  seeking  to 


recover  more;  but  if  the  same  sum 
was  tendered  unconditionally,  no 
such  effect  would  follow.  Sutton  v. 
Hawkins,  8  C.  &  P.  259.  The  rea- 
son why  a  tender  has  so  often  been 
held  invalid  when  a  receipt  in  full 
has  been  demanded  seems  not  to 
have  been  merely  because  a  receipt 
was  asked  for,  but  rather  because 
a  part  was  offered  in  full  payment. 
See  Sanford  v.  Bulkley,  30  Conn. 
344. 

In  Holton  v.  Brown,  18  Vt.  224, 
46  Am.  Dec.  348,  it  was  held  that  a 
tender  to  pay  a  note  is  vitiated  by 
demand  of  it,  and  refusing  to  ac- 
cept a  discharge  of  the  mortgage 
and  a  receipt  for  the  payment,  the 
holder  not  being  able  at  the  time 
to  find  the  note.  See  Wilder  v. 
Seelye,  8  Barb.  408 ;  Story  on  Prom. 
Notes,  §  106  et  seq.;  §§  243,  244; 
Balme  v.  Wambaugh,  16  Minn.  116. 

In  Robinson  v.  Ferreday,  8  C.  & 
P.  752,  it  was  held  that  a  tender 
was  not  vitiated  by  the  person  mak- 
ing it  saying,  at  the  time,  that  it 
was  all  that  the  debtor  considered 
was  due;  but  if  he  offers  the  sum 
"as  all  that  is  due,"  it  is  different. 
Sutton  V.  Hawkins,  8  C.  &  P.  259; 
Field  V.  Newport,  etc.  R.  Co.,  3  H. 

6  N.  409;  Thorpe  v.  Burgess,  8 
Dowl.  P.  C.  603.  And  in  Bowen  v. 
Owen,  11  Q.  B.  130,  a  tenant  sent 
to  his  landlord  20?.,  with  a  letter 
in  these  words:  "I  have  sent  witii 
the  bearer  26?.  to  settle  on  year's 
rent  of  Nant-y-pair."  Tlie  landlord 
refused  to  take  it,  saying  that  more 
was  due.     Held,  a  good  tender. 

82  Manning  v.  Lunn,  2  C.  &  K.  13; 
Scott  V.  Uxbridge  &  R.  R.  Co.,  L.  R. 
1  C.  P.  596;   Sweny  v.  Smith,  L.  K. 

7  Eq.  324.     But  see  Wood  v.  Hitch- 


§    270]       CONVENTIUNAJ.    J.UilU  DATIDNS    AND    DISOIIA 


RQKS. 


809 


been  some  intinuitidiis  lliat  evi'ii  asking-  a  receipt  would  vitiate 
a  tender;  and  it  is  probable  the  re(|nireiiu'Mt  to  ^ive  one  stamjied 
would  have  that  ellect ;  ®^  but  it  is  believed  that  the  tenderer 
may  ask  a  simple  receipt  for  what  is  j)aid."  At  all  events,  if 
the  creditor  refuse  the  tender  wholly  on  the  ^^round  of  more 
being  due  he  cannot  afterwards  object  thereto  because  the  debtor 
required  a  receipt. ^^  A  tender,  however,  which  is  accompanied 
bv  a  demand  for  a  receipt  in  full  is  conditional  and   invalid.*® 


cock,  20  Wend.  47,  quoted   from    in 
the  preceding  note. 

An  ofi'er  to  the  effect  that  "I  am 
willing  to  pay  you  the  named  sum 
to  avoid  litigation;  it  is  not  due 
you,  but  1  am  willing  to  i^ay,"  if 
accompanied  by  the  money  (which 
is  not  necessary  in  Iowa)  is  not  a 
good  tender.  Kiihns  v.  Chicago,  etc. 
R.  Co.,  65  Iowa,  528. 

83  Laing  v.  Meader,  1  C.  &  P.  257. 
See  Ryder  v.  Xownsend,  7  D.  &  R. 
lit). 

84  Lovett  V.  Eastern  ().  Co.,  68  W. 
Va.  667.  See  2  Par.  on  Cont.  645, 
note  m;  Jones  v.  Arthur,  8  Dowl.  P. 
C.  442;  Bowen  v.  Owen,  U  Q.  B. 
J. 30. 

Under  the  code  of  California  the 
debtor  may  demand  a  receipt.  Fer- 
rea  v.  Tubbs,  ]25  Cat.  687.  And  so 
in  Georgia;  but  nothing  more  than 
a  receipt  can  be  demanded.  Dc 
Graffenreid  v.  Menard,  10.3  Ga.  651. 

A  tender  of  taxes  may  be  condi- 
tioned upon  the  giving  of  a  receipt, 
the  statute  requiring  that  the  officer 
do  that.  State  v.  Central  Pac.  R. 
Co.,  21  Ncv.  247. 

86  Richardson  v.  Jackson,  8  M.  & 
W.  298;    Cole  v.  Blake,  Peake,  179. 

86  Purdin  v.  Hancock,  67  Ore. 
164;  Union  Esperanza  Min.  Co.  v. 
Shandon  Min.  Co.,  18  N.  M.  153; 
Sigel-C.  L.  S.  Co.  v.  Holly,  44  Colo. 
580;  Pittsburg  P.  G.  Co.  v.  Leary, 
25  S.  D.  256,  ;51  L.R.A.(N.S.)  746; 
Northern  Pac.  R.  Co.  v.  Goss,  203 


Fed.  904,  122  C.  C.  A.  198;  Halpin 
V.  Pheni.K  Ins.  Co.,  118  N.  Y.  165: 
Noyes  v.  Wyckofl',  ]14  N.  Y.  204; 
Frost  v.  Yonkers  Sav.  Bank,  70  N. 
Y.  558,  26  Am.  Rep.  627;  Bowen 
v.  Owen,  11  Q.  B.  1.30;  Griffith  v. 
Hodges,  1  C.  &  P.  419;  Glasscott  v. 
Day,  5  Esp.  48;  Higham  v.  Baddely, 
Gow,  213;  Foord  v.  Noll,  2 
Dowl.  (N.  S.)  617;  Finch  v.  .Miller. 
5  C.  B.  428;  Sanford  v.  Bulkley,  .30 
Conn.  344;  Richardson  v.  Boston  ('. 
Laboratory,  0  Mete.  (Mass.)  42; 
Perkins  v.  Beck,  4  Cranch  C.  C.  68; 
Hart  V.  Flynn,  8  Dana  190;  Holton 
V.  Brown,  18  Vt.  224,  46  Am.  Dec. 
148;  Siter  v.  Robinson,  2  Bailey, 
274;  Brooklyn  Bank  v.  DeGrauw, 
23  Wend.  342,  35  Am.  Dec.  569; 
Wood  v.  Hitchcock,  20  Wend.  47; 
Eddy  V.  O'Hara,  14  id.  221;  Clark 
V.  Mayor,  1  Keyes,  9;  Thayer  v. 
Brackett,  12  Mass.  450;  Wagenbla.st 
V.  McKean,  2  Grant's  Cas.  393; 
Pulsifer  v.  Shepard,  36  111.  513; 
Cothran  v.  Scanlan,  34  Ga.  555; 
Shaw  v.  Sears,  3  Kan.  242;  Hunter 
v.  Warner,  1  Wis.  141 ;  Rose  v. 
Duncan,  49  Ind.  269. 

Where  a  tender  was  made  in 
"greenbacks,"  and  refused  because 
payment  in  coin  was  demanded,  it 
was  considered  a  valid  tender,  if  the 
court  should  be  of  opinion  that  the 
debtor  was  entitled  to  pay  in  such 
money.  The  money  was  paid  into 
court,  to  be  drawn  only  on  its  order 
"or  l)y  the  plaintifT,  if  he  shall  ac- 


-sio 


SUTIliOKLANi)    ON    DAiMACJES. 


[§  270 


A  tender  of  inoiiey  in  payment  of  a  debt  to  be  availal)le  nnist 
be  without  (inalification ;  that  is,  there  must  not  be  anything 
raising  an  implication  that  the  debtor  intends  to  cut  otf  or  bar 
a  claim  for  any  amount  beyond  the  sum  offered.^'  A  tender  of 
money  to  pay  negotiable  paper  may  be  so  far  conditional  as  to 


ccpt  tlic  same  as  tendered."  The 
plaintiff  obtained  an  order  of  the 
court  and  drew  the  money,  and  the 
order  recited  that  he  should  not  be 
prejudiced  by  his  acceptance  and 
appropriation  of  the  amount.  Lind- 
say, J.,  said:  "So  long  as  the  legal 
tender  notes  remained  in  the  hands 
of  the  court,  or  its  agent,  the  Farm- 
ers' Bank,  they  constituted  a 
standing  and  continuous  offer  to 
Robb,  which  he  had  the  option  at 
any  time  to  accept  'as  tendered.' 
But  he  could  not  of  his  own  voli- 
tion take  out  and  appropriate  such 
notes  upon  any  other  conditions 
than  those  upon  which  the  tender 
was  made.  Nor  had  the  court  the 
power  to  change  or  modify  these 
conditions.  If  it  should  finally  be 
adjudged  that  the  tender  was  suf- 
ficient in  law,  the  appellant  would 
be  entitled  to  his  costs,  and  the  title 
to  the  money  on  deposit  would  be 
vested  in  Robb.  Upon  the  other 
hand,  if  the  court  should  adjudge 
that  Robb  was  entitled  to  have  his 
note  paid  in  gold  coin,  a  judgment 
specificially  enforcing  his  contract 
would  be  rendered,  and  Wells  would 
have  the  right  to  withdraw  from 
the  hands  of  the  court  the  legal 
tender  notes  on  deposit.  The  rule 
is  different  where  there  is  no  con- 
troversy as  to  the  character  of  the 
money  tendered;  but  where  the 
plaintiff  claims  a  larger  amount 
than  the  defendant  concedes  to  be 
due,  in  such  cases  the  tender  estab- 
lishes the  liability  of  the  party  sued 
for  the  amount  tendered,  and  the 
plaintiff  has  a  right  to  accept  that 


amount  as  a  payment  pro  tanto, 
and  continue  the  litigation  for  the 
balance  claimed,  he  being  responsi- 
ble for  costs  subsequently  accruing, 
in  case  he  fails  to  recover  judgment 
for  such  balance  or  some  part  there- 
of. Here  it  was  all  the  time  in  the 
power  of  Robb  to  waive  his  objec- 
tion to  the  character  of  the  money 
tendered  and  accept  it  in  satisfac- 
tion of  his  debt;  but  as  it  was  law- 
ful money,  as  held  recently  by  the 
supreme  court  of  the  United  States 
(Knox  V.  Lee  and  Parker  v.  Davis), 
it  was  not  within  the  power  of  the 
circuit  court  to  permit  him  to  take 
possession  of  it  as  property,  and 
account  to  appellant  for  its  value 
in  coin,  nor  to  compel  the  latter  to 
pay  it  out  upon  any  debt  for  less 
than  its  face  value.  As  the  unau- 
thorized order  of  the  court  under 
which  Robb  obtained  possession  of 
the  money  tendered  was  made  at  his 
instance,  and  contrary  to  the  objec- 
tions of  his  debtor,  he  occupies  no 
better  attitude  than  he  would  have 
done  had  he  withdrawn  the  money 
from  the  bank,  as  he  had  a  right  to 
do,  under  the  order  directing  the 
deposit  to  be  made.  He  must  be 
held  to  have  waived  objection  to 
the  character  of  the  money  tendered, 
and  to  have  accepted  it  as  a  pay- 
ment of  his  debt."  Wells'  Adni'r  v. 
Robb,  n  Bush,  26. 

87  Wood  V.  Hitchcock,  20  Wend. 
47 ;  Roosevelt  v.  Bull's  Head  Bank, 
45  Barb.  579;  Wilder  v.  Seelye,  8 
id.  408;  Sanford  v.  Bulkley,  30 
Conn.  344;  Perkins  v.  Beck,  4 
Cranch    C.    C.    68;    Brooklyn    Bank 


§    270]       CONVENTIONAL    LIQUIDATIONS    AND    DISCirARGES.       811 


be  accompanied  by  a  demand  for  its  siirrendcr,^^  unless  the 
creditor  asserts  in  good  faith  that  the  sum  tendered  is  insuf- 
ficient.®^ The  debtor  may  require  that  a  pledge  be  surren- 
dered.^" The  rule  as  to  such  paper  is  exceptional,  to  withdiaw 
it  from  circulation  and  for  recourse  to  other  parties. 

The  general  doctrine  in  respect  to  tender  is  that  no  condition 
can  be  annexed  which,  by  acceptance,  would  preclude  any  ques- 
tion which  would  otherwise  be  ojien  to  the  creditor.  He  should 
be  at  liberty  to  accept  the  tender  and  to  say  he  does  not  take 
it  in  full  satisfaction  of  his  demand ;  or  that  he  does  not  forego 
any  right  by  its  acceptance  except  to  deny  that  so  imich  was 
paid  and  such  benefits  to  the  tenderer  as  are  consecpient  bv  legal 
intendment.  The  party  making  the  tender  should  l)e  content 
to  allow  the  creditor  to  take  the  money  and  get  more  if  the  jury 
find  him  entitled  to  it;  or  to  assert  any  other  right  consistent 
with  the  mere  acceptance  of  the  money  and  applying  it  to  the 
subject.^^  If,  however,  there  is  no  dispute  as  to  the  amount 
of  the  debt  a  tender  may  always  be  restricted  by  such  conditions 


V.  De  Grauw,  23  Wend.  342,  35  Am. 
Dec.  569;  Holton  v.  Brown,  18 
Vt.  224,  46  Am.  Dec.  148;  Hart 
V.  Flynn,  8  Dana  190;  Eddy  v. 
O'Hara,  14  Wend.  221;  Clark  v. 
Mayor,  1  Keyes  9;  Cheminant 
V.  Thornton,  2  C.  &  P.  50;  Strong 
V.  Harvey,  3  Bing.  304;  Mitchell  v. 
King,  6  C.  &  P.  237;  Brady  v. 
Jones,  2  Dow.  &  Ry.  305;  Benkard 
V.  Babcock,  27  How.  Pr.  391;  Rose 
V.  Duncan,  49  Ind.  269;  Finch  v. 
Miller,  5  C.  B.  428;  Sutton  v.  Haw- 
kins, 8  C.  &  P.  259. 

88  Spears  v.  Fields,  72  S.  C.  395; 
Bailey  v.  Buchanan  County,  115  N. 
Y.  297,  6  L.R.A.  562;  Strafford  v. 
Welch,  59  N.  H.  46;  Cutler  v.  Goold, 
43  Hun  516;  Wilder  v.  Seelye,  8 
Barb.  408;  Rowley  v.  Ball,  3  Cow. 
303,  15  Am.  Dec.  266;  Smith  v. 
Rockwell,  2  Hill  482;  Hansard  v. 
Robinson,  7  B.  &  C.  90.  See  Story 
on  Bills,  §§  448-9;  Chitty  on  Bills, 
423;   Story  on  Prom.  Notes,  §§  106, 


112,  143,  244;  Storey  v.  Krewson, 
55  Ind.  397,  23  Am.  Rep.  668; 
Dooley  v.  Smith,  13  Wall.  604,  20 
L.  ed.  547. 

89  Moore  v.  Norman,  52  Minn.  83, 
38  Am.   St.  526,   18  L.R.A.  359. 

90  Cass  V.  Higenbotam,  100  N.  Y. 
253;  Loughborough  v.  McNevin,  74 
Cal.  250,  5  Am.  St.  435 ;  Johnson  v. 
Cranage,  45  Mich.  14;  Johnson  v. 
Garlichs,  63  Mo.  App.  578. 

91  Beardsley  v.  Bcardsley,  29  C.  C. 
A.  538,  86  Fed.  16.  See  Jennings 
V.  Major,  8  C.  &  P.  61;  Thayer  v. 
Brackett,  12  Mass.  450. 

A  party  qualifies  his  tender  wlien 
he  demands  in  return  wliat.  accord- 
ing to  his  own  tlieory  of  liia  right>!, 
lie  is  strictly  entitled  to  for  tlie 
money  he  pays,  and  even  though 
sucli  theory  is  legally  correct,  if 
that  theory  is  questioned.  This  is 
illustrated  by  Loring  v.  Cooke,  3 
V'uk.  4S.  A  tcndrr  was  made  to 
redeem  from  an  t-xrciilion  salf.     'I'lic 


812 


SUTHERLAND    ON    DAMAGES. 


[§   270 


as  by  the  terras  of  the  contract  are  precedent  to  or  simnltaneons 
with  the  payment  of  the  debt  or  proper  to  be  performed  by  the 


amount  tendered  was  not  the  subject 
of  dispute;  but  the  debtor  demand- 
ed a  release  which  was  not  neces- 
sary to  cancel  the  sale,  and  the 
purchaser's  inchoate  title,  and  a 
release  had  been  prepared  by  tlie 
tenderer  ready  for  execution.  The 
purchaser  refused  to  execute  it  and 
claimed  to  hold  his  purchase  to 
secure  other  debts.  This  right  was 
held  not  to  exist,  as  the  English 
doctrine  of  tacking  was  not  recog- 
nized ;  but  the  tender  was  invalidat- 
ed by  the  demand  of  a  release, 
though  if  executed  it  would  have  ex- 
tinguished no  right  which  the  pur- 
chaser could  have  asserted.  In  the 
subsequent  case  of  Saunders  v. 
Frost,  5  Pick.  259,  275,  a  tender 
was  made  on  a  mortgage  debt  after 
the  mortgagee  had  taken  possession 
to  foreclose  for  interest  in  arrear, 
the  principal  not  being  due.  The 
tender  was  of  the  whole  mortgage 
debt,  including  interest  computed 
to  the  date  of  the  tender,  and  not 
to  the  maturity  of  the  debt.  The 
court  held  that  as  to  the  principal 
the  tender  was  not  good ;  for  the 
creditor  had  a  right  to  Iceep  his  debt 
at  interest  until  the  time  appointed 
for  payment.  But  it  was  no  objec- 
tion to  the  tender  in  respect  to  in- 
terest due  that  a  larger  sum  was 
tendered;  nor  that  a  discharge  of 
the  mortgage  was  demanded;  for 
since  the  statute  entitled  the  mort- 
gagor to  a  discharge  on  payment  of 
the  mortgage  debt  the  demand  of 
such  discharge  was  only  of  the  per- 
formance of  a  duty  imposed  by  law. 
So  it  seems  that  the  tender,  as  to 
interest,  was  not  rendered  nugatory 
by  being  accompanied  by  a  condition 
which  was  only  admissible  when  a 
tender  could  rightfully  be  made  of 


the  mortgage  debt.  It  was  sus- 
tained because  it  was  the  duty  of 
the  mortgagee  to  inform  the  mort- 
gagor that  possession  was  held 
only  for  the  interest  due;  and  the 
mortgagee  should  have  shown  a 
willingness  to  accept  payment  of 
such  interest. 

In  Storey  v.  Krewson,  55  Ind.  397, 
23  Am.  Rep.  G68,  the  court  held 
that  under  a  statute  which  requires 
a  mortgagee  of  lands  to  discharge  a 
mortgage  of  record,  after  having  re- 
ceived full  payment,  a  mortgagor  is 
not  entitled  to  demand  such  dis- 
charge when  tendering  such  full 
payment;  that  the  mortgagee  could 
not  be  required  to  do  so  merely 
upon  a  tender  of  the  amount  as  a 
condition  to  his  right  to  receive  the 
amount.  Biddle,  J.,  said:  "When 
one  party  is  to  perform  an  act, 
whose  right  does  not  depend  upon 
any  act  to  be  performed  by  the 
other  party,  the  tender  must  be 
without  condition  as  where  money 
is  to  be  paid  without  condition. 
The  current  of  authorities — indeed 
we  believe  it  to  be  quite  uniform — 
liolds  that  the  party  bound  to  pay 
the  money  cannot  make  a  good  ten- 
der upon  the  condition  that  the 
party  to  whom  the  money  is  to  be 
paid  shall  give  him  a  written  re- 
ceipt therefor;  and  in  the  case  of 
a  non-commercial  promissory  note 
the  authorities  are  in  conflict 
whether  a  good  tender  can  be  made 
upon  the  condition  that  the  note 
shall  be  surrendered;  but  in  the 
case  of  commercial  paper  the  au- 
thorities seem  to  be  imiform  that  a 
tender  upon  condition  that  the  pa- 
per shall  be  surrendered  is  good, 
because  such  paper  migbt  be  put 
in    circulation    after    payment,    and 


§    270]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       813 

tenderee,^^  as  that  ho  shall  disehargo  a  iiiortgago,®^  i-otiini  col- 
lateral security/*  give  a  release,^^  surrciidt'i-  mortgaged  chattels, 
if  a  reasonable  time  be  given,^®  or  api)ly  the  money  tendered  to  a 
particular  demand.^''  If  the  holder  of  a  note  secured  by  mort- 
gage claims  them  under  an  oral  assignment  from  the  payee  and 
the  latter  has  warned  the  maker  not  to  pay  the  hohh'r  tlio  maker 
may  require  a  written  assignment  or  release  from  the  i)ayee  as  a 
condition  of  a  tender.^*  A  tender  in  payment  of  a  mortgaefo 
is  not  conditional.^^  But  if  a  tender  is  made  upon  condition 
its  acceptance  is  an  acceptance  of  the  condition.^  Thus  a  cred- 
itor who  accepts  money  offered  on  condition  that  it  be  received 
in  full  satisfaction  of  a  demand  does  so  subject  to  the  condition, 


innocent  parties  become  liable;  not 
so,  however,  with  non-commercial 
paper;  after  payment  by  the  maker 
it  becomes  harmless  against  him, 
wherever  it  may  go." 

A  tender  to  be  good  must  not  be 
upon  any  condition  prejudicial  to 
the  party  to  whom  it  was  made. 
See  Wheelock  v.  Tanner,  39  N.  Y. 
481;  Hepburn  v.  Auld,  1  Cranch, 
321,  2  L.  ed.  122.  D.  purchased 
some  oats  of  F.,  who  took  goods 
worth  $41.78  in  part  payment.  D. 
tendered  $170  to  F.,  telling  him 
that  if  he  took  $130  of  the  amount 
it  closed  the  whole  business;  and 
if  he  took  the  $170  it  settled  the  oat 
biisiness  and  left  the  account  for 
the  goods  standing;  held  not  condi- 
tional; D.  merely  explained  his 
tender.     Foster  v.  Drew,  39  Vt.  51. 

A  tender  of  the  amount  due  on 
a  judgment,  accompanied  by  a  de- 
mand for  the  assignment  of  the  se- 
curity or  writ,  will  not  entitle  tiie 
person  making  it  to  be  subrogated 
to  the  plaintiff's  rights  therein. 
Forest  O.   Co.'s  App.,   118   Pa.   138. 

92  Neely  v.  Williams,  149  Fed.  00, 
79  C.  C.  A.  82;  Wadleigh  v.  Phelps, 
149  Cal.  627;  Halpin  v.  Phenix  Tns. 
Co.,    118    N.     Y.     165;     Johnson    v. 


Cranage,  45  Mich.  14;  Lamb  t.  Jef- 
frey, 41  Mich.  719;  Brink  v.  FreolT, 
40  Mich.  614. 

93  Halpin  v.  Phenix  Ins.  Co., 
supra;  Wheelock  v.  Tanner,  39  N. 
Y.  481;  Salinas  v.  Fllis,  26  S.  C. 
337.  See  Jewett  v.  Earle,  53  N. 
Y.  Super.  Ct.  349;  Werner  v,  Tuch, 
52  Hun  269. 

94  Howard  P.  Co.  v.  Glover,  7  C.a. 
App.  548;  Cass  v.  Higenbotani,  100 
N.  Y.  253;  Ocean  Nat.  Bank  v. 
Fant,  50  N.  Y.  474;  Loughborough 
v.  McNevin,  74  Cal.  250,  5  Am.  St. 
435. 

95  Saunders  v.  Frost,  5  Pick.  259. 
96Liglitfoot    v.     Ilurd,     113     Mo. 

App.  012;  Brink  v.  FreofT,  4(1  Mich. 
610. 

97  Bomm  v.  Landon,  44  Iiid.  -App. 
430. 

98  Kennedy  v.  Moore,  91  Iowa  39. 

99  Davis  v.  Dow,  SO  Minn.  223. 
ISt.  Joseph  School  Board  v.  Hull, 

72  Mo.  .App.  403;  Rnsenia  v.  Porter. 
112  Micii.  13:  Potter  v.  Douglass. 
44  Conn.  546;  Walston  v.  Denny,  84 
111.  App.  417;  Adams  v.  Helm.  55 
Mo.  468;  Kronenberger  v.  Binz,  56 
id.  121  ;  Lee  v.  Dodd,  20  Mo.  App. 
284;  Kofoed  v.  fiord. >n,  122  Cal. 
315. 


814  SUTHERLAND  ON  DAMAGES.  [§  270 

notwithstanding  he  may  then  or  subsequently  protest.^  In 
some  of  these  cases  checks  or  drafts  sent  by  mail  to  the  creditor 
"in  full  satisfaction"  or  as  "payment  in  full"  were  retained, 
and  in  some  of  them  the  claims  were  disputed.  But  ordinarily 
the  retention  of  a  check  inclosed  in  a  letter  which  refers  to  the 
amount  as  the  balance  due  an  accounts  between  the  parties  will 
not  be  an  accord  and  satisfaction  so  as  to  bar  an  action  for  the 
balance  due.^  "It  is  only  in  cases  where  a  dispute  has  arisen 
between  the  parties  as  to  the  amount  due  and  a  check  is  tendered 
on  one  side  in  full  satisfaction  of  the  matter  in  controversy 
that  the  other  party  will  be  deemed  to  have  acquiesced  in  the 
amount  offered  by  an  acceptance  and  retention  of  the  check."  * 
If  the  amount  of  the  claim  is  in  dispute  and  the  creditor  ad- 
vises his  debtor  that  the  amount  for  which  his  check  was  given 
has  been  credited  to  his  account  and  has  not  been  accepted  in 
full,  the  debtor  will  be  deemed  to  have  acquiesced  in  that  ap- 
plication unless  he  expresses  to  the  creditor  his  dissent.^  To 
constitute  the  acceptance  of  less  than  is  due  an  accord  and 
satisfaction  of  a  disputed  and  unliquidated  claim  the  money 
must  be  tendered  in  satisfaction  and  the  tender  accompanied 

2  Treat    v.    Price,    47    Neb.    875,  (N.  Y.)   353,  affirmed  without  opiii- 

citing   Fuller   v.   Kemp,    138   N.   Y.  ion    162    N.    Y.    624;     Connecticut 

231,   20   L.R.A.    785;,    Reynolds    v.  River  L.  Co.  v.  Brown,  68  Vt.  239; 

Empire  L.  Co.,  85  Hun  470;  Dono-  Murphy     v.     Little,     69     Vt.     261; 

hue  V.   Woodbury,   6   Cush.   150,   52  Ostrander    v.    Scott,    161    111.    339; 

Am.  Dec.  777;  McDaniels  V.  Lipham,  Vorhis  v.   Elias,   54   App.   Div.    (N. 

21  Vt.  222.     To  the  same  effect  are  y.)    412;    Lewinson   v.   Montauk   T. 

Nassoiy    v.    Tomlinson,    148    N.    Y.  ^^^    ^^     .          j^.^      ^^^    Y.)     572; 

326,  51   Am.   St.  695;   Bull  v.  Bull,  „       .,,  „,  .    .r,^  n      onn 

'  ,        ,.  ^„  Hamilton  v.  Stewart,  105  Ga.  300. 

43  Conn.  455;  Hilhard  V.  Noyes,  58  t^      t,      r.  r, 

^  .  ,        „,  ,,    „  3  Eamcs    \'.    B.    Co.    v.    Prosser, 

N.  H.  312;  Brick  V.  Plymouth  Coun-  ,^  ^^ 

ty,  63  Iowa  462;   Hinkle  v.  Minne-  ''^'    N-   Y.   289;    McKay   v.    Myers, 

apolis,   etc.   R.   Co.,   31    Minn.   434;  If^  Mass.   312;   Day  v.  Lea,   22  Q. 

Freiberg    v.    Moffett,    91    Hun    17;  ^'-   ^^i^'-   <^10. 

Anderson  v.  Standard  G.  Co.,  92  Me.  *  Kames  V.  B.  Co.  v.  Prosser,  su- 

429,  69  Am.  St.  522;  Ennis  v.  Pull-  pra;  Hodges  v.  Truax,  19  Ind.  App. 

man  P.  C.  Co.,  165  111.  161;  Lang  v.  651   (reviewing  many  cases). 

Lane,  83  111.  App.  543 ;  Pollman  C.  ^  Strock  v.   Brigantine  T.  Co.,  23 

&  S.  Co.  V.  St.  Louis,  145  Mo.  651  ;  N.     Y.     Misc.     358;       McKeen      v. 

Logan    V.    Davidson,    18    App.    Div.  Morse,  1  C.  C.  A,  237,  49  Fed.  253. 


§    1^71]       CONVENTIONAL    LIQUIDATIONS    AND    DISC  II AKCKS.       815 

with  such  acts  and  declarations  as  make  its  acccijtaiicc  a  c-on- 
dition  to  that  cnd.^ 

When  mutual  acts  are  to  he  done  hy  two  j)aiiies  at  the  same 
time  and  the  right  of  each  depends  upon  the  performance  of  the 
other  either  may  tender  his  part  of  the  performance  n[)nii  ihc 
condition  that  the  other  discharges  his  duty;  and  neither  is 
com{)elled  to  perform  unless  the  other  does  so  also,  as  wlicu 
land  is  bargained  and  sold  to  he  conveyed  ujion  payiiicnt  of  iho 
purchase-money.  In  such  a  case  neither  can  he  comjx'lled  U^ 
perform  his  part  of  the  agreement  except  on  the  i)erformance 
by  the  other  of  his  part;  that  is,  the  vendee  cannot  demand  the 
conveyance  without  tendering  the  purchase-money,  and  the 
vendor  cannot  demand  the  purchase-money  without  tendering 
the  conveyance;  and  either  may  make  a  good  tender  to  the  other 
upon  the  condition  that  he  will  perform  his  part  of  the  agree- 
ment.' If  the  performance  of  precedent  or  contemporaneous 
conditions  is  refused  the  person  whose  duty  it  is  to  pay  has  done 
all  that  is  required  of  him  when  he  has  made  a  tender;  he  is 
thereby  excused  from  kee])ing  it  good.^  But  where  it  is  i)ro- 
vided  by  statute  that  a  tender  shall  be  unconditional  excej)t 
for  a  receipt  in  full  or  delivery  of  the  obligation  one  who  has 
completed  the  payment  of  the  purchase-money  of  land  and  is 
entitled  to  evidence  of  the  title,  conditions  a  tender  hv  making 
it  dependent  upon  the  execution  of  a  conveyance.^ 

§  271.  Effect  of  accepting.  Acceptance  of  a  tender,  when 
made  as  full  payment,  has  the  effect  of  entire  satisfaction  in 
case  of  a  disputed  claim. ^°     But  the  acceptance  of  a   ])rojier 

SKingsville   P.   Co.   v.    Frank,   81  Storoy  v.  Krcwson.  .'>;■)  Ind.  ."{It?,  2'.l 

III.  App.  586;   Lang  v.  Lane,  83  id.  ^ni.  Rop.  66S. 

543.  8  Cannon  v.  Handlcv,  72  Cal.  13;}; 

TScott    V.    Beach,    172    111.    273;  ^v,,,,,3„,„    ^.    Dewey,    17    Vt.    92; 

Comstock    V.    Lager,    78    Mo.    App.  white  v.  Dobson,  17  Gratt.  262;  Mc- 

390;  Clark  v.  Weis,  87  111.  438,  20  ^_^^^^^^  ^^  j,.^^^^^„^  3  ^  ,,^^^^^ 
Am.   Rep.   60;    Englebach   v.   Simp- 

son,  12  Tex.  Civ.  App.   188;    Whee-  "  "1'^     ^     „        .,         ,,          ,     ,^„ 

lock    V.    Tanner,    39     N.    Y.    486;  '  ^e   GrafTenre.d   v.    Menard.    103 

Mankel  v.  Belseamper,  84  Wis.  218;  Ga.  651;  Elder  v.  .Tol.nson.  115  Oa. 

Halpin  v.  Phenix  Ins.  Co.,  118  N.  Y.  691- 

165;    Englander  v.  Rogers,   41   Cal.  W  Carter  v.  Carter,   129  Mo.  App. 

420;  Heine  V.  Treadwell,  72  id.  217;  467;    St.    Joseph    School    Board    v. 


SUTJIEKI.AND    ON    DAMAGES. 


[§  271 


tender,  acconipauied  by  no  such  condition,  does  not  preclude 
the  creditor  from  proceeding  for  niore.^^  An  appeal  is  not 
waived  by  the  receipt  of  a  payment.  The  acceptance  of  a  sum 
tendered  on  account  of  a  claim  onl}'  extinguishes  it  when  it  is 
all  the  creditor  is  entitled  to  or  it  is  received  as  being  so.^^ 

§  272.  Must  be  kept  good.  Unless  the  conduct  of  the  party 
who  is  entitled  to  payment  excuses  the  other  from  so  doing  ^' 
he  must  keep  his  tender  good ;  that  is  the  debtor  must  at  all 
times  be  prepared  to  meet  a  demand  for  money  tendered ;  if 
he  fails  to  do  so  he  places  himself  in  default  and  loses  the  bene- 
fit of  his  tender."     And  the  rule  applies  in  chancery  and  at 


Hull,  72  Mo.  App.  403;  Towslee 
V.  Healy,  39  Vt.  522;  Springfield  & 
N.  R.  Co.  V.  Allen,  46  Ark.  217; 
United  States  v.  Adams,  7  Wall. 
463,  19  L.  ed.  249;  Jenks  v.  Burr, 
56  111.  450;  Draper  v.  Pierce,  29 
Vt.  250;  Cole  v.  Champlain  T.  Co., 
26  Vt.  87;  MeDaniels  v.  Bank,  20 
Vt.  230,  70  Am.  Dec.  406;  Adams 
V.  Plelm,  55  Mo.  468. 

It  is  held  in  some  cases  tl)at  an 
unaccepted  tender  is  an  admission 
that  there  is  a  sum  due  the  tcndcree 
equal  to  it,  and  this  although  it  be 
defective  or  be  made  in  a  case  where 
it  is  not  binding  and  cannot  be 
pleaded.  Denver,  etc.  R.  Co.  v. 
Harp,  6  Colo.  420;  Cilley  v.. Haw- 
kins, 48  111.  309.  These  cases  are  of 
doubtful  authority,  because  the  le- 
gal effect  of  such  a  tender  is  no  more 
than  a  mere  offer  of  compromise. 
No  doubt  is  entertained  that  where 
a  tender  is  made  under  a  mistaken 
belief  by  the  party  who  made  it 
that  the  sum  tendered  was  due,  evi- 
dence is  admissible  to  rebut  the  in- 
ference that  a  debt  was  thereby  ad- 
mitted. Ashuelot  R.  Co.  v.  Cheshire 
R.  Co.,  60  N.  H.  356. 

11  Tilden  v.  Gordon,  34  Wash.  92 ; 
Higgins  V.  Halligan,  46  111.  173; 
Ryal  V.  Rich,  10  East,  47;  Sleght 
V.  Rhinelander,  1  Johns.  192. 


12  Benkard  v.  Babcock,  2  Robert. 
175. 

13  See  §  268. 

14  Abbott  V.  Herron,  90  Ark.  206; 
Kelly  V.  Keith,  85  Ark.  30;  Parker 
V.  Grotatowsky,  129  Ga.  623;  Lee 
V.  Manley,  154  N.  C.  244;  Godwin's 
Est.,  22  Pa.  Super.  469;  Middle 
States  L.  B.  &  C.  Co.  v.  Hagers- 
town  M.  &  U.  Co.,  82  Md.  506;  Park- 
er V.  Beasley,  116  N.  C.  1,  33  L.R.A. 
231  ;  Shank  v.  Groff,  45  W.  Va.  543; 
McDaniel  v.  Upton,  45  111.  App.  151 ; 
Beardsley  v.  Beardsley,  29  C.  C.  A. 
538,  86  Fed.  16;  Grain  v.  McGoon, 
86  111.  431;  Sanders  v.  Peck,  131 
id.  407;  Aulger  v.  Clay,  109  111. 
487;  Wyckoff  v.  Anthony,  9  Daly 
417;  Rainwater  v.  Hummell,  79 
Iowa,  571  ;  Wilson  v.  McVey,  83 
Ind.  108;  Park  v.  Wiley,  67  Ala. 
310;  Wilder  v.  Seelyc,  8  Barb.  408; 
State  V.  Briggs,  65  N.  C.  159;  Bron- 
son  V.  Rock  Island,  etc.  R.  Co.,  40 
How.  Pr.  48;  Mohn  v.  Stoner,  14 
Iowa,  115,  11  id.  30;  Warrington 
V.  Pollard,  24  id.  281,  95  Am.  Dec. 
727;  Kortright  v.  Cady,  23  Barb. 
490,  5  Abb.  Pr.  358;  Brooklyn  Bank 
V.  DeGrauw,  23  Wend.  342,  35  Am. 
Dec.  569;  Pulsifer  v.  Shepard,  36 
111.  513;  Nelson  v.  Oren,  41  111.  18; 
Cullen  v.  Green,  5  Harr.  17;  Clark 
V.  Mullenix,  11  Ind.  532;  Jarboe  v. 


§    272]       COJNTVKNTIONAJL    I.IQ UIUATlONS    AND    DISCJI AKGES.       817 

]ii\v.^^  It  is  not  uocessarj  to  kee[i  lor  the  creditor  the  ideiitiiMl 
money  tendered.  The  tenderer  is  at  liberty  to  use  it  as  his  dwii ; 
all  he  is  nnder  obligation  to  do  is  to  be  ready  at  all  times  to 
pay  the  debt  in  current  money  when  recpiested.^^ 

A  refusal  by  tlic  debtor,  after  a  tender,  to  pay  llic  nmiicy 
tendered  on  demand  of  the  creditor  d(!prives  the  oiler  of  all 
legal  availability  and  elVect.^'  For  this  purpose  the  debtor 
should  keep  the  money  in  his  own  possession.  A  deposit  of  it 
with  a  third  ])erson  for  the  creditor,  with  or  witliont  gis  ing  lilm 
notice  thereof,  will  not  exem])t  him  from  this  necessity;  the 
creditor  will  be  under  no  obligation  to  a])])ly  to  the  depositary 
for  it.  If  he  thiid<s  proper  to  accept  the  tender  he  may  call  on 
the  debtor  himself  for  it.  In  that  case,  unless  the  debtor  pjiys 
or  tenders  the  sum,  he  will  lose  the  benefit  of  the  previous 
tender. ^^     Hence  the  debtor  is  entitled  to  the  benefit  of  his 


McAtee,  7  B.  Mon.  279;  Livingston 
V.  Harrison,  2  E.  D.  Smitli  107; 
Call  V.  Scott,  4  Call  402;  Mason  v. 
Croom,  24  Ga.  231;  Brock  v.  Jones, 
16  Tex.  461;  Webster  v.  Pierce,  35 
111.  1.58;  Wood  v.  Merchants',  etc. 
Co.,  41  111.  267;  Suver  v.  O'Riley, 
80  111.  104;  Haynes  v.  Thoni,  28  N. 
H.  386;  Nantz  v.  Lober,  1  Duv.  304; 
Hayward  v.  Hague,  4  Esp.  93; 
Peirse  v.  Bowles,  1  Stark.  323 ;  Spy- 
bey  V.  Hide,  1  Camp.  181;  Rivers 
V.  Griffiths,  1  D.  &  Ry.  215;  Coles 
V.  Bell,  1  Camp.  478,  note;  Coore  v. 
Callaway,  1   Esp.  115. 

Under  statutes  making  a  tender 
equivalent  to  payment  a  tender  need 
not  be  kept  good  in  order  that  it 
may  extinguish  a  lien.  Kelley  v. 
Clark,  23  Idalio  1.  See  Reynolds  v. 
Price,  88.  S.  C.  525. 

iBDe  Wolf  V.  Long,  7  111.  679; 
Doyle  V.  Teas,  5  111.  202;  Brooklyn 
Bank  v.  DeGrauw,  23  Wend.  342, 
35  Am.  Dec.  569;  Stow  v.  Rus- 
sell, 36  111.  18;  McDaniel  v.  Up- 
ton, 45  111.  App.  151  (holding  that 
the  rule  applies  to  justices'  courts)  ; 
Rankin  v.  Rankin,  216  HI.  132; 
Suth.  Dam.  Vol.  I.— 52. 


Healy  v.  Protection  Mut.  F.  Ins. 
Co.,  213  111.  99.  Contra,  Murray  v. 
O'Brien,  56  Wasli.  361,  28  L.R..\. 
(N.S.)    998. 

•A  plaintiff  failing  in  his  suit  in 
e(|uity  after  tender  and  deposit  of 
money  in  court  brought  error,  aiwl 
pending  the  proceedings  in  error 
withdrew  the  deposit;  held,  not  a 
waiver  of  error.  Vail  v.  McMillan, 
17  Ohio  St.  617. 

16  Cheney  v.  Bill)y.  20  C.  C.  A. 
201,  74  Fed.  52;  Tliomp.son  v.  Lyon, 
40  W.  Va.  87;  Curtiss  v.  Green- 
banks,  24  Vt.  536.  But  see  Quynn 
V.  Whetcroft,  3  Harr.  &  McH.  352; 
Roosevelt  v.  Bull's  Head  Bank,  45 
Barb.  579;  S<>curity  State  Bank  v. 
Waterloo  Lodge,  85  Neb.  255. 

HNantz  V.  Lober,  1  Duval,  :{(>1; 
Rose  V.  Brown,  Kirby,  293,  1  Am. 
Dec.  22. 

18  Rainwater  v.  Hummcll,  79 
Iowa  571:  Town  v.  Trow,  24  Pick. 
168. 

But  a  tender  is  kept  good  where, 
after  tiie  creditor's  refusal  to  ac- 
cept, tlie  money  is  deposited  in  bank 
to     his     credit     and     subsequently 


818  SUTHERLAND    ON    DAMAGES.  [§    272 

tender  if  lie  is  ready  with  the  money  on  a  demand  made  to  him- 
self personally  although  he  may  have  made  the  tender  hy  his 
attorney.^^ 

The  demand  for  the  money  after  a  tender  and  refusal  must 
be  of  the  precise  sum  tendered,^"  and  must  be  made  by  some 
one  authorized  to  receive  it  and  give  the  debtor  a  discharge.^^ 
Where  the  tender  had  been  made  by  two  persons  demand  on 
one  was  snfficicnt.^^  If  money  is  tendered  with  which  the 
debtor  has  a  right  then  to  discharge  the  debt  and  sufficient  to 
satisfy  it,  he  is  not  to  bear  the  loss  of  its  subsequent  depreci- 
ation.^^ 

§  273,  Waiver  and  omission  of  tender  on  sufficient  excuse. 

There  is  probably  no  difference  in  respect  to  the  effect  of  stop- 
ping interest  as  damages,  based  on  default,  between  an  actual 
tender  or  tender  with  some  punctilio  waived  and  a  readiness  to 
pay,  and  a  tender  altogether  prevented  by  the  conduct  of  the 
creditor;  as,  for  example,  by  his  absence  or  concealment.  For 
this  effect  it  is  only  needful  to  negative  default.^*  Where,  how- 
ever, the  debt  bears  interest  by  agreement  of  the  parties  after  it 
is  payable  an  actual  tender  is  doubtless  essential  to  stop  interest 
unless  the  creditor  prevents  it  by  some  fraudulent  evasion. ^^ 

paid   to  the   clerk   of  the  court   for  to  which  an  answer  is  returned  that 

the    creditor's    benefit.      Kitchell    v.  the   demand   should   be  settled,   was 

Schneider,  180  Ind.  58fl.  held   to   be   sufficient   evidence   of   a 

19  Bcrthold  v.  Reyburn,  37  Mo.  demand  on  an  issue  of  a  subsequent 
586.  A  defendant's  attorney  having  demand  and  refusal  to  a  plea  ot 
made  a  tender  the  plaintiff's  attor-  tender.  Hayward  v.  Hague,  4  Ksp. 
ney  subsequently  agreed  to  take  it,  93. 

but  it  was  held  this  assent  was  not  A   tender   may   lose   its   effect   by 

such  a  demand  as  would  avoid  the  mutual  waiver,  as  where  afterward 

tender.    The  demand  for  such  a  pur-  the  debtor,  at  the  suggestion  of  the 

pose  must  be  made  upon  the  debtor  creditor,     consents     to     retain     the 

personally.  money.      He   cannot   afterwards   set 

20  Anderson  v.  Griffith,  51  Ore.  it  up  as  a  defense.  Terrell  v. 
116;   Spybey  v.  Hide,  1  Camp.  181;  Walker,  65  N.  C.  91. 

Rivers   v.    Griffiths,    1    Dow.   &    Ry.  23  Anonymous,  1  Hayw.  183.     See 

215.  Jeter  v.  Littlejohn,  3  Murph.  186. 

21  Coles  V.  Bell,  1  Camp.  478,  24  Thompson  v.  Lyon,  40  W.  Va. 
note;  Coore  v.  Calloway,  1  Esp.  115.  87;  Thorne  v.  Mosher,  20  N.  J.  Eq_. 

22  Peirse  v.  Bowles,  1  Stark.  523.       257.     See  Creek  L.  &  I.  Co.  v.  Davis, 
A   letter,   demanding   payment  of       28  Okla.  579. 

a  debt,   sent  to  the  debtor's  house.  25  Gilmore  v.  Holt,  4   Pick.   258; 


i 


§    273]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       819 

^Yhere  a  tender  is  made  to  the  creditor,  not  in  currency  wlildi 
he  is  bound  to  receive,  but  in  bank  bills  current  at  par  as  money, 
and  not  objected  to  on  that  account;  or  is  made  by  a  check  on  a 
bank,  assented  to  as  a  mode  of  payment,  the  oti'er  is  a  sufficient 
tender.  And  where  there  is  a  verbal  otter  to  pay  and  tlie  debtor 
is  prepared  to  make  his  offer  good,  but  omits  to  })i'()(hicc  the 
money  to  the  view  of  the  creditor  because  the  latter  says  it  need 
not  be  produced  as  he  will  not  receive  it,  the  proffer  is  in  sub- 
stance and  legal  effect  a  tender.^^  The  law  interprets  the  con- 
duct of  the  parties  in  the  ceremony  of  tender  according  to  their 
apparent  intentions,  and  determines  its  sufficiency  upon  the 
objections  then  stated.  We  have  seen  that  certain  incidents, 
such  as  demanding-  a  receipt  for  what  is  paid,  or  change  where 
there  is  an  offer  of  a  larger  amount,  or  bank  bills  instead  of 
money  which  is  legal  tender,  must  be  specially  objected  to  at 
the  time.  Silence  is  a  tacit  waiver  of  such  objections.  Other 
objections  may  also  be  waived  by  implication  on  the  maxim 
of  expressio  uniiis  est  excliisio  alterius.  A  general  rule  on  this 
subject  is  that  if  a  tender  is  refused  on  a  specific  ground  the 
creditor  will  not  be  permitted  afterwards  to  raise  any  other 
objection  which,  if  stated  at  the  time  it  was  made,  could  have 
been  obviated.^  A  tender  of  money,  left  with  the  creditor  not- 
withstanding his  refusal  to  receive  it,  becomes  good  where  the 

Southworth  v.  Smith,  7  Cush.  391;  Carman  v.  Piiltz,  21  N.  Y.  r)47: 
Cheney  v.  Bilby,  20  C.  C.  A.  291,  74  KeHer  v.  Fisher,  7  Ind.  718;  Mitch- 
Fed.  52.  ell  V.  Cook,  29  Barb.  24:3 ;  Haakell  v. 

26  Packard  v.  Mobile,  151  Ala.  Brewer,  11  Me.  258:  Hayward 
159;  Ronaldson  &  P.  Co.  v.  Bynum,  v.  Mun<jer,  14  Iowa  510;  Graves  v. 
122  La.  687;  Stephenson  v.  Kilpat-  McFarlane,  2  Cold.  167;  Bradahaw 
rick,  166  Mo.  262,  267;  Holmes  v.  v.  Davis,  12  Tex.  336;  Nelson  v. 
Holmes,  9  N.  Y.  525;  Hall  v.  Nor-  Robson,  17  Minn.  284;  Rndulph 
walk  F.  Ins.  Co.,  57  Conn.  105;  Roe  v.  Wagner,  36  Ala.  698;  Stokes  v. 
v.  State,  82  Ala.  68;  McDaneld  v.  Recknagel,  38  N.  Y.  Super.  Ct.  368; 
Kimbrell,  3  G.  Greene,  335;  Man-  Ricker  v.  Blanchard,  45  N.  H.  39; 
hattan  L.  Ins.  Co.  V.  Smith,  44  Ohio  Abbot  v.  Banfield,  43  id.  152; 
St.  156,  58  Am.  Rep.  806;  Matliis  Scliroeder  v.  Piasis,  128  Cal.  209; 
V.  Thomas,  101  Ind.  119;  Ilotfman  v.  Ricketta  v.  BiickatatT.  64  Neb.  851; 
Van  Diemen,  62  Wis.  362;  Sharp  v.  Nolan  v.  Foley,  141  Iowa  671;  Neal 
Todd,  38  N.  J.  Eq.  324;  Duffy  v.  v.  Finlcy.  136  Ky.  346;  Kent  B.  & 
Patten,  74  Me.  396;  Koon  v.  Snod-  L.  Co.  v.  Middleton,  112  Md.  10; 
grass,  18  W.  Va.  320.     See  §  268.  Gilman    v.    Gary.    198    Mass.    318; 

27  Hull    V.    Peters,    7    Barb.    331;  Witt    v.    Dersham,     146    Mich.    68; 


820 


SUTHERLAND    ON    DAMAGES. 


[§  274 


latter  on  demand  refuses  to  give  it  up.'^^^  The  repudiation  of 
the  contract  between  the  parties  excuses  a  tender.*^^ 

§  274.  Tender  must  be  pleaded  and  money  paid  into  court.   ' 

If  the  money  tendered  is  not  demanded  by  the  creditor  and  he 
brings  suit  the  defendant  must  plead  the  tender  and  his  plea 
must  be  accompanied  by  payment  of  the  money  into  court  for 
the  creditor,^^  unless  the  effect  of  the  tender  is  merely  the  ex- 
tinguisliment  of  a  lien  without  discharging  the  debt,  in  which 
case  payment  into  court  is  not  necessary.^"  It  is  also  unneces- 
sary if  it  is  merely  desired  to  stop  interest ;  ^^  and  so  where 


Moulton  V.  Kolodzik,  97  Minn.  423; 
Merrill  v.  Hexter,  52  Ore.  138 ;  Gott- 
schalk  V.  Meisenheimer,  62  Wash. 
299 ;  Walsh  v.  Colvin,  53  Wash.  309 ; 
Weinberg  v.  Naher,  51  Wash.  591, 
22  L.R.A.(N.S.)  956;  Hidden  v. 
German  S.  &  L.  Soc,  48  Wash.  384 ; 
Zeimantz  v.  Blake,  39  Wash.  6.  See 
Moore  v.  Beiseker,  147  Fed.  367,  77 
C.  C.  A.  545. 

27a  Rogers  v.  Rutter,  11  Gray  410. 

28  Kuhlman  v.  Wieben,   129  Iowa 
188,  2  L.R.A.(N.S.)    666. 

29  McPheters  v.  Kimball,  99  Me. 
505;  Portsmouth  Sav.  Bank  v.  Yei- 
ser,  81  Neb.  343;  Reusens  v.  Arken- 
burgh,  135  App.  Div.  (N.  Y.)  75; 
Towles  V.  Carpenter,  62  W.  Va.  151 ; 
Colby  V.  Reed,  99  U.  S.  560,  25  L.  ed. 
484;  Matthews  v.  Lindsay,  20  Fla. 
962;  Allen  v.  Cheever,  61  N.  H.  32; 
Halpin  v.  Phenix  Ins.  Co.,  118  N.  Y. 
165;  Coghlen  v.  South  Carolina  R. 
Co.,  32  Fed.  316;  Morrison  v.  Ja- 
coby,  114  Ind.  84;  Roberts  v.  White, 
146  Mass.  256;  Park  v.  Wiley,  67 
Ala.  310;  Frank  v.  Pickens,  69  id. 
369;  Goss  v.  Bowen,  104  Ind.  207; 
Fernald  v.  Young,  76  Me.  356;  Jen- 
kins V.  Briggs,  65  N.  C.  159;  Claflin 
V.  Hawes,  8  Mass.  261 ;  Harvey  v. 
Hackley,  6  Watts  264;  Nelson  v. 
Oren,  41  111.  18;  Brown  v.  Fergu- 
son, 2  Denio,  196;  Sheriden  v. 
Smith,    2    Hill    538;    Livingston    v. 


Harrison,  2  E.  D.  Smith,  197;  Rob- 
inson v.  Gaines,  3  Call,  243;  Hume 
v.  Peploe,  8  East,  168 ;  Giles  v.  Har- 
tis,  1  Ld.  Raym.  254;  Becker  v. 
Boon,  61  N.  Y.  317;  Karthaus  v. 
0 wings,  6  Har.  &  J.  134;  Griffin 
v.  Tyson,  17  Vt.  35 ;  CuUen  v.  Green, 
5  Harr.  17;  Mason  v,  Croom,  24 
Ga.  211;  Brock  v.  Jones,  16  Tex. 
461;  Clark  v.  Mullenix,  11  Ind.  532; 
Marine  Bank  v.  Rushmore,  28  111. 
463;  Webster  v.  Pierce,  35  111.  158; 
Warrington  v.  Pollard,  24  Iowa,  281, 
95  Am.  Dec.  727;  Jarboe  v.  McAtee, 
7  B.  Mon.  279;  De  Goer  v.  Kellar, 
2  La.  Ann.  496;  Alexandrie  v.  Sa- 
loy,  14  id.  327 ;  Call  v.  Scott,  4  Call, 
402;  State  v.  Briggs,  65  N.  C.  159; 
National  M.  &  T.  Co.  v.  Standard  S. 
Mach.  Co.,  181  Mass.  275.  See  Ter- 
rell V.  Walker,  65  N.  C.  91 ;  and  for 
a  construction  of  the  code  of  Oregon, 
see  Holladay  v.  Holladay,  13  Ore. 
523,  536. 

30  Cass  V.  Higenbotara,  100  N.  Y. 
248.     See  §  277. 

siFerrea  v.  Tubbs,  125  Cal.  687. 

If  tender  is  made  after  forfeiture 
and  the  money  refused,  it  must  be 
paid  into  court  or  the  tender  be  kept 
good.  Bronson  v.  Leibold,  87  Conn. 
293.  Contra,  Donaldson  v.  Severn 
River  G.  Co.,  138  Fed.  691. 

A  public  treasurer  need  not  pay 


§    275]       CONVENTIONAL    LIQUIDATIONS    AND    DISCIIARQES.       821 

there  has  been  a  breach  of  the  vendor's  eontraet  to  put  the  veiuleo 
of  land  into  possession,  the  former  having  tohl  the  vendee  tliat 
he  would  not  comply  with  the  contract.''^  And  if  the  vendor 
puts  himself  in  a  position  to  make  it  appear  that  a  tender  of 
the  purchase  price  would  be  refused  if  made,  the  vendee  may 
plead  an  offer  to  bring  the  money  into  court,  and  may  have 
specific  performance.^^  If  there  is  uncertainty  as  to  the  amount 
due,  the  plaintiff  may  have  specific  performance  by  j)leading 
readiness  to  bring  the  money  into  court  whenever  tlie  sum  is 
liquidated.^*  The  payment  made  before  trial  is  final;  the 
debtor  cannot  speculate  on  the  effect  of  the  evidence  an«]  add 
to  the  sum  paid  after  the  trial  has  begnn.'^  If  the  pleadings 
do  not  object  to  the  failure  to  allege  payment  into  court  the 
money  may  be  paid  in  during  the  trial,  and,  in  the  absence  of 
an  objection  in  the  record,  the  appellate  court  will  assume  that 
it  was  so  paid.^^ 

§  275.  Effect  of  plea  of  tender.  The  plea  of  tender  is  a 
conclusive  admission  that  the  sum  tendered  is  due ;  ^'  and  if 
the  money  is  not  paid  into  court  the  plaintiff  may  sign  judg- 
ment.^'    But  the  tender  and  plea  go  no  further  than  to  admit 

money  held  by  him  pending  the  de-  Maddox,  ]55  Ala.  292;  Wells  v.  Mis- 
termination  of  the  rights  of  litigants  sonri-Edison  E.  Co.,  108  Mo.  App. 
into  court  to  avoid  liability  for  in-  607;  Mann  v.  Roberts,  12G  Wis. 
terest  and  costs.  Newport  W.  &  L.  142;  McDaniel  v.  Upton,  45  III.  App. 
Co.  V.  Drew,  141  Cal.  103;  Eau  151;  Illinois  Cent.  Co.  v.  Cole.  62  id. 
Claire  v.  Eau  Claire  W.  Co.,  137  480;  Noble  v.  Fagnant,  162  Ma.ss. 
Wis.  555.  275,   286;    Giboney   v.   German   Ins. 

32  Murray  v.  Nickerson,  90  Minn.  Co.,    48    Mo.    App.    185;    Taylor    v. 
197;  Irwin  v.  Askew,  74  Ga.  581.  Brooklyn  E.  R.  Co.,  119  N.  Y.  561  ; 

33  Kerr  v.  Hammond,  97  Ga.  567.  Voss  v.  McGuire,  26  Mo.  App.  452; 

34  Id.;  Irvin  v.  Gregory,  13  Gray,  Kansas  City  T.  Co.  v.  Neiswanger, 
215.  27    id.   356;    Schnur   v.   Hickox,   45 

35  Frank  v.  Pickens,  69  Ala.  369.       Wis.   200;    Monroe  v.   Chaldeck,   78 
A  payment  at  the  time  of  filing       111.  429;   Roosevelt  v.  New  York   & 

the  answer  will  not  affect  the  costs  II.  R.  Co.,  30  IIow.  Pr.  226:  Currier 

unless  there  is  a  specification  of  the  v.  .Tordan,  117  Mass.  260;   Ruble  v. 

amount  paid  on   th§  claim  and  for  Murray,  4  ITayw.  27;  Huntington  v. 

costs.     The  Good  Hope,  40  Fed.  608.  American  Bank,  6  Pick.  340;  2  Par.s. 

36Halpin  v.  Phenix    Ins.  Co.,   118  on  Cont.  638,  note.     But  see  Clarke 

N.  Y.  165.  V.  Lyon  County,  7  Nev.  75. 

37  Dessinger    v.    Gevurtz,    69    Ore.  88  Chapman  v.  Hicks,  2  Dowl.  P. 

304;    Birmingham    &    .A.    R.    Co:    v.  C.  641;   Monroe  v.  Chaldeck,  78  III. 


822  SUTIIEKLAND    ON    DAMAGES.  [§    275 

the  contract  or  duty  sued  upon  and  the  right  of  the  plaintiff  to 
the  sum  paid  in,  except  that  it  is  ground  for  doubling  the  dam- 
age under  a  statute. ^^  The  defendant  may  contest  the  plaintiff's 
right  to  anything  beyond  that  sum  upon  any  ground  consistent 
with  an  admission  of  the  original  contract  or  transaction.  He 
may  insist  upon  the  statute  of  limitations,  payment  beyond  the 
sum  tendered  or  other  defense.'*"  He  cannot  claim  in  a  motion 
for  arrest  of  judgment  that  the  complaint  is  so  defective  as  not 
to  authorize  the  recovery  of  any  sum.*^  It  has  been  held  that 
an  answer  under  the  code  must  allege  that  the  money  has  been 
brought  into  court,  and  if  it  omits  this  allegation  it  does  not 
state  facts  sufficient  to  constitute  a  defense  and  the  plaintiff 
may  avail  himself  of  the  objection  on  the  trial ;  *^  it  must  also 
be  alleged  that  the  money  is  brought  into  court  for  the  other 
party's  use  and  benefit;  it  is  not  enough  to  say  for  his  use.'*^ 
And  if  issue  be  joined  on  the  plea  of  tender,  where  the  money 
has  not  been  brought  into  court,  it  has  been  held  that  judgment 
should  be  given  for  the  plaintiff"  notwithstanding  a  verdict  in 
favor  of  the  defendant  on  that  issue.'*^  But  in  other  cases  the 
omission  to  pay  the  money  into  court  has  been  treated  as  an 
irregularity ;  and  if  the  plaintiff  accept  the  plea  and  reply  there- 
to without  receiving  notice  that  the  money  has  been  paid  in  he 
waives  the  irregularity.'*^     The  technical  rules  governing  pleas 

429.     See  Knox  v.  Light,  12  111.  86;  dered;   it  admits  his  liability  for  it 

Sloan  V.  Petrie,  16  111.  262;  Marine  as    bailee    without    hire.      Craw    v. 

Bank  V.  Eushmore,  28  111.  46.3;  Web-  Abrams,  68  Neb.  546,  553. 

ster  V.  Pierce,  35  111.   158;    Stow  v.  41  Wilson  v.   Cliicago,  etc.  R.   Co., 

Russell,  36  111.   35;    Reed  v.   Wood-  08  Iowa  673. 

man,  17  Me.  43.  42  p.^-cker  v.   Boon,   01    N.  Y.   417. 

39  Black    V.    Minneapolis,    etc.    R.  See  last  section. 

Co.,  122  Iowa  32.  The  notice  of  payment  into  court 

40  Peters  v.  McPherson,  62  Wash.  after  suit  which  is  required  l)y  the 
496;  Cox  V.  Parry,  1  T.  R.  464;  code  is  not  waived  by  failing  to  re- 
Reid  V.  Dickons,  5  B.  &  Ad.  499;  turn  an  answer  pleading  tender  be- 
Meager  v.  Smith,  4  id.  673;  Spald-  fore  suit  or  to  otherwise  raise  the 
ing  V.  Vandercook,  2  Wend.  431 ;  question  before  trial.  Wilson  v. 
Wilson    V.   Doran,    110   N.    Y.   101;  Doran,  110  N.  V.  101. 

Griffin   v.  Harriman,   74   Iowa  436;  43  Phoenix  Ins.  Co.  v.  Overman,  21 

Young  V.  Borzone,  20  Wash.  4,  20.  Ind.  App.  510. 

A   tender  by   an   officer   is  not  an  44Claflin   v.   Hawes,  8   Mass.  261. 

admission    that    he    is    or    was    the  45  Woodruff  v.   Trapnall,    12   Ark. 

official  custodian  of  the  money  ten-  040;  Sheriden  v.  Smith,  2  Hill  538; 


§     27;")]        OONVKNTIOA'AI,     1,1  (ilM  DATION' S    A.\l>     DISC  1 1  A  KM  i  KS.        ,S2.'{ 

ol'  ti'iulfi-  ill  at'tioiis  ill  hiw  do  not  aj)[)lv  in  cuiiilv.  \'\h>\\  a  Iiil| 
to  enforce  s^ieciHc  perfoi'i nance  of  an  ajirecmcnt  to  acco|ir  a 
named  snni  of  money  in  satisfaction  of  a  delit  secnrc(|  hv 
pledii'ed  property  a  tender  is  well  j)Ieade(l  by  allei;in,t'-  readiness, 
williiiiiiiess  and  al)ility  to  pay  the  amount  due  or  t(t  liring-  it  into 
court  to  be  paid  njion  transfer  of  the  colhiteral.*'^ 

The  plaintiir  is  entitled  to  the  money  paid  into  a  c<nirl  of 
law,  with  a  plea  of  tender,  in  any  event.*'  II(>  may  take  it  out, 
thoug'h  he  replies  that  the  tender  was  not  made  before  action 
brought.'*^  'I'lie  fact  that  more  is  paid  (liaii  is  due  or  that  no 
payment  was  necessary  for  the  protection  of  the  rii;hts  oi'  the 


Shepherd  v.  Wvsoiig,  3  W.  Va.  46; 
Roosevelt  v.  New  Yorlc  &  H.  11.  Co., 
30  How.  Pr.  22G. 

In  the  last  case  tlie  defendant  set 
up  in  tlie  answer  a  tender  witliout 
paj'ing  the  money  into  court.  Tiiis 
answer  was  accepted,  and  the  plain- 
tiff afterwards  applied  to  the  court 
for  an  order  requiring  the  defend- 
ant to  pay  to  the  plaintiff  the  sum 
tendered,  vnider  a  provision  of  the 
code  that  "when  the  answer  of  the 
defendant  expressly,  or  by  not  deny- 
ing, admits  part  of  the  plaintilT's 
claim  to  be  just,  the  court,  on  mo- 
tion, may  order  defendant  to  satisfy 
that  part  of  tlie  claim,  and  may  en- 
force the  order  as  it  enforces  a  judg- 
m.ent  or  provisional  remedy."  Tlie 
tender  was  held  to  be  such  an  ad- 
mission. The  court  say:  "The 
money  tendered  in  this  case  was 
not  paid  into  court,  and  it  is  to  be 
inferred  from  the  fact  that  the  an- 
swer is  treated  as  part  of  the  plead- 
ings that  it  is  accepted  witliout  the 
money  being  paid  in.  On  the  facts 
before  me  I  must  treat  the  plea  of 
tender  as  sufficient,  although  the 
money  has  not  been  paid  into  court. 
But  if  the  tender  was  irregular  for 
the  reason  stated,  the  admission  of 
the  justice  of  the  plaintiff's  claim 
would  be  none  the  less  distinct  and 


uii('<iuivoeal."  See  also  Merritt  v. 
'l'hoinps()n,,10  How.  Pr.  4'28;  'i'hurs- 
ton  V.  Marsli,  5  Abb.  Pr.  3S!>. 

46Chicora  F,  Co.  v.  Dunan,  91 
Md.  ]44,  r)0  L.R.A.  401  :  Zebley  v. 
Farmers'  L.  &  T.  Vn..  13!t  N.  Y.  461. 

47  Palatine  Ins.  Co.  v.  O'Brien,  109 
Md.  100;  Mann  v.  Sprout,  185  N. 
Y.  109,  5  L.R.A.(N.S.)  561;  Dechen- 
bach  v.  Rima,  50  Ore.  540;  Sanders 
v.  Mosbarger,  159  Mo.  App.  488; 
Foster  v.  Napier,  74  Ala.  393;  Tay- 
lor v.  Brooklyn  K.  R.  Co.,  119  N.  Y. 
f)!)!;  Kansas  City  T.  Co.  v.  Ncis- 
wanger,  27  Mo.  App.  356;  Dillen- 
bach  v.  The  Rossend  Castle,  30  Fed. 
462;  Supply  D.  Co.  v.  Elliott,  10 
(  olo.  327;  Sweetland  v.  Tuthill,  54 
111.  215;  Munk  v.  Kanzler,  26  Ind. 
App.  10.1;  Martin  v.  Bott,  17  Ind. 
App.  444;  Beil  v.  Supreme  Council 
American  Legion  of  Honor,  42  App. 
Div.  (N.  Y.)  168.  See  Ruble  v. 
Murray,  4  Hayw.  27. 

If  money  paid  into  court  in  a  suit 
for  unliquidated  damages  is  taken 
out  in  good  faith  by  the  plaintiff's 
solicitor  and  paid  to  his  client  the 
solicitor  cannot  be  compelled  to  re- 
pay it  after  his  client's  death. 
Davys  v.  Richardson,  21  Q.  B.  Div. 
202. 

«Le  Crew  v.  Cooke.  1  Bos.  & 
Pul.  332. 


S2-i 


SUTHERLAND    ON    DA  iM  A  (IKS. 


[§  27J 


party  who  paid  does  not  give  liiiii  the  right  to  withdraw  the 
money  or  any  part  of  it.*^  Bnt  the  rule  that  the  plaintiff  is  en- 
titled ahsolntoly  to  the  amount  tendered  and  ])aid  into  court 
has  been  held  not  to  apply  to  an  action  brought  to  recover  a 
penalty  or  other  iixed  amount  where,  unless  the  plaintiff  re- 
covers the  amiiunt  of  tlio  j)Oiialty  or  fixed  sun\,  ho  is  not  en- 
titled to  judgment.^"  Nor  is  it  applicable  to  money  paid  into 
court  by  the  plaintiff"  on  a  bill  in  equity  to  redeem,  where  the 
defendant  for  whom  such  money  is  paid  successfully  contests 
the  right  to  redeem. ^^  In  such  an  action  the  plaintiff'  paid  in, 
under  order  of  the  court,  a  sum  previously   tendered ;  in  the 


49  Fox   V.   Williams,  02  Wis.   320. 

socanastota  &  M.  P.  R.  Co.  v. 
Parkill,  50  Barb.  601. 

51  Putnam  v.  Putnam,  13  Pick. 
129.  In  this  case  Shaw,  C.  J.,  said: 
"There  is  no  analogy  between  the 
payment  of  money  into  court  in  a 
common-law  action  of  debt  or  a~s- 
siimpsit  and  a  like  payment  upon  a 
bill  in  equity  to  redeem  under  our 
statute,  and  hence  the  authorities 
applicable  to  the  former  case  afford 
no  rule  governing  the  present.  By 
payment  into  court,  in  an  action 
claiming  debt  or  damages,  the  de- 
fendant admits,  in  the  most  formal 
manner,  his  absolute  liability  to 
that  sum,  and  by  the  form  of  the 
rule  or  plea  offers  it  in  satisfaction 
and  discharge  of  such  admitted  lia- 
bility. If  not  accepted  it  is  paid 
into  court  for  the  plaintiff's  use, 
and  the  defendant  derives  tlie  full 
benefit  of  it  as  if  paid  to  and  ac- 
cepted by  the  plaintiff  himself,  be- 
cause it  operates  as  a  bar  pro  tanto 
to  all  claims  in  respect  to  such  sum. 
It  is  therefore  upon  the  strongest 
reason  held  that  such  payment  shall 
be  deemed  absolute,  and  the  party 
shall  not  be  permitted  to  draw  it  in 
question  on  the  ground  of  equity  or 
mistake,  or  any  ground  except  fraud 
or  imposition. 


"But  cliaractcr  of  a  payment  of 
money  into  court  on  a  bill  in  equity 
to  redeem  a  mortgage  is  entirely  dif- 
ferent. It  is  in  its  nature  entirely 
provisional;  it  is  an  offer  to  pay 
in  discluirgc  of  a  delit  secured  by 
mortgage  on  real  estate,  the  pur- 
pose of  which  is  to  release  such  real 
estate  from  the  incumbrance.  But 
tlie  defendant  contests  the  right  to 
redeem ;  alleges  that,  by  force  of  law 
and  tlie  lapse  of  time,  tlie  mortgage 
is  foreclosed,  that  she  has  become 
the  absolute  owner  of  tlie  estate,  and 
of  course  that  there  is  no  longer  any 
debt  secured  by  mortgage,  and,  con- 
sequently, that  she  has  no  claim  to 
tlie  money  offered  in  satisfaction  of 
such  debt.  This  defense  prevails, 
and  the  conclusion  of  law  is  that 
the  defendant  wag  right  in  rejecting 
the  money  tendered  and  not  releas- 
ing tiic  estate.  8he  cannot  now  be 
allowed  to  claim  this  money  against 
her  own  formal  act  showing  that  she 
has  no  title  to  it.  Nor  ought  the 
plaintiffs  to  be  bound  by  ?  pro- 
visional offer  of  money  to  redeem  an 
estate,  where  it  appears  that  they 
cannot  redeem,  and  the  payment 
cannot  avail  them  for  the  only  pur- 
pose for  which  the  money  was  of- 
fered." 


§    276]       CONVENTIONAL    LIQUIDATIONS    AND    DTSCIIARGES.       825 


meantime  he  had  failed  to  keep  his  tender  good  and  judgment 
was  given  for  the  defendant  for  that  reason.  The  plaintiff  was 
then  entitled  to  withdraw  the  money  except  so  much  as  iniglit 
pay  the  defendant's  costs. ^'^  By  withdrawing  money  paid  into 
court  the  plaintiff'  accepts  it  for  the  purposes  for  which  it  was 
paid ;  he  cannot  claim  that  it  was  merely  payment  on  account." 
§  276.  Effect  of  tender  when  money  paid  into  court.  A  mere 
tender  of  a  sufficient  sum  only  has  the  eff'ect  to  ato]»  interest 
and  protect  the  debtor  against  subsequent  costs.  It  does  not  dis- 
charge the  debt,^*  nor  preclude  the  plaintiff  from  maintaining 
a  counterclaim  on  an  independent  cause  of  action.^*  But  when 
the  debtor  has  kept  the  tender  good,  and,  on  being  sued,  regular- 
ly pleads  it  and  brings  the  money  into  court  it  accomplishes 
such  discharge  whether  the  action  proceeds  to  judgment  or  not. 
If  the  action  abate  or  be  withdrawn  the  defendant  in  a  subse- 
quent action  may  ]dead  the  tender  and  payment  into  court  in 
the  first  action;  and  if  these  facts  are  established  he  will  be  en- 
titled to  judgment.*^  A  tender  is  equivalent  to  an  admission  of 
liability  pro  tanto.^"^ 


52  Dunn  V.  Hunt,  76  Minn.  19fi. 

53  Haeussler  v.  Duross,  14  Mo. 
App.  103;  Turner  v.  Lee  G.  &  M. 
Co.,  98  Tenn.  604,  38  L.R.A.  549; 
Gardner  v.  Black,  98  Ala.  638;  Han- 
son V.  Todd,  95  Ala.  328;  Cline  v. 
Rudesill,  326  N.  C.  523.  Compare 
Spaulding  v.  Vandercook,  2  Wend. 
431  ;  Sleglit  v.  Ehinelander,  1  Jolina. 
192;  Johnston  v.  Columbian  Ins. 
Co.,  7  Johns.  315.  The  opinion  in 
the  Tennessee  case  cited  contains  a 
summary  of  the  practice  uiulcr  tlie 
old  procedure. 

54G10S  V.  Stern,  213  HI.  325;  For- 
rea  v.  Tubbs,  125  Cal.  687;  Ruppel 
V.  Missouri  Guarantee  S.  &  B.  Ass'n, 
158  Mo.  613;  Wright  v.  Robinson, 
84  Hun  172;  Law  v.  Jackson,  9 
Cow.  641;  Carley  v.  Vance,  17  Mass. 
389;  Haynes  v.  Thorn,  28  N.  H.  386, 
400;    Barnard    v.    Cushnian,    35    III. 


451;  Raymond  v.  Bearnard,  12 
Johns.  274,  7  Am.  Dec.  317;  Coit 
V.  Houston,  3  Johns.  Cas.  243;  Jack- 
son V.  Law,  5  Cow.  248;  Cornell 
V.  Green,  10  S.  &  R.  14.  See  Jeter  v. 
Littlejohn,  3  Murph.  186;  Staat  v. 
Evans,  35  HI.  455;  Teass  v.  Boyd,  29 
Mo.  131 ;  Wheeler  v.  Woodward,  66 
Pa.  158;  Pennsylvania  Co.  v.  Dovey, 
64  id.  260;  Dixon  v.  Clark,  5  C.  B. 
365;  Waistell  v.  Atkinson,  3  Bing 
289;  Johnson  v.  Triggs,  4  O.  Greene 
97;  Freeman  v.  Fleming,  5  Iowa 
460;  Shant  v.  Southern,  10  id.  415; 
Mohn  V.  Stoncr,  II  id.  30;  Hay  ward 
v.  Munger,  14  id.  516. 

55  Ahrens  v.  Fenton,  138  Iowa 
559. 

66  Robinson  v.  Gaines,  3  Call, 
243.  See  Warder  v.  Arell,  2  Wash. 
(Va.)  282.  1  Am.  Dec.  488. 

Keys   V.    Roder,    1    Ht-ad    19,    was 


57  Browning,  King  &  Co.  v.  Cham- 
berlain, 210  N.  Y.  270;   Lasoya  Oil 


Co.  V.  Zulkey,  40  Okla.  690;   New- 
man V.  Levi.  74  W.  Va.  223. 


826 


SUTIIKUI-ANI)    ON    DAMAGES. 


[§  277 


§  277.  Effect  of  tender  on  collateral  securities.  A  sufficient 
tender,  however,  will  disclulrge  all  liens  and  colhileral  s(!cnri- 
ties;  and  for  this  cllect  it  need  not  he  k(!pt  ii,()()d  nor  he  hroii<:^ht 
into  eourt.^*  'idiiis,  where  a  niorti^'a^e  of  real  estate  is  a  mere 
security  for  the  deht  and  the  legal  title  remains  in  the  mort- 
j^agor  precisely  the  same  after  as  hefore  the  deht  is  due  and 
nntil  there  is  a  f(»reci()sni'e,  the  tendei'  (d"  the  aniounl  du(!  after 
the  law  day  and  Ixdore  foreclosure  will  dis(diai'i;(;  the  mortgage; 
and  if  the  mortgagee  is  in  possession  th(!  mortgagor  may  recover 
in  ejectment.''^  iJiit  to  estahlish  a  tender  and  I'cd'nsal,  such  as 
will  discharge  the  lien  of  a  mortgage  withonl  the  tender  being 
kept  good,  the  i)roof  must  he  clear  that  the  tender  was  fairly 
made  and  deliberately  and  intentionally  refused  by  the  owner 
of  the  mortgage,  and  that  sidlicient  op])oi'tunity   was  alTorded 


an  action  of  deljt  coiniuciiciHl  in  a 
justice's  court.  It  was  held  that  a 
nioru  ofFcr  l)y  tlic  dofondant  to  tlic 
phiintill'  of  till'  sum  clainicd  lufnrc 
tlu'  isHiiaiu'c  of  tlio  warrant  {•ouiii 
not  he  ph'aded  as  a  valid  tender  in 
bar  of  the  action.  Tlie  nioiity 
should  liave  been  produced  and 
offered  also  at  the  time  df  the  trial 
before  the  justice;  and  upon  appeal 
to  the  eireiiit  court,  it  should  have 
been  hrouj^dit  into  that  coiut  at  the 
time  of  liliny  the  papers,  and  still 
held  ready  and  produced  as  a  cdii- 
tinuous  offer.  A  more  offei-  uf  tlic 
amount  to  the  plaintiff  by  the  de- 
fondant's  counsel,  in  the  progress  of 
the  argument  in  tin!  circuit  court, 
was  not  sufficient. 

58  I'ittslmrg    T'.    Ci.    Co.    v.    Leary, 

2r,  s.  D.  2r.(i,  ;n  l.u.a.(N.s.)  74(i; 

Thomas  v.  Seattle  B.  &  IM.  Co.,  IS 
Wash.  5fi0,  12.')  Am.  St.  945,  15 
L.R.A.(N.S.)  1104;  Schayer  v.  Com- 
monwoalth  L.  Co.,  103  Mass.  .322; 
Mitchell  V.  Roberts,  17  Fed.  776; 
Wright  V.  Robinson,  84  Hun  172; 
Willard  v.  TTarvey.  5  N.  TI.  252; 
Swett  V.  Horn,  1  id.  :W2 ;  Maynard 
V.    Hunt,  5   Pick.  240. 


59  Smith  V.  Mould,  «7  Misc.  (N. 
Y.)  1!)i);  Security  State  Bank  v. 
Waterloo  Lodge,  85  Neb.  255;  Kort- 
right  V.  Cady,  21  N.  Y.  34.3,  5  Abb. 
I'r.  .■!.-)S:  .[aeks(m  v.  Crafts,  18 
.loliiis.  110;  Kdwards  v.  Farmers' 
F.  Ins.  &  L.  Co.,  21  Wend.  407; 
Farmers'  F.  Ins.  &  L.  Co.  v.  Kd- 
wards, 20  id.  541  ;  Arnot  v.  Post,  0 
II ill  05;  I'ost  V.  Arnot,  2  Denio 
.fll;  Tiffany  v.  St.  .Tohnj  5  Lans. 
I.-.;!,  (i.-)  .\.  W  :!11  :  iinrtley  v.  'i'at- 
hani,  1  Robert.  240,  1  Keyes  222; 
Trinun  v.  Marsh,  54  N.  Y.  5!)9,  13 
Am.  Rep.  023;  McDaniels  v.  Reed, 
17  Vt.  074;  Kslow  v.  i\Iitc,hell,  20 
Mieii.  500;   Caruthers  v.   Humphrey, 

12  id.  270;   Van   llusan  v.   Kanouse, 

13  id.  303;  Saltus  v.  Everett,  20 
Wend.  207;  Salinas  v.  Fllis,  20  S. 
('.  ;{:i7;  Thornton  v.  Natiomil  F.vch. 
Bank,  71  Mo.  221.  See  Harris  v. 
,Jc\,  (10  Barb.  232;  Merritt  v.  Lam- 
licrt,  7  I'aige  344;  Ketelium  v. 
Cripiicii,  .37  Cal.  223;  Bryan  v. 
MauMic,  28  Cal.  238;  Wilson  v.  Keel- 
ing, 1  Wash.  (Va.)  104;  Werner  v 
Tu.li,  52  Hun  200. 


§    277]       C0XVENT10^•AI.    I.IQUIDATIONS    AM)    DlSllIAKUKS.       S27 

to  at!ccrtaiii  the  ainount  due ;  at  least  it  sliouM  appear  thai  a  siiin 
was  absohitely  and  imeonditionally  tendered  sutKeient  to  cover 
the  whole  anionnt  dne.^°  Thoujrh  tlie  tender  he  sufficient,  vet 
if  the  niortiiaiior  asks  for  affirmative  relief,  even  for  extiuiruish- 
nient  of  the  lien,  he  niustdo  e<piity ;  this  obliires  him  to  keep 
the  tender  good;  he  must  pay  the  amount  eipiitahly  due  the 
mortgag-ee.^^  Where  the  im-idents  attached  to  a  mortgaire  of 
real  estate  are  those  which  prevailed  at  the  common  law,  the 
mortgagee  having  an  estate  on  comlitiou  which  hecnmes  absolute 
by  reason  of  iion-paynicnt  on  the  day  named,  a  tender  will  not 
discharge  the  lien  unless  it  is  made  punctually  and  is  kept 
good.®^  A  tender  Avill  discharge  a  mechanic's  lien  for  the  repair 
of  personal  property ;  ^  an  attorney's  lien ;  "  a  pledge  or  mort- 
gage of  personal  lu-opcrty;"  the  right  to  distrain  for  rent;®® 
and  will  release  a  surety.®^     Init  a  temU'r  of  the  sum  due  on  a 


SOSinitli  V.  :\Jould.  87  .Misc.  (N. 
Y.)  ]W:  Tiithill  v.  Morris.  81  X. 
Y.  04;  Parks  v.  Allen,  42  Mich.  82: 
Jewi'tt  V.  Earle,  53  X.  Y.  Super.  Ct. 
349;  Waldron  v.  Murphy.  40  Midi. 
068. 

eiTutliill  V.  Morris.  81  X.  Y.  04: 
Landis  v.  Saxton,  SO  ^lo.  375.  See 
Salinas  v.  Ellis,  26  S.  C.  337. 

62Crain  v.  McGoon.  86  111.  431; 
:\Iatthe\vs  v.  Lindsay.  20  Fla.  002; 
ScheartY  v.  Dodge.  33  Ark.  340; 
Alexander  v.  Caldwell,  61  Ala.  543; 
Greer  v.  Turner.  36  Ark.  17;  Cur- 
rier V.  Gale.  0  Allen  522;  Holman 
v.  Bayley,  3  ^ietc.  (^lass. )  oii; 
Phelps  V.  Sage,  2  Day  151;  Shields 
V.  Lozear,  34  X'.  J.  L.  496,  3  Am.  Rep. 
256:  Rowell  v.  Mitchell.  68  Me.  21: 
Storey  v.  Krewson,  55  Ind.  307,  23 
Am.  Rep.  668;  Collins  v.  Robinson. 
33  Ala.  01  :  Slaughter  v.  Swift.  67 
id.  404:  Frank  v.  Pickens.  60  id. 
360;  Tompkins  v.  Patie.  11  Xeh. 
147,  38  Am.  Rep.  361;  Hudson  v. 
Glencoe  S.  &  G.  Co.,  140  Mo.  103. 
62  Am.  St.  722:  Himmelmann  v. 
Fitzpatrick.  50  Cal.  650:  Mitchell 
V.  Roberts,  17  Fed.  776. 


63  Pittsburg  P.  G.  Co.  V.  Leary. 
25  S.  D.  256.  31  L.R.A.(X.S.i  746; 
Moynahan  v.  ^loore.  0  ^lich.  0; 
Pall  V.  Stanley.  5  Yerg.  100,  26  Am. 
Dec.  263. 

64  Stokes  on  Lien  of  Att'ys,  81, 
172;  Jones  v.  Tarleton.  0  M.  &  \V. 
675;  Scarfe  v.  Morgan.  4  id.  280; 
Irving  V.  Viana,  2  Y.  &  ,Jor.  71. 

65  Hyanis  v.  Bamberger.  10  LUah, 
3,  citing  the  text:  X'orton  v.  Baxter, 
41  Minn.  146.  4  L.R.A.  305:  Lough- 
borough V.  McXevin.  74  Cal.  250, 
5  Am.  St.  435:  I^IcCalla  v.  Clark, 
55  Ga.  53;  Wildman  v.  Radenaker, 
20  Cal.  615:  Ball  v.  Stanley,  supra; 
Cooley  V.  Weeks,  10  Yerg.  141 ; 
Coggs  V.  Bernard,  2  Ld.  Rayni.  909, 
1  Am.  X'eg.  Cas.  948:  Comvn's  Dig., 
tit.  Mortgage.  .\.  But  not  after  the 
day  it  is  due.  Tompkins  v.  Batie, 
siipra.  Contia,  Myains  v.  Bamberg- 
er, supra.  See  Frank  v.  Pickens.  69 
Ala.  360. 

66  Hunter  v.  Le  Conte,  6  Cow. 
728;   Davis  v.  Henry.  63  Miss.   110. 

67  Smith  V.  Old  Dominion  B.  *  L. 
Ass'n,  110  X.  C.  257;  Mitchell  v. 
Roberts.    17    Fed.    776;     Brandt    on 


S28 


SUTHERLAND    ON    DAMAGES. 


[§  277 


contract  for  the  purcliase  of  land,  the  legal  title  being  in  the 
vendor,  does  not  discharge  his  lieu;  he  can  be  divested  of  his 
title  only  by  payment  of  the  purchase-money.^*  A  landlord's 
statutory  lien  for  rent  is  not  discharged  by  a  tender  of  the  rent 
due.«^ 

Whether  a  judgment  which  is  a  lien  on  land,  or  under  which 
an  execution  has  been  levied,  will  be  discharged  by  a  tender  is 
not  very  clearly  settled.  It  has  been  held  that  to  make  a  ten- 
der eifectual  for  this  purpose  the  money  should  be  brought 
into  court  and  the  judgment  satisfied  of  record.  Being  a  debt 
of  record,  and  a  tender  not  discharging  it,  the  lien,  being  a  legal 
consequence,  must  subsist  while  the  debt  continues  in  that 
form.'''''  But  the  weight  of  reason,  if  not  authority,  is  in  favor 
of  holding  an  execution  lien  discharged  by  a  tender  the  same  as 
a  conventional  lien  would  be.  In  each  case  the  lien  exists  as  a 
collateral  advantage  to  the  creditor.  It  is  incidental  to  the  debt. 
In  each  case,  if  the  lien  is  not  satisfied,  there  is  a  power  to  sell. 
Payment  will  extinguish  one  as  well  as  the  other.'''^    But  it  will 


Suretyship,  §§  21,  22;  Appleton  v. 
Donaldson,  3  Pa.  381 ;  Spurgeon 
V.  Sniitha,  114  Ind.  453;  Joslyn  v. 
Eastman,  46  Vt.  258;  White  v.  Life 
Ass'n  of  America,  63  Ala.  419,  35 
Am.  Rep.  45;  McQuesten  v.  Noyes, 
6  N.  H.  19;  Sailly  v.  Elmore,  2 
Paige  497 ;  Fisher  v.  Stockebrand, 
26  Kan.  565;  Hayes  v.  Josephi,  26 
Cal.  535;  Solomon  v.  Reese,  34  id. 
28.  Compare  Clark  v.  Sickler,  64 
N.  Y.  231,  21  Am.  Rep.  606;  Second 
Nat.  Bank  v.  Pouchcr,  56  N.  Y.  348. 

68  Schearff  v.  Dodge,  33  Ark.  346. 

69Hamlett  v.  Tallman,  30  Ark. 
505;  Bloom  v.  McGehee,  38  Ark. 
329. 

70  Jackson  v.  Law,  5  Cow.  248 ; 
Law  V.  Jackson,  9  id.  641;  Halsey 
V.  Flint,  15  Abb.  Pr.  367.  See  Schu- 
maker  v.  Nichols,  6  Gratt.  592; 
Flower  v.  Elwood,  66  111.  447,  449; 
Redington  v.  Chase,  34  Cal.  666. 
But  see  also  Mason  v.  Sudam,  2 
Johns.     Ch.     172;     Tiffany     v.     St. 


Jolin,   5   Lans.    153,    65   N.   Y.   314, 
23  Am.  Rep.  55. 

71  Tiffany  v.  St.  John,  65  N.  Y. 
314,  23  Am.  Rep.  55.  In  this  case 
Dwight,  C,  said:  "There  is,  un- 
doubtedly, a  stage  in  a  proceeding 
in  an  action  where  property  is  in 
the  custody  of  the  law,  that  a  tender 
will  not  destroy  the  lien,  as  that 
might  interfere  with  the  proper  dis- 
position of  the  case.  After  the  ac- 
tion is  over,  and  judgment  obtained, 
and  execution  levied,  the  case  be- 
comes clearly  assimilated  to  that  of 
an  ordinary  lien;  and  if  tender  is 
made  and  not  accepted  the  lien  will 
be  extinguished.  This  distinction 
was  settled  as  far  back  as  the  time 
of  Lord  Coke,  and  is  clearly  stated 
in  the  Six  Carpenters'  Case  (8  Coke, 
146a).  The  point  there  discussed 
was  the  effect  of  a  tender  in  the 
case  of  a  distress  for  rent,  or  of 
cattle  doing  damage — an  instance  of 
a  lien  created  by  the  act  of  the  law. 


§    277]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.        829 

not  discharge  ii  lien  to  secure  the  payment  of  special  assc'^sincnts 


Coke  considers  the  distinction  be- 
tween a  tender  made  upon  tlie  land 
before  distress,  after  the  distress 
and  before  impounding,  after  im- 
pounding and  before  the  determina- 
tion of  the  litigation,  and  contrasts 
these  witli  a  tender  made  after  the 
law  has  determined  the  riglits  of 
the  parties.  He  says:  "Note,  read- 
er, this  difference:  that  tender  upon 
the  land  before  the  distress  makes 
the  distress  tortious;  tender  after  the 
distress  and  before  the  impound- 
ing makes  the  detainer,  and  not  tlie 
taking,  wrongful ;  tender  after  the 
impounding  makes  neither  one  nor 
the  other  wrongful,  for  tlien  it  comes 
too  late,  because  tlien  the  cause  is 
put  to  the  trial  of  the  law,  to  bo 
there  determined.  But  after  tlie 
law  has  determined  it,  and  tlic  avow- 
ant has  return  irreplevisable,  yet  if 
the  plaintiff  makes  him  a  sufficient 
tender  he  may  have  an  action  of 
detinue  for  the  detainer  after,  or  he 
may,  upon  satisfaction  made  in 
court,  have  a  writ  for  the  redeliv- 
ery of  his  goods.'  He  adds:  'And 
therewith  agree  all  the  books,  and 
Pelkington's  Case,  in  the  fifth  part 
of  my  reports  (fol.  76),  and  so  all 
the  books  which,  prima  facie,  seem 
to  disagree,  are,  upon  full  and  preg- 
nant reason,  well  reconciled  and 
agreed.' 

"There  is  here  a  clear  statement 
of  the  principle  applicable  to  the 
case  at  bar.  Here  the  law  has  al- 
ready determined  the  right  which 
has  become  final  in  analogy  to  the 
'return  irreplevisable'  of  Lord  Coke, 
and  the  tender  having  been  made 
and  refused,  if  it  were  sufficient  in 
amount,  an  action  of  replevin  in 
the  detinct  will  lie  in  analogy  to  the 
action    of    detinue    referred    to    by 


liim.  It  sliould  also  be  observed  tliat 
Lord  Coke's  rule  provides  tliat  tlie 
owner  of  goods  lias  his  election  to 
make  an  application  to  tlie  court  for 
relief. 

"'ilie  defendant  cites  in  opjiosition 
to  these  views  the  case  of  .lackson 
V.  Law,  5  Cow.  24.S,  0  id.  «4l.  That 
case,  however,  has  no  bearing  upon 
the  present  controversy,  'j'he  point 
there  decided  was  that  a  tender  of 
money  due  upon  a  judgment  by  a 
junior  judgment  creditor  did  not 
discharge  it,  nor  take  away  tlie  lim 
of  the  senior  judgment  creditor 
upon  lands,  but  that  the  laKer 
might  still  redeem  upon  his  judg- 
ment witiiin  tlie  terms  of  tlie  stat- 
ute applicable  to  that  subject.  The 
ground  of  this  decision  briefly  was 
that  a  judgment,  being  a  debt  of 
record,  is  not  discharged  by  a  ten- 
der, and  it  is,  in  no  case,  tlie  effect 
of  a  tender  to  discharge  the  debt. 
The  judgment  could  only  lie  e.Ktin- 
guished  by  actual  satisfaction.  As 
long  as  it  remained  in  force,  it 
must,  by  its  very  nature,  as  pre- 
scribed by  statute,  he  a  lien  on  the 
land.  If  its  existence  continued  it 
could  not  be  deprived  of  its  ordinary 
and  usual  cliaracteristics.  The  ease 
is  very  different  witii  a  pledge  or 
mortgage,  or  lien  of  any  kind  col- 
lateral to  the  debt.  To  tiiia  class 
of  collateral  liens  an  execution  be- 
longs, and  on  general  principles  a 
tender  destroys  it.  Even  in  the 
case  of  a  judgment  a  tender  may 
have  such  an  effect  as  to  make  it 
inequitable  to  enforce  the  lien;  and 
a  court  of  equity  may  set  aside  a 
sale  under  it  as  irregular  and  void. 
Mason  v.  Sudani,  2  Johns.  Cli.  172." 
Sec  Crozer  v.  Pilling,  (5  D.  &  R.  ]2!t. 


830  suthp:rland  on  damages.  [§  277 

for  street  iinproveiiieuts,   no  personal  liability  therefor  exist- 

72 

mg. 

A  plea  of  tender  should  conclude  by  praying  judgment 
whotlier  the  plaintiff  ought  to  recover  any  damages  by  reason 
of  the  non-payment  of  the  sum  alleged  to  have  been  tendered.'^ 
If  upon  the  trial  the  sum  tendered  and  brought  into  court  is 
found  by  the  jury  to  be  less  than  was  due  at  the  time  of  the 
tender  the  verdict  and  judginent  should  be  for  the  whole  amount 
of  the  plaintiff's  demand  without  any  deduction  on  account  of 
the  money  brought  into  court.  The  defendant,  however,  is 
entitled  to  the  benefit  of  the  payment  by  indorsement  upon  the 
judgment  or  execution.'''* 

§  278.  Paying  money  into  court.  A  practice  was  introduced 
into  England  in  the  time,  of  Charles  II.  of  paying  money 
into  court  where  no  previous  tender  had  been  made.'^  This  is 
supposed  to  have  been  adopted  to  avoid  the  hazard  and  difficulty 
of  pleading  a  tender.''®  The  money  was  paid  in  on  a  rule  of 
court,  and  thereafter  the  plaintiff  proceeded  for  more  at  the 
hazard  of  paying  subsequent  costs.  The  amount  paid  in  was 
stricken  from  the  declaration  and  no  evidence  given  of  that 
part  of  the  claim.'"''  It  was  at  first  required  to  be  paid  in  before 
plea,  but  was  afterwards  allowed  by  withdrawing  the  plea.  The 
rule  allowing  the  defendant  to  pay  money  into  court  was  grant- 
ed generally  on  condition  of  paying  costs,  directing  that  sum 
to  be  stricken  out  of  the  declaration,  if  refused  by  the  plaintiff, 
and  concerning  it  no  evidence  to  be  received  on  the  trial.  This 
reduced  the  controversy  to  the  quaniwrn  of  damages;  and  the 
consequence  was  that,  if  the  plaintiff  did  not  prove  a  greater 
sum  due  than  that  paid  in,  a  verdict  passed  for  the  defendant  and 
he  had  judgment  for  subsequent  costs.""*    If  the  plaintiff  proved 

72  McGuire  v.  Brockman,  58  Mo.  75  Payment  into  court  without  a 
App.  307.                                                        rule  may  be  disregarded.     Levan  v. 

73  Kartliaus  v.   Owings,  6  Har.  &       Sternfeld,   infra. 

J.  L34.  76  Levan  v.  Sternfeld,  55  N.  J.  L. 

74Dakin    v.    Dunning,    7    Hill    30  41 ;  Arch.  Pr.  199;  Boyden  v.  Moore, 

42     Am.    Dec.    33;     Huntington    v.  5  Mass.  365;   Reed  v.  Woodman,  17 

Zeigler,  2  Ohio  St.   10;    Bennett  v.  Me.  43. 

Odom,  30  Ga.  940 ;  Baker  v.  Gasque,  77  Id. 

3  Strobh.  25;  Reed  v.  Woodman,  17  78  But   the    judgment   should    not 

Me.  43;  1  Tidd's  Pr.  569.  require  the  payment  of  costs  by  the 


§    279]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       831 

that  more  was  due  he  liad  a  verdict  and  jndiinieiit  for  the  bal- 
ance and  subsequent  costs. '^  The  payment  of  money  into  court 
was  proved  hy  production  of  the  rule.®"  P>iit  when  the  teiuler 
is  found  sufficient  and  the  money  has  l)een  brought  into  court 
the  verdict  should  be  for  the  defendant.*^  A  debtor  may  re- 
lieve himself  from  his  obligation,  int(!rest  and  costs  by  ]iaying 
money  into  court  after  an  assignment  of  the  debt.^^  Wiiere 
payment  into  court  is  unauthorized  by  law,  money  dcjxisitcd  by 
the  defendant  with  the  clerk  to  be  paid  to  the  plaintilT  on  con- 
dition of  his  discontinuing  the  suit  cannot  on  the  latter's  failure 
to  comply  with  such  condition  be  recovered  by  him  from  the 
clerk.®^  Money  paid  into  court  becomes  the  ])roperty  of  the 
plaintiff  and  his  attorney's  lien  for  services  attaches  at  once." 

Section  6. 

stipulated  damages. 

§  279.  Contracts  to  liquidate  damages  valid.  After  damages 
have  been  sustained  an  agreement  to  })ay  such  sum  therefor  as 
shall  be  ascertained  in  a  particular  way  is  binding.^^  And 
parties  in  making  contracts  are  at  liberty  to  stipulate  the  amount 
which  shall  be  paid  by  either  to  the  other  as  compensation  for 
the  anticipated  actual  loss  or  injury  which  they  foresee  or  con- 
plaintiff  as  a  condition  precedent  to  audi  payment,  and  the  plaintiff 
his  right  to  receive  the  amount  took  the  money ;  it  was  lield  that 
paid  into  court.  Kelley  v.  Fielding,  in  the  aljsence  of  proof  that  tlie 
180  111.  App.  70.5.  plaintiff  took    it   in    satisfaction   of 

79  1  Bac.  Abr.  473c.  See  Ruble  his  claim  lie  was  not  thereby  pre- 
V.  Murray,  4  Hayw.  27.  eluded   from    filing  new   counts   and 

80  Id.  recovering  an  aiUlitioiial  sum  tlien- 

81  Pennypacker    v.    Umberger,    22       on. 

Pa.  492;  Levan  v.  Sternfeld,  supra.  82  McGaughey    v.    AfcGaughey,    A4 

In  Hill  V.  Smith,  34  Vt.  .Wf),  the  Pa.  Super.  Ct.  29. 

defendant,    before    the    new    counts,  83  Browning,  King  &  Co.  v.  <  liam- 

upon    which    alone   the    ])laintiff   re-  berlain,  210  N.  V.  270. 

covered,  were  filed,  paid    into  court  84  Bernstein  v.  Traver.so.  S2  Misc. 

a  sum  of  money  sufficient  to  satisfy  (N.  Y.)   411. 

all   tlie  damages  the  plaintiff  could  85  Longridge    v.    l)(uvill.'.    ."•    P..    & 

have    recovered    under    the    original  Aid.   117.     See  lldstiicr   v.   True,    19 

declaration  and  costs  to  the  time  of  Barb.  10(5. 


832 


SUTHERLAND    ON    DAMAGES. 


[§   279 


cede  will  result  from  a  breach  if  it  should  occur.'^  No  doubt 
the  consideration  which  supports  the  contract  will  support  such  a 
stipulation  as  an  incidental  part  of  it.  The  cases  all  seem  to 
proceed  on  the  theory  that  no  independent  consideration  is 
necessary.^''  The  stipulation  need  not  be  reciprocal.*^  Without 
express  statutory  authority  officers  who  are  authorized  by  law  to 
make  contracts  for  a  state  or  municipality  have  power  to  fix  a 
sura  as  liquidated  damages  for  their  violation.®^  The  sum  desig- 
nated in  the.  contract  or  subsequently  agreed  upon  becomes,  on 
the  happening  of  the  event  on  which  its  payment  depends,  the 
precise  sum  to  be  recovered  and  the  jury  are  confined  to  it.^° 
Nor  will  equity  relieve  from  the  payment  of  it.^^ 


seCatterlin  v.  Voney,  177  Fed. 
527;  District  of  Columbia  v.  Har- 
lan, 30  App.  D.  C.  270;  Wilson 
V.  Godkin,  136  Mich.  106;  Blunt  v. 
Egeland,  104  Minn.  351;  Hart  v. 
Pennsylvania  R.  Co.,  112  U.  S.  331 ; 
Conreid  Met.  0.  Co.  v.  Brin,  66  N. 
Y.  Misc.  282;  Krausse  v.  Greenfield, 
61  Ore.  502;  Sun  P.  &  P.  Ass'n  v. 
Moore,  183  U.  S.  642,  46  L.  ed.  366; 
Guerin  v.  Stacy,  3  75  Mass.  595; 
Holmes  v.  Holmes,  12  Barb.  137; 
Fasler  v.  Beard,  39  Minn.  32. 

87  Harris  v.  Theus,  149  Ala.  133, 
123  Am.  St.  17,  10  L.R.A.(N.S.) 
204. 

It  is  immaterial  that  tlie  contract 
relates  to  property  wliich  is  not  to 
be  used  for  commercial  purposes — as 
a  vessel  of  war.  Clydebank  E.  & 
S.  Co.  V.  Yzquierdo  y  Caataneda, 
[1905]  App.  Cas.  6. 


88  Shubert  v.  Sonheim,  138  App. 
Div.    (N.  Y.)    800. 

89  State  T.  Co.  v.  Duluth,  70  Minn. 
257;  Brooks  v.  Wichita,  114  Fed. 
297,  52  C.  C.  A.  209;  Little  v. 
Banks,  86  N.  Y.  258;  Parr  v.  Green- 
bush,  42  Hun  232 ;  Nelson  v.  Jones- 
boro,  57  Ark.  168;  Salem  v.  Anson, 
40  Ore.  339,  56  L.R.A.  169;  Barber 
A.  P.  Co.  V.  Wabash,  43  Ind.  App. 
167.  See  Springwells  v.  Detroit, 
etc.  R.,  140  Mich.  277. 

The  court  may,  after  sustaining 
a  demurrer  to  tlie  answer,  enter 
judgment  for  the  stipulated  amount. 
Biebcr  v.  Gans,  24  App.  D.  C.  517, 
or  direct  tlie  return  of  a  verdict  for 
it.     Camp  V.   Pollock,  45  Neb.   771. 

soCatterlin  v.  Voney,  177  Fed. 
527 ;  United  States  v.  United  States 
F.  &  G.  Co.,  151  Fed.  534;  United 
States    V.    Alcorn,    145    Fed.    995; 


siPogue  V.  Kaweah  P.  &  W.  Co., 
138  Cal.  604 ;  Hull  v.  Angus,  00  Ore. 
95;  Harper  v.  Tidholm,  155  111. 
370;  Ewing  v.  Litchfield,  91  Va. 
575;  Sanford  v.  First  Nat.  Bank,  94 
Iowa  680;  Wood  v.  Niagara  Falls 
P.  Co.,  121  Fed.  818,  58  C.  C.  A. 
256;  Wibaux  v.  Grinnell  L.  S.  Co., 
9  Mont.  154,  162;  2  Story's  Eq. 
§  1318;  3  Lead.  Cas.  in  Eq.  671  et 
seq.;  Westerman   v.   Means,   12   Pa. 


97;  Downey  v.  Beach,  78  111.  53; 
Brooks  V.  Wichita,  114  Fed.  297,  52 
C.  C.  A.  209;  Sun  P.  &  P.  Ass'n  v. 
Moore,  183  U.  S.  642,  46  L.  ed.  366; 
Young  V.  Gaut,  69  Ark.  114. 

If  further  damages  accrue  after 
the  date  of  the  trial  in  which  the 
payment  of  the  stipulated  damages 
for  daily  delay  is  adjudged,  they 
may  be  recovered.  De  Soysa  v.  De 
Pless  Pol,  [1912]  App.  Cas.  194. 


§    27i)]       CONVENTIONAL    I, U^r  1 1  )A'riONS    AND    DISC  11  AK(!  KS.        8I53 

As  will  more  fiill}^  apponr  horejiftor,  iIkm-o  iii-c  liinilatinris  on 
the  i)Ower  thus  to  contract.  As  a  general  nilf  where  the  injury 
resulting  from  the.  hrcach  of  a  eontraet  is  susecjitihle  of  (leliuite 
measurement,  as  where  the  breach  consists  in  the  n(Ui-payniont 
of  money,  the  parties  will  not  be  sustained  in  the  enfoi-ccmcnt 
of  stipulations  for  a  further  sum,  whether  in  tlu^  I'orm  of  a 
penalty  or  licjuidatinl  daniaiios;  l)ut  where  \]io  (hiniaii;cs  sustaitied 
are  uncertain  and  are  not  readily  susceptible  of  beini>-  reduced  to 
a  certainty  by  a  log'al  comjiutation  they  may  l)e  <l(^tennined 
before  a  breach  occurs. ^^  Th(>  \alidity  of  an  agreement  to  stip- 
ulate what  the  damages  shall  be  is  to  be  determined  l)y  the  situa- 
tion of  the  ]iarties  and  their  apprehension   of  the  ed'ect  of  a 


Rteplionson  v.  Essex  County  P. 
Com.,  143  Fed.  844,  75  C.  C.  A.  60; 
District  of  Columbia  v.  Harlan,  30 
App.  D.  C.  270;  Mercantile  T.  Co. 
V.  Hensey,  27  App.  D.  C.  210;  How- 
ard V.  Adkins,  167  Ind.  184;  Long 
V.  Furnas,  130  Iowa  504  (specific 
injury  need  not  l)e  alleged  nor 
proved)  ;  Louisville  &  N.  R.  Co.  v. 
Mason,  126  Ky.  844;  Beveridge  v. 
West  Side  C.  Co.,  130  App.  Div.  (N. 
Y.)  139;  Gann  v.  Ball,  26  Okla.  26; 
Yoder  v.  Strong,  227  Pa.  432;  Li- 
chetti  V.  Conway,  44  Pa.  Super.  71 ; 
Ancrum  v.  Camden  W.,  L.  &  I.  Co., 
82  S.  C.  284,  21  L.R.A.(N.S.)  1029; 
Donovan  v.  Ilanaiier,  32  Utah  317; 
K.  P.  Min.  Co.  V.  Jacobson,  30  ITtali 
115,  4  L.R.A.(N.S.)  7.55;  Crawford 
V.  Heatwole,  110  Va.  358,  34  L.R..\. 
(N.S.)  587,  quoting  the  text: 
Schlunipf  V.  Sasake,  38  Wash.  27S; 
Charleston  L.  Co.  v.  Friedman,  64 
W.  Va.  15]  ;  Woodford  v.  Kelley,  18 
S.  D.  615;  Filers  Music  House  v. 
Oriental  Co.,  69  Wash.  618;  Smith 
v.  Newell,  37  Fla.  147 ;  American 
C.  B.  &  I.  Works  V.  Galland-B.  B. 
&  M.  Co.,  30  Wash.  178;  Kelso  v. 
Reid,  145  Pa.  600,  27  Am.  St.  71(1; 
Welch  V.  McDonald,  85  Va.  500; 
Stanley  v.  Montgomery,  102  Ind. 
102;  Lowe  v.  Peers,  4  Burr.  2225; 
Suth.  Dam.  Vol.   I.— 53. 


Beale  v.  Hayes,  5  Sandf.  640;  Tar- 
deveau  v.  Smith,  Hardin,  175,  13 
Am.  Dec.  727.  See  Bi-adshaw  v. 
Craycraft,  3  J.  J.  Marsh.  79;  Keeble 
V.  Keeble,  85  Ala.  552;  West  Coast 
M.'s  Agency  v.  Oregon  C.  M.  Co., 
54  Wash.  247;  Selln*  v.  Matson,  137 
Iowa  97,  14  L.R.A.(.\.S.)    1210. 

In  Louisiana  the  sum  agr('<>d  to 
be  paid  by  way  of  liquidati'd  dam- 
ages is  subject  to  reduction  under 
certain  circumstances;  wlien  tiH>  re- 
duction is  permissil)lc  ami  suit  is 
brought  for  tlic  wliole  amount,  the 
onus  is  upon  the  party  claiming  the 
reduction  to  establish  the  extent  to 
which  it  should  be  made.  Cold- 
man   v.   (~!oldmaii,  51   La.   .\un.   761. 

ITndiT  the  Ontario  .liidicature  Act 
of  1895  c(juity  will  award  actual 
damages,  estimated  on  a  lilieral 
scale,  in  lieu  of  the  damages  stipu- 
lated for.  Townsend  v.  Toronto,  etc. 
R.  Co.,  28  Ont.  195. 

A  tender  of  partial  ixrformanrc 
of  the  contract  does  nut  rrlievf  tln' 
party  in  default  from  liaiiility  for 
the  full  amount  stipulali-d.  Krost 
V.  Foote  (Te.\.  Civ.  -\|'|>  ).  44  S.  W. 
1071. 

92  Deming  T.  Co.  v.  I'.aird.  .'^i 
Okla.  .■(93;  Coldman  v.  (loldman.  51 
La.    .Ann.    Till;    Kiinkij    v.    Whcirv, 


834 


SUTPIERLAND    ON    DAIMAGES. 


[§  -279 


breach  of  the  contract  at  the  time  of  making  it.  The  fact  that  it 
is  subsequently  ascertained  that  the  damages  caused  bj  the 
breach  were  capable  of  ascertainment  does  not  change  the  legal 
effect  of  their  stipulation.^^  There  is  an  implied  condition  in 
every  judicial  sale  that  if  the  purchaser  does  not  pay  the  price 
he  offered  he  will  pay  the  difference  between  that  j)rice  and  the 
price  realized  on  a  subsequent  sale  duly  made  after  proper  notice, 
and  also  .pay  the  expense  of  such  sale.  This  condition  has  the 
same  effect  as  if  there  was  a  formal  contract  stipulating  the 
damages  for  such  default.^^  The  payment  of  stipulated  damages 
will  not  be  enforced  if  no  damage  has  been  sustained  though 
there  was  a  breach  of  the  contraet.^^ 

§  280.  Damages  can  be  liquidated  only  by  a  valid  contract. 
A  valid  contract  must  exist  on  which  damages  could  be  re- 
covered.^^ If  void  for  not  being  in  writing,^'''  or  if  impeached 
for  fraud,^*  or  as  against  public  policy  ^^  the  sti])ulation  for  dam- 


189  Pa.  198,  69  Am.  St.  802;  Tobler 
V.  Austin,  22  Tex.  Civ.  App.  99; 
Palmer  v.  Toms,  96  Wis.  367;  Fas- 
ler  V.  Beard,  39  Minn.  32;  Sun  P. 
&  P.  Ass'n  V.  Moore,  183  U.  S.  G42, 
46  L.  ed.  366;  Brooks  v.  Wichita, 
supra;  Whitfield  v.  Levy,  35  N.  J. 
L.  149. 

93Kimbro  v.  Wells,  112  Ark.  126; 
Vaulx  V.  Buntin,  127  Tenn.  118,  cit- 
ing the  text;  Blackwood  v.  Liebke, 
87  Ark.  545 ;  Wilson  v.  Jonesboro, 
57  Ark.  168;  Dunn  v.  Morgen- 
thau,  73  App.  Div.   (N.  Y.)   147. 

94Hovvison  v.  Oakley,  118  Ala. 
215,  238. 

Subsequent  events  are  immaterial 
as  to  the  effect  of  the  contract. 
Clydebank  E.  &  S.  Co.  v.  Yzquierdo 
y    Castranda,    [1905]    App.    Cas.    6. 

96  The  Colombia,  197  Fed.  661; 
Northwest  F.  Co.  v.  Kilbourne,  128 
id.  261,  62  C.  C.  A.  638;  Ward  v. 
Haren,  183  Mo.  App.  569. 

96  Bates  V.  White,  138  111.  App. 
112. 

The  ordinary  terms  of  an  applica- 
tion  for   life   insurance,   stipulating 


that  insurer  sliould  not  be  liable  un- 
til it  received  the  first  premium, 
does  not  constitute  the  amount  of 
such  premium  liquidated  damages 
upon  its  nonpayment.  Royal  Vic- 
toria L.  Ins.  Co.  V.  Richards,  31 
(hit.  483. 

97  Newman  v.  Perrill,  73  Ind.  153; 
Scott  V.  Bush,  26  Mich.  418,  12  Am. 
Rep.  311. 

98  Darrow  v.  Cornell,  12  App.  Div. 
(N.  Y.)  604;  Wambaugh  v.  Bimer, 
25  Ind.  36S.  See  Fruin  v.  Crystal 
R.  Co.,  89  IMo.  397;  Ahlers  v.  Har- 
rison, 131  Iowa  289. 

99  Watson  V.  Watson,  37  Ind.  App. 
548;  Edgerton  v.  Edgerton,  153  N. 
C.  167;  Menzies  v.  Fairburn,  113 
App.  Div.  (N.  Y.)  119;  Dittrich  v. 
Gobey,  119  Cal.  599;  Cowdrey  v. 
Carpenter,  1  Robert.  429;  Freeman 
V.  Miller,  9  Ohio  N.  P.    (N.  S.)    26. 

A  party  to  an  action  for  the  fore- 
closure of  a  mortgage  of  real  estate 
on  assigning  a  junior  mortgage  of 
only  a  part  of  the  premises  stipu- 
lated with  its  assignee  that  the 
order  of  sale  should  direct  the  prop- 


§    281]       CONVENTIONAL    LIQUIDATIONS    AND    DIBCHAItUES.       835 

ages  will  share  tlie  late  of  the  contract.  A  contract  is  not  void 
so  as  to  bar  the  recovery  of  tlie  sum  stipulated  as  damages  for 
the  violation  of  its  condition  as  to  the  sale  of  a  good-will  because 
it  includes  more  territory  than  the  statute  allows.  Though  the 
contract  is  void  as  to  the  excess  of  such  territory  the  defcmhmt, 
by  breaching  it  within  the  territory  as  to  which  it  was  valid,  Ijo- 
came  liable  for  the  entire  sum  stipulated  to  be  paid.^  A  jtrovi- 
siou  in  a  contract  for  liquidating  the  damages  which  may  result 
from  its  breach  will  not  be  extended  by  construction  to  other 
provisions  or  conditions  in  it  than  are  within  its  obvious  scopo 
and  purpose.^  Thus,  a  stipulation  as  to  the  damages  for  delay 
in  the  performance  of  a  contract  does  not  govern  the  contractor's 
liability  for  abandoning  the  work  undertaken.^  A  doubtful  or 
indefinite  clause  concerning  stipulated  damages  will  iiol  he  en- 
forced.^ 

§  281.  Modes  of  liquidating  damages;  computation  of  time. 
The  stii)ulalion  for  the  adjustment  of  the  amount  of  daiiKigos 
is  usually  embraced  in  the  contract  for  the  violation  of  which 
they  are  to  be  paid ;  but  not  always  so.  A  deposit  may  be  matle 
with  a  third  person  or  with  the  party  of  money,  a  note  or  some- 
thing else  of  value  to  be  paid,  delivered  over  or  retained  on  the 
happening  of  the  breach.*     Agi-eements  are  of  this  nature  and 


erty  not  covered  by  the  junior  mort- 
gage to  lie  first  sold  for  tlie 
payment  of  tlie  mortgage  being  fore- 
closed. It  was  held  tliat,  the  stipu- 
lation being  void,  the  assignee  could 
not  recover  the  liquidated  damages 
specified  upon  its  breach  by  tlie 
making  of  an  order  without  the 
designated  provision.  See  Voorhees 
V.  Reed,  17  111.  App.  21. 

1  Trentnian  v.  Wahrenburg,  'M) 
Ind.  App.  304;  Franz  v.  Bieler,  126 
Cal.  176;  Price  v.  Green,  16  M.  & 
W.  346. 

2  Curnam  v.  Delaware  &  O.  I\. 
Co.,  138  N.  Y.  480;  Ilattersly  v. 
Waterville,  26  Ohio  C.  C.  227;  At- 
wood  V.  Fagan,  —  Tex.  Civ.  App.  — , 
134  S.  W.  765;  Schlumpf  v.  Sasake, 


38  Wash.  278;  Sprague  v.  Booth,  21 
Ont.  L.  R.  637. 

3  Murphy  v.  I'nitfd  States  V.  & 
C.   Co.,    100   App.   Div.    (N.   V.)    03. 

4  Robertson  v.  Grand  Rapids,  96 
:\linn.  69. 

SGleaton  v.  Fulton  I!,  i^  ('.  .Mills, 
ry  Ga.  App.  420;  Moyses  v.  St-lien- 
dorf,  238  111.  2.32;  ])<'troit  v.  Peo- 
ple's Tel.  Co.,  135  Mich.  096;  Davin 
v.  Syracuse,  62  X.  Y.  Misc.  2H5;  Bev- 
eridge  v.  West  Side  C.  Co.,  130  App. 
Div.  (N.  Y.)  139;  Moore  v.  Durnnni, 
63  N.  J.  Eq.  96;  Wallis  v.  Smitli, 
21  Ch.  Div.  243;  Lea  v.  Whitaker. 
L.  R.  8  C.  P.  70;  Mag.e  v.  Lavell, 
9  id.  107;  Swift  v.  Powell,  44  Ga. 
123;  Kellogg  v.  Curtis,  9  Pick.  634; 
Stilhvell  V.  Temple,  28  Mo.  156; 
Reillv  V.  Jones,   1   Ring.  302;    Bctts 


836 


SUTJIERLANl)    ON     DAMAOKS. 


[§  281 


valid  wlnt'li  provide  a  particular  luctliod  of  proof;  as  that  prop- 
erty covered  by  insurance,  if  destroyed  by  fire,  shall  be  estimated 
by  a  particular  standard,^  or  by  a  designated  person.^    An  agree- 


V.  Biirch,  4  H.  &  N.  50G;  Hinton  v. 
Sparkcs,  L.  R.  3  C.  P.  160;  Leslie 
V.  Macmiclial,  2  New  South  Wales, 
250;  Sanders  v.  Carter,  91  Ga.  450; 
Caesar  v.  Rubinson,  71  App.  Div. 
(N.  Y.)  180;  Fessman  v.  Seeley 
(Tex.  Civ.  App.),  30  S.  W.  268; 
Donahue  v.  Parknian,  161  Mass.  412, 
42  Am.  St.  415. 

In  White  v.  Dingley,  4  Mass.  433, 
the  plaintiff  had  given  the  defend- 
ant a  license  for  two  years,  and  cov- 
enanted not  to  sue  him  within  that 
time,  and  that  if  he  should  sue  him 
he  should  be  wholly  discharged  from 
the  claim.  The  creditor  brought 
suit  in  violation  of  the  covenant, 
and  the  debtor  was  imprisoned  upon 
the  writ,  whereupon  ho  brought  suit 
upon  the  covenant  for  damages.  It 
was  held  that  the  action  could  not 
be  maintained;  the  forfeiture  was  a 
liquidation  of  the  damages.  Upham 
v.  Smith,  7  Mass.  265. 

In  an  action  to  recover  damages 
for  breaking  up  a  higliway  the  de- 
fendant gave  tlie  plaintiff  a  cognovit 
to  confess  judgment  for  £200,  with 
a  defeasance  tliat  no  execution 
should  issue  if  the  defendant,  within 
a  limited  time,  should  reinstate  the 
road  according  to  certain  specifica- 
tions. The  road  not  being  complete- 
ly reinstated  within  the  time  pre- 
scribed, the  plaintiff  sued  out  execu- 
tion and  levied  the  £200  and  costs. 
Held,  that  tlie  £200  was  in  the  na- 
ture of  a  penalty,  and  not  of  stipu- 
lated damages;  and  the  court  re- 
ferred it  to  a  prothonotary  to  as- 
certain what  damages  the  plaintiff 
had  actually  sustained,  and  what 
sum  lie  was  entitled  to  recover  from 
the  defendant  for  his  failure  to  re- 


instate the  road.  f'harrington  v. 
Laing,  3  M.  &  P.  587. 

Where  the  intention  of  the  par- 
ties is  potential,  the  circumstance 
that  the  sum  is  deposited  with  a 
stakeholder  to  be  paid  over,  or  in 
the  hands  of  the  opposite  party, 
with  a  stipulation  that  it  is  to  be 
forfeited  in  the  event  of  a  breach, 
is  pointed  out  as  stronger  evidence 
of  an  intention  to  make  it  liqui- 
dated damages  than  the  words  or 
nature  of  the  contract  otherwise 
would.  Magee  v.  Lavell,  L.  R.  9 
C.  P.  107;  Betts  v.  Burch,  4  II.  & 
N.  500;  Hinton  v.  Sparkes,  L.  R. 
3  C.  P.  160;  Wallis  v.  Smith,  21 
Cli.  Div.  243. 

A  contract  which  provides  that 
if  it  shall  be  broken  by  either  of 
the  parties  to  it  the  party  who  com- 
mits the  breach  shall  pay  such  sum 
as  the  other  party  would  have  re- 
ceived if  it  had  been  observed,  and 
that  the  average  yearly  receipts 
shall  be  the  basis  on  which  the  sura 
to  be  paid  shall  lie  determined,  does 
not  provide  for  liquidated  damages, 
but  fixes  the  basis  on  which  the  ac- 
tual damages  shall  be  ascertained. 
Tufts  V.  Atlantic  Tel.  Co.,  151  Mass. 
269. 

6  JEtna.  Ins.  Co.  v.  Johnson,  11 
Bush  587,  21  Am.  Rep.  223;  Com- 
monwealth Ins.  Co.  V.  Sennett,  37 
Pa.  208,  78  Am.  Dec.  418;  Lycom- 
ing Ins.  Co.  V.  Mitchell,  48  Pa.  367; 
Bodine  v.  Glading,  21  id.  50,  59  Am. 
Dec.  749 ;  Irving  v.  Manning,  6  C. 
B.  391;  C.  H.  Brown  B.  Co.  v. 
Baker,  99  Mo.  App.  660. 

7  Faunce  v.  Burke,  ]  6  Pa.  479 ; 
Rol)inson  v.  Cropsey,  2  Edw.  Ch. 
138;  Wells  v.  Smith,  id.  78;  Barnet 


§    282]       CONVENTIONAL    LIQI' I  DATK  )NS    AN'l)    DIfSC  II AKGKS.       S37 

mciit  bctweoii  a  broker  and  a  fanner,  llic  former  liavinir  advanccMl 
money  to  the  latter  lo  raise  a  crn|),  for  the  rei)a.viiienf  ..I' 
sneh  money,  witli  iiit(>re.st,  and  to  slii].  to  fhe  broker  a  ••ertain 
ninnber  of  bales  of  cotton  to  bo  sold  by  him,  or.  in  rh-fanlt,  to 
pay  the  customary  bi'oker's  commission  on  such  bales  as  ho 
failed  to  ship,  is  for  liquidated  damages,  it  not  beinir  shown 
to  be  a  cover  for  usury.*  Wh(M-e  a  ))art  of  the  work  rcpiin-d  to 
be  done  under  a  contract  which  provided  for  stipuhited  damai:es 
in  consequence  of  delay  vas  .sul)let  and  both  the  contractor  and 
the  subcontractor  were  in  default,  the  clause  providing  for  such 
damages  was  binding  on  the  latter,  and  each  was  responsible  for 
the  proportion  of  the  damages  his  delay  caused.'  A  condition 
in  a  contract  extending  municipal  aid  to  a  railroad  cf)mi)anv 
that  if  it  should  cease  to  remain  independenl  for  a  stated  time 
the  money  paid  should  be  returned  provides  for  liqiiidaled  <l;iiii- 
ages.-'" 

Where  the  stipulation  was  to  pay  five  dolhirs  jxt  (hiv  for 
every  car  delayed  beyond  the  specified  date  the  coiirl  refused  to 
exclude  Sunday  from  the  computation.  This  general  iide  was 
laid  down:  In  the  computation  of  rents,  interest,  damages,  or 
any  other  amounts  in  which  the  day,  the  week,  the  month,  or  any 
other  fixed  period  of  time  is  the  agreed  standard  of  nieasnrement 
every  intervening  Sunday,  as  well  as  every  secular  (hiy,  must  be 
included  and  counted  in  the  reckoning. ■^^ 

§  282.  Alternative  contracts.  These  are  su<-h  as  by  their 
terms  may  be  executed  by  doing  either  of  se\cr;il  ads  al  the  elec- 
tion of  the  party  from  whom  ])erformancc  is  due.  ( "omiiletii.n 
in  one  of  the  modes  is  a  jjerformance  of  the  entire  contriK-t,  ;ind 
no  question  of  damages  arises.  Such  a  contract,  tlierefore.  is 
not  one  for  licjuidated  damages. ^^     AMiere  by  the  coii.liiinu  of  a 

V.   Paasumpsic   T.   Co.,    15   Vt.   7 ')7 ;  H  Pressed    Steel  Car  in.   v.    Kast- 

City  Rank  v.  Smith,  3  G.  &  J.  205.  erii    R.   Co.,    121    Fod.   60!),   (Jlft.   r,7 

8  Blackburn  v.  ITayes,  50  Ark.  C.  C.  A.  fi.35.  Compare  fJo  Fun  v. 
366.  See  Pogue  v.  Kavvoah  P.  &  W.  Fidalpo  Isl.  C.  Co.,  .37  Wasli.  2:?8. 
Co.,  13S  Cal.  664.  Covtra,     Davis     v.     La     Crosse     II. 

9  Chicago  R.  &  I.  Co.  v.  Olson.  SO  As.s'n.  121   Wis.  .".70. 

Minn.  52.3.  12  Strickland   v.   Williams.    [ISO!)) 

10  Hamilton  County  v.  Grand  1  Q.  R.  .3S2;  Salem  v.  Ans«in,  40 
Trunk   R.  Co.,  19  Ont.  App.  252.  Ore.  .'{."{O,  ;{4.").  .')6  L.R.A.  160;  Smith 


838  SUTHERLAND    ON    DAMAGES.  [§    282 

bond  the  ohlif-'or  niiglit,  by  paying  $000  in  twelve,  or  $400  in  six, 
months,  become  the  owner  of  a  patent  right  for  a  specified 
district  or  otherwise  shonld  account  for  a  certain  share  of  the 
profits,  he  had  a  choice  of  those  alternatives  for  those  periods." 
Stipulating  the  damages  and  promising  to  pay  them  in  case  of  a 
default  in  the  performance  of  an  otherwise  absolute  undertaking 
do  not  constitute  an  alternative  contract.-^*     The  promisor  is 
bound  to  perform  his  contract,  though  there  is  generally  a  prac- 
tical option  to  violate  it  and  take  the  consequences ;  but  he  is  not 
entitled  to  an  election  to  pay  the  liquidated  damages  and  thus 
discharge  himself.     A  contract  stipulating  that  drainage  works 
shall  be  completed  in  all  respects  and  cleared  of  all  implements, 
tackle,  impediments,  and  rubbish  on  or  before  a  date  fixed,  and 
that  in  default  of  such  completion  the  contractor  shall  forfeit 
and  pay  lOOL  and  51.  for  every  seven  days  during  which  the 
works  shall  be  incomplete  after  the  said  time  as  and  for  liqui- 
dated damages,  provides  for  such  payment  only  in  a  single  event, 
the  non-completion  of  the  works.'^*     A  bond  conditioned  for  the 
defendant's  obedience  to  a  jierpetual  injunction  restraining  him 
from  trespassing  on  the  lands  of  the  plaintiff  or  the  walls,  gates 
or  fences  thereof,  or  inclosing  the  same,  and  from  pulling  down 
or  removing  or  otherwise  injuring  the  same,  or  inciting  others  to 

V.    Bergongren,    153    Mass.    236,    10  15  Law    v.    Local    Board    of    Red- 

L.R.A.    768;    Beck    v.    Indianapolis  ditch,     [1802]     1    Q.    B.    Div.    127; 

L.  &  P.  Co.,  36  Tnd.  App.  600.    Com-  Tovvnsend  v.  Toronto,  etc.  R.  Co.,  28 

pare  Steol  v.  People's  0.  &  G.  Co.,  ^ 

147  111.  App.  133.  "/    V,    '•  ■  u  X  •  , 

io  HT  -KT-ij.        m     1     T   T  1         ^pc  A  physician  who  goes  to  a  special- 

13  McNitt  V.  Clark,  7  Johns.  465 ;  '^    ■'  "^  ' 

Fisher  V.  Shaw,  42  Me.  32;  Slosson  ist  in  his  profession   for  treatment 

V.    Beadle,   7   Johns.   72;    Mercer   v.  and  is  told  that,   in  the  event  of  a 

Irving,  1  E.  B.  &  E.  563;  Reynolds  cure,  he  would  require  either  a  cer- 

V.  Bridge,  6  E.  &  B.  528;  Choice  v.  tificate  of  his  skill  and  proficiency 

Moseley,  1  Bailey,  136,  19  Am.  Dec.  as  a  specialist  or  $5,000  in  cash,  is 

661.  liable  for  the  latter  sum,  having  re- 

14  Stewart  v.  Bedell,  79  Pa.  336;  ^^^^^  ^^  ^.^^  ^,^^  certificate  after  as- 

People  v.  Central  Pac.  R.  Co.,  76  ,-.  .^  i.  j  rru„ 
^  ,„-.„.  ^  -r.  .o  XT  senting  to  the  terms  proposed.  The 
Cal.  29,  34;  Crane  v.  Peer,  43  N.  "  ,  .,  x-  j 
J.  Eq.  553,  quoting  the  text  and  ^o"^*  considered  the  question  as  de- 
examining  a  large  number  of  cases.  P^-nd'^g  "P^"  ^^^ether  the  contract 
Compare  Hahn  v.  Concordia  Soc,  provided  for  a  penalty  or  liquidated 
42  Md.  460.  And  see  Indianola  v.  damages.  Burgoon  v.  Johnson,  194 
Gulf,  etc.  R.  Co.,  56  Tex.  594.  Pa.  61. 


§    282]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHAliaES.       839 

commit  any  such  trespasses,  dcpeiuls  upon  one  condition  only — 
a  breach  of  the  injunction — and  the  sum  designated  in  it  was 
liquidated."  A  party  agreed  to  pay  $350  for  certain  real  estate, 
and  paid  do\vn  a  small  part.  On  full  performance  the  promisee 
was  to  procure  for  the  promisor,  as  purchaser,  a  deed  from  a 
third  person;  it  was  also  agreed  that  if  the  purchaser  should 
fail  to  perform  the  contract  or  any  part  of  it,  he  should  \k\\  \]\u 
other  party  $25  as  li(|uidatcd  (hiiii.'igcs  and  iiimicdi.itcly  sur- 
render possession.  A  teiuler  of  that  sum  and  of  j.ossession  was 
made  before  suit  brought  for  the  remainder  of  the  purchase- 
money,  and  it  was  unsuccessfully  contended  in  behalf  of  the 
purchaser  that  he  was  entitled  by  the  terms  of  the  contract  to 
relieve  himself  by  those  acts  from  its  obligation.^'^  On  ciitcriiig 
the  service  of  a  bank  the  defendant  executed  a  l)on(l  in  the  ])onaI 
sum  of  1,000/.,  its  condition  being  that  it  should  be  void  if  ho 
discharged  his  duties  in  the  manner  sti])filated,  and  if  he  slmnld 
pay  the  plaintiffs  a  like  sum  in  case  he  should  at  any  time  within 
two  years  after  leaving  their  service  accept  (■ni))loyment  in 
any  other  bank  within  a  distance  of  two  miles.  This  condition 
was  violated.  It  was  held  that  the  obligation  could  not  be  satis- 
fied by  paying  the  sum  mentioned;  there  was  an  agreement  im- 
plied from  the  bond  that  the  defendant  should  not  enter  the 
service  of  a  rival  bank,  which  agreement  would  be  enforced  by 
a  court  of  equity."  Such  courts  may  enforce  performance,  or 
enjoin  those  acts  that  would  be  a  violation/^  but  in  such  cases 
the  equitable  is  an  elective,  not  a  cumulative,  remedy.     P>efore 

le  Strickland  v.  Williams,   [lS9n]  2    Ld.    Raym.    814;    Preblo    v.    lUip- 

]  Q.  B.  382.  hurst,    1    Swanat.    580;    Sloinaii    v. 

"Ayres  v.  Pease,  12  Wend.  39.3;  Walter,  1  Brown  Ch.  418;  Lamp- 
Phoenix  Ins.  Co.  V.  Continental  Ins.  man  v.  Cochran,  IG  N.  V.  27.">; 
Co.,  14  Abb.  Pr.  (N.  S.)  2Gfi;  Long  Ward  v.  .Tewett,  4  Robert.  714; 
V.  Bovvring,  33  Beav.  585;  Howard  Robeson  v.  Wbitesidea,  10  S.  &  R. 
V.  Hopkyns,  2  Atk.  371;  Dike  v.  .320;  Robinson  v.  liakeweli.  25  Pa. 
Greene,  4  R.  I.  285;  Dooley  v.  Wat-  424;  Cartwrijibl  v.  Ciiniinr,  5 
son,   ]    Gray,  414;    Gray  v.   Crosby,  Cusli.  273. 

18  Johns.  219;  Sainter  v.  Ferguson,  18  Xational     Provincial     Itaiik     v. 

7  C.  B.  716;  Hobson  v.  Trevor,  2  P.  Marshall,  40  Ch.  Div.  112. 

Wms.  191;    Chilliner  v.  Chillincr,  2  19  Cases  cited    in   tlif   (wo  priced- 

Ves.    Sr.    528;    Ingledew    v.    Cripps,  ing  notes. 


840 


SUTHERLANT)    ON    DAMAOKS. 


[§  28; 


granting  such  relief  equity  will  require  the  plaintiff  to  forego 
the  legal  claim  to  the  stipulated  damages.^" 

§  283.  Liquidated  damages  contradistinguished  from  penalty. 

The  most  important  and  difficult  question  in  respect  to  a  sum 
stated  in  connection  with  a  breach  of  contract  is  whether  it  is 
licpiidated  damages  or  penalty.  If  the  latter,  it  is  not  an  actual 
debt;  it  cannot  be  recovered,  but  only  the  real  damages,  which 
have  to  be  proved ;  and  the  statement  of  the  agreement  in  the 
contract  is  of  very  little  consequence.  If  the  former,  it  is  the 
precise  sum  to  be  recovered  on  proof  of  a  breach  of  the  under- 
taking to  which  it  refers,  and  no  evidence  of  the  manner  and 
extent  of  the  real  injury  is  necessary.^^  Subsequent  fluctuations 
in  the  value  of  the  property  concerning  which  the  stipulation  is 


20  Howard  v.  liopkins,  2  Atk.  371 ; 
1  Story's  Eq.,  §§  717a,  793/;  3  Par. 
on  Cont.  356,  note  q;  Gordon  v. 
Brown,  4  Ired.  Eq.  399;  Dooley  v. 
Watson,  1  Gray  414;  French  v.  Ma- 
cale.  2  Drury  &  W.  269;  Long  v. 
Bowring,  33  Beav.  585.     See  §  298. 

21  Moore  v.  Kline,  26  Colo.  App. 
334;  Quigley  v.  C.  S.  Brackett  Co., 
124  Minn.  360;  Nakagawa  v.  Oka- 
moto,  164  Cal.  718,  citing  the  text; 
Barrett  v.  Monro,  69  Wash.  229,  40 
L.R.A.(N.S.)  763;  New  Haven  v. 
National  S.  E.  Co.,  79  Conn.  482, 
citing  this  section;  Barber  A.  P. 
Co.  V.  Wabash,  43  Ind.  App.  167; 
Wolcott  V.  Frick,  40  Ind.  App.  236; 
Selby  V.  Matson,  137  Iowa  97,  14 
L.R.A.(N.S.)  1210;  Coen  v.  Birch- 
ard,  124  Iowa  394;  Blunt  v.  Ege- 
land,  114  Minn.  113;  Case  T.  M. 
Co.  V.  Fronk,  105  Minn.  39;  Salem 
V.  Anson,  40  Ore.  339,  56  L.R.A. 
169;  Hennessy  v.  Metzgcr,  152  111. 
505,  43  Am.  St.  267;  McCann  v. 
Albany,  158  N.  Y.  634;  O'Keefe  v. 
Dyer,  20  Mont.  477;  Kelley  v.  Seay, 
3  Okla.  527;  St.  Louis,  etc.  R.  Co. 
V.  Shoemaker,  27  Kan.  677;  Hatha- 
way V.  Lynn,  75  Wis.  186,  6  L.R.A. 
551;    Spicer  v.   Hoop,   51    Ind.   365; 


Wood  V.  Niagara  Falls  P.  Co.,  121 
Fed.  818,  58  C.  C.  A.  256.  See 
§  279  for  other  cases. 

In  some  of  the  cases  the  qualifica- 
tion is  added  that  the  damages  must 
be  beyond  nominal.  That  theory 
probably  originated  in  Hathaway  v. 
Lynn,  supra.  Doubt  as  to  its  being 
sound  was  expressed  in  the  second 
edition  of  this  work.  Since  its  pub- 
lication that  doubt  has  been  ap- 
proved by  several  courts.  The  con- 
trary rule  was  held  prior  €o  that 
time  in  Kelso  v.  Reid,  145  Pa.  606, 
27  Am.  St.  716,  and  in  Spicer  v. 
Hoop,  51  Ind.  365.  If  the  money 
deposited  is  to  l)e  treated  as  liqui- 
dated damages  proof  of  damage  be- 
cause of  the  breach  of  contract  need 
not  be  made.  "The  case  of  Hatha- 
way V.  Lynn,  75  Wis.  186,  6  L.R.A. 
551,  announcing  a  contrary  rule, 
does  not  commend  itself  to  our  judg- 
ment." Sanford  v.  First  Nat.  Bank, 
94  Iowa  680;  Smith  v.  Newell,  37 
Fla.  147.  But  see  McCann  v.  Al- 
bany, 158  N.  Y.  634. 

The  parties  may  stipulate  what 
the  evidence  of  the  nonperformance 
of  the  contract  shall  be.  Swift  v. 
Dolle,  39  Ind.  App.  653. 


§    28-'5]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       841 

made  do  not  affet't  the  riglits  of  I  ho  parties.^'^  The  dei-ision  <tf 
this  question  is  often  intrinsicallv  dillirult,  for  judicial  ojiinions, 
in  the  numerous  cases  on  the  suhject,  are  verv  inhaniKinions ; 
they  furnish  no  universal  test  or  guide.  Jiut,  as  was  said  l)_v 
Chi'istiuncj,  J. :  "While  no  one  can  fail  to  discover  a  very  great 
amount  of  apparent  conflict,  still  it  will  be  found  on  examination 
tliat  mosf  of  the  cases,  however  coiiHictiiig  in  appearance,  have 
yet  been  decided  according  to  the  justice  and  e(]uily  of  the  par- 
ticular case."  ^^  "The  (juesticm  whether  a  sum  named  in  a  con- 
tract to  he  paid  for  a  failure  to  pei-form,"  said  Karl,  J.,  "shall 
be  regarded  as  stipulated  damages  or  a  penalty,  has  been  fre- 
quently before  the  courts  and  has  given  them  much  trouble. 
The  cases  cannot  all  be  harmonized,  and  they  furnish  conspic- 
uous examples  of  judicial  efforts  to  make  for  parties  wisei-  and 
more  prudent  contracts  than  they  have  made  for  themselves. 
Courts  of  law  have,  in  some  cases,  assumed  the  functions  of 
courts  of  equity,  and  have  relieved  parties  by  forced  and  un- 
natural constructions  from  sti])ulations  highly  penal.  Where  an 
amount  stipulated  as  liquidated  damages  would  he  grossly  in 
excess  of  the  actual  damages,  they  have  learned  to  hold  it  a 
penalty.  Where  the  actual  damages  were  uncertain  and  difficult 
of  ascertainment  they  have  learned  to  hold  the  stipulated  amount 
to  have  been  intended  as  liquidated  damages.  No  form  of  words 
has  been  regarded  as  controlling.  But  the  fundamental  rule,  so 
often  announced,  is  that  the  construction  of  these  stijudations 
depends,  in  each  case,  upon  the  intent  of  the  parties  as  evidenced 
by  the  entire  agreement  construed  in  the  light  of  the  circum- 
stances under  which  it  was  made."  ^* 

22  Atvvood    V.    Fafjaii     (Tex.    Civ.  Co.,  83  Minn.  523;  Lrnnon  v.  Smith, 

App.),  134  S.  W.  765.  14    Daly,    520;    Foasnian    v.    Scrloy 

23Jaquith    V.    Hudson,    5     Mich.  (Tex.    Civ.    App.),    30    S.    W.    2fi8; 

]23.  (Joiipar  v.  BiilTalo  Specialty  Co.,  2(1 

24  Kemp  V.  Knici<erbocker  I.  Co.,  Colo.  App.  8;  Weher  v.  Moy,  183  III. 
60  N.  Y.  145;  Caesar  v.  Rubinson,  App.  200;  Parker-Wasiiinpton  Co.  v. 
174  N.  Y.  402;  Butler  v.  Wallbaum  City  of  Chieapo,  185  111.  App.  237; 
S.  &  M.  Co.,  47  111.  App.  153;  San-  Dopp  v.  Richards,  43  Utah  332;  Na- 
ders V.  Carter,  91  Ga.  450;  Allison  kapawa  v.  Okamoto,  164  Cal.  718, 
V.  Dunwody,  100  Ga.  51;  Salem  v.  quoting  the  text;  Herger  v.  Nants, 
Anson,  40  Ore.  330,  56  L.R.A.  160,  172  Til.  App.  623;  Van  Kannel  v. 
citing  the  text;   Taylor  v.  Times  N.  Iliglcy,  id.  88;   Strode  v.  Smith,  60 


S42 


SUTIIKKLAND    ON    DAMAGES. 


[§  283 


The  general  tendency  toward  "judicial  expansion,"  which  has 
been  a  marked  characteristic  of  recent  years,  has  increased  the 
uncertainty  involved  in  this' branch  of  the  law.  That  uncertain- 
ty was  never  absent ;  but  it  has  become  so  great  that  it  is  prac- 
tically, if  not  actually,  impossible  to  formulate  a  rule  which  will 
be  recognized  in  any  considerable  number  of  cases.  While  the 
judicial  tendency  to  paternalism  is  marked,  there  is  abundant 
evidence  to  warrant  the  conclusion  that  business  men  are  much 
more  inclined  than  formerly  to  stipulate  their  liability  if  there 
shall  be  failure  to  perform  their  contracts.  Why  the  courts  are 
more  than  ever  disposed  to  deny  the  same  freedom  of  contract 
in  this  respect  that  is  unhesitatingly  recognized  in  other  depart- 
ments of  law  and  business  it  is  difficult  to  say.  Notwithstanding 
the  deplorable  state  of  the  decisions  it  may  be  assumed,  first, 
that  if,  by  the  terms  of  the  contract,  a  greater  sum  is  to  be  paid 


Ore.  163;  Orenbauni  v.  Sowell  (Tex. 
Civ.  App.),  153  S.  W.  905;  Hughes 
V.  United  States,  45  Ct.  of  Cls.  517; 
Hendorson-P..  L.  Co.  v.  Coolv,  149 
Ala.  226;  District  of  Columbia  v. 
Harlan,  30  App.  D.  C.  270;  Flor- 
ence W.  Works  V.  Salmon,  8  Ga. 
App.  197,  quoting  the  text;  Mayor 
V.  ^tna  Ind.  Co.,  4  Ga.  App.  722; 
Steel  V.  People's  0.  &  G.  Co.,  147 
111.  App.  133;  Barber  A.  P.  Co.  v. 
Wabash,  43  Ind.  App.  167;  United 
S.  Co.  V.  Summers,  110  Md.  95; 
Wheaton  B.  &  L.  Co.  v.  Boston,  204 
Mass.  218;  Womack  v.  Coleman,  89 
Minn.  17 ;  Robinson  v.  Centenary 
Fund,  68  N.  J.  L.  723;  Harris  v. 
Snyder,  55  N.  Y.  Misc.  306;  York 
V.  York  R.  Co.,  229  Pa.  236;  Yoder 
V.  Strong,  227  Pa.  432;  Levy  v. 
Goldsoll  (Tex.  Civ.  App.),  131  S. 
W.  420;  demons  v.  Grays  Harbor, 
etc.  R.  Co.,  63  Wash.  38;  Pye  v. 
British  Auto  Com.  Syndicate, 
[1906]  1  K.  B.  425;  Cerero  v. 
American  S.  Co.,  59  N.  Y.  Misc. 
548. 

The  question  whether  the  amount 


stated  in  a  conditional  bond  or  con- 
tract is  to  be  taken  as  a  penalty 
or  a  liquidation  of  damages  arising 
from  a  breach  of  the  condition  is  to 
be  determined  bj'  the  intention  of 
tlie  parties,  drawn  from  the  words 
of  the  wliole  contract,  examined  in 
the  light  of  its  subject-matter  and 
its  surroundings;  and  in  this  exami- 
nation will  be  considered  the  rela- 
tion which  the  sum  stipulated  bears 
to  the  extent  of  the  injury  which 
may  be  caused  by  the  several 
breaches  provided  against,  the  ease 
or  difficulty  of  measuring  a  breach 
of  damages,  and  such  other  matters 
as  are  legally  or  necessarily  inherent 
in  the  transaction.  The  concurrent 
declarations  of  the  parties  are  inad- 
missible except  to  show  mistake  or 
fraud.  March  v.  Allabough,  103  Pa. 
335. 

A  practical  construction  given  a 
contract  containing  several  stipula- 
tions long  after  all  but  one  of  them 
had  been  perfo^rmed,  has  been  given 
M'eight.  Berghuis  v.  Schultz,  119 
Minn.  87. 


§    283]       CONVENTIONAL    LIQl'IDATIONS    AND    DISCHARGES.       843 

upon  default  in  the  payment  of  a  lesser  sum  at  a  given  time,  the 
provision  for  the  payment  of  the  greater  sum  will  be  held  a 
penalty;  second,  where,  by  the  terms  of  a  contract,  the  damaLres 
are  not  difficult  of  ascertainment  according  to  such  terms  and 
the  stipulated  damages  are  unconscionable,  the  latter  will  be  re- 
garded as  a  penalty;  third,  within  these  two  rules  parties  may 
agree  upon  any  sum  as  compensation  for  tiie  breach  of  a  con- 
tract. ^^ 

It  has  been  often  declared  judicially  that  a  stii)ul;itioii  in  a 
contract  for  the  payment  of  a  stated  sum,  in  the  event  of  a 
breach,  should  be  interpreted,  like  all  its  other  provisions,  with 
a  view  to  carrying  into  effect  the  intention  of  the  parties.  Ko- 
ferring  to  this  subject  Nelson,  C.  J.,  said:  "A  court  of  law 
possesses  no  dispensing  power;  it  cannot  inquire  whether  the 
parties  have  acted  wisely  or  rashly  in  respect  to  any  stijinlation 
they  may  have  thought  proper  to  introduce  into  their  agree- 
ments. If  they  are  competent  to  contract,  within  the  prudential 
rules  the  law  has  fixed  as  to  parties,  and  there  has  been  no  fraud, 
circumvention  or  illegality,  in  the  case,  the  court  is  bound  to 
enforce  the  agreement."  ^^  Best,  C.  J.,  said  at  iiisi  //r/j/.s;  ^'Tho 
law  relative  to  liquidated  damages  has  always  been  in  a  state  of 
great  uncertainty.  This  has  been  occasioned  by  judges  endeavor- 
ing to  make  better  contracts  for  parties  than  they  have  made  for 
themselves.  I  think  that  parties  to  contracts,  from  knowing 
exactly  their  own  situations  and  objects,  can  better  ajipreeiate 
the  consequences  of  their  failing  to  obtain  those  ol)jects  than 
either  judges  or  juries.  Whether  the  contract  be  under  seal  or 
not  if  it  states  what  shall  be  paid  by  the  party  who  breaks  it  (o 
the  party  to  whose  prejudice  it  is  broken,  the  verdict  in  the 
action  for  the  breach  of  it  should  be  for  the  stipulated  smii.  A 
court  of  justice  has  no  more  authority  to  put  a  ditTerent  con- 
struction on  the  ])art  of  the  instrument  ascertaining  the  amount 
of  damages  than  it  has  to  decide  contrary  to  any  other  of  its 

25  Blaclcwood    v.    Liel)ko,    87    Ark.  111.  lOi;  Law  v.  Local  lioar.l  ..f  K.il- 

545,  quoting  tlio  text  and  saying  it  ditrli,  [ISil'i]  I  Q.  15.  l'J7. 
is  a   fair   deduction    from    the    an-  26  Dakin    v.    Willianis,    17    W  <'Md. 

tlioritiea;    Poppers  v.  Meagher,   148  447. 


8-i-l:  SUTHERLAND    ON    DAMAGES.  [§    283 

clauses.''  ^"^    Equally  emphatic  language  is  to  be  found  in  other 

28 

cases. 

In  this  connection  language  employed  by  the  supreme  court 
of  the  United  States  in  a  case  ^^  ruled  in  1902  is  pertinent  as 
indicating  a  larger  regard  for  the  contractual  rights  of  parties 
than  is  manifested  in  many  of  the  decisions.     The  contention 
made  was  that  where  actual  damages  can  be  assessed  from  the 
testimony  the  court  must  disregard  any  stipulation  fixing  the 
amount  and  require  proof  of  the  damage  sustained.^"    The  court 
said :    We  think  the  asserted  doctrine  is  wrong  in  principle,  was 
unknown  to  the  common  law,  does  not  prevail  in  the  courts  of 
England  at  the  present  time,  and  it  is  not  sanctioned  by  the 
decisions  of  this  court.     *    *     "'    The  decisions  of  this  court  on 
the  doctrine  of  liquidated  damages  and  penalties  lend  no  sup- 
port to  the  contention  that  parties  may  not,  ho7}a  fide,  in  a  case 
where  the  damages  are  of  an  uncertain  nature,  estimate  and 
agree  upon  the  measure  of  damages  which  may  be  sustained 
from  the  breach  of  an  agreement.     On  the  contrary,  this  court 
has  consistently  maintained  the  principle  that  the  intention  of 
the  parties  is  to  be  arrived  at  by  a  proper  construction  of  the 
agreement  made  between  them,  and  that  whether  a  particular 
stipulation  to  pay  a  sum  of  money  is  to  be  treated  as  a  penalty, 
or  as  an  agreed  ascertainment  of  damages,  is  to  be  determined 
by  the  contract,  fairly  construed,  it  being  the  duty  of  the  court 
always,  where  the  damages  are  uncertain  and  have  been  liqui- 
dated by  an  agi'eement,  to  enforce  the  contract.     *     *     *     In 
the  case  at  bar,  aside  from  the  agreement  of  the  parties,  the 
damage  which  might  be  sustained  by  a  breach  of  the  covenant 
\£)  surrender  the  vessel  was  uncertain,  and  the  imambiguous  in- 
tent of  the  parties  was  to  ascertain  and  fix  the  amount  of  such 

27Crisdee   v.    Bolton,    3    C.   &    P.       Knox  R.  B.   Co.  v.   Grafton  S.   Co., 
240.  64  Ohio  St.  361. 

28  Dwinel  v.  Brown,  54  Me.  468;  ^^  Sun  P.  &  P.  Ass'n  v.  Moore,  183 

Brewster  v.  Edgerly,  13  N.  H.  275;        U.  S.  642,  46  L.  ed.  366. 

30  Chicago  H.  W.  Co.  v.  United 
States,  106  Fed.  385,  389,  45  C.  C. 
A.  343,  and  Gay  Mfg.  Co.  v.  Camp, 
Crawford,  142  Mo.  390;  Emack  v.  gg  ^ed.  794,  68  id.  67,  15  C.  C.  A. 
Campbell,  14  D.  C.  App.  Cas.  186;       226,  were  relied  upon. 


Clement  v.  Cash,  21  N.  Y.  253 ;  Yet- 
ter  V.  Hudson,  57  Tex.  604;  May  v. 


§    283]       CONVENTIONAL    LTQIITDATIONS    AND    DISCIIAROES.       845 

damage.  In  effect,  liowever,  tlio  pfTm-t  of  the  potiticiicr  .mi  the 
trial  was  to  nullify  the  stipulation  in  (|iie.stion  hy  mere  proof, 
not  that  the  parties  did  not  intend  to  tix  tlie  value  of  the  yaoht 
for  all  purposes,  hut  that  it  was  improvident  and  unwise  for  its 
agent  to  make  such  an  agreement.  Suhstautially,  the  i)etitiouer 
claimed  a  greater  right  than  it  Avould  have  ha<]  if  it  had  uiad.^ 
application  to  a  court  of  equity  for  relief,- for  it  teu(K'red  iu  its 
answer  no  issue  concerning  a  disprojiortion  l)et\ve('ii  the  agreed 
and  actual  value,  averred  uo  fraud,  suri)rise  or  mistake!  and 
stated  no  facts  claimed  to  warrant  a  reforuuition  of  the  afree- 
ment.  •  ■••  •••  The  law  does  not  limit  au  owner  of  property, 
in  his  dealings  with  private  individuals  respecting  such  jirop- 
ertj,  from  affixing  his  own  estimate  of  its  value  ujion  a  sale 
thereof,  or  on  being  solicited  to  place  the  property  at  hazard  hy 
delivering  it  into  the  custody  of  another  for  employment  in  a 
perilous  adventure.  If  the  would-be  buyer  or  lessee  is  of  the 
opinion  that  the  value  affixed  to  the  jn-operty  is  exor])itant,  he 
is  at  liberty  to  refuse  to  enter  into  a  contract  for  its  acquisition. 
But  if  he  does  contract  and  has  induced  the  owner  to  part  with 
his  property  on  the  faith  of  stipulations  as  to  value,  the  pur- 
chaser or  hirer,  in  the  absence  of  fraud,  should  not  have  the  aid 
of  a  court  of  equity  or  of  law  to  reduce  the  agreed  \alne  tn  a 
sum  which  others  may  deem  is  the  actual  value.^^ 

Heretofore  such  views  have  been  given  but  a  limited  prac- 
tical application;  and  cases  abound  in  which  strong  language 
of  a  different  tenor  is  employed.  "They  mistake,''  says  Scott, 
J.,  "the  object  and  temper  of  our  system  of  jurisprudence,  wlio, 
while  maintaining  that  men  in  making  all  contracts  have  a 
right  to  stipulate  for  liquidated  damages  regardless  of  the  dis- 
proportion to  the  sum  resulting  from  a  breach  of  the  contract, 
insist  that  it  would  be  hard  if  men  were  not  permitted  to  make 
their  own  bargains.  ISTo  system  of  laws  would  demand  our  re- 
spect or  secure  our  willing  obedience,  which  did  imt  to  some  ex- 

31  The    general    doctrine    of    this  58  C.  C.  A.  2.'>fi;   Ifnll  v.  An.^'ns.  00 

case    has    been     approved.       United  Ore.    fl.') ;     Conried    Met.    ().    Co.    v. 

States  V.  Bethlehem  R.  Co.,  205  U.  Brin,   Of.   N.   Y.   Misc.  282;    Fonisot 

S.  10,5,  51  L.  ed.  7.31.     See  Wood  v.  v.    Burslein,    82    N.    Y.    .Misc.    420; 

Niagara  Falls  P.  Co.,  121   Fed.  818,  Stoner  v.  Slmltz,  fif)  Wash.  (187. 


846  SUTHERLAND  ON  DAMAGES.  [§  283 

tent  provide  against  the  mischiefs  resulting  from  improvidence, 
carelessness,  inexperience  and  undue  expectations  on  one  side, 
and  skill,  avarice  and  a  gross  violation  of  the  principles  of  hon- 
esty and  fair  dealing  on  the  other.  The  folly  of  one  making  a 
wild  and  reckless  stipulation  will  not  justify  gross  oppression  in 
another.  A  just  man,  when  he  sees  one  in  a  situation  in  which  he 
is  prepared  to  make  a  contract  which  must  grind  and  oppress 
him,  will  not  take  advantage  of  his  state  of  mind  and  enrich 
himself  by  his  folly  and  want  of  experience.  It  has  been  re- 
marked that  in  reason,  in  conscience,  in  natural  equity,  there  is 
no  ground  to  say  because  a  man  has  stipulated  for  a  penalty  in 
case  of  his  omission  to  do  a  particular  act — the  real  object  of 
the  parties  being  the  performance  of  the  act — that  if  he  omits 
to  do  the  act  he  shall  suffer  an  eno;-mous  loss,  wholly  dispro- 
portionate to  the  injury  to  the  other  party."  ^^ 

The  trend  of  judicial  thought  and  action  on  the  subject  is 
well  and  frankly  expressed  by  Justice  Marshall  of  the  Wiscon- 
sin court :  The  law  is  too  well  settled  to  pennit  any  reasonable 
controversy  in  regard  to  it  at  this  time,  that  where  parties  stip- 
ulate in  their  contract  for  damages  in  the  event  of  a  breach  of 
it,  using  appropriate  language  to  indicate  that  the  damages  are 
agTeed  upon  in  advance,  and  such  damages  are  unreasonable  con- 
sidered as  liquidated  damages,  the  stipulated  account  will  be 
considered  to  be  a  mere  forfeiture  or  penalty  and  the  recoverable 
damages  be  limited  to  those  actually  sustained.  While  courts 
adhere  to  the  doctrine  that  the  intention  of  the  parties  must 
govern  in  regard  to  whether  damages  mentioned  in  their  con- 
tract are  liquidated,  they  uniformly  take  such  liberties  in  regard 
to  the  matter,  based  on  arbitrary  rules  of  construction,  so  called, 
as  may  be  necessary  to  effect  judicial  notions  of  equity  between 
parties,  guided  of  course  by  precedents  that  are  considered  to 
have  the  force  of  law,  sometimes  calling  that  a  penalty  which 
the  parties  call  stipulated  damages,  where  otherwise  an  un- 
conscionable advantage  would  be  obtained  by  one  person  over 
another.     The  judicial  power  thus  exercised  cannot  properly  be 

32Basye  v.  Ambrose,  28  Mo.  39;  Tenn.  219,  G  Am.  St.  832;  Mount 
Jaquith  v.  Hudson,  5  Mich.  123;  Airy  M.  &  G.  Co.  v.  Runkles,  118 
Schrimpf  v.  Tennessee  Mfg.  Co.,  86       Md.  371. 


§    283]       CONVENTIONAL    LIQUIDATIONS    AND    DlSCJl AKGES.       847 

justified  under  any  ordinary  rules  of  judicial  construction. 
Such  rules  permit  courts  to  go  as  far  as  possible  lo  clVoct  llic  in- 
tent of  the  parties  where  it  is  left  obscure  by  llieir  laui^uagc  so 
long  as  such  intent  can  he  read  out  of  the  contract  without  vio- 
lating the  rules  of  language  or  law.  ihit  in  dcteruiiuiug  whether 
an  amount  agreed  upoji  as  danuiges  was  iiilcinJcd  as  li(niiii;itci! 
damages  or  as  a  penalty,  rules  of  language  are  iguored  aud  the 
express  intent  of  the  parties  is  nuide  to  give  way  to  the  equity 
of  the  particular  case,  haviug  due  regard  to  precedents.'' 

As  is  remarked  in  the  last  paragraph,  the  iiitcniidii  of  j>ar- 
ties  on  this  subject,  under  the  artificial  rules  tliat  have  been 
adopted,  is  determined  by  very  latitudinary  construction.'*     To 


33  Secman  v.  Bioniann,  108  Wis. 
365,  373;  Hardie-T.  F.  &  Macb.  Co. 
V.  Glen  Allen  0.  Co.,  84  Miss,  'if)!), 
citing  this  section;  Gann  v.  Ball,  20 
Okla.  26;  Case  T.  Co.  v.  Souders,  4S 
Ind.  App.  503,  quoting  much  of  tlic 
foregoing  extract. 

34  In  each  case  we  must  look  to 
the  language  of  the  contract,  tlie 
intention  of  the  parties  as  gatlierinl 
from  all  its  provisions,  the  subject 
of  the  contract  and  all  its  surround- 
ings, the  ease  or  didlculty  of  meas- 
uring the  breach  in  damages,  and 
the  sum  stipulated,  and  from  the 
whole  gather  the  view  which  good 
conscience  and  equity  ought  to  take 
of  the  case.  Clements  v.  Schuylkill, 
etc.  E.  Co.,  1.32  Pa.  445. 

Where  the  damages  resulting  from 
a  breach  of  the  agreement  were  evi- 
dently the  subject  of  calculaticm 
and  adjustment  between  the  parties 
and  a  certain  sum  was  agreed 
on  and  intended  as  compensation, 
and  is  in  fact  reasonable  in  amount, 
it  will  be  allowed  by  the  court  as 
liquidated  damages;  but  though  the 
intention  of  the  parties  seems  clear 
and  manifest  that  a  breach  shall 
operate  as  a  complete  forfeiture  of 
the  entire  sum  named  in  the  agree- 
ment, the  court  will  decline  to  ren- 


der its  assistance  to  enforce  the 
payinciit  of  an  amount  wiiicli  is 
grossly  excessive,  unreasonable  and 
unjust,  and  will  treat  tlie  stipula- 
tion as  in  the  nature  of  a  penalty 
and  will  award  only  such  (lamage» 
as  the  injured  ])arty  may  liave  actu- 
ally sustained.  Sanders  v.  Carter, 
!»1  Ga.  4.')0. 

In  determining  whether  an 
amount  named  in  a  contract  is  to 
be  taken  as  penalty  or  ii(|uidated 
damages,  courts  are  intlucneed 
largely  by  tlie  reasonablencas  of  the 
tran.saction  and  are  not  restrained 
by  the  form  of  the  agreement  nor 
by  the  terms  used  by  the  partii's, 
nor  even  by  tlieir  manifest  intent. 
Where  the  contract  has  expressly 
designated  the  amount  named  as 
li(juidated  damages,  courts  have 
held  that  it  was  a  penalty;  and  con- 
versely, where  tlie  contract  lias 
called  it  a  penalty,  it  has  been  iield 
to  be  liquidated  damages;  and 
again,  where  tiie  parties  have  mani- 
festly supposed  and  intended  that 
an  exorbitant  and  unconscionable 
amount  should  be  forfeited,  the 
courts  have  carried  out  the  intent 
only  so  far  as  it  was  right  and  rea- 
sonable.   Davis  V.  United  States,  17 


S-kS 


SUTIIEKJ.AND    ON    DA  IMAGES. 


[§   283 


be  ])oteutial  and  controlling  that  a  stated  snm  is  liquidated  dam- 
age, that  sum  must  be  fixed  as  the  basis  of  compensation  and 


Ct.  of  Cls.  201,  215.  See  Bceman 
V.  Hexter,  98  lowca,  378. 

The  term  "estimated  damages"  is 
equivalent  to  J.'liquidated  damages." 
Gallo  V.  McAndrews,  29  Fed.  715. 

The  words  "shall  act  as  a  for- 
feiture and  shall  be  forfeited"  have 
been  construed  to  provide  for  liqui- 
dated damages.  Eakin  v.  Scott,  70 
Tex.  442. 

"To  forfeit"  is  equivalent  to  "to 
pay."  Streeper  v.  Williams,  48 
Pa.  450. 

"Forfeiture"  is  synonymous  witli 
"penalty."  Muldoon  v.  Lynch,  66 
Cal.  5.36.  But  it  will  be  presumed, 
in  order  to  effectuate  the  intention 
of  the  parties,  that  the  word  "for- 
feit" was  used  in  a  conversational 
sense.  Maxwell  v.  Allen,  78  Me. 
32,  57  Am.  Rep.  783;  Lynde  v. 
Thompson,  2  Allen  456. 

A  penalty  is  not  necessarily  to 
be  understood  from  the  use  of  the 
word  "forfeit;"  the  circiunstances 
must  be  considered.  Claude  v. 
Shepard,  122  N.  Y.  397,  400; 
Womack  v.  Coleman,  92  Minn.  328 
( the  language  was  "shall  be  abso- 
lute forfeiture  and  indemnity")  ; 
Chatterton  v.  Crothers,  9  Ont.  683; 
Tinkham  v.  Satori,  44  Mo.  App. 
659.  Nor  is  an  instrument  using 
the  words  "penalty"  or  "forfeit"  to 
be  always  construed  as  providing 
for  a  penalty.  Lipscomb  v.  Seegers, 
19  S.  C.  425,  434. 

In  other  cases  "penalty"  and  "for- 
feit" have  been  given  their  usual 
signification.  Bagley  v.  Peddie,  16 
N.  Y.  469,  69  Am.  Dec.  713;  Laurea 
V.  Bernauer,  33  Hun,  307. 

A  penalty  is  implied  from  the 
language  "and  each  party  is  hereby 
held  and  fully  bound  in  the  sum  ot 
$300  for  the  faithful  fulfillment  of 


the  above  contract."  Moore  v.  Colt, 
127  Pa.  289,  14  Am.  St.  845. 

A  clause  in  a  charter-party  by 
which  the  parties  bind  themselves 
"in  the  penal  sum  of  estimated 
amount  of  freight"  is  a  penalty. 
Watts  V.  Camors,  115  U.  S.  353,  29 
L.  ed.  406.  But  if  the  sum  is  men- 
tioned as  a  penalty  and  the  instru- 
ment uses  the  words  "which  sum 
is  herel^y  named  as  stipulated  dam- 
ages," the  latter  expression  will 
control.  Tode  v.  Gross,  22  N.  Y. 
St.  Rep.  818;  Ward  v.  Hudson  River 
B.  Co.,  24  N.  Y.  St.  Rep.  347. 
And  so  where  the  language  is  that 
the  parties  "bind  themselves  in  tlie 
pinal  sum"  of  "as  fixed  and  settled 
damages  to  be  paid  by  the  failing 
party."  Parr  v.  Greenbusli,  43  Hun 
232. 

The  use  of  the  words  "liquidated 
damages"  will  not  control  the  con- 
struction if  the  court  can  find  in 
the  whole  instrument  reason  to 
doubt  that  it  was  the  intention  of 
the  parties  to  so  contract.  Bagley 
v.  Peddie,  16  N.  Y.  469,  69  Am.  Dec. 
713;  Wolf  V.  Des  Moines  R.  Co.,  64 
Tow  a  380:  Ex  parte  Pollard,  2  Low, 
411  ;  Condon  v.  Kemper,  47  Kan. 
126,   13  L.R.A.  671.     See  §  284. 

An  agreement  to  pay  $500,  be- 
sides all  damages  sustained,  pro- 
vides for  a  penalty.  Foote  &  D.  Co. 
V.  Malony,  115  Ga.  985.  See 
Dwinel  v.  Brown,  p.  726n. 

In  Pierce  v.  Jung,  10  Wis.  30, 
Paine,  J.,  said:  "The  opinions  on 
this  subject  are  conflicting.  On  the 
one  hand,  they  lean  towards  treat- 
ing sucli  provisions  as  in  the  nature 
of  penalties,  and  to  do  so  have 
sometimes  disregarded  the  positive 
and  implicit  language  of  the  par- 
ties.    On  the  other,  they  go  for  up- 


§    283]     CONVENTIOJSAJ,    LJQU1DAT10JM«    ANlJ    DISOJIARGES.  849 


substautiallj  limited  to  it;  for  just  ('(MiiixMisiitiuu  is  rccdgnizeil 
as  the  universal  measure  of  damages  not  pnuitorv.     Parties  may 


holding  contracts  as  inado,  treating 
the  parties  as  equally  competent  to 
provide  for  the  amount  of  damages 
to  be  paid  in  case  of  a  failure  to 
perform  as  to  determine  any  oilier 
matter  contained  in  them.  The  case 
of  Astlcy  V.  Weldon,  2  Bos.  &  Pul. 
346,  and  Kemble  v.  Farrel,  0  Bing. 
141,  are  strong  illustrations  of  tlie 
first  class;  and  in  Crisdee  v.  Bolton, 
3  C.  &  P.  240,  the  opposite  doctrine 
is  very  clearly  stated.  But  even 
the  first  class  of  cases  concede  the 
power  of  the  parties  to  liquidate 
the  damages  by  their  agreement  in 
case  of  a  non-performance.  And 
they  profess  also  to  go  upon  the  in- 
tention of  the  parties.  And  perhaps 
the  only  real  difference  between  the 
two  is  that  the  former  takes  greater 
liberties  than  the  latter  with  the 
words  of  the  parties  in  determining 
what  the  intention  is.  They  pay 
more  attention  to  the  whole  nature 
and  object  of  the  agreement  than  to 
the  precise  words  in  determining 
whether  the  intent  was  to  create  a 
penalty  or  provide  for  liquidated 
damages." 

In  Beale  v.  Hayes,  5  Sandf.  640, 
Duer,  J.,  said :  "It  is  not  always, 
Iiowever,  that  damages  are  to  be 
construed  as  liquidated  because  the 
parties  have  declared  them  to  be  so. 
The  language  of  the  parties  (to  the 
agreement  in  question)  is  clear  and 
emphatic  that  the  sum  of  £3,000 
sliall  be  recoverable  from  tlie  party 
making  default  as  and  for  liquidated 
damages;  yet  no  court  of  justice, 
without  an  entire  disregard  of  prior 
decisions,  can  give  effect  to  the  ap- 
parent intention  of  the  parties  by 
adopting  tliat  construction  of  their 
agreement  which  the  terms  they 
have  used  so  forcibly  suguest. 
Suth.  Dam.  Vol.  I.— 54. 


»     *    » 


Wlien  consequences  so  uii- 
ri'asonable  would  follow,  tlie  law 
presumes  tliat  tlicy  must  have  bwn 
overlooked  by  the  parties,  and  ther*-- 
fore  mercifully  gives  to  their  lan- 
guage an  interpretation  wliieh  ex- 
cludes them.  When  it  would  ])v. 
I)liiinlv  unednscieiitiiius  to  exact  a 
large  sum  for  a  trival  breach,  even 
a  court  of  law,  acting  upon  a  prin- 
ciple of  equity,  will  release  the  par- 
ties from  the  literal  obligation 
whicli  their  language  imports." 

In  Jaquith    v.    Hudson,    5    Midi. 
123,   Christiancy,    J.,    said:     '"It    is 
true  the  courts   in  nearly  all   these 
cases   profess   to   be   construing  the 
contract   with   reference   to   the    in- 
tention of  the  parties,  as  if  for  the 
purpose  of  ascertaining  and  giving 
effect   to   tliat   intention;    yet   it    is 
obvious      from     these     cases     tliat 
wherever    it    has    appeared    to    thi; 
court  from  the  face  of  the  contract 
and  the  subject-matter  that  the  sum 
was  clearly  too  large  for  just  com- 
pensation, here,  while  they  will  al- 
low any  form  of  words,  even  those 
expressing    the    direct    contrary,    to 
indicate    the    intent    to    make    it    a 
penalty,  yet   no  form   of  words,   no 
force  of   language,   is  competent  to 
the  expression  of  the  opposite  intent. 
Here,  then,  is  an  intention  incapabli- 
of  expression   in   words;   and  as  all 
written  contracts  must  be  expressed 
in    words,    it    would    seem    to    be   a 
mere    waste   of   time   and    efTort   to 
look  for  such   an   intention   in  such 
a  contract.     And  as  the  question  is 
between   two   opposite   intents  only, 
and  the  negation  of  one  necessarily 
implies  the   existence   of  the   other, 
there  would  seem  to  be  no  room  left 
for    construction    with    reference    t  ■ 
the  intent.     It  must,  then,  bu  muni- 


850 


StJTllEELAND    ON    DAMAGES. 


[§  283 


liquidate  the  amount  by  previous  agreement.     But  when  a  stip- 
ulated sum  is  evidently  not  based  on  that  princijjlc,  the  inten- 


fc&t  thiit  tlio  intention  of  the  parties 
in  such  cases  is  not  the  governing 
consideration. 

"But  some  of  the  cases  attempt 
to  justify  this  mode  of  construing 
the  contract  with  reference  to  the 
intent,  by  declaring  in  substance 
that  though  the  hvnguage  is  the 
strongest  which  could  be  used  to 
evince  the  intention  in  favor  of 
stipulated  damages,  still,  if  it  ap- 
pear clearly  by  reference  to  the  sub- 
ject-matter that  the  parties  have 
made  the  stipulation  without  refer- 
ence to  the  principle  of  just  com- 
pensation, and  so  excessive  as  to  be 
out  of  all  proportion  to  the  actual 
damage,  the  court  must  hold  that 
they  could  not  liave  intended  it  as 
stipulated  damages  though  they 
have  so  expressly  declared.  Sec,  as 
an  example  of  this  class  of  cases, 
Kemble  v.   Farren,  6  Bing.   141. 

'Now  this,  it  is  true,  may  lead 
to  the  same  result  in  the  particular 
case  as  to  have  placed  tlie  decision 
upon  the  true  groiuid,  viz. :  that 
thougli  the  parties  actually  intend- 
ed the  sum  to  be  paid  as  the  dam- 
ages agreed  between  them,  yet  it 
being  clearly  unconscionable,  the 
court  would  disregard  the  intention 
and  refuse  to  enforce  tlie  stipula- 
tion. But,  as  a  rule  of  construction 
or  interpretation  of  contracts,  it  is 
radically  vicious  and  tends  to  a  con- 
fusion of  ideas  in  tlie  construction 
of  contracts  generally.  It  is  this, 
more  than  anything  else,  which  has 
produced  so  much  apparent  conflict 
in  the  decisions  upon  this  whole  sub- 
ject of  penalty  and  stipulated  dam- 
ages. It  sets  at  defiance  all  rules 
of  interpretation,  by  denying  the  in- 
tention of  the  parties  to  be  what 
they  in  the  most  unambiguous  terras 


have  declared  it  to  be,  and  finds  an 
intention  directly  opposite  to  that 
which  is  clearly  expressed — 'divina- 
tio,  non  intcrprctatio  est,  qiKJC 
omnino   rcccdit  a   litcra.' 

"Again,  the  attempt  to  place  this 
question  upon  the  intention  of  the 
parties,  and  to  make  this  the  gov- 
erning consideration,  necessarily  im- 
plies that  if  the  intention  to  make 
the  sum  stipulatt^d  damages  should 
clearly  appear  the  court  would  en- 
force the  contract  according  to  that 
intention.  To  test  this,  let  it  be 
asked  whether  in  such  a  case  if  it 
were  admitted  that  the  parties  actu- 
ally interulrd  the  sum  to  be  con- 
sidered as  stipulated  damages  and 
not  as  penalty,  would  a  court  of 
law  enforce  it  for  the  amount  stipu- 
lated? Clearly,  they  could  not, 
without  going  back  to  the  technical 
and  long-exploded  doctrine  which 
gave  the  whole  penalty  of  the  bond, 
without  reference  to  the  damages 
actually  sustained.  They  would 
thus  be  simply  changing  the  names 
of  things,  and  enforcing  under  the 
name  of  stipulated  damages  what 
in  its  onm  nature  is  but  a  penality. 

"The  real  question  in  this  class 
of  cases  will  be  found  to  be,  not 
wliat  the  parties  intended,  but 
whether  the  sum  is  in  fact  in  the 
nature  of  a  penalty;  and  this  is  to 
be  determined  by  the  magnitude  of 
the  sum,  in  connection  with  the  sub- 
ject-matter, and  not  at  all  by  the 
words  or  the  understanding  of  the 
parties.  The  intention  of  the  par- 
ties cannot  alter  it.  While  courts 
of  law  gave  the  penalty  of  the  bond, 
the  parties  intended  the  payment  of 
the  penalty  as  much  as  they  now  in- 
tend the  payment  of  stipulated  dam- 
ages; it  must  therefore,  we  think,  be 


§    283]    CONVENTIONAL    T.TQUIDATIONS    AND    DISCIIAROES.         851 


tiou  to  liquidate  will  either  bo  found  not  to  exist  or  will  i)e 
disregarded  and  the  stated  sum  treated  as  a  jiennlty.     Contracts 


very  obvious  that  the  actual  inten- 
tion of  the  parties  in  this  class  of 
cases  and  relating  to  this  point  is 
wholly  immaterial ;  and  though  the 
courts  have  very  generally  pro- 
fessed to  base  their  decisions  upon 
the  intention  of  the  parties,  that  in- 
tention is  not  and  cannot  be  made 
the  real  hanis  of  these  decisions.  In 
endeavoring  to  reconcile  these  de- 
cisions with  the  actual  intention  of 
the  parties,  the  courts  have  some- 
times been  compelled  to  use  lan- 
guage wholly  at  war  with  any  idea 
of  interpretation,  and  to  say  'that 
the  parties  must  be  considered  as 
not  meaning  exactly  what  they  say.' 
Horner  v.  Flintoff,  9  M.  &  W.  678, 
per  Parke,  B.  May  it  not  be  said, 
with  at  least  equal  propriety,  that 
courts  have  sometimes  said  what 
they  did  not  exactly  mean?  The 
foregoing  remarks  are  all  to  be  con- 
fined to  that  class  of  cases  where  it 
was  clear  from  the  sum  mentioned 
and  the  subject-matter  that  the 
principle  of  compensation  had  been 
disregarded." 

In  Dwinel  v.  Brown,  .54  Me.  46S, 
the  defendant  had  bound  himself,  in 
the  event  of  a  failure  to  perform 
each  and  every  condition  and  stipu- 
lation represented  in  a  certain  li- 
cense and  agreement  for  carrying  on 
a  lumbering  operation  upon  the 
plaintiff's  land,  "in  the  full  and 
liquidated  sum  of  $1,000  Avell  and 
truly  to  be  paid,"  on  demand,  "over 
and  above  the  actual  damages" 
which  should  be  sustained  by  the 
nonperformance.  Dickerson,  .1., 
said:  "The  question  presented  for 
our  determination  is  whether  the 
sum  named  in  the  contract  to  be 
paid  by  the  defendant  on  his  failure 
to  fulfill  its  conditions  is  penalty  or 


liquidated  damages.  It  is  compe- 
tent for  the  parties  in  making  a 
contract  to  leave  the  damages  aris- 
ing from  a  breach  of  its  provisions 
to  be  determined  in  a  court  of  law, 
or  to  specify  the  amount  of  such 
damages  in  the  contract  itself.  If 
the  contract  is  silent  in  respect  to 
damages,  the  law  will  allow  only 
the  actual  or  proximate  damages. 
In  order,  however,  to  provide  for 
consequential  damages  or  secure  the 
profits  which  are  expected  to  arise 
from  business,  or  contracts  that  de- 
pend upon  the  performance  of  the 
principal  contract,  or  to  save  ex- 
pense, or  to  render  certain  what 
would  otherwise  be  difficult  if  not 
impossible  to  ascertain,  it  is  some- 
times desirable  that  the  contract 
should  fix  the  amount  of  damages. 
If,  for  instance,  a  party  has  a  con- 
tract for  building  a  ship  at  a  large 
profit,  conditioned  upon  his  having 
her  completed  at  a  specified  time,  it 
would  be  competent  for  him  in  con- 
tracting for  the  material  to  make 
tlie  damages,  in  case  of  breach,  sutVi- 
cieiit  to  cover  his  pros]U'ctive  |)r(iflts 
in  building  the  ship.  While  to  per- 
sons unacquainted  with  the  circum- 
stances the  damages  stipulated  in 
such  a  contract  might  seem  greatly 
disproportionate  to  the  loss  sus- 
tained by  a  breach  of  it,  they  might, 
in  fact,  be  insulliciciit  to  indemnify 
tlie  party  against  the  loss  he  might 
sustain  by  being  preveiitiHl  from 
completing  the  ship  according  to  his 
contract.  The  parties  tiiemselves 
best  know  what  their  expectations 
are  in  regard  to  tlic  advantages  of 
their  undertaking,  and  the  damages 
attendant  on  its  failure,  and  when 
tliey  have  mutually  agreed  upon  the 
amount    of    such    damages    in    good 


852 


SUTIIKULANl)    ON    DAMAGES. 


[§  283 


are  not  made  to  be  broken ;  and  hence,  when  parties  provide  for 
the  consequences  of  a  breach,  they  proceed  with  less  caution 


faith  and  without  illegality,  it  is  as 
much  the  duty  of  the  court  to  en- 
force the  agreement  as  it  is  the 
other  provisions  of  the  contract.  As 
in  construing  the  otlier  parts  of  the 
contract,  so  in  giving  construction 
to  the  stipulation  concerning  dam- 
ages, the  intention  of  the  parties 
governs.  The  inquiry  is,  what  was 
the  understanding  of  the  parties; 
and  wlien  it  is  said  in  judicial  par- 
lance that  certain  language  of  the 
parties  is  held  to  mean  liquidated 
damages  and  certain  other  language 
a  penalty,  this  is  affirmed  of  the  in- 
tention of  the  parties,  and  not  of 
the  construction  of  the  court,  in 
contradistinction  from  such  inten- 
tion. It  is  the  province  of  the  court 
to  uphold  existing  contracts,  not  to 
make  new  ones.  It  is  not  for 
the  court  to  sit  in  judgment  upon 
the  wisdom  or  folly  of  the  parties 
in  making  a  contract  when  their 
intention  is  clearly  expressed,  and 
there  is  no  fraud  or  illegality.  No 
judges,  however  eminent,  can  place 
themselves  in  the  place  or  position 
of  the  parties  when  the  contract  is 
made,  scan  the  motives  and  weigh 
the  considerations  which  influenced 
them  in  the  transaction  so  as  to 
determine  what  would  have  been 
best  for  them  to  do :  wlio  was  least 
sagacious,  or  who  drove  the  best 
bargain.  Courts  of  common  law  can- 
not, like  courts  where  the  civil  law 
prevails,  award  such  damages  as 
they  may  deem  reasonable,  but  must 
allow  the  damages,  whether  actual 
or  estimated,  as  agreed  upon  by  the 
parties.  The  bargain  may  be  an  un- 
fortunate one  for  the  delinquent 
party,  but  it  is  not  the  duty  of 
courts  of  common  law  to  relieve 
parties    from    the    consequences    of 


their  own  improvidence,  where  tliese 
contracts  are  free  from  fraud  and 
illegality. 

"The  controversy  in  the  courts, 
whether  the  particular  language  of 
a  contract  in  regard  to  damages  i.s 
to  be  construed  as  a  penalty  or 
liquidated  damages,  arises  mainly 
from  a  desire  to  relieve  parties 
from  what,  under  a  different  con- 
struction, is  assumed  to  be  an  im- 
prudent and  absurd  agreement. 
When,  however,  it  is  considered  how 
little  courts  know  of  the  modifying 
circumstances  of  the  case,  how  far 
the  particular  provision  was  framed 
with  reference  to  the  personal  feel- 
ings of  the  parties,  what  fluctua- 
tions in  the  market  were  anticipated 
at  the  time  and  what  effect  the  con- 
tract in  question  was  expected  to 
have  upon  other  business  engage- 
ments or  negotiations,  there  is  per- 
haps less  cause  for  departing  from 
the  literal  construction  of  the  lan- 
guage used  than  might  at  first  view 
be  supposed.  These  considerations 
should  at  least  admonish  us  that  in 
straining  the  language  of  a  con- 
tract to  prevent  a  seeming  disad- 
vantage to  one  of  the  parties,  we 
may  impose  upon  the  otlier  party 
the  very  hardships  which  both  in- 
tended to  protect  him  against  by 
the  terms  of  their  agreement.  The 
interests  of  the  public  are  quite  as 
likely  to  be  subserved  in  maintain- 
ing the  inviolability  of  contracts  as 
they  are  in  contriving  ways  and 
means  to  make  a  contract  mean 
what  is  not  app&rent  upon  the  face 
of  it  to  save  a  party  from  some  con- 
jectural inequity  growing  out  of 
liis  supposed  inadvertence  or  im- 
providence." The  judge  stated 
three  rules  upon  which  he  said  the 


§    288]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.         853 


than  if  that  event  was  certain  and  they  were  fixing  a  sum  to  be 
paid  absolutely.    The  intention  in  all  such  cases  is  material ;  but 


courts  are  substantially  agreed,  and 
the  third  he  stated  as  follows:  '"If 
the  instrument  provides  for  the 
payrnent  of  a  larger  sum  in  future 
to  pay  a  less  sum,  the  larger  will 
be  regarded  as  penalty  in  respect 
to  the  excess  over  the  legal  interest 
whatever  the  language  used;  and  if 
the  contract  consist  of  several 
stipulations,  the  damages  for  the 
breach  of  which  independently  of 
the  sum  named  in  the  instrument 
are  uncertain  and  cannot  well  be 
ascertained,  the  sum  agreed  upon  is 
to  be  treated  as  liquidated  damages. 
Orr  V.  Churchill,  1  11.  Bl.  227 ;  Ast- 
ley  V.  Weldon,  2  B.  &  P.  346;  Mead 
V.  Wheeler,  ]3  N.  H.  351;  Atkyns 
V.    Kinnier,   4   Ex,   776.     *     *     * 

"In  the  case  at  bar  the  defendant 
bound  himself  'in  the  full  and  liqui- 
dated sum  of  $1,000  over  and  above 
the  actual  damages'  in  the  event 
of  his  failure  to  do  and  perform 
each  and  every  condition  and  stipu- 
lation in  his  contract.  Language 
can  scarcely  make  the  intention  of 
the  parties  to  fix  the  amount  of  the 
damages  more  clear  and  emphatic. 
The  sum  is  not  only  'liquidated,' 
but,  as  if  to  exclude  all  possibility 
of  its  being  a  penalty,  it  is  declared 
to  be  'over  and  above  the  actual 
damages.'  Whetlier  it  was  to  afi'ord 
an  additional  stimulus  to  secure  the 
fulfillment  of  the  contract,  or  to  pro- 
vide against  all  other  losses,  or  com- 
pensate for  other  advantages  con- 
tingent upon  this  contract,  or  from 
the  difficulty  of  ascertaining  the 
actual  damages,  or  for  some  other 
reason,  it  is  manifest  that  other 
damages  than  the  legal  damages 
Were  taken  into  the  account  by  the 
parties  when  they  incorporated  this 
provision   in   their   agreement.      Be- 


sides, the  contract  contains  several 
distinct  conditions  and  rc(iuircmeiits 
for  the  fulfillment  of  whieii,  respect- 
ively, no  sum  is  specified;  and  it 
is  impossible  to  ascertain  such  dam- 
ages from  the  very  nature  of  these 
stipulations.  What  actual  damages 
would  result  to  the  plaintifi'  solely 
from  tile  defendant's  omission  to 
land  the  logs  at  a  suitable  place, 
or  to  notify  the  scaler  seasonably,  or 
to  mark  the  logs,  or  drive  them  as 
eaily  as  practicable,  or  to  cut  clear 
without  waste,  or  to  perform  the 
dozen  other  stipulations  of  the  con- 
tract, is  practically  beyond  the 
power  of  a  judicial  tribunal  to  ascer- 
tain with  anything  like  accuracy. 
The  case  clearly  comes  within  tlie 
second  clause  of  the  tliird  rule  of 
interpretation,  that  when  parties  in- 
corporate several  distinct  stipula- 
tions in  a  contract,  the  breach  of 
which  cannot  be  respectively  meas- 
ured, they  must  be  taken  to  have 
meant  that  the  sum  agreed  upon 
was  to  bo  liquidated  damages  and 
not  a  penalty.  That  such  was  the 
intention  of  the  parties,  moreover, 
as  drawn  from  the  particular  lan- 
guage of  tlie  contract  upon  this 
point,  cannot  admit  of  a  doubt." 

The  stipulation  in  this  case  is  so 
expressed  that  it  would  seem  not  to 
have  been  intended  to  provide  tlie 
fixed  Sinn,  in  lieu  of  actual  damages 
difi^icult  of  proof,  but  a  comminatory 
sum  in  addition.  Tlie  dissenting 
opinion,  of  Appleton,  C  J.,  is  be- 
lieved to  contain  a  sounder  exposi- 
tion of  the  contract  and  the  law  ap- 
plicable to  it:  "In  case  of  a  con- 
tract damages  are  tlie  pecuniary 
satisfaction  to  which  the  injured 
party  is  entitled  by  way  of  com- 
pensation for  its  breach.     Liquidat- 


854 


SUTIIEELAND    ON    DAMAGES. 


[§  ^83 


to  prevent  a  stated  sum  from  being  treated  as  a  penalty  the  in- 
tention should  be  apparent  to  liquidate  damages  in  the  sense  of 


ed  damages  are  damages  agreed 
upon  by  the  parties,  as  and  for  a 
compensation  for  and  in  lieu  of  the 
aetnal  da  mages  arising  from  sveh 
breach.  Tlicy  may  exceed  or  fall 
short  of  tlie  actual  damages — but 
the  sum  thus  fixed  and  determined 
binds  the  parties  to  such  agreement. 
When  this  sum  is  paid  all  damages 
are  paid.  In  the  case  at  bar  tlie 
sum  of  $1,000  was  not  liquidated 
damages.  It  was  not  for  damages 
at  all.  The  contract  so  expressly 
and  unqualifiedly  states  it.  It  was 
a  sum  'over  and  above  the  actual 
damages.'  The  plaintiff,  by  its 
terms  was  further  entitled  to  re- 
cover the  'actual  damage'  which  he 
miglit  sustain  by  'the  non-perform- 
ance of  any  agreement  hereinafter 
contained.'  Suppose  the  actual 
damages  were  $5,000,  would  not  the 
plaintiff'  be  entitled  to  recover  that 
Sinn?  Most  assuredly.  The  actual 
damages  are  therefore  excluded 
from  the  sum  of  $1,000,  and  yet  re- 
main to  be  assessed.  *  *  *  Liqui- 
dated damages  are  fixed,  settled  and 
agreed  upon  in  advance,  to  avoid 
all  litigation  as  to  those  actuall_y 
sustained.  They  are  a  compensa- 
tion for  and  in  lieu  of  actual  dam- 
ages, never  in  addition  thereto.  The 
language  of  the  agreement  leaves 
no  room  for  any  other  conclusion 
than  that  the  sum  fixed  is  a  penalty. 
It  is  not  for  damages  by  the  terms 
of  the  contract.  It  is  not,  there- 
fore, a  sum  agreed  upon  in  liquida- 
tion of  damages,  but  is  a  penalty 
and  so  must  be  regarded."  Gowen 
V.  Gerrish,  15  Me.  273;  Gammon  v. 
Howe,  14  Me.  2.50. 

In  Chamberlain  v.  Bagley,  UN. 
H.  234,  Upham,  J.,  said:  "Courts, 
from  a  desire  to  avoid  cases  of  seem- 


ing hardship,  have  in  many  in- 
stances made  decisions  disregarding 
the  evident  intent  and  design  of  the 
parties  to  contracts;  and  a  variety 
of  reasons  have  been  assigned  for 
this  course.  *  *  »  \Yg  gg^  j,o 
reason  why  contracts  of  this  kind 
should  not  be  judged  of  by  the  rules 
of  construction  as  other  contracts; 
or  why  a  technical,  restricted  mean- 
ing should  be  given  to  particular 
phrases  without  reference  to  other 
portions  of  the  instrument  to  learn 
tlie  design  of  the  parties.  The  mod- 
ern decisions  upon  this  subject  have 
turned  on  the  construction  of  the 
agreement  according  to  the  general 
intent.  In  Reilly  v.  Jones,  8  Moore 
244,  it  is  said  that  where  it  may  be 
fairly  collected  that  the  intent  of 
tlie  parties  was  that  the  damages 
stipulated  for,  as  between  them- 
selves, were  to  be  considered  as 
liquidated  they  cannot  be  treated  as 
a  penalty  although  they  might 
operate  as  such  in  a  popular  sense. 
*  *  *  Tlie  words  forfeit  or  for- 
feiture, penal  sum  or  penalty,  have 
in  some  instances  been  regarded  as 
furnishing  a  very  strong,  if  not  con- 
clusive, indication  of  the  intention 
of  the  parties  in  an  instrument  of 
this  description;  but  the  weight  to 
be  given  to  such  phraseology  will 
depend  entirely  on  its  connection 
with  other  parts  of  the  instrument. 
If  an  individual  promises  to  pay 
tlie  damage  which  may  be  incurred 
under  a  given  penalty,  or  under  a 
forfeiture,  the  damage  only  in  such 
case  is  agreed  to  be  paid.  On  the 
other  hand,  the  penalty  may  be  ex- 
pressly agreed  to  be  paid  in  such 
terms  as  to  admit  of  no  doubt  that 
such  was  the  intent  of  the  parties; 
and  where  such  is  the  case,  notwith- 


283]     CONVENTIONAL    LUiUIDATlONS    AND    DISC  II  AKliES. 


855 


makln-'  just  compensation;  it  is  not  (Mi-.u-li  that  tlic  parties  ex- 
press the  intention  that  the  stated  sum  shall  he  paid  in  ease  .d'  a 


standing  it  may  bo  nanu-d  as  a  for- 
feiture, or  the  parties  arc  spoken  of 
as  bound  in  a  certain  sum,  if  it  was 
clearly  the  design  of  tbe  parties 
that  such  sum  should  be  paid,  it  is 
holden  in  the  more  modern  decisions 
as  liquidated  damages." 

In  Brewster  v.  Edgerly,  13  N.  H. 
275,  the   same   doctrine   is   aflirmed. 
Gilchrist,  J.,  said:  "Many  of  the  de- 
cisions    of     tlie    judicial     tribunals 
heretofore    have    been    based    upon 
what  is  now  admitted  to  be  an  in- 
secure   foundation;     for    the    judg- 
ments have  often  proceeded  not  upon 
the   plainly    expressed    intention   of 
the  parties  in  a  case  free  from  fraud 
or    illegality,     but    upon    the    view 
which     the     court     entertained     of 
what  would  have  been  on  the  whole 
just,  considering  such  circumstances 
as  were  proved  to  exist.     The  dan- 
gerous uncertainty  of  such  a  mode 
is  manifest  when  the  impossibility 
of  placing  any  other  person  in  the 
exact    condition    of    the    parties    at 
the  time  the  contract  was  made  is 
considered.     Many  motives  influence 
them,    many    considerations    weigh 
with   them   which   no   other   person 
could  understand  and  appreciate  un- 
less   he    could    thoroughly    identify 
himself  with  the  parties;  and  when 
the  contract,   reasonably  construed, 
has  a  plain  meaning  that  one  party 
shall,  in  a  certain  contingency,  pay 
the  other  party  a  definite  sum,  thus 
relieving    him    from    that    liattility 
and     making     the     contract     mean 
something  which  on  its  face  is  not 
apparent,  by  assuming  that  we  can 
place  ourselves  in  the  position  of  the 
parties,  and  can  then  know  precise- 
ly what  would  have  been  equitable 
for  them  to  do,  is  nothing  else  tlian 
a  rescission  of  their  contract,  and 


a  substitution  for  it  of  one  maib'  by 
tile  court,     'litis  result  tlie  cautious 
policy  of  tiie  conunon  law  has  never 
recognized  as  witliin  its  powers,  nor 
have     the     courts     ever     in     terms 
claimed  the  right  to  i)roduce  it;  still 
it  has  sometimes  been  efVected  l)y  the 
anxious  desire  of  the  tribunals  that 
the  law  should  not  be  made  the  in- 
strument    of     injustice;     forgetting 
sometimes,    perhaps,    in    this    laud- 
able  zeal   that   one   of   the   greatest 
evils   in  the  administration   of  jus- 
tice, and  one  which  brings  number- 
less others  in  its  train,  is  that  feel- 
ing of  social   insecurity   which   will 
exist   whenever   the  inviolability   of 
contracts  is  trenched  upon,  however 
pure  might  have  been  the  motive  for 
so     doing."       The    court    seem     in- 
clined to  think  Kemble  v.  Farren,  6 
Bing.  141,  a  case  of  liipiidated  dam- 
ages by  reason  of  the  obvious  intent 
of   the  parties  as  expressed   in   the 
contract.     Mead  v.  Wheeler,   13   N. 
H.  351. 

But  in  Davis  v.  Gillott,  52  X.   H. 
126,     Foster,    J.,    said:     "The    sub- 
stance of  these  principles  (laid  down 
by  Sedgwick   in   his  treatise  on  the 
Measure  of  Damages)     is    that    the 
language    of    the    agreement  is  not 
conclusive;    and   that   the   efTort   of 
the   tribunal    called   to   put   a   con- 
struction upon   it  will   be  to  ascer- 
tain the  true   intent  of   the   parties 
and    to    efl'ectuate    that    intent.      In 
order  to  do  this  courts  will  not  be 
absolutely  controlled  by  terms  that 
may    seem    to    be    quite    definite    in 
their  meaning,  but  will  be  at  liberty 
to  consider  and  declare  a  sum  men- 
tioned in  the  bond  to  be  a  penalty, 
even  although  it  may  be  denominat- 
ed    liquidated    damages,     and    vice 
versa,   if   manifest   justice   requires 


856 


SlITJlli:RJ,A^'l)    ON    DAMAGES. 


283 


violation   of    the   contract.      A    pcnultv    is   not   converted    into 
liquidated  damages  by  the  intention  that  it  shall  be  paid  ;  it  is 


that  a  construction  opposite  to  tlic 
expressed  lanfjuage  of  the  instru- 
ment should  be  adopted.  In  such 
cases  the  court  do  not  assume  (as 
they  certainly  could  not)  to  make 
a  new  contract  for  the  parties;  but 
they  conclude  that  the  parties  have 
incorrectly  and  inconsiderately  ex- 
pressed their  intention.  The  court, 
therefore,  ascertain  the  intention 
and    tlien   give   effect   to   it." 

In  Williams  v.  Dakin  (court  of 
errors),  22  Wend.  201,  Walworth, 
J.,  said:  "There  is  undoubtedly  a 
class  of  cases  in  which  courts  have 
been  in  the  habit  of  considering  a 
certain  specified  sum  as  penalty, 
whatever  may  be  the  language  of 
the  agreement.  Such  is  the  case 
wherever  such  specified  sum  is  evi- 
dently intended  as  a  mere  col- 
lateral security  for  the  payment  of 
a  different  sum  which  is  the  real 
debt;  or  where  it  was  evidently  in- 
tended to  be  in  the  nature  of  a  mere 
penalty;  and  there  is  another  class 
where  from  the  language  of  the 
agreement  it  was  difficult  to  ascer- 
tain what  the  parties  really  intend- 
ed, in  which  the  courts  have  taken 
the  reasonableness  of  the  provision 
as  liquidated  damages  into  con- 
sideration for  the  purpose  of  deter- 
mining whether  it  was  intended  as 
sucli  or  only  as  a  comminatory 
sum." 

In  Cotheal  v.  Talmage,  9  N.  Y. 
551,  the  court  recognize  it  as  a  gen- 
eral rule  that  courts  in  acting  upon 
these  stipulations  should  carry  into 
effect  the  intent  of  the  parties;  but 
there  is  an  intimation  that  tliis  rule 
may  be  departed  from  when  the 
party  might  be  made  responsible  for 
the  whole  amount  of  damages  sup- 
posed to  be  stipulated  for  breach  of 


an  unimportant  part  of  his  con- 
tract; "and  so  be  made  to  pay  a 
sum  by  way  of  damages  grossly  dis- 
proportionate to  the  injury  sus- 
tained." 

In  Lampnian  v.  Cochran,  16  N. 
Y.  275,  61  Am.  Dec.  716,  a  sum 
specially  named  in  an  agreement  as 
"liquidated  damages,"  in  case  either 
party  shall  fail  to  perform  the  con- 
tract, was  nevertheless  held  a  penal- 
ty, because  on  the  face  of  the  in- 
strument it  appeared  that  such  sum 
would  necessarily  be  an  inadequate 
compensation  for  the  breach  of  some 
of  the  provisions,  and  more  than 
enough  for  the  breach  of  others. 
The  court  say:  "The  parties  to  this 
contract  must  be  regarded  as  hav- 
ing given  a  wrong  name  to  the  sum 
of  $500,  and  that  it  is  in  substance 
a  penalty  and  not  liquidated  dam- 
ages." 

In  Colwell  v.  Lawrence,  38  N.  Y. 
7],  Miller,  J.,  said:  "One  of  the 
rules  of  construction  established  is 
that  tlie  courts  are  to  be  governed 
by  tlie  intention  of  the  parties  to 
be  gathered  from  the  language  of 
the  contract  itself  and  from  the 
nature  of  the  circumstances  of 
the  case.  And  in  all  the  cases  tiie 
courts  have  treated  it  as  a  question 
as  to 'the  intention  of  the  parties." 
In  that  case  a  contract  had  Ijcen 
made  to  build  and  place  in  a  steam- 
boat two  steam-engines  of  a  particu- 
lar description  on  or  before  a  day 
specified  for  $8,000,  and  to  have  the 
same  ready  for  steam  on  or  before 
that  day  "under  a  forfeiture  of  $100 
per  day  for  each  and-  every  day 
after  the  above  date  until  the  same 
is  completed  as  above."  Held,  the 
amount  being  large  and  grossly  dis- 
proportionate to  the  actual  damage, 


§    28'}']     CONVKNTTONAT.    IJQTTIDATIONS    AND    DISCIIAKGES.  857 

intrinsically  a  different  thing,  mid  the  iiifciitioii  that  it  sliull  ho 
paid  cainiot  alter  its  nature.  A  hoiid,  litci'allv  ediistrued,  im- 
ports an  intention  that  ils  penalty  shall  be  paid  if  there  l)e 
default  in  the  performance  of  the  condition;  and  formerly  that 
was  the  legal  effect.  Courts  of  law  now,  however,  administer 
the  same  equity  to  relieve  from  penalties  in  other  forms  of  con- 
tract as  from  those  in  honds.  The  evidence  of  an  intention  to 
measui-e  the  damage,  therefore,  is  seldom  satisfactory  when  tlie 
amonni  stated   varies  materially  from   a   just  estimate  of  the 


it  was  not  a  reasonable  inference 
that  it  was  agreed  on  as  liquidated 
damages. 

In  Clement  v.  Cash,  21  N.  Y.  25.3, 
Wright,  J.,  said:  "When  the  sum 
fixed  is  greatly  disproportionate  to 
the  presumed  actual  damage,  prol)- 
ably  a  court  of  equity  may  relieve; 
but  a  court  of  law  has  no  right  to 
erroneoTisly  construe  the  intention 
of  parties  when  clearly  expressed,  in 
the  endeavor  to  make  better  con- 
tracts for  them  than  they  have  made 
for  themselves.  In  these,  as  in  all 
other  cases,  the  courts  are  bound 
to  ascertain  and  carry  into  effect 
the  true  intent  of  the  parties.  I 
am  not  disposed  to  deny  that  a  case 
may  arise  in  which  it  is  doubtful, 
from  the  language  employed  in  the 
instrument,  whether  tbe  parties 
meant  to  agree  upon  the  measure  of 
compensation  to  the  injured  party 
in  case  of  a  breach.  In  such  cases 
there  would  be  room  for  construc- 
tion, but  certainly  none  where  tlie 
meaning  of  the  parties  was  evident 
and  unmistakable.  When  they  de- 
clare, in  distinct  and  unequivocal 
terms,  that  they  have  settled  and 
ascertained  the  damages  to  be  .$500, 
or  any  otlier  sum,  to  be  paid  by  the 
party  failing  to  perform,  it  seems 
absurd  for  a  court  to  tell  them  that 
it  lias  looked  into  the  contract  and 
reached  the  conclusion  tliat  no  such 
thing  was  intended,  but  tliat  tlie  in- 


tention was  to  name  a  sum  as  a 
]icnalty  to  cover  any  damages  that 
might  be  proved  to  have  been  sus- 
tained by  a  breach  of  the  agreement; 
still,  certain  rules  have  crept  into 
the  law  that  are  supposed  to  con- 
ti'ol  the  construction  of  contracts  of 
this  character,  until  in  tlie  view  of 
some  it  has  become  dilficult,  if  not 
impossible,  to  support  an  agreement 
for  liquidated  damages  in  cases 
where  the  amount  ascertained  by 
the  parties  seems  disprwportionate 
to  the  conjectured  actual  damage." 
Rolf  V.  Peterson,  2  Brown,  P.  0. 
470. 

If  the  sum  would  be  very 
enormous  and  excessive,  considered 
as  liquidated  damages,  it  should  be 
taken  to  be  a  penalty  though  agreed 
to  be  paid.  Lord  Eldon,  C.  J.,  la- 
ments, in  Astley  v.  Weldon.  2  H. 
&  P.  346,  the  adoption  of  sucii  a 
principle.  Hoag  v.  McGinnis,  22 
Wend.  163,  per  Cowen,  J.;  Spencer 
V.  Tilden,  5  Cow.  144  and  note; 
Bagley  v.  Pcddie,  5  Sandf.  192;  Ber- 
ry V.  Wisdom,  3  Ohio  St.  241:  Es- 
mond V.  Van  Benschoten,  12  Barb. 
.366;  Nash  v.  Hermosilla,  9  Gal.  585, 
70  Am.  Dec.  670;  Bright  v.  Row- 
land, 3  How.  (Miss.)  308;  Shreve 
v.  Brereton,  51  Pa.  175;  Streeper 
V.  Williams,  48  id.  450;  Powell  v. 
Burrouglis,  54  id.  320;  Moore  v. 
Anderson,  30  Tex.  224;  t'hase  v. 
Alien,    13   (Jray  42;    tlowen   v.   Cier- 


858 


SUTHERLAND    ON    DAMAGES. 


[§  283 


actual  loss  finally  siistained.^^  If  a  contract  provides  for  a 
penalty  for  the  breach  of  some  of  its  provisions  it  must  be  re- 
garded as  so  providing  if  there  is  a  breach  of  them  all ;  as  where 
the  damages  resulting  from  the  breach  of  some  of  its  stipulations 
are  capable  of  being  ascertained.  It  cannot  provide  for  a  pen- 
alty as  to  those  and  for  liquidated  damages  as  to  the  other 


rish,  15  Me.  273;  Leggett  v.  Mu- 
tual L.  Ins.  Co.,  53  N.  Y.  394 ;  Den- 
nis V.  Cummins,  3  Johns.  Cas.  297 ; 
Hamilton  v.  Overton,  6  Blackf.  200, 
38  Am.  Dec.  136;  Lea  v.  Whitaker, 
L.  R.  8  C.  P.  70:  Streeter  v.  Rush, 
25  Cal.  67. 

If  the  sum  agreed  upon  was  sug- 
gested by  tlie  defendant  he  cannot 
claim  it  was  unconscionable.  Clyde- 
bank E.  &.  S.  Co.  V.  Yzquierdo  y 
Castandra,   [1900]  App.  Cas.  0. 

85  Graham  v.  Lebanon,  240  Pa. 
337 ;  Ward  v.  Hareen,  183  Mo.  App. 
569,  quoting  the  text;  Van  Kannel 
V.  Higley,  172  111.  App.  88;  Elgin, 
etc.  R.  Co.  V.  Northwestern  Nat. 
Bank,  105  111.  App.  35;  Buchanan 
V.  Louisiana  P.  E.xp.  Co.,  245  ~S\o. 
337,  quoting  the  te.\t  and  saying  it 
is  a  clear  statement  of  the  doctrine; 
Stoner  v.  Shultz,  09  Wash.  087; 
Sherburne  v.  Hirst,  121  Fed.  998; 
Bethleliem  S.  Co.  v.  United  States, 
41  Ct.  of  Cls.  19;  Florence  W. 
Works  V.  Salmon,  8  Ga.  App.  197; 
Case  T.  M.  Co.  v.  Fronk,  105  Minn. 
39;  Blunt  V.  Egeland,  104  Minn. 
351;  Boulware  v.  Crohn,  122  Mo. 
App.  571 ;  Lee  v.  Carroll  N.  S.  Co., 
1  Neb.  (Unof.)  681;  Kimkel  v. 
Roberts,  16  Pa.  Dist.  179;  Davis  v. 
La  Crosse  H.  Ass'n,  121  Wis.  579; 
Commissioner  of  P.  Works  v.  Hills, 
[1900]  App.  Cas.  308;  Scofield  v. 
Tompkins,  95  111.  190,  35  Am.  Rep. 
160;  Myer  v.  Hart,  40  Mich.  517,  29 
Am.  Rep.  553;  Muldoon  v.  Lynch, 
66  Cal.  536,  quoting  the  text  and 
pronouncing  it  a  clear  statement  of 
the  result  of  the  decisions;    Glass- 


cock v.  Rosengrant,  55  Ark.  376; 
Condon  v.  Kemper,  47  Kan.  126,  13 
L.R.A.  671,  quoting  the  text;  Doane 
v.  Chicago  City  R.  Co.,  51  111.  App. 
353;  Iroquois  F.  Co.  v.  Wilkin  Mfg. 
Co.,  181  111.  582;  Willson  v.  Balti- 
more, 83  Md.  203,  55  Am.  St.  339; 
Cochran  v.  People'»  R.  Co.,  113  Mo. 
359;  Cowart  v.  Connally  (Tex.  Civ. 
App.),  108  S.  W.  913;  Sehmieder 
V.  Kingsley,  6  N.  Y.  Misc.  107; 
Lindsay  v.  Rockwall  County,  10 
Tex.  Civ.  App.  225;  Haliday  v. 
United  States,  33  Ct.  of  Cls. 
453;  Quinn  v.  Same,  99  U.  S.  30, 
25  L.  ed.  269;  Mundy  v.  Same, 
35  Ct.  of  Cls.  265;  Csesar  v.  Rubin- 
son,  174  N.  Y.  292;  Raynor  v.  Red- 
eriaktiebolaget  Condor,  [1895]  2  Q. 
B.  289;  Radloff  v.  Haase,  96  III. 
App.  74 ;  Denver  L.  &  S.  Co.  v. 
Rosenfeld  C.  Co.,  19  Colo.  539;  Gil- 
lilan  V.  Rollins,  41  Neb.  540;  New 
Britain  v.  New  Britain  Tel.  Co.,  74 
Conn.  326,  332;  Zimmerman  v.  Con- 
rad (Mo.  App.),  74  S.  W.  139; 
Hahn  v.  Horstman,  12  Bu.sh,  (Ky. ) 
249. 

Occasionally  there  has  been  a 
very  wide  departure  from  the  rule. 
In  Eakin  v.  Scott,  70  Tex.  445,  a 
stipulation  for  the  forfeit  of  $8,000 
was  enforced  though  no  actual  dam- 
ages was  sustained.  The  doctrine 
of  this  case  has  been  limited  by 
Collier  v.  Betterton,  87  Tex.  442. 
See,  as  more  fully  in  accord  with 
the  cases  generally,  Cowart  v.  Con- 
nally (Tex.  Civ.  App.),  108  S.  W. 
973. 


§    284]     CONVENTIONAL    UQUIDATIONS    AM)    DISCll AKGES,  S59 

clauses,  tlioiigli  tlie  coiiseqiienecs  of  their  breucli  are  iiiu'erlain.^^ 
What  has  been  said  concerning  the  intention  of  the  parties  has 
no  application  to  bonds  given  under  a  statute  which  declares 
what  their  effect  shall  be."  The  (piestions  which  arise  under 
stipulations  such  as  have  been  considered  are  foreclosed  by  ihc 
action  of  the  parties  where  a  de})osit  is  \um\c  by  one  (d'  tlieni 
with  or  for  the  benetit  of  the  other.  "Wiien  a  purchaser  ex- 
pressly stipulates  that  a  payment  on  account,  actually  made  by 
him,  is  to  be  forfeited  if  by  his  own  fault  the  purchase  shall  not 
go  into  effect,  he  may  reasonably  be  nndcrstfuxl  to  mean  that  it 
shall  not  be  reclaimed  in  whole  or  in  part.  1'he  distinction  be- 
tween a  penalty  and  liquidated  danuiges  does  not  apply  to  a  case 
of  that  description."  ^^ 

§  284.  The  evidence  and  effect  of  intention  to  liquidate. 
A  bond  is  pri)iia  facie  a  penal  obligation;  but  the  snm  stated 
where  a  j)eualty  is  usually  inserted  has  sometimes  been  held 
liquidated  damagcs.^^  This  has  seldom  been  done,  however,  un- 
less words  were  em})loyed  in  connection  with  that  sum  to  conntcr- 


36Still\vell  V.  Paepcke-L.  L.  Co., 
73  Ark.  432,  citing  the  text;  Lansin<:; 
V.  Dodd,  45  N.  5.  L.  525;  Wiiitfield 
V.  Levy,  39  id.  149;  Laurea  v.  Ber- 
nauer,'  33  Hun,  307 ;  Case  T.  Co.  v. 
Souders,  48  Ind.  App.  503. 

A  stipulation  providing  for  tlie 
payment  of  damages  for  the  delay 
of  the  original  contractor  is  not 
binding  upon  him  when  the  em- 
ployer exercises  the  contract  right 
either  to  have  the  performance  com- 
pleted by  another  contractor  or  to 
carry  it  to  completion  itself.  In 
other  words,  the  contractor  stipu- 
lates for  liability  only  where  he 
causes  the  delay.  Shields  v.  Shields 
C.  Co.,  81  N.  J.  Eq.  286. 

37  United  States  v.  United  States 
F.  &  G.  Co.,  151  Fed.  534.  See 
note  to  §  284. 

38  Kelly  v.  Thompson,  101  Mass. 
299;  Donahue  v.  Parkman,  161 
Mass.  412,  42  Am.  St.  415. 

39McCullough   v.   Moore,    111    111. 


App.  545;  Guerin  v.  Stacy,  175 
Mass.  595;  Shclton  v.  Jackson,  20 
Tex.  Civ.  App.  443;  De  Graflf  v. 
Wickham,  89  Iowa,  720;  Wilkin- 
son V.  Colley,  6  Kulp,  401 ;  Studa- 
baker  v.  White,  21  Ind.  212;  Fisk  v. 
Fowler,  10  Cal.  512;  Duffy  v. 
Shockey,  11  Ind.  70,  71  Am.  Dec. 
348. 

It  is  not  to  be  regarded  as  a  uni- 
versal rule  that  contracts  in  the 
ordinary  form  of  penal  bonds,  de- 
signed as  an  indemnity  between 
private  persons  for  the  nonperform- 
ance of  collateral  agreements,  arc 
to  be  regarded  as  a  penalty.  It  can- 
not correct!}'  be  said  to  l)e  true  in 
all  such  cases  that  the  intention  to 
treat  the  sum  named  in  tlie  bond  as 
a  penalty  to  secure  the  performance 
of  the  condition  and  to  be  dis- 
charged on  payment  of  damages 
arising  from  nonperformance  can 
be  inferred  as  a  rule  of  law  or  a 
conclusive     presumption     from     tlie 


SCIO 


SUTHERLAND    ON    DAMAGES. 


[§  284 


vail  the  implication  of  penaltj.^"  And  where  the  i^arties  in  any 
other  form  of  contract  designate  tlie  stated  sum  a  penalty  or 
characterize  it  by  other  eipiivalent  words,  it  is  an  indication  that 
a  penalty,  in  a  strict  or  technical  sense,  is  intended ;  "  but  the 


mere  form  of  the  obligation.  Clark 
V.  Barnard,  108  U.  S.  436,  453,  27 
L.  ed.  780,  786.  See  n.  to  §  283. 
The  weight  to  be  given  the  words 
"forfeit,"  "forfeiture,"  "paid  sum" 
or  "penalty"  will  depend  on  their 
connection  with  other  parts  of  the 
instrument  in  which  they  are  used, 
the  nature  of  tlie  agreement,  the 
intention  of  the  parties,  and  other 
facts  and  circumstances.  De  Graff 
V.  Wickham,  supra;  Dobbs  v.  Tur- 
ner. 

40  Coker  v.  Brevard,  90  Miss. 
64;  Small  v.  Burke,  92  App.  Div. 
(N.  Y.)  338;  Cotheal  v.  Talmage,  9 
N.  Y.  551,  61  Am.  Dec.  716;  Shiell 
V.  McNitt,  9  Paige  101;  Leary  v. 
Laflin,  101  Mass.  334;  Smith  v. 
Wedgwood,  74  Me.  457. 

If  a  bond  which  stipulates  that 
the  obligor  shall  abide  by  the  de- 
termination of  arbitrators  contains 
no  express  agreement  that  the  sum 
named  in  it  is  to  be  regarded  as 
liquidated  damages,  and  there  is  no 
evidence  of  an  intention  that  it 
should  be  so  stated,  such  sum  will 
be  regarded  as  a  penalty.  Henry  v 
Davis,  123  Mass.  345. 

A  stipulation  for  "a  penalty  as 
liquidated  damages,"  held  to  l)e  the 
latter.  Toomey  v.  Murphy,  [1897] 
2  Irish  601. 

41  Van  Kannel  v.  Higley,  172  111. 
App.  88;  Hughes  v.  United  States, 
45  Ct.  of  Cls.  517 ;  Bethlehem  S.  Co. 
v.  Same,  41  id.  19;  Evans  v.  Mose- 
ley,  84  Kan.  322;  Buckhout  v.  Wit- 
wer,  157  Mich.  406,  23  L.Il.A.  (N.S.) 
506;  Norman  v.  Vickery  (Tex.  Civ. 
App.),  12S  S.  W.  452;  Wilkes  v. 
Bierne,   68   W.   Va.    82,    31    L.R.A. 


(N.S.)  937;  Madison  v.  American  S. 
E.  Co.,  118  Wis.  480;  Iroquois  F. 
Co.  V.  Wilkin  Mfg.  Co.,  181  111.  582; 
Meyer  v.  Estes,  164  Mass.  457,  32 
L.R.A.  283;  McCann  v.  Albany,  11 
App.  Div.  (N.  Y.)  378;  Edgar  &  T. 
Works  V.  United  States,  34  Ct.  of 
Cls.  205;  Bignall  v.  Gould,  119  U.  S. 
495,  30  L.  ed.  491;  L.  P.  &  J.  A. 
Smitli  Co.  V.  United  States,  34  Ct. 
of  Cls.  472;  Moore  v.  Colt,  127  Pa. 
289;  Wilkinson  v.  Colley,  164  Pa. 
35,  20  L.R.A.  114;  Dill  v.  Lawrence, 
109  Ind.  564;  March  v.  Allabough, 
103  Pa.  335;  Whitfield  v.  Levy,  35 
N.  J.  L.  149;  Yenner  v.  Hammond, 
36  Wis.  277 ;  Tayloe  v.  Sandiford,  7 
Wheat.  13,  5  L.  ed.  384;  White  v. 
Arleth,  1  Bond,  319 ;  Smith  v.  Dick- 
enson, 3  B.  &  P.  630;  Davies  v.  Pen- 
ton,  6  B.  &  C.  216;  Harrison  v. 
Wriglit,  13  East  343;  Brown  v.  Bel- 
lows, 4  Pick.  179 ;  Burr  v.  Todd,  41 
Pa.  206;  Robinson  v.  Cathcart,  2 
Cranch  C.  C.  590;  Bigony  v.  Tyson, 
75  Pa.  157 ;  Esmond  v.  Van  Ben- 
sclioten,  12  Barb.  366;  Clement  v. 
Cash,  21  N.  Y.  253;  Cheddick  v. 
Mars]),  21  N.  J.  L.  463;  Hodges 
v.  King,  7  Mete.  (Mass.)  583;  Sal- 
ters  v.  Ralph,  15  Abb.  Pr.  273; 
Bearden  v.  Smith,  11  Rich.  554; 
Ilcatwole  V.  Gorrell,  35  Kan.  692. 
Compare  the  last  case  with  Streeter 
V.  Rush,  25  Cal.  67 ;  Moore  v.  Kline, 
26  Colo  App.  334,  where  the  instru- 
ment was  termed  a  "guarantee." 

Even  if  the  use  of  the  word  "pen- 
alty" is  not  conclusive,  very  strong 
evidence  is  required  to  authorize  a 
court  to  say  that  the  parties'  own 
words  do  not  express  their  inten- 
tion ;  the  use  of  that  word  prevents 


284]     COJyVENTlOA'AL    LIQUIDATIONS    Ai\D    DISCUAIIGES. 


S(jl 


inference  is  not  so  strong  because  the  obligation  is  in  the  fonii  of 
a  bond  as  may  be  inferred  from  the  greater  number  (if  iustances 
in  which  a  sum  called  a  peualtj  or  forfeiture  by  the  parties  in 
contracts  has  been  held,  nevertheless,  liquidated  daiuages.  The 
tendency  and  preference  of  the  law  is  to  regard  a  stated  sum 
as  a  penalty  because  actual  damages  can  then  be  recovered,  aud 
the  recovery  be  limited  thereto.*^  This  tendency  and  preference, 
however,  do  not  exist  where  the  actual  daiuages  cannot  be 
ascertained  by  any  standard.    A  stipulation  to  liquidate  in  such 


a  court  from  holding  that  the  par- 
ties stipulated  the  damages.  Smith 
V.  Brown,  164  Mass.  584;  Kelley  v. 
Seay,  3  Okla.  527;  Reno  v.  Cul- 
linano,  4  Okla.  457. 

42  Gougar  v.  Buffalo  Specialty 
Co.,  26  Colo.  App.  8;  Moore  v. 
Kline,  26  Colo.  App.  334;  Wilson  v. 
Agnew,  25  Colo.  App.  109;  Weber 
V.  Moy,  183  111.  App.  200;  Poppen- 
burg  V.  R.  M.  Owen  &  Co.,  84  N.  Y. 
Misc.  126;  Wright  v.  Bott,  — 
Tex.  Civ.  App.  — ,  163  S.  W.  360; 
Sherman  v.  Gray,  11  Cal.  App.  348; 
Disosway  v.  Edwards,  134  N.  C. 
254;  Schmid  v.  Eppers,  17  Pa.  Dist. 
1064;  Stidham  v.  Laurie  (Tex.  Civ. 
App.),  133  S.  W.  1082;  Hennesy  v. 
Metzger,  152  111.  505;  Willson  v. 
Baltimore,  83  Md.  203,  55  Am.  St. 
339;  Wiliston  v.  Mathews,  55  Minn. 
422;  Ilaliday  v.  United  States,  33 
Ct.  of  Cls.  453 ;  O'Keefe  v.  Dyer,  20 
Mont.  471  quoting  the  text;  Iro- 
quois F.  Co.  V.  Wilkin  Mfg.  Co., 
181  111.  582;  Monmouth  Park  Ass'n 
V.  Wallis  I.  Works,  55  N.  J.  L.  132, 
19  L.R.A.  456,  39  Am.  St.  626;  Fisk 
V.  Gray,  11  Allen,  132;  Lansing  v. 
Dodd,  45  N.  J.  L.  525;  Whitfield  v. 
Levy,  35  id.  149 ;  Burrill  v.  Daggett, 
77  Me.  545;  Smith  v.  Wedgwood,  74 
id.  458;  Henry  v.  Davis,  123  Mass. 
345;  Shutc  v.  Taylor,  5  Mete. 
(Mass.)  61;  Wallis  v.  Carpenter,  13 
Allen  19;  Choddick  v.  Mar.sh,  21  N. 
J.    L.    463;    Baird     v.     Tolliver,     6 


lluiiiph.  186,  44  Am.  |)ir.  298; 
Spear  v.  Smith,  1  Denio  464. 

It  is  provided  by  sec.  961.  R.  S. 
of  the  U.  S.,  that  in  all  suits 
brought  to  recover  for  forfeiture 
annexed  to  anv  articles  of  agree- 
ment, covenant  l)ond  or  other  spe- 
cialty, where  the  forfeiture,  breach  or 
nonperformance  appears  by  the  de- 
fault or  confession  of  the  defendant 
or  upon  demurrer,  the  court  shall 
render  judgment  for  the  plaintiff  to 
recover  so  much  as  is  due  accord- 
ing to  equity.  And  when  tlie  sum 
for  which  judgment  should  be  ren- 
dered is  uncertain  it  shall,  if  eitlier 
of  the  parties  recjuest  it,  be  assessed 
by  a  jury.  This  has,  apparently, 
been  considered  applicable  to  a  con- 
tract expressly  providing  for  stipu- 
lated damages  in  a  case  where  no 
material  danuige  to  tlie  government 
was  shown  to  iiave  resulted  from 
the  I)reach  of  the  contract.  Chicago 
H.  W.  Co.  V.  United  States,  53 
L.R.A.  122,  45  C.  C.  A.  343,  106 
Fed.  385.  The  doctrine  of  this  case, 
aside  from  the  statute,  has  been  dis- 
approved. Siui  P.  &  P.  Aas'n  v. 
Moore,  183  U.  S.  642,  660,  40  L.  ed. 
366,  377. 

In  Brofeld  v.  Sclilanger  (N.  Y. 
Misc.),  104  N.  Y.  Supp.  369,  the 
writing  Jicillier  used  tlie  term 
li(|nidated  daiiiiiges  nor  penalty.  It 
was  assumed  to  have  been  given  as 
security    for    the    actual    damages. 


862 


SUTHERLAND    ON    DA]\rAGES. 


[§  284 


cases  is  cousidered  favorably.*^  If  the  amount  is  not  so  large 
as  to  raise  a  doubt  that  it  is  proportionate  to  the  injury,  other 
circumstances  being  e(pial,  the  tendency  of  the  judicial  mind  is 
to  treat  a  fixed  sum  as  liquidated  damages  by  whatever  name  it 
may  be  mentioned  in  the  contract.*^  Another  statement  of  the 
rule  is  that  if  the  language  of  the  parties  is  clear  and  explicit  to 
the  eti'ect  that  the  sum  named  is  to  be  deemed  liquidated  dam- 
ages and  the  actual  damages  contemplated  when  the  contract 


See  Weinberg  v.  Greenburg,  47  N. 
Y.  Misc.  117. 

43  Moyses  v.  Schendorf,  238  111. 
232;  Western  G.  C.  Co.  v.  Dowagiac 
G.  &  F.  Co.,  146  Mich.  119;  Lamson 
V.  Marshall,  133  Mich.  250;  Atwood 
V.  Fagan  (Tex.  Civ.  App.)  134  S. 
W.  765;  Kellam  v.  Hampton  (Tex. 
Civ.  App.),  124  S.  W.  970;  Barthc- 
lottle  V.  Mclanson,  35  New  Bnms. 
652;  Posner  v.  Rosenberg,  149  App. 
Div.  (N.  Y.)  272;  Kelly  v.  Fejer- 
vary,  111  Iowa  693;  Sanders  v.  Car- 
ter, 91  Ga.  450;  Monmouth  Park 
Ass'n  V.  W'allis  I.  Works,  supra; 
Everett  L.  Co.  v.  Maney,  16  Wash. 
552;  Tennessee  Mfg.  Co.  v.  James, 
91  Tenn.  154,  30  Am.  St.  865,  15 
L.R.A.  211,  quoting  the  text;  Ja- 
quith  V.  Hudson,  5  Mich.  123;  Duffy 
v.  Shockey,  11  Ind.  70 ;  Sparrow  v. 
Paris,  7  H.  &  N.  594;  Pierce  v.  Jung, 
10  Wis.  30;  Cotheal  v.  Talmage,  9 
N.  Y.  551;  Boys  v.  Ancell,  5  Bing. 
N.  C.  390;  Richards  v.  Edick,  17 
Barb.  260;  Noyes  v.  Pliillips,  60  N. 
Y.  408;  Harris  v.  Miller,  6  Sawyer 
319;  Knowlton  v.  Mackay,  29  Up. 
Can.  C.  P.  601 ;  Ivinson  v.  Althrop, 
1  Wyo.  71  ;  Williams  v.  Vance,  9  S. 
C.  344;  Birdsall  v.  Twenty-third  St. 
Ry.  Co.,  8  Daly  419;  Salem  v.  An- 
son, 40  Ore.   339,  56  L.R.A.   169. 

«Axe  V.  Tolbert,  179  Mich.  556; 
Chapman  v.  Propp,  125  Minn.  447 ; 
Hennessy  v.  Metzger,  152  111.  505, 
43  Am.  St.  267;  Gates  v.  Family, 
93  Wis.  294;  Manistee  I.  Works  Co. 
v.  Shores  L.  Co.,  92  Wis.  21;   Half 


V.  O'Connor,  14  Tex.  Civ.  App.  191; 
Standard  B.  F.  Co.  v.  Breed,  ]63 
Mass.  10;  McCurry  v.  Gibson,  108 
Ala.  451,  54  Am.  St.  177;  Boyce  v. 
Watson,  52  111.  App.  361;  Pastor 
v.  Solomon,  26  N.  Y.  Misc.  125; 
Railroad  v.  Cabinet  Co.,  104  Tenn. 
508,  78  Am.  St.  933,  50  L.R.A.  729; 
Jaqua  v.  Hcadington,  114  Ind.  309; 
Bird  v.  St.  John's  Episcopal  Church, 
154  Ind.  138;  Maxwell  v.  Allen,  78 
Me.  32,  57  Am.  Rep.  783;  Holbrook 
V.  Tobey,  66  Me.  410,  22  Am.  Rep. 
581;  Lynde  v.  Thompson,  2  Allen, 
456;  Colby  v.  Bailey,  5  Hawaii, 
152;  Die^tal  v.  Stevenson,  [1906]  2 
K.  B.  345  (especially  if  the  stipula- 
tion was  drawn  by  a  layman)  ; 
United  States  v.  Bethlehem  S.  Co., 
205  U.  S.  105,  51  L.  ed.  731,  re- 
versing 41  Ct.  of  Cls.  19 ;  Westbay 
V.  Terry,  83  Ark.  144;  Pinkney  v. 
Weaver,  216  111.  185;  Barber  A.  P. 
Co.  V.  Wabash,  43  Ind.  App.  167; 
Davidson  v.  Hughes,  76  Kan.  247; 
Ross  V.  Loescher,  152  Mich.  386,  125 
Am.  St.  418 ;  Womack  v.  Coleman, 
89  Minn.  17;  Coonan  v.  Cape  Girar- 
deau, 149  Mo.  App.  609;  Werner 
V.  Finley,  144  Mo.  App.  554;  Yoder 
V.  Strong,  227  Pa.  432;  Santa  Fe 
St.  R.  Co.  V.  Schutz,  37  Tex.  Civ. 
App.  14;  Erickson  v.  Green,  47 
Wash.  613.  See  Mallory  v.  Globe-B. 
C.  M.  Co.,  11  Ariz.  296;  Fish  v. 
Robinson,  14  Ohio  C.  C.  (JST.S.) 
414;  Vaulx  v.  Huntin,  127  Tenn. 
118. 


284]     CONVENTIONAL    LIQUIDATIONS    AND    DIf?CIIAI{OKR.         8G3 


was  made  "are  in  their  nature  uncertain  and  unnscertainable 
with  exactness,  and  may  be  dependent  upon  extrinsic  considera- 
tions and  circumstances,  and  the  amount  is  not,  on  the  face  of 
the  contract,  out  of  all  ])roi)ortioii  to  the  probable  loss,"  elfet't 
will  be  given  the  contract.*^  Hut  wherever  there  is  doubt  as  to  the 
justice  of  the  stipulation  if  the  sum  be  called  a  "penalty"  in  the 
contract  that  circumstance  is  frequently  referred  to  as  a  i-cason 
for  holding  it  to  be  a  penalty  on  the  ground  of  intention,  riie 
'purpose  in  such  cases,  however,  is  commonly  a  dfducliun  Irdni 
the  general  effect  of  the  contract,  and  the  word  "i)enalty"  is  al- 
luded to  to  conform  a  foregone  con(dusion.*^  On  the  other  hand, 
if  the  general  effect  of  the  contract  otherwise  leads  to  the  conclu- 
sion that  the  stipulated  sum  should  be  held  to  be  a  penalty  the 
circumstance  that  the  parties  have  called  it  "liquidated  dam- 
ages," and  said  they  do  not  mean  it  as  penalty,  and  even  use  very 
clear  language  that  it  is  to  be  actually  paid,  will  not  control  the 
interpretation;  it  will,  notwithstanding,  be  considered  a  jx'iial- 
ty.*^   Bonds  given  to  secure  the  erection  of  iniblic  works  pursuant 


45Burley  T.  Soc.  v.  Gillaspy,  51 
Ind.  App.  583;  Northwestern  S.  B. 
&  Mfg.  Co.  V.  Great  Lakes  E.  Works, 
181  Fed.  38,  104  C.  G.  A.  52;  D'Olier 
E.  Co.  V.  United  States,  45  Ct.  of 
Cls.  471;  Cleveland  C.  &  C.  Co.  v. 
American  C.  I.  P.  Co.,  168  Ala.  250 ; 
Mondamin  Meadows  D.  Co.  v.  Bnuli, 
163  Ind.  642;  Benner  v.  Magee,  34 
Ind.  App.  176;  Selby  v.  Matson,  137 
Iowa,  97,  14  L.R.A.(N.S.)  1210 
prima  facie  the  parties  are  sup- 
posed to  intend  what  they  have 
said)  ;  Morrison  v.  Richardson,  1!)4 
Mass.  370;  Clydebank  E.  &  S.  Co.  v. 
Yzquierdo  y  Caataneda  |  IDOf)] 
App.  Cas.  G;  Marsh  v.  Pliillips 
(Tex.  Civ.  App.),  144  S.  W.  1100; 
Curtis  v.  Van  Bergh,  161  N.  Y.  47 : 
Pressed  Steel  C.  Co.  v.  Eastern  H. 
Co.,  121  Fed.  609,  57  C.  C.  A.  635, 
citing  this  and  the  preceding  sec- 
tion. 

46  VVolcott  V.   Frick,  40   ind.   App. 


236;  Commissioner  of  P.  Works  v. 
Hills,  [1906]  App.  Cas.  368;  Alli- 
son V.  Dunwody,  100  Ga.  51  ;  Pop- 
pers V.  Meagher,  148  111.  192;  Gates 
V.  Parmly,  93  Wis.  294;  Edgar  & 
T.  Works  V.  Unitetl  States,  34  Ct. 
of  Cls.  205;  Willson  v.  Love,  [1896] 
1  Q.  B.  626;  Houghton  v.  Pattee,  58 
N.  H.  326;  Matliews  v.  Sharp,  99 
Pa.  560;  Colwell  v.  Lawrence,  38  N. 
Y.  75. 

47Greenblatt  v.  McCall  &  Co.. 
67  Fla.  165;  Sanders  v.  M(>Kim.  138 
Iowa  122;  Coen  v.  Hirdiard, 
124  Iowa  394;  Ca'sar  v.  Kubinson, 
174  N.  Y.  492;  Townsend  v.  iJumball. 
19  Ont.  L.  R.  433;  Quid  v.  Spartan- 
burg K.  Co.,  94  S.  C.  184;  Chicago 
FI.  W.  Co.  V.  United  States,  53 
L.R.A.  122,  45  C.  C.  A.  343,  106 
I'^ed.  385  (disapproved  in  Sun  I'. 
&  P.  Ass'n  V.  Moore,  183  U.  S.  642, 
666,  46  L.  ed.  366,  377,  as  is  Gay 
Mfg.  Co.  \-.  Camp  infra)  ;  Hadlotl  v. 
Ilaase,   !)(;    III.    App.    74;    Gay    Mfg. 


S64 


SUTHERLAND    ON    DAMAGES. 


[§   284 


to  statutes  are  to  be  regarded  as  penal  because  it  cannot  be  sup- 
posed that  it  was  the  intention  of  the  legislature  to  fix  tbe  dam- 
ages in  every  case  for  each  and  every  breach  of  the  contracts  the 
bonds  were  given  to  secure  the  performance  of,  regardless  of  the 
resulting  injury.^*  The  penalty  of  a  druggist's  bond  given  to  as- 
sure his  observance  of  the  law  is  not  to  be  considered  as  liquida- 
ted damages.'*^  And  so  of  bonds  usually  given  to  secure  the  per- 
formance of  statutory  duties,^"  and  the  bonds  required  of  retail 
liquor  dealers,^^  tliough  a  bond  given  under  the  liquor  tax  law  of 
ISTew  York  to  secure  on  the  part  of  the  principal  therein  the  ob- 
servance of  that  law  and  also  good  behavior  in  other  particulars 
essential  to  the  orderly  and  proper  conduct  of  his  business,  is  for 
stipulated  damages,  and  the  liability  of  the  surety  thereon  is  not 
affected  because  a  judgment  has  been  rendered  against  the  prin- 
cipal for  a  sum  equal  to  the  penalty  of  the  bond.^^  The  rule  in 
Connecticut  and  Kentucky  is  to  the  same  eifect.^^ 

It  is  apparent  from  this  consideration  of  the  cases  that  in 
determining  whether  the  sum  named  in  a  contract  is  to  be  taken 


Co.  V.  Camp,  13  C.  C.  A.  137,  65 
Fed.  794;  Lowman  v.  Foley,  14 
Xew  Zeal.  099;  Wheedon  v.  Ameri- 
can B.  &  T.  Co.,  128  N.  C.  69; 
Seeman  v.  Biemann,  108  Wis. 
365;  Higbie  v.  Fair,  28  Minn. 
439;  Horner  v.  Flintoff,  9  M.  & 
W.  678;  Dennis  v.  Cummins,  3 
Johns.  Cas.  297,  2  Am.  Dec.  160; 
Lindsay  v.  Anesley,  6  Ired.  188; 
l^.aird  v.  Tolliver,  6  Hiimph.  186,  44 
Am.  Dec.  298;  Yenner  v.  Hammond, 
36  Wis.  277;  Lapman  v.  Cochran,  10 
N.  Y.  275. 

If  the  parties  use  the  term  "liq- 
uidated damages"  the  usual  tech- 
nical meaning  will  be  given  it  if  no 
reason  appears  for  doing  otherwise, 
and  the  party  objecting  to  such 
construction  has  the  burden  of 
sliowing  that  something  else  was 
really  intended.  Kelley  v.  Fejer- 
vary,  111  Iowa,  693. 

48  Nevada  County  v.  Hicks,  38 
Ark.  557;   Pigeon  v.  United  States, 


27    Ct.    of    Cls.    167.      But    see   the 
last  paragraph  of  this  section. 

49  State  V.  Estabrook,  29  Kan. 
739. 

50  Clark  V.  Barnard,  108  U.  S. 
436,  27  L.  ed.  780;  United  States  v, 
Montell,  Taney,  47.  See  People  v. 
Central  Pac.  R.  Co.,  76  Cal.  29. 

51  State  V.  Larson,  83  Minn.  124, 
54  L.R.A.  487.  See  Jenkins  v.  Dan- 
ville, 79  111.  App.  339. 

52  Lyman  v.  Shenandoali  S.  Club, 
39  App.  Div.   (N.  Y.)   459. 

53  Quintard  v.  Corcoran,  50  Conn. 
34. 

A  bond  given  to  secure  the  ob- 
servance of  the  law  by  a  licensee 
carries  liability  for  the  sum  stipu- 
lated in  it.  "The  question  of  the 
amount  of  damages  caused  by  the 
violation  of  the  law  by  the  prin- 
cipal does  not,  and  cannot  enter  in- 
to tlie  question.  It  is  not  contem- 
jjlated  tluit  the  recovery  should  be 
for    anv    less    sum    than   that   fixed. 


§    284]     CONVENTIONAL    T.TQUIDATIONS    AND    DISC  II AROES. 


805 


as  a  penalty  or  liquidated  damages  eoiirts  are  influenced  largely 
by  the  reasonableness  of  the  transaction,  and  are  not  restrained 
by  the  form  of  the  agreement,  nor  by  the  terms  used  by  tlie 
parties,  nor  even  by  their  manifest  intent.  Where  the  sum 
named  has  been  expressly  designated  as  stipulated  damages  it 
has  been  held  to  be  a  penalty;  and,  conversely,  where  the  sum 
has  been  denominated  a  penalty,  it  has  been  declared  to  be  stip- 
ulated damages.  And  where  the  intent  of  the  parties  has  been 
manifest  it  has  been  disregarded  if  the  sum  was  an  unconscion- 
able one.^*  The  better  rule  is  that  declared  in  a  recent  case 
decided  by  the  supreme  court  of  the  United  States,  the  doctriuo 
of  which  puts  agreements  for  the  liquidation  of  damages  upon 
substantially  the  same  footing  as  other  contracts  in  which  fraud, 
surprise  or  mistake  has  not  entered.^* 

A  condition  in  an  ordinance  governing  the  rights  and  duties 
of  a  water  company  in  its  relations  to  the  municipality  may  be 
sustained  as  providing  for  stipulated  damages  though  it  would 
be  considered  as  providing  for  a  penalty  if  it  was  part  of  a  con- 
tract between  individuals.     It  was  said  in  a  case  involving  this 


It  would  be  totally  impracticable, 
if  not  impossible,  in  an  action  by 
the  city  on  the  bond  to  arrive  at 
any  measure  of  damages  except  the 
amount  stipulated."  Paducah  v. 
Jones,  126  Ky.  809. 

64McCall  V.  Deuchler,  174  Fed. 
133'  89  C.  C.  A.  169;  Hicks  v.  Mon- 
arch C.  Mfg.  Co.,  176  N.  Y.  Ill; 
Crown  0.  Co.  v.  Probert,  28  Ohio 
C.  C.  739;  Diestal  v.  Stevenson, 
[1906]  2  K.  B.  345  (the  language 
used  is  only  presumptive  of  the  in- 
tent of  the  parties;  all  the  circum- 
stances will  be  looked  at  to  ascer- 
tain the  nature  of  the  transaction)  ; 
Davis  V.  United  States,  17  Ct.  of 
Cls.  201;  L.  P.  &  J.  A.  Smith  Co.  v. 
United  States,  34  id.  472;  Sanford 
V.  First  Nat.  Bank,  94  Iowa  683; 
De  Graff  v.  Wickham,  89  Iowa  720, 
O'Keefe  v.  Dyer,  20  Mont.  477;  Gil- 
lilan  V.  Rollins,  41  Neb.  540;  CiEsar 
Suth.  Dam.  Vol.  I.— 55. 


V.  Rubinson,  71  App.  Div.  (N.  Y.) 
180;  Dobbs  v.  Turner-Feinsat  v. 
Burstein,  78  N.  Y.  Misc.  259.  Sif 
Mount  Airy  M.  &  G.  Co.  v.  Runkles, 
118  Md.  371. 

The  intention  of  tiie  parties  is  to 
be  ascertained  solely  from  the  con- 
tract, and  its  determination  is  a 
question  of  law  for  the  court. 
Geiger  v.  Cawley,  140  Mich.  550. 

"Kach  case  must,  to  a  large  e.\- 
tent,  l)e  determined  in  the  light  of 
tlie  subject-matter  of  the  contract, 
the  stipulations  contained  therein, 
and  the  particular  circumstances 
surrounding  the  parties  at  tlie  time 
of  entering  into  tlie  contract  and 
during  its  continuance."  Dopp  v. 
Richards,  43  Utah  332. 

65  Sun  P.  &  P.  Co.  v.  Moore,  183 
r.  S.  642,  46  L.  ed.  366,  stated  and 
(juoted  from  in  §  283. 


866  SIITTIETJLATVI)    ON    DAMAGES.  [§    284 

question :  In  granting  the  franchise  to  the  water  company  the 
city  was  exercising  a  public  and  governmental  function.  It 
could  impose  such  conditions  and  enforceable  penalties  as  it 
deemed  necessary  and  proper  to  secure  the  object  sought  to  be 
attained.  It  had  the  right  to  provide  what  rates  or  rentals  the 
company  might  charge  for  water,  and  when  and  under  what  cir- 
cumstances it  should  have  the  right  to  charge  them.  The  busi- 
ness in  whicli  the  water  company  was  about  to  engage  was  one 
affected  with  a  public  interest,  and  hence  subject  to  regulation 
in  the  exercise  of  the  police  power  of  the  state.  In  accepting 
the  ordinance  the  water  company  accepted  it  with  all  its  terms 
and  conditions.  Hence,  we  do  not  think  the  ordinary  rules 
wliich  apply  to  a  contract  between  private  parties  with  refer- 
ence to  business  not  affected  with  a  public  interest  have  any  ap- 
plication in  determining  whether  this  provision  is  or  is  not  a 
non-enforceable  penalty.  Even  if  it  is  to  be  considered  as  a 
penalty  we  ihhik  it  is  enforceable,  although  the  same  provision, 
if  contained  in  a  private  contract,  might  be  non-enforceable. 
There  is  no  reason  why  the  city,  in  exercising  a  governmental 
function  with  reference  to  a  business  affected  with  a  public  in- 
terest, might  not  incorporate  into  the  very  ordinance  granting 
the  franchise  au  enforceable  condition  or  jjenalty  in  the  nature  of 
a  yiublic  regulation  to  insure  performance  of  its  pul)lie  duty  on 
part  of  the  grantee  of  the  f  rauchise.^^  This  view  is  in  accordance 
with  the  general  rule  regardless  of  the  form  of  the  contract  be- 
tween the  ])arties  for  the  prosecution  of  a  public  undertaking. 
The  difficulty  of  ascei-taining  the  damages  for  the  failm-o  to 
complete  the  work  within  tin;  agreed  time  is  ground  foi-  holding 
that  it  was  the  intention  of  the  parties  to  stipulate  the  sum  pay- 
able on  default.^''' 

56Rtato    T.    Co.    V.     Duluth,    70  W.    1034;    Whiting    v.    Now    Balti- 

Minn.   257;    Rpringwells   v.   Detroit,  more,  127  Midi.  OG;  Detroit  v.  Peo- 

etc.  R.  Co.,  140  Mich.  277;  TTattors-  pie's  Tel.   Co.,    1.1;!  Mich.   G06.     See 

ly  V.  Waterville,  4  Ohio   V.   C.    (N.  Nilson   v.    Jonesboro,    r)7    Ark.    168; 

S.)      242;     Whitcomb     v.     Houston  Brooks  v.  Wichita,  IH  Fed.  297,  52 

(Tex.    Civ.   App.),    130    S.   W.   215;  C.   C.   A.   209;    Ralem    v.   Anson,   40 

Marshall     v.     Atkins      (Tex.     Civ.  Ore.  339,  56  L.R.A.  169. 
App.),  127  8.  W.  1148;  Grayson  v.  57  Clark    v.    Barnard,    108    U.    S. 

Marshall    (Tex.   Civ.   App.),   145   S.  436,  27  L.  ed.  780;  York  v.  York  R. 


§    285]     CONVENTIONAL    LKiUU'ATlUNS    ANU    DISCIIAKGES.  867 

§  285.  Stipulated  sum  where  damages  otherwise  certain  or 
uncertain.  There  is  a  marked  (lilfereiice  between  contracts 
which  relate  to  subjects  within  established  rules  for  measuring 
dan]ai>es  and  those  for  infraction  of  which  the  damages  are  un- 
certain and  dilhcult  to  be  proved.  A  stii)ulated  sum  in  a  con- 
tract of  the  former  class  is  generally  unnecessary  unless  to 
restrict  damages  below  the  legal  standard  or  extend  them  beyond 
it.  The  parties  have  the  right  to  do  either;  and  when  the  in- 
tention is  clearly  manifested  to  do  so,  it  will  be  enforced  in 
cases  clear  of  fi'aud,  oppression  or  unconscionable  extrava- 
gance.^* But  in  such  cases  the  disparity  between  the  agreed 
sum  and  the  actual  injury  is  readily  seen,  and  nuiy  be  supposed 
to  have  been  ecpially  ap])arent  to  the  parties;  and  courts,  pro- 
ceeding upon  the  rational  theory,  which  all  experience  confirms, 
that  large  damages  for  small  injury  are  never  willingly  stip- 
ulated to  be  actually  paid,  nor  a  small  and  disi)roiK)rtionate 
compensation  accepted  for  a  great  injury,  are  seldom  convinced 
that  such  unecpial  contracts  are  voluntarily  entered  into  to 
liquidate  damages.     Of  this  nature  are  contracts  for  the  pay- 


Co.,  229  Pa.  236;  Marshall  v.  At- 
kins (Tex.  Civ.  App.),  127  S.  W. 
1148;  Springwell  v.  Detroit,  etc.  R. 
Co.,  140  Midi.  277;  Turner  v.  Fre- 
mont, 159  Fed.  221,  95  C.  C.  A. 
455;  Coonan  v.  Cape  Girardeau,  149 
Mo.  App.  609.  But  compare  Will- 
son  V.  Baltimore,  83  Md.  202,  stat- 
ed in  the  text  of  §  295.  See  Lind- 
sey  V.  Rockwall  County,  10  Tex.  Civ. 
App.  225. 

58  Cliapman  v.  Propp,  125  Minn. 
447;  Dopp  v.  Richards,  43  Utali 
332;  IJncoln  v.  Little  Rock  G.  Co., 
56  Ark.  405;  Nielson  v.  Read,  15 
Phila.  450,  12  Fed.  441;  Gallo  v. 
McAndrcws,  29  Fed.  715;  Lipscomb 
V.  Seegers,  19  S.  C.  425;  Sun  P.  & 
P.  Ass'n  V.  Moore,  183  U.  S.  642. 

In  Cutler  v.  How,  8  Mass.  257,  a 
party  being  liable  to  have  his  prop- 
erty taken  to  satisfy  an  execution, 
gave  an  obligation  to  pay  the  debt 
and  a  certain  amount  for  costs  not 


incurred,  in  oats  at  twenty  cents 
per  bushel,  wlien  they  were  worth 
tliirty-seven  cents.  It  was  held  that 
the  jury  might  disregard  tlie  con- 
tract because  unconscionable  and 
oppressive  as  to  the  sum  added  for 
costs;  but  otherwise  valid,  because 
witliin  a  specified  time  the  debtor 
liad  tlie  option  to  pay  money  at  the 
rate  of  $1  for  five  busliels.  Cutler 
v.  Jolinson,  8  Mass.  266;  Baxter  v. 
Wales,  12  id.  365;  Leland  v.  Stone, 
10  id.  459;  James  v.  Morgan,  1 
Levinz,  111;  Earl  of  Cliesterfield  v. 
Jansen,  1  Wils.  287;  Russell  v. 
Roberts,  3  E.  D.  Smith,  318. 

In  an  action  brought  on  a  promise 
of  £1,000  if  the  plaintiff  should  find 
the  defendant's  owl,  the  court  de- 
clared, thougli  tlie  promise  was 
proved,  the  jury  might  mitigate  the 
damages.  Bae.  Abr.,  Damages,  D. 
See  Thornborow  v.  Wliitacrc,  2  Ld. 
Ravm.  1164. 


868 


SUTHERLAND    ON    DAMAGES. 


[§  285 


ment  of  money,  and  all  others  for  the  violation  of  which  market 
values  furnish  the  data  ordinarily  adequate  for  the  ascertain- 
ment of  due  compensation.  When  such  contracts  provide  for 
damages,  either  more  or  less  than  those  due  by  the  legal  stand- 
ard, they  must  be  drawn  with  great  clearness  to  express  the 
intention;  and  in  general  there  should  appear  on  their  face  or 
otherwise  some  ground  for  departing  from  that  standard,  for 
the  leaning  of  the  court  in  case  of  doubt  will  be  towards  the 
construction  that  the  provision  is  a  penalty.®^  On  the  other 
hand,  where  a  contract  is  of  such  a  character  that  the  damages 
which  must  result  from  a  breach  of  it  are  uncertain  in  their 
nature  and  not  susceptible  of  proof  by  reference  to  any  pecuni- 
ary standard,  it  is  deemed  especially  fit  that  the  parties  should 
liquidate  them,  and  an>^  stipulation  they  make  ostensibly  for 
that  purpose  receives  favorable  consideration. ^° 


69  Wilson  V.  Agnew,  25  Colo.  App. 
109;  Union  Pac.  R.  Co.  v.  Mitchell- 
C.  T.  Co.,  190  Fed.  544,  111  C.  C.  A. 
396;  McCall  v.  Deuchler,  174  Fed. 
133,  98  C.  C.  A.  169;  Home  L.  &  C. 
Co.  V.  McNamara,  145  Fed.  17,  76  C. 
C.  A.  47;  Mansur  &  T.  Imp.  Co.  v. 
Tissier  A.  &  H.  Co.,  136  Ala.  597; 
Stillwell  V.  Paepcke-L.  L.  Co.,  73 
Ark.  432;  Sherman  v.  Gray,  11  Cal. 
App.  348;  Florence  W.  Works  v. 
Salmon,  8  Ga.  App.  866;  Evans  v. 
Moseley,  84  Kan.  322;  Case  T.  M. 
Co.  V.  Fronk,  105  Minn.  39;  Cfesar 
V.  Rubinson,  174  N.  Y.  492;  Haier 
V.  McDonald,  21  Okla.  470;  Kellam 
V.  Hampton  (Tex.  Civ.  App.),  124 
S.  W.  970;  Muchlbach  v.  Missouri, 
etc.  R.  Co.,  166  Mo.  App.  305;  Wil- 
liston  V.  Mathews,  55  Minn.  422; 
State  T.  Co.  v.  Duluth,  70  Minn. 
257;  Lowman  v.  Foley,  14  New  Zeal. 
699;  Parlin  v.  Boatman,  84  Mo. 
App.  67;  Seeman  v.  Bieman,  108 
Wis.  365;  Tilley  v.  American  B.  & 
L.  Ass'n,  52  Fed.  618;  Lansing  v. 
Dodd,  45  N.  J.  L.  525;  Tinkham 
V.  Satori,  44  Mo.  App.  659;  Fisk  v. 
Gray,   11   Allen   132;   Baird  v.  Tol- 


liver,  6  Humph.  186,  44  Am.  Dec. 
298;  Foote  v.  Sprague,  13  Kan.  155; 
Tholon  v.  Duffy,  7  id.  405;  Kurtz 
V.  Sponablc,  6  id.  395 ;  Wilmington 
T.  Co.  V.  O'Neil,  98  Cal.  1;  liaston 
V.  Cressey,  100  Cal.  75;  Jack  v. 
Sinsheimcr,  125  Cal.  563;  Nortli  & 
South  R.  S.  Co.  V.  O'Hara,  73  111. 
App.  691;  O'Keefe  v.  Dyer,  20  Mont. 
477;  Squires  v.  Elwood,  33  Neb. 
126;  Mcintosh  v.  Johnson,  8  Utah, 
359;  Maudin  v.  American  Sav.  & 
L.  Ass'n,  63  Minn.  258;  Radloff  v. 
Haase,  196  111.  365,  and  local  cases 
cited;  Nilson  v.  Jonesboro,  57  Ark. 
168,  175,  citing  the  text;  Johnson 
v.  Cook,  24  Wash.  474,  citing  the 
preceding  section;  Home  L.  &  C. 
Co.  v.  McNamara,  111  Fed.  822,  49 
C.  C.  A.  642,  applying  the  Montana 
code  and  citing  the  text;  Caesar  v. 
Rubinson,  174  N.  Y.  492. 

60  Westbay  v.  Terry,  83  Ark.  144; 
Chickasaw  R.  Co.  v.  Crigger,  83 
Ark.  364;  Howard  v.  Adkins,  167 
Ind.  184;  America  v.  Burgett,  36 
Ind.  App.  453;  K.  P.  Min.  Co.  v. 
Jacobson,  30  Utah  115,  4  L.R.A. 
(N.S.)    755;   Clydebank  E.  &  S.  Co. 


286]     CONVENTIONAL    LIQl'IDATIOXS    AND    DISCHARGES. 


8  HO 


§  286.  Contracts  for  the  payment  of  money.  These  arc  l-oii- 
tracts  of  the  highest  degree  of  certainty.  Interest  is  the  ahuost 
universal  measure  of  damages  for  mere  delay  of  payment. ** 
But  some  latitude  is  allowed  for  modifying  the  rate  by  con- 
"tract.  Stipulations  as  to  rate  before  maturity,  not  exfccding 
any  statutory  limit,  are  uniformly  enforced  in  cases  free  from 
fraud  or  oppression.  There  is  no  reason  why  a  i)arty  may  not 
stipulate  the  rate  after  maturity  as  freely  and  effectually  as 
before  except  that  such  stipulations  are  made  with  less  cantion, 
for  they  are  made  only  to  be  operative  in  case  of  default,  an 
event  not  then  antici]iated  to  occur.  When,  theref(u-c,  the  rate 
is  made  very  much  higher  immediately  after  maturity  than  that 
reserved  before  there  is  a  departure  from  the  standard  of  com- 
pensation fixed  by  the  parties  for  the  period  of  credit,  and  it 
has  been  held  in  some  cases  that  such  increased  rate  as  damages 
is  in  the  nature  of  a  penalty ;  ^^  and  in  otlier  cases  that  anything 


V.  Yzquierdo  y  Castaneda,  [1005] 
App.  Cas.  6 ;  Franceschini  v.  Chau- 
cer (N.  Y.  Misc.),  110  N.  Y.  Supp. 
775;  Whitson  v.  Sheffield  Farms-S.- 
D.  Co.,  76  N.  Y.  Misc.  180  ;  Strode  v. 
Smith,  66  Ore.  163;  Consolidated  C. 
Co.  V.  Peers,  150  111.  344 ;  Hennessy 
V.  Metzger,  152  111.  505,  43  Am.  St. 
267;  Heisen  v.  Westfall,  86  111. 
App.  576;  Louisville  W.  Co.  v. 
Youngstown  B.  Co.,  16  Ky.  L.  Rep. 
350;  Woodbury  v.  Turner,  etc.  Mfg. 
Co.,  96  Ky.  459;  Monmouth  Park 
Ass'n  V.  Wallis  I.  Works,  55  N.  J. 
L.  132,  39  Am.  St.  626;  19  L.R.A. 
456;  Goldman  v.  Goldman,  51  La. 
Ann.  761;  Willson  v.  Baltimore,  83 
Md.  203,  55  Am.  St.  339;  Maw.son 
V.  Leavitt,  16  N.  Y.  Misc.  289;  Nil- 
son  V.  Jonesboro,  57  Ark.  168,  cit- 
ing the  text;  Waggoner  v.  Cox,  40 
Ohio  St.  539;  Berrinkott  v.  Trap- 
hagen,  39  Wis.  219;  Wooster  v. 
Kisch,  26  Hun,  61  ;  Jones  v.  Binford, 
74  Me.  439;  Geiger  v.  Western 
Maryland  R.  Co.,  41  Md.  4;  Penn- 
sylvania R.  Co.  V.  Reichert,  58  id. 
261,   277;    Wolf  Creek   D.   C.   Co.   v. 


Schultz,  71  Pa.  ISO;  Kemble  v.  Far- 
ren,  6  Bing.  141;  Sainter  v.  Fergu- 
son, 7  C.  B.  716;  Fletcher  v.  Dyche, 
2  T.  R.  32;  Sparrow  v.  Paris,  7  II. 
&  N.  594;  Mundy  v.  Culver,  18 
Barb.  336;  Bagley  v.  Peddie.  16  N. 
Y.  469,  69  Am.  Dec.  713;  Dakin  v. 
Williams,  17  Wend.  447;  Knapp  v. 
Maltby,  13  W'vud.  .187 :  Price 
V.  Green,  16  M.  &  W.  346;  Ja(piitli 
v.  Hudson,  5  Mich.  123;  Cotlieal  v. 
Talmage,  9  N.  Y.  551  ;  Dennis  v. 
Cummins,  3  Johns.  Cas.  297,  2  Am. 
Dec.  160;  Whiting  v.  New  Balti- 
more, 127  Midi.  66,  citing  tlie  text; 
Peach  V.  Jcwisli  (Oiig.  of  .lohaniies- 
burg,  1  So.  African  Rep.  315  (1894). 

61  United  S.  Mach.  Co.  v.  Abbott, 
158  Fed.  762,  86  C.  C.  A.  118;  Po- 
tomac P.  Co.  V.  Burdiell,  l(»!t  Va. 
676;  Colonna  D.  Co.  v.  Colenuin. 
108  Va.  230;  Morrill  v.  Weeks.  70 
N.  ir.  178;  Orr  v.  Churchill,  1  H. 
Black.  227;  Fisk  v.  Gray,  11  Allen 
132;  Watkins  v.  Morgan,  6  C.  &  P. 
661;  Hughes  v.  Fisher,  Walk. 
(Miss.)   516. 

62rni()ii     Fstates     Co.     v.     .\(lbin 


S70 


SUTHERLAND    ON    DAMAGES. 


[§    286 


above  the  legal  rate  is  a  penalty,  even  though  parties  are  by  law 
at  liberty  to  stipulate  for  any  rate  of  interest  proper  without 
restriction.^^  But  the  general  current  of  authority  is  that  any 
rate  which  parties  may  lawfully  agree  to  pay  before  maturity 
may  be  iixed  as  the  rate  afterwards,  though  the  debt,  before  it 
becomes  due,  bears  no  interest  or  a  lower  rate.^*  If,  however, 
a  rate  is  fixed  for  interest  as  damages  which  is  above  the  highest 
that  may  be  reser\'ed  by  agreement  to  be  paid  during  the  period 
of  ci-edit  it  is  not  usurious,  because  the  debtor  can  at  any  time 
relieve  himself  by  payment.^^     But  such  excessive  rate  will  be 


Const.  Co.,  84  Misc.  (N.  Y.)  590; 
Manhattan  L.  Ins.  Co.  v.  Wright, 
126  Fed.  82,  61  C.  C.  A.  138;  Wal- 
ler V.  Long,  6  Munf.  71;  Upton  v. 
O'Donahue,  32  Neb.  565;  Hallam  v. 
Tclleren,  55  Neb.  255. 

In  Astley  v.  Weldon,  2  B.  &  P. 
346,  Heath,  J.,  said:  "It  is  a  well- 
known  rule  in  equity  that  if  a  mort- 
gage covenant  be  to  pay  51  per 
cent.,  and  if  the  interest  be  paid  on 
certain  days  then  to  be  reduced  to 
41  per  cent.,  the  court  will  not  re- 
lieve if  the  early  days  be  suffered  to 
pass  without  pa^nnent;  but  if  the 
covenant  be  to  pay  41.  per  cent., 
and  the  party  do  not  pay  at  a  cer- 
tain time  it  shall  be  raised  to  51. 
per  cent.,  there  the  court  of  chan- 
cery will  relieve."  See  Gully  v. 
Reniy,  1  Blackf.  69;  Herbert  v.  Sal- 
isbury, etc.  R.  Co.,  L.  R.  2  Eq.  221 ; 
Aylet  V.  Dodd,  2  Atk.  238;  Watts 
v.  Watts,  11   Mo.  547. 

63  Mason  v.  Callender,  2  Minn. 
350,  72  Am.  Dec.  102;  Talcott  v. 
Marston,  3  Minn.  339;  Daniels  v. 
Ward,  4  id.  168;  Robinson  v.  Kin- 
ney, 2  Kan.  184;  AVatkins  v.  Mor- 
gan, 6  C.  &  P.  661. 

64  Palmer  v.  Leffler,  18  Iowa,  125; 
Phinney  v.  Baldwin,  16  111.  108,  61 
Am.  Dec.  62;  Fisher  v.  Bidwell,  27 
Conn.  363;  Downey  v.  Beach,  78  111. 
53;     Funk    v.    Buck,    91    111.    575; 


Wernwag  v.  Mothershead,  3  Blackf. 
401 ;  Latham  v.  Darling,  2  111.  203 ; 
Young  V.  Fluke,  15  Up.  Can.  C.  P. 
360;  Witherow  v.  Briggs,  67  111.  96; 
Davis  V.  Rider,  53  111.  416;  Brew- 
ster V.  Wakefield,  22  How.  118,  16 
L.  ed.  301;  Wyman  v.  Cochrane,  35 
111.  152;  Gould  V.  Bishop  Hill 
Colony,  35  111.  334;  Lawrence  v. 
Cowles,  13  111.  577;  Smith  v.  Whit- 
aker,  23  111.  367;  Young  v.  Thomp- 
son, 2  Kan.  83 ;  Dudley  v.  Reynolds, 
1  Kan.  285;  Wilkinson  v.  Daniels, 
1  Greene  179 ;  Taylor  v.  Meek,  4 
Blackf.  388.     See  ch.  8. 

65  Lawrence  v.  Cowles,  13  111.  577; 
Gould  V.  Bishop  Hill  Colony,  35  111. 
324;  Davis  v.  Rider,  53  111.  416; 
Witherow  v.  Briggs,  67  111.  96;  Wil- 
day  V.  Morrison,  66  III.  532;  Cutler 
v.  How,  8  Mass.  257;  Call  v.  Scott, 
4  Call,  402;  Wilson  v.  Dean,  10 
Iowa  432;  Gower  v.  Carter,  3  Iowa 
244,  06  Am.  Dec.  71 ;  Moore  v.  Hyl- 
ton,  1  Dev.  Eq.  433;  Campbell  v. 
Shields,  6  Leigh,  517;  Gambril  v. 
Doe,  8  Blackf.  140,  44  Am.  Dec. 
760;  Fisher  v.  Otis,  3  Pin.  78; 
Shuck  v.  Wight,  1  G.  Greene,  128; 
Wight  V.  Shuck,  Morris,  425;  Fish- 
er V.  Anderson,  25  Iowa  28,  95  Am. 
Dec.  761 ;  Jones  v.  Berryhill,  25 
Iowa  289;  Rogers  v.  Sample,  33 
Miss.  310,  69  Am.  Dec.  349;  Roberts 
V.    Tremayne,    Croke's    James    507; 


§    286]     CONVENTIONAL    LIQUIDATIONS    AND    DISCIIAROKS.         S71 

held  a  penalty  if  it  exceeds  any  whicli  tlic  law  recognizes  as 
compensation.^^  In  Illinois  even  a  rate  abo\'e  that  allowed  by  law 
to  be  contracted  for  before  maturity  may  be  fixed  as  liquidated 
damages  after  maturity,  if  not  intended  as  an  evasion  of  tlie 
statute  against  usury,^'''  ISTo  damages  for  the  mere  non-payment 
of  money  can  be  so  ]i(iui(latod  between  tlio  parties  as  to  evade 
that  statute.^*  An  agreement  in  a  note  and  mortgage  to  pay  an 
increased  rate  of  interest  in  ease  of  default  in  payment  of  any 
instahiient  of  interest,  insurnuce  ])rciiiiuiii,  taxes  or  the  ])rinci- 
pal,  is  in  the  nature  of  a  penalty,  and  will  uot  l)e  enforced  in  a 
foreclosure  suit.^^ 

Where  there  are  special  circumstances  wdiich  r(M|nii-e  punctual- 
ity in  the  payment  of  moneys  when  due  di-  wliidi  cause  special 
loss,  or  necessitate  a  particular  outlay  in  cousei[uence  of  default, 
a  stipulated  forfeiture  on  that  default  e(piity  has  refused  to  re- 
lieve against,  and  stipulated  compensations  therefor  have  been 
sanctioned.  Thus  costs  and  ex])enses  of  making  collection,  in- 
cluding attorney's  fees,  are  sometimes  inijKjsed  on  tlie  (h'btoi"  by 
the  terms  of  the  contract  and  when  reasonable  in  amount  have 
been  sustained  as  valid  in  some  states  '"  but  held  void  as  against 

Floyer   v.    Edwards,    1    Cowp.    1]2;  gago   is   ratlior   in   the   naturo  of   a 

Wells   V.    Girling,    3    Brod.   &.   Bing.  penalty    tlian     stipulated     damages, 

447;   Caton  v.  Shaw,  2  H.  &  G.  13;  and    may    be    redueed)  ;     Miner    v. 

Bac.  Abr.,  title  Usury.  Paris  Exch.  Bank,  5.3  Tex.  ry^9;  Par- 

66Gower     v.     Carter,     Shuck     v.  ham  v.  Pulliani,  5  Cold.  407;  Smith 

Wight,  supra;   Wilson   v.   Dean,   10  v.  Silvers,  32  Ind.  321;   First  Nat. 

Iowa  432;   Wight  v.  Shuck,  Morris,  Bank    v.    Larsen,    GO    Wis.    200,    f.O 

425.  -Am.    Rep.    3G5    (the    stipulation    is 

67  Smith  V.  Wliitaker,  23  111.  367;  not  conclusive  as  to  the  amount  to 
Downey  v.  Beach,  78  111.  ')3;  Funk  be  recovered);  Robinson  v.  Loomis, 
V.  Buck,  91  111.  575.  51    Pa.    78;    ITuling    v.    Drexell,    7 

68  0rr  V.  Churchill,  1  IT.  Black.  Watts,  12G;  Fitzsimons  v.  Baum,  44 
227;  Gray  V.  Crosby,  IS  Johns.  21!).  Pa.    32;    McAllister's    .App.    50    Pa. 

69Krutz  V.  Bobbins,  12  Wash.  7,  204;    Tallman   v.   Truesdcil.   3    Wis. 

50  Am.  St.  871.     So  of  a  lump  sum  443;  ]\Iosher  v.  Chapin,   ]'2  id.    153; 

in    excess    of    interest    due.      Hock-  Billingsicy    v.    Dean.    11     Iml.    :!31: 

sprung  V.  Young,  27  X.  D.  322.  Kulin  v.  Meyers,  37  Iowa  351  ;    Nel- 

70  Peyser  v.   Cole,    11    Ore.   39,   .50  son  v.  Everett.  20  id.  184;  Williams 

Am.    Rep.    451;    Tmler   v.    Tmler,   04  v.    Meeker,    id.    202:    Wilson    S.    M. 

Pa.  372;    Darly  v.  Maitland,  88   id.  Co.  v.  :Moreno,  G  Sawyer,  35;   Bank 

384,  32  Am.  Rep.  457    (the  amount  of   Britisli   Nortli    .America  v.    Ellis, 

provided  as  attorney's  fee  in  a  mort-  id.  OG:  Merck  v.  American  Freoliold 


872 


SUTHERLAND    ON    DAMAGES. 


[§  287 


public  policy  or  as  providing  for  a  penalty  or  forfeiture,  in 
others.'^ 

§  287.  Same  subject.  Where  there  is  a  stipulation  in  public 
undertakings  that  shareholders,  on  non-payment  of  calls,  shall 
forfeit  their  shares,  equity,  upon  grounds  of  public  policy  and 
from  the  necessity  of  punctuality  in  payment  in  such  cases  will 


L.  M.  Co.,  79  Ga.  213,  233;  Reed  v. 
Miller,  1  Wash.  426.     See  §  564. 

71  State  V.  Taylor,  10  Ohio,  368 ; 
Shelton  v.  Gill,  11  id.  417;  Wither- 
spoon  V.  Musselman,  14  Bush,  214; 
Bullock  V.  Taylor,  39  Mich.  137,  33 
Am.  Rep.  356;  Dow  v.  Updike,  11 
Xeb.  95.     See  §  564. 

In  Foote  v.  Sprague,  13  Kan.  155, 
a  stipulation  in  a  mortgage  for  $50 
as  liquidated  damages  for  its  fore- 
closure was  held  void.  Valentine, 
J.,  said:  "The  stipulation  in  the 
mortgage  in  this  case  *  *  *  is  for 
a  certain  sum  to  be  paid  by  the  debt- 
or as  liquidated  damages  over  and 
above  the  debt  and  interest  and  all 
legitimate  costs.  Now  what  was 
the  term  'liquidated  damages'  in 
this  mortgage  designed  to  cover? 
If  it  was  designed  to  cover  attorney 
fees,  why  did  not  the  parties  say  so 
in  the  mortgage?  If  it  was  designed 
to  cover  any  legitimate  charge  or 
expense,  why  did  they  not  say  so? 
*  *  *  If  the  damages  were  for 
usurious  interest  they  could  not  be 
allowed.  And  would  it  be  proper 
to  allow  an  issue  to  be  framed  and 
a  trial  had  to  determine  whether 
these  'liquidated  damages'  were  in- 
tended to  cover  some  legitimate 
cliarge  or  expense,  or  to  cover  usu- 
rious interest?" 

In  Johnsons  v.  Anderson,  3  N.  J. 
L.  983,  the  defendant  was  indebted 
to  the  plaintiff  in  the  sum  of  $500; 
and  the  plaintiff  was  indebted  to 
two  other  persons  in  the  sum  of 
$100,  which  would  come  due  May  1, 


1810.  In  consequence  of  plaintiff 
being  in  danger  of  suit  and  costs 
for  these  debts,  the  defendant 
promised  that  he  would  pay  the 
debt  due  from  him  to  the  plaintiff 
to  enable  him  to  discharge  in  time 
these  debts,  and  in  case  of  failure 
to  do  so,  and  the  plaintiff  should  be 
sued  and  put  to  costs  and  expenses, 
the  defendant  would  pay  them.  The 
defendant  failed  to  pay  the  money 
at  the  time,  whereupon  the  plaintiff 
was  sued  in  two  actions  and  put 
to  $80  costs,  for  recovery  of  which 
from  the  defendant  this  suit  was 
brought.  It  was  held  that  the  plain- 
tiff was  not  entitled  to  recover. 
The  court  say,  "there  is  no  legal 
consideration  on  which  the  promise 
can  attach.  If  this  was  law,  usury 
and  oppression  would  take  a  wide 
range.  The  creditor  in  most  cases 
suffers  an  inconvenience  in  the  case 
of  a  want  of  punctuality  in  his 
debtor;  he  cannot,  however,  recover 
more  than  tlie  debt,  interest  and 
costs;  nor  will  a  promise  to  pay 
more  help  his  case." 

A.  being  indebted  to  B.  and  not 
being  able  to  raise  the  money  him- 
self directed  B.  to  raise  it  and 
promised  to  pay  him  whatever  he 
had  to  pay  for  it.  B.  raised  it  at 
an  exorbitant  interest  for  three 
years;  held,  that  B.  was  the  mere 
agent  of  A.  in  raising  the  loan  and 
was  entitled  to  recover  the  whole 
amount  paid  by  B.  for  the  Aise  of 
tlie  money.  Shirley  v.  Spencer,  9 
111.  583 


§    287]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHAKGES.         873 

refuse  to  interfere  and  grant  relief  from  forfeiture/^  Sir 
William  Grant,  M.  R./^  refused  to  relieve  against  a  forfeiture 
under  a  by-law  of  an  incorporated  company  which  provided 
that  the  members  receiving  notice  of  default  in  paying  a  call 
should  incur  a  forfeiture  by  non-payment  ten  days  after,  al- 
though the  non-payment  arose  from  ignorance  of  the  call, 
absence  from  the  town  where  the  notice  was  sent  and  other 
accidental  circumstances.  He  said :  "This  bill  is  founded  on 
forfeiture  and  upon  the  ground  that  the  ])laintirt'  did  not  con- 
sider himself  as  a  partner,  and  offering  compensation,  and  pray- 
ing to  be  relieved  from  the  forfeiture.  The  parties  might 
contract  upon  any  terms  they  thought  fit,  and  might  impose 
terms  as  arbitrary  as  they  pleased.  It  is  essential  to  such  trans- 
actions. This  struck  me  as  not  like  the  case  of  individuals.  If 
this  species  of  equity  is  open  to  parties  engaged  in  those  under- 
takings, they  could  not  be  carried  on.  It  is  essential  that  the 
money  should  be  paid,  and  that  they  should  know  what  is  their 
situation.  Interest  is  not  an  adequate  compensation,  even  among 
individuals,  much  less  in  these  undertakings.  In  particular 
cases  interest  might  be  a  compensation,  but  in  a  majority  of 
cases  it  is  no  compensation  from  the  uncertainty  in  which  they 
may  be  left.  The  effect  is  the  same  whether  the  money  has  been 
paid  or  not.  They  know  the  consequence;  the  party  making  de- 
fault is  no  longer  a  member;  but  if  a  party  can,  in  equity,  enter 
into  a  discussion  of  the  circumstances  each  may  bring  his  suit. 
They  must  remain  a  considerable  time  to  see  whether  a  suit  will 
be  begun,  and  before  the  suit  can  be  decided.  They  do  not  know 
when  any  member  will  sue.  If  a  bill  is  to  be  permitted  there 
cannot  be  any  certainty  that  every  member  who  has  made  de- 
fault may  not  file  a  bill.  Can  the  court  impose  a  limitation  of 
the  period  when  bills  may  be  filed  'i  If  the  court  ever  began  to 
deal  with  these  cases  the  number  must  be  infinite.  This  is  Tiie 
mode  which  a  party  has  to  witlidraw  from  a  losing  concern. 
Why  is  not  this  equity  open  to  contracts  for  the  government 
loans?  Why  may  not  they  come  here  to  be  relieved,  when  they 
have  failed  in  making  their  deposit  ?     And  if  they  could  have 

72  Lead.  Cas.  in  Eq.  917.  '3  Sparks  v.  Livorpool  W.  Works, 

i:j  Ves.  428. 


874 


SUTIIKKLAND    ON    DAMAGES. 


[§  287 


their  relief,  liow  could  the  government  go  on  ?  It  would  be  just 
as  difficult  for  these  undertakings  to  go  on.  If  compensation 
cannot  be  effectually  made  it  ought  not  to  be  attempted.  It 
would  be  hazardous  to  entertain  such  a  bill.  x\ccident  here  is 
only  the  want  of  precaution."  '''* 

A  sum  greater  than  interest  may  be  fixed  by  the  parties  as 
compensation  for  paying  a  debt  at  an  earlier  time  or  at  a  differ- 
ent place.'^  It  is  obvious  that  the  omission  to  pay  money  pur- 
suant to  agreement  in  particular  situations,  or  for  specific  pur- 
poses which  would  otherwise  miscarry,  followed  by  loss  or 
injury  of  uncertain  amount  and  for  which  interest  would  be  no 
adequate  compensation,  may  be  the  subject  of  a  different  meas- 
ure of  reparation  by  agreement,   as  it  often  is  without  such 


74  See  Georgia  L.  &  C.  Co.  v. 
Flint,  35  Ga.  226;  Hughes  v.  Fish- 
er, Walk.  (Miss.)  516;  Fowler  v. 
Word,  Harp.  372. 

Equit}^  says  Mr.  Cook  in  vol.  1 
of  his  treatise  on  Corporations  (3d 
ed.),  §  134,  M'ill  sometimes  set  aside 
a  forfeiture  on  purely  equitable 
grounds;  as,  for  example,  where  a 
forfeiture  was  declared  for  nonpay- 
ment of  calls,  which,  it  was  shown, 
VA'cre  not  paid  because  the  share- 
holder had  died  and  no  administia- 
tor  had  been  appointed  before  the 
time  for  payment  had  fully  elapsed. 
Glass  V.  Hope,  16  Grant  (Up.  Can. 
Ch.)  420.  Cf.  Walker  v.  Ogden,  1 
Biss.  287,  29  Fed.  Cas.  41.  .  .  . 
But  it  seems  that  the  weight  of  au- 
tliority  is  to  the  efTect  that  a  for- 
feiture of  shares,  lawful  and  regu- 
lar, for  nonpayment  of  assessments, 
is  one  of  those  forfeitures  from 
which  equity  will  not  aflford  relief 
except  in  very  exceptional  cases. 
Sparks  v.  Liverpool  W.  Works,  13 
Ves.  428;  Prendergast  v.  Turner,  1 
Y.  &  C.  98;  Germantown,  etc.  R. 
v.  Fitler,  60  Pa.  124;  Clark  v.  Bar- 
nard, 108  U.  S.  436,  456,  27  L.  ed. 
780,  787.  Elquity  will  not  relieve 
vvhere.    on   the   reorganization   of   a 


company,  old  stockholders  fail  to 
use  their  options  for  securing  new 
shares  before  the  expiration  of  a 
fixed  time  limit.  Vatable  v.  New 
York,  etc.  R.  Co.,  96  N.  Y.  49,  57. 
Equity  will  not  relieve  from  such 
forfeiture  because  to  do  so  would,  it 
is  said,  be  in  contravention  of  the 
direct  expression  of  the  legislative 
will.  Small  v.  Herkimer  Mfg.  Co., 
2  N.  Y.  330,  340.  Neither  can  a 
shareholder  have  a  forfeiture  set 
aside  merely  because  the  calls  which 
he  refused  to  pay  were  for  the  pur- 
pose of  paying  debts  which  the  com- 
pany would  not  have  owed  but  for 
the  previous  misappropriation  of 
the  corporate  funds  by  the  trustees. 
Marshall  v.  Golden  Fleece,  etc.  Co., 
16  Nev.  156,  179;  Weeks  v.  Silver 
Islet,  etc.  Co.,  55  N.  Y.  Sup.  Ct. 
1 ;  Taylor  v.  North  Star,  etc.  Co., 
79  Cal.  285. 

75  United  S.  Mach.  Co.  v.  Abbott, 
158  Fed.  762,  86  C.  C.  A.  118;  Plum- 
mer  v.  McKean,  2  Stew.  423;  Jor- 
dan V.  Lewis,  id.  426;  Thompson  v. 
Hudson,  L.  R.  4  Eng.  &  Ir.  App.  1, 
rev'g  L.  R.  2  Eq.  612;  Lord 
Ashtown  V.  White,  11  Irish  L.  400. 
See  United  States  v.  Gurney,  4 
Cranch  333,  2  L.  ed.  638. 


I 


287]    CONVENTIONAL    LIQUIDATIOXS    AND    DISCIIARGKS. 


87;-) 


agTeement."^^  Thus  where  two  persons  assumed  liability  for 
the  payment  of  a  mortgage  and  agreed  that  on  the  default  of 
either  to  pay  the  other  might  do  so  and  hold  a  lieu  for  half  the 
sum  paid,  and  a  "bonus  of  $500  for  having  made  such  advance," 
the  inconvenience,  loss,  expense  and  damage  arising  from  the 
failure  to  pay  as  agreed  sustained  the  sum  designated  as  a  bonus 
as  liquidated  damages." 

A  contract  between  a  borrower  and  a  loan  association  that 
the  gross  amount  of  the  stock  dues  without  any  rebate  or  dis- 
count for  the  time  they  had  run  might  be  recovered  as  liijuidated 
damages  in  case  of  default  in  complying  witli  the  terms  of  the 
mortgage,  is  void,  because  the  breach  of  the  mortgiige  is  merely 
the  breach  of  a  contract  for  the  payment  of  money,  the  damages 
for  which  are  easily  ascertained.'®  Where  there  is  a  breach  of 
a  contract  to  deliver  property  in  exchange  or  pay  its  agreed 


76  Jacobs  V.  Shannon  F.  Co.,  13 
Ohio  C.  C.  (N.  S.)  140;  Woodbridge 
V.  Bropley,  2  West.  L.  Monthly,  274 ; 
Hardee  v.  Howard,  33  Ga.  533,  S3 
Am.  Dec.  176;  Sutton  v.  Howard, 
33  Ga.  536.     See  §  76. 

In  Parfitt  v.  Chanibre,  L.  R.  15 
Eq.  36,  an  action  at  law  was  by 
consent  referred,  and  the  arbitrator 
awarded  and  ordered  that  the  de- 
fendant should  pay  to  the  plaintiff 
in  the  action  an  annuity  of  £1,200 
a  year  for  life,  and  that  in  order 
to  secure  the  annuity  tlie  defendant 
should,  within  tAvo  months,  pur- 
chase and  convey  to  trustees  on  be- 
half of  the  plaintiff  a  government 
annuity  of  £1,200  a  year,  and  that 
if  for  any  reason  the  annuity  sliould 
not  have  been  legally  secured  bo- 
fore  the  last  day  of  the  second 
montli  from  tlie  date  of  the  award, 
then,  in  addition  to  the  annuity,  a 
further  sum  of  £100  should  become 
due  and  payable  by  the  defendant 
to  the  plaintiff  on  the  last  day  of 
the  second  month,  and  <a  like  sum 
of  £100  on  the  last  day  of  each  suc- 
cessive   month,    until    sucli    annuity 


should  be  legally  secured;  and  the 
award  added:  "Tliese  montlily  pay- 
ments are  to  be  considered  as  ad- 
ditional to  the  payments  due  in 
respect  of  the  annuity,  and  as  a  pen- 
alty for  delay  in  the  legal  settle- 
ment of  the  same."  No  annuity  as 
directed  by  the  award  having  been 
purchased,  the  plaintiff  liaving  been 
adjudicated  a  bankrupt,  the  defend- 
ant having  died,  and  the  £1,200  a 
year  and  £100  a  month  liaving  been 
regularly  paid  to  the  plaintiff  and 
her  assigns  up  to  the  defendant's 
death,  but  not  since,  upon  claim  by 
the  assignees  to  prove  against  the 
defendant's  estate  for  the  payment 
due  in  respect  of  the  annuity,  and 
of  the  monthly  payments  accrued 
due  since  his  deatli :  Held,  that  tlie 
£100  per  month,  tliough  called  a 
penalty,  was  not  to  be  regarded 
strictly  as  such,  and  tiiat  the  as- 
signees were  entitled  to  prove  for 
the  arrears  both  of  tlie  annuity  and 
the  £100  a  month." 

77Herberger  v.  Orr,  02  Wash.  520 
78  Maudlin    v.    American    S.    &    L 
Ass'n,  03  Minn.  358. 


8Y6 


SUTHEKLAND    ON    DAMAGES. 


[§  287 


value,  the  obligation  becomes  one  for  the  payment  of  money, 
and  no  question  as  between  penalty  and  liquidated  damages 
arises.'^ 

The  duty  of  a  bank  to  pay  the  checks,  drafts  and  orders  of  a 
depositor,  so  long  as  it  has  in  its  possession  funds  of  his  suffi- 
cient to  do  so,  and  which  are  not  incumbered  by  any  earlier  lien 
in  its  favor,  is  but  a  legal  obligation  to  pay  money.  It  is  implied 
from  the  usual  course  of  business,  if  it  is  not  express;  and  it 
usually  is  not.^°  The  customer  may  draw  out  his  funds  in  such 
parcels  as  he  may  see  fit,  both  as  regards  number  and  amount. 
The  rule  of  law  forbidding  a  creditor  to  split  up  his  demand 
does  not  affect  this  principle,  which  is  based  upon  a  custom  of 
the  banking  business.^^  This  duty  of  the  bank  is  of  such  im- 
portance that  if  it  refuses  without  sufficient  justification  to  pay 
the  check  of  the  customer,  he  has  his  action,  and  may  recover 
substantial  damages,  though  no  actual  loss  or  injury  be  shown, 
and  may  recover  for  such  approximate  loss  or  injury  as  may  be 
proven. 

§  288.  Large  sum  to  secure  payment  of  a  smaller.  Where 
a  large  sum,  which  is  not  the  actual  debt,  is  agreed  to  be  paid 
in  case  of  a  default  in  the  payment  of  a  less  sum,  which  is  the 
real  debt,  such  larger  sum  is  always  a  penalty.^^     This  rule  has 


79  Potomac  p.  Co.  v.  Burchell,  109 
Va.  676;  First  Nat.  Bank  v.  Lynch, 
6  Tex.  Civ.  App.  590. 

80  Downes  v.  Pha?nix  Bank,  6  Hill, 
297;  Marzetti  v.  Williams,  1  B.  & 
Ad.  415;  Watson  v.  Phoenix  Bank,  8 
Mete.  (Mass.)  217,  41  Am.  Dec.  500; 
Morse  on  Banking,  29. 

Slid.;  Munn  v.  Burch,  25  111.  35; 
Chicago,  etc.  Ins.  Co.  v.  Stanford, 
28  111.  168,  81  Am.  Dec.  270. 

82  Rollin  V.  Stewart,  14  C.  B.  595; 
Morse  on  Banking,  453;  §  77. 

83  Cimarron  L.  Co.  v.  Barton,  51 
Kan.  554;  Schmieder  v.  Kingsley, 
6  N.  Y.  Misc.  107;  Goodyear  S. 
Mach.  Co.  V.  Selz,  157  111.  186;  Kim- 
ball V.  Doggett,  62  111.  App.  528; 
Turrell  v.  Archer,  1  Mart.  Ch.  103; 
Fisk  V.  Gray,  11  Allen  132;   Walsh 


V.   Curtis,   73   Minn.   254;    Kurtz  v. 
Bobbins,    12    Wash.    7,    50    Am.    St. 
871;   Bradstreet  v.  Baker,  14  R.   I. 
546;  Bryton  v.  Marston,  33  111.  App. 
211  ;   Clements  v.  Railroad  Co.,  132 
Pa.  445;   Astley  v.  Weldon,  2  B.  & 
P.    346;    Taul    v.    Everet,    4    J.    J. 
Marsh.     ]0;     Bagley    v.    Peddie,    5 
Sandf.  ]02;  Beale  v.  Hayes,  id.  640 
Cairnes  v.  Knight,  17  Ohio  St.  69 
Morris  v.  McCoy,  7  Nev.  399;  Tier 
nan   v.   Hinman,    16    111.   400;    Fitz 
patrick  v.  Cottingham,  14  Wis.  219 
Halderaan     v.     Jennings,     14     Ark 
329 ;  Mead  v.  Wheeler,  13  N.  H.  353 
Chamberlain  v.  Bagley,  11  id.  234 
Kemble    v.    Farren,    6    Bing.    141 
Mason  v.  Callender,  2  Minn.  350,  72 
Am.  Dec.  102;  Niver  v.  Rossman,  18 
Barb.  50;   Kuhn  v.  Myers,  37  Iowa 


§    288]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.         877 

often  been  loosely  stated  and  its  true  scope  and  operation  over- 
looked by  following  too  rigidly  the  letter.  A  contract  may  be 
framed  so  as  apparently  to  secure  the  payment  of  a  less  sum  by 
a  greater  when  it  is  in  substance  but  an  alternative  or  condition- 
al agreement  to  accept  a  stipulated  part  in  full  satisfaction  if 
paid  at  a  particular  time  or  in  a  specified  manner."  A  demise 
of  land  was  made  at  a  yearly  rent  of  £187,  with  the  usual  chiuscs 
for  distress  and  entry  on  non-i)aymeiit,  and  an  agreement  that 
so  long  as  the  lessee  performed  the  covenant  the  lessor  would  be 
content  with  the  yearly  rent  of  £93,  payable  on  the  same  day  as 
the  first  reserved  rent.  It  was  held  that  the  larger  rent  was  not 
penal;  that  ejectment  could  be  maintained  on  its  non-payment.*^ 
Such  cases  must  be  determined  on  the  true  intent  of  the 
transaction.  If  the  larger  sum  is  in  truth  the  actual  price  or 
debt,  and  the  smaller  only  agreed  upon  as  a  satisfactiou  if  })aid 
under  stated  conditions,  the  omission  to  com])ly  with  the  terms  of 
payment  in  the  easier  mode  will  preserve  to  the  creditor  the  right 


351 ;  Davis  v.  Hendrie,  1  Mont.  499 ; 
Wallis  V.  Carpenter,  13  Allen  19; 
Gray  v.  Crosby,  18  Johns.  219; 
Brockway  v.  Clark,  6  Ohio,  45;  Bre- 
vard V.  Wimberly,  89  Mo.  App.  331 ; 
Morrill  v.  Weeks,  70  N.  H.  178. 

84  In  Thompson  v.  Hudson,  L.  R. 
2  Eq.  G12,  a  creditor  had  agreed 
with  his  debtor  to  remit  part  of 
his  debt  upon  having  a  mortgage  to 
secure  the  payment  of  the  balance  in 
two  years,  without  prejudice  to  his 
right  to  recover  the  whole  debt  if 
such  balance  was  not  paid  within 
tliat  time.  Tlio  debtor  executed  a 
mortgage  for  such  balance,  contain- 
ing a  proviso  that  if  the  mortgage 
debt  be  not  paid  within  two  years, 
the  whole  of  the  original  should  be 
recovered;  and  it  was  held  that  the 
proviso  was  of  the  nature  of  a  pen- 
alty from  which  the  mortgagor  was 
entitled  to  be  relieved  in  equity; 
that  the  mortgagee  could  only  re- 
cover the  smaller  sum.  But  on  ap- 
peal to  the  house  of  lords   (L.  R.  4 


Eng.  &  Ir.  App.  l),.tliis  decision 
was  reversed;  and  it  was  held  if 
tlie  larger  sum  is  actually  due,  and 
the  creditor  agrees  to  take  a  lesser 
sum,  provided  that  sum  is  secured 
in  a  certain  way  and  paid  on  a  cer- 
tain day,  and  that,  if  these  stipu- 
lations be  not  performed,  he  shall 
be  entitled  to  recover  the  wliole  of 
tbe  original  debt,  such  remitter  to 
such  original  debt  does  not  consti- 
tute a  penalty,  and  a  court  of  equity 
will  not  relievo  against  it.  Mayne 
on  Dam.  101,  Lord  Westbury  said 
that  any  plain  man  walking  the 
streets  of  London  would  have  said 
that  it  was  in  accordance  with  com- 
mon sense;  and  if  he  were  told  that 
it  would  be  requisite  to  go  to  three 
tribunals  before  getting  it  accepted, 
would  have  held  up  his  bands  witii 
astonishment  at  the  state  of  the 
law.  Carter  v.  Corley,  23  Ala.  012. 
85  Lord  Ashtown  v.  White,  1 1 
Irish  L.  400;  McXitt  v.  Clark,  7 
Johns.  465. 


878  SUTHEKLAND  ON  DAMAGES.  [§  288 

to  exact  the  larger  sum.^^  A  case  in  Wisconsin  was  correctly  de- 
cided on  this  principle.  A  bond  was  made  in  a  penalty  of  $900, 
conditioned  that  if  the  obligor  should  pay  to  the  obligee  one  year 
after  the  death  of  her  husband,  and  annually  thereafter  during 
her  natural  life,  the  sum  of  the  interest  on  $464  at  the  rate  of 
seven  per  cent,  per  annum,  the  bond  should  be  void,  otherwise 
of  force;  and  it  was  also  provided  in  the  condition  that  should 
any  default  be  made  in  the  payment  of  the  said  interest  or  any 
part  thereof  on  any  day  wherein  the  same  was  made  payable  by 
the  bond,  and  the  same  should  remain  unpaid  and  in  arrear  for 
thirty  days,  then  and  in  that  case  the  principal  sum  of  $464, 
with  arrearages  of  interest  thereon,  should,  at  the  option  of  the 
obligee,  become  immediately  payable;  and  that  if  the  payment 
of  said  interest  were  promptly  made,  then  at  the  obligee's  death 
the  debt  and  the  mortgage  given  to  secure  the  bond  should  cease 
and  be  null.  A  default  occurred  in  the  payment  of  the  an- 
nuities of  interest ;  and  the  obligee  gave  notice  of  her  option  to 
consider  the  principal,  with  the  arrears  of  interest,  presently 
due  and  payable.  The  question  was  what  sum  was  due  on  the 
bond  which  the  mortgage  in  suit  was  given  to  secure.  A  decree 
had  been  made  adopting  the  sum  of  $464,  mentioned  in  the  con- 
dition as  the  principal  that  became  due  on  its  breach,  and  for 
that  sum,  with  the  delinquent  interest,  judgment  was  rendered. 
The  defendant  contended  that  the  sum  the  plaintiff  was  entitled 
to  recover  was  not  $464,  but  only  the  value  of  a  life  annuity  of 
$32.48  at  the  time  the  plaintiff  declared  her  option;  at  which 
time  she  was  fifty-two  or  fiftj^-three  years  of  age.  Such  value, 
computed  by  the  JSTorthampton  tables,  was  then  a  little  less  than 
$300.  Lyon,  J.,  said  :  '^'The  covenant  was  voluntarily  made  by 
the  obligor,  and,  so  far  as  appears,  he  received  therefor  full 
value  for  the  sum  which  he  agreed  to  pay  at  the  option  of  the 
obligee  in  case  of  default.  The  most  that  can  be  said  against 
the  justice  of  it  is  that  the  damages  would  be  the  same  if  default 
were  made  and  the  option  declared  at  a  much  later  period  in 
the  life  of  the  obligee.  But  that  is  a  contingency  which  it  may 
be  fairly  presumed  the  obligor  took  into  consideration  when 

86  Waggoner   v.   Co\-,   40   Ohio   St.     539,  543,  quoting  tlip  text. 


g    2S8]     OOJXVENTIOWAL    LIQUIDATIONS    AND    DlSOllAKGES.  879 

lie  made  liis  covenant;  and  it  was  always  in  his  power  to  prevent 
tlio  happening  of  such  contingeucy  by  paying  the  annuity  wliich 
he  covenanted  to  pay."  The  judge  added:  ''It  follows  that 
the  sum  named  in  the  hond  is  to  be  regarded  as  stipulated  dam- 
ages unless  the  gross  value  of  the  life  annuity  can  be  ascertained 
by  some  exact  pecuniary  standard."  He  discusses  this  question 
and  arrives  at  the  conclusion  that  the  value  is  uncertain,  ft 
may  be  observed  that  that  method  of  determining  whether  the 
sum  mentioned  in  the  condition  was  i)enalty  or  not  would  be 
very  pro])er  if  it  be  assumed  tli:it  ihc  nnnuity  was  the  ])rimary 
object  of  the  arrangement  and  that  no  sum  was  originally  fixed 
which  represented  the  value  of  the  defendant's  undertaking  or 
of  the  consideration  received ;  and  that  the  gross  sum  was  stip- 
ulated as  the  valuation  put  by  the  parties  on  the  annuity;  and 
equally  so  if  the  case  was  that  $4G4  was  a  sum  arising  in  tlie 
transaction  which  they  agreed  might  be  withheld  so  long  as  the 
interest  on  it  was  promptly  paid,  and  with  the  fnrther  benefit 
that  the  debt  should  cease  at  the  creditor's  death,  otherwise  to  be 
paid  at  once;  then  the  case  stands  on  the  principle  of  Thompson 
v.  Hudson,^'  and  the  conditional  method  of  discharge  not  having 
been  strictly  followed,  the  dispensation  depending  on  it  failed 
and  the  original  debt  remained  unsatisfied  and  absolute.^' 

87  Thompson   v.   Hudson,   L.   R.   2  after  each  is  due,  as  an  inducement 
Ef|.  612,  stated  supra.  to  punctuality,  two  hundred  dollara 

88  Berrinkott  v.  Trapliagen,  39  of  the  amount  will  he  released.  And 
Wis.  219.  eight  hundred  dollars  and  its  yearly 

Longwortli  v.  Askren,  15  Ohio  St.  interest  accepted  in  full  payment, 
370,  does  not  appear  to  be  consist-  hut  not  otlicrwise."  Before  the  ten 
ent  with  these  views.  An  action  years  expired,  fully  $800  and  annual 
was  brought  to  foreclose  a  mortgage  interest  on  that  sum  liad  been  paid; 
made  to  secure  a  payment  of  a  note  but  the  payments  had  not  been  made 
reading:  "For  value  received,  I  according  to  the  terms  of  the  con- 
promise  to  pay  N.  L.,  or  order,  one  tract  as  to  time  and  amount.  The 
thousand  dollars,  witli  interest  year-  court  held  that  the  sum  of  $1,000 
ly  till  paid,  and  payable  as  follows:  was  penalty,  and  $800  the  actual 
In  two,  three,  four,  five,  si.x,  seven,  debt  according  to  the  face  of  the 
eight,  nine  and  ten  years,  equal  in-  note.  White,  J.,  said:  "This  case 
stalments,  with  interest  yearly,  as  presents  the  single  legal  question: 
aforesaid,  heing  the  contract  price  whether,  upon  the  true  construction 
of  a  lot.  But  if  each  and  every  of  the  mortgage  note  sued  on,  the 
payment  is  made  punctually  as  due,  one  thousand  dollars  therein  men- 
or   before   due,   or   within   ten   days  tioncd   is  to  be   regarded  as  a  pen- 


880 


SUTHERLAND    ON    DAMAGES. 


[§  288 


Where  a  large  sum  is  stipulated  to  be  paid  on  the  non-pay- 
ment of  a  less  amount  made  payable  by  the  same  instrument, 


alty.  If  tliat  bo  its  character,  the 
judgment  of  the  superior  court 
should  be  affirmed;  otherwise,  it 
should  be  reversed.  This  is  not  the 
case  of  an  agreement  for  the  compo- 
sition of  a  subsisting,  independent 
indebtedness.  The  instrument  in 
question  creates  the  only  debt  on 
which  the  plaintiff  relies  for  a  re- 
covery. Nor  can  the  claim  made  by 
tlie  plaintiff's  counsel  be  supported, 
that  the  stipulation  for  the  dis- 
charge of  the  obligation  by  the  punc- 
tual payment  of  .$800  in  instalments 
is  a  privilege  given  to  the  payer, 
and  inserted  for  his  exclusive  bene- 
fit. This  claim  is  based  on  the  as- 
sumption that  the  $1,000  Avas  the 
sole  consideration  for  the  lot,  and 
consequently  is  the  amount  of  the 
actual  debt.  But  it  is  as  fair  to 
presume  that  the  omission  of  the 
stipulation  in  regard  to  the  $800 
would  have  defeated  the  sale  as  that 
tlie  insertion  of  the  $1,000  secured 
it.  The  transaction  was  the  sale  of 
the  lot;  and  the  instrument  in  ques- 
tion contains  the  terms  upon  which 
it  was  made.  All  the  stipulations 
on  the  part  of  Ricords  are  supported 
by  the  same  identical  consideration. 
It  is  not  to  be  presumed  that  the 
sale  would  have  l)oen  concluded  had 
any  of  the  terms  actually  agreed  to 
been  omitted;  and,  as  the  terms 
of  the  sale  were  satisfactory  to  the 
parties,  the  presumption  is  they 
were  acquiesced  in,  not  as  a  special 
favor  to  either,  but  for  the  mutual 
benefit  of  both.  Nor,  in  our  view, 
does  the  order  in  which  the  sums 
are  stated  change  their  character, 
or  the  legal  eflfect  of  the  instru- 
ment; for  whether  the  amount  to 
be  paid  is  to  be  reduced  upon  com- 


pliance with  the  terms  of  payment, 
or  to  be  increased  as  a  default,  is 
only  a  different  mode  of  expressing 
the  same  thing. 

"All  that  the  plaintiff,  at  the  time 
of  making  the  contract,  had  a  right 
to  expect  was  the  payment  of  $800, 
with  the  interest,  in  the  instalments 
and  at  the  times  stipulated.  These 
payments  Ricords  had  promised  to 
make  punctually.  A  default  oc- 
curred; and  in  such  a  contract,  in 
our  opinion,  interest  is  to  be  re- 
garded as  a  compensation  for  the 
injury  caused  by  the  delay.  All  be- 
yond must  be  regarded  either  as 
penalty  or  liquidated  damages ;  but 
under  neither  form  can  the  plaintiff 
be  allowed  to  recover  more  than 
what  the  law  deems  adequate  com- 
pensation for  the  breach. 

"It  is  to  be  noted  that  the  only 
evidence  of  the  terms  of  the  sale  is 
what  appears  from  the  instrument 
itself.  There  is  nothing  to  show 
that  the  contract  for  the  purchase 
of  the  lot,  was  originally  made,  in 
fact,  at  $1,000;  and  that  the  remis- 
sion of  the  contract  price  to  $800 
was  the  gratuitous  act  of  the  vend- 
or. If  tlie  abatement  stood  on  this 
footing,  it  would  devolve  on  the 
party  seeking  its  benefit  to  show 
that  lie  had  complied  with  the  con- 
ditions upon  which  it  was  offered." 

This  opinion  bases  the  right  of 
the  debtor  to  discharge  the  bond  by 
payment  of  $800  on  its  being  re- 
served in  the  agreement  of  pur- 
chase: it,  however,  concedes  that  it 
was  equally  a  part  of  the  contract 
of  sale  that  $1,000  should  be  paid 
if  all  the  instalments  should  not 
be  punctually  paid.  It  would  seem 
to  be  a  reciprocal  right  to  enforce 
the    bond    according    to    its    terms; 


§    288]       CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.       881 

the  former  is  prima  facie  a  penalty.  If  the  question  is  to  ])e  de- 
terminated by  constrnction  of  the  instrument  alone  it  would  be 
deemed  a  penalty.  May  the  real  transaction  be  investigated 
and,  upon  proper  facts,  a  different  interpretation  and  effect  be 
given  to  the  agreement  'i  No  language  of  the  contract  can  be 
adopted  which  will  shelter  a  penalty  so  that  inquiry  may  not 
be  made  into  the  subject-matter  and  surroundings  to  ascertain 
if  it  be  such.  The  principle  is  often  declared  in  terms  that 
permits  inquiry  to  go  to  the  intrinsic  nature  of  the  transaction ; 
and  a  large  sum  promised  as  a  consequence  of  the  non-payment 
of  a  small  one  will  be  held  a  penalty  whatever  may  be  the  lan- 
gTiage  describing  it.^^  Wright,  C.  J.,  said  in  an  Iowa  case: 
"From  all,  however,  we  may  deduce  one  point  as  settled. 
Whether  the  sum  mentioned  shall  be  considered  as  a  penalty 
or  as  liquidated  damages  is  a  question  of  construction,  on  which 
the  court  may  be  aided  by  circumstances  existing  extraneous  to 
the  writing.  The  subject-matter  of  the  contract,  the  intention 
of  the  parties,  as  well  as  other  facts  and  circumstances  may  be 
inquired  into,  although  the  words  are  to  be  taken  as  proved 
exclusively  by  the  writing.^" 

that  there  was  as  ample  a  consider-  discount,   was  the  actual  debt,  and 

ation    for   the   agreement    in    either  tliat   the    so-called    discount   was   a 

alternative  as  in  the  cases  of  Lord  penalty. 

Ashtown  V.  White,  11  Irish  L.  400,  89  Bryton  v.  :\Iarston,  33  111.  App. 
and  McNitt  v.  Clark,  7  Johns.  465.  211;  Bagley  v.  Peddie,  3  Sandf.  192; 
Longworth  v.  Askren,  supra,  is  Niver  v.  Rossman,  18  Barb.  55; 
approved  in  Goodyear  S.  Mach.  Co.  Morris  v.  McCoy,  7  Nev.  399;  Fein- 
V.  Selz,  158  111.  ]86.  In  the  latter  sot  v.  Burstein,  78  N.  Y.  Misc.  259. 
case  a  contract  for  the  monthly  rent-  90  Foley  v.  McKeegan,  4  Iowa  1. 
al  of  certain  patented  machines,  to  C(j  Am.  Dec.  107;  Perkins  v.  Lyman, 
be  computed  on  the  montli's  manu-  11  Mass.  76,  6  Am.  Dec.  158;  Hodges 
facture  of  goods  with  the  machines,  v.  King,  7  Mete.  (Mass.)  583;  Den- 
stipulated  that  the  rental  should  be  nis  v.  Cummins,  3  Johns.  Cas.  297, 
due  on  tlie  first  day  of  the  month  2  Am.  Dec.  160. 
next  following,  and  to  be  paid  with-  In  Morris  v.  McCoy,  7  Nev.  399, 
in  one  month  from  tliat  day,  and  Lewis,  C.  J.,  said :  "Although,  as  a 
that  if  the  rents  due  on  the  first  general  rule,  it  is  acknowledged  that 
day  of  any  month  shall  be  paid  on  the  intention  of  the  parties  as  ex- 
or  before  the  fifteenth  day  thereof  pressed  in  the  contract  should  be  en- 
the  lessor  will  grant  a  discount  of  forced,  still,  it  is  clearly  ignored  in 
fifty  per  cent.  It  was  resolved  that  that  class  of  cases  where  the  parties 
tlie  sum  to  be  computed,  less  the  stipulate  for  the  payment  of  a  large 
Suth.  Dam.  Vol.  I.— 56. 


S^'2 


SUTHERLAND    ON    DAMAGES. 


[§  ^89 


§  289.  Stipulations  where  damages  certain  and  easily  proved. 

Oil  gciienil  princiiiletf,  an  agreement  to  pay  a  fixed  sum  as  dam- 
ages for  non-performance  of  a  contract,  where  the  loss  or  injury 
might  without  it  be  easily  determined  by  proof  of  market  values, 
or  by  a  precise  pecuniary  standard,  is  subject  to  nearly  the 
same  criticism  as  a  contract  to  liquidate  damages  for  non-pay- 
ment of  money.  There  are  no  peculiar  reasons  why  a  stipulated 
sum  should  be  treated  as  a  peualty  for  exceeding  just  compensa- 
tion for  a  default  in  the  payment  of  money,  and  not  be  so  treated 
in  case  of  a  different  agreement  where  the  excess  is  capable  of 
being  made  equally  manifest,^^  In  money  contracts  any  rate 
of  interest  not  prohibited  by  statute  may  be  contracted  to  be 
paid  as  interest  proper,  that  is,  during  the  period  of  credit ;  so 
any  sum  may  be  contracted  to  be  paid  for  property  or  services 
in  a  contract  of  purchase  or  hiring.  But  when  parties  contract 
for  the  same  thing  in  advance  as  damages  for  a  considerable 


sum  of  money  as  damages  for  the 
non-payment  of  a  smaller  sum  at  a 
given  day.  In  such  cases,  it  is  said, 
no  matter  what  may  be  the  language 
of  the  parties,  the  large  sum  will  be 
deemed  a  penalty,  and  not  liquidated 
damages."  But  upon  an  exception 
to  the  exclusion  of  parol  testimony 
to  affect  the  question  wliere  the 
agreement  was  apparently  of  tliia 
nature,  and  such  extrinsic  evidence 
was  offered  to  rebut  the  inference 
that  the  larger  sum  was  a  penalty, 
the  learned  judge  said  "that  was  not 
admissible,  because  there  was  no 
ambiguity;  and  it  must  be  supposed 
that  the  agreement  was  fully  em- 
bodied in  the  written  instrument.  ] 
Greenlf.  Ev.,  §  275." 

91  Fisher  v.  Bidwell,  27  Conn.  363. 

Section  1670  of  the  Civil  Code  of 
California  provides  that  "every  con- 
tract by  which  the  amount  of  dam- 
age to  be  paid,  or  other  compensa- 
tion to  be  made,  for  a  breach  of  an 
obligation,  is  determined  in  anticipa- 
tion thereof,  is  to  that  extent  void, 
except  as  expressly  provided"  in  sec. 


]671,  vvhicli  says:  "The  parties  to' a 
contract  may  agree  tlierein  upon  an 
amount  which  shall  be  presumed  to 
be  the  amount  of  damage  sustained 
by  a  breach  thereof,  when,  from 
the  nature  of  the  case,  it  would  be 
impracticable  or  extremely  difficult 
to  fix  tlie  actual  damage."  It  has 
been  ruled  under  these  provisions 
tliat  a  stipulation  by  a  building  con- 
tractor to  pay  the  owner  a  specified 
sum  for  each  day's  delay  in  complet- 
ing the  building  is  not  of  itself 
sufficient  to  autliorize  a  recovery. 
Patent  B.  Co.  v.  Moore,  75  Cal.  205; 
Long  Beach  City  School  Dist.  v. 
Dodge,  135  Cal.  401. 

There  is  no  difficulty  in  fixing  tiie 
actual  damage  which  one  sustains 
liy  being  deprived  of  .the  use  of  land 
to  which  he  is  entitled.  Eva  v.  Mc- 
Mahon,  77  Cal.  467.  Nor  in  ascer- 
taining the  damage  resulting  from 
the  breach  of  a  warranty  of  the  fit- 
ness of  a  harvesting  machine. 
Greenleaf  v.  Stockton  Combined  H, 
&  A.  Works,  78  Cal.  606. 


§    289]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.         883 

excess  above  the  ciistomary  rate  of  interest,  or  the  market  value 
of  property  or  other  thing,  the  agreement  will  raise  the  inquiry 
whether  such  excessive  sum  was  intended  to  be  paid,  or  whether, 
even  if  it  was,  it  is  not  a  penalty.  It  would  be  such,  according 
to  the  preponderance  of  authority,  if  not  intended  to  be  paid 
in  case  of  default  and  if  not  fixed  on  the  basis  of  compeiLsa- 
tion.^^  In  such  cases  courts  generally  arrive  al  harmonious 
conclusions  by  diverse  modes  of  reasoning.  One  will  say  the 
sum  fixed  is  so  flagrantly  excessive  it  was  evidently  not  the  in- 
tention of  the  parties  that  it  should  be  paid  or  enforced,  and 
therefore  it  is  a  penalty.  Another  will  say  the  excess,  per  se, 
makes  the  stated  sum  a  penalty,  and  the  intention  of  the  parties 
is  simply  immaterial.  It  generally  occurs  that  where  there  is 
an  agreement  to  pay  a  gross  sum  in  the  event  of  the  non-per- 
formance of  a  contract,  and  the  case  is  such  that  a  jury  can 
ascertain  with  reasonable  certainty  how  much  damages  the  in- 
jured party  has  actually  sustained  by  the  non-performance, 
courts  are  strongly  inclined  to  regard  the  gross  sum  as  a  penalty, 
and  not  as  liquidated  damages.^^     If  the  intention,  however,  is 

92  See  Sun  P.  &  P.  Ass'n  v.  Moore,  25  Cal.  67 ;  Bright  v.  Rowland,  3 
183  U.  S.  042,  46  L.  ed.  366.  How.  (Miss.)  398;  Scofield  v.  Tomp- 

93  Carson  v.  Arvantes,  10  Colo.  kins,  95  111.  190,  35  Am.  Rep.  160; 
App.  382;  Smith  v.  Newell,  37  Fla.  In  re  Newman,  4  Ch.  Div.  724;  Man- 
147;  Simon  v.  Lanius,  9  Ky.  L.  sur  &  T.  T.  Co.  v.  Tissier  A.  &  H. 
Rep.  59;  Hill  v.  Wertheimer-S.  S.  Co.,  136  Ala.  597;  Foinsot  v.  Bur- 
Co.,  150  Mo.  483;  Connelly  v.  Priest,  stein,  161  App.  Div.  (N.  Y.)  651; 
72  Mo.  App.  673;  Knox  R.  B.  Co.  Benfield  v.  Croson,  90  Kan.  661; 
V.  Crafton  S.  Co.,  16  Ohio  C.  C.  21,  Golden  v.  McKim,  —  Nov.  — ,  141 
04  Ohio  St.  361;  Seim  v.  Krause,  13  Pac.  070;  Yuen  Suey  v.  Pleshman, 
S.  D.  530;  Schroeder  v.  California  65  Ore.  606;  Dilley  v.  Thomas,  106 
Yukon  T.  Co.,  95  Fed.  296;  Wil-  Ark.  274;  Nichols '&  S.  Co.  v.  Bey- 
mington  T.  Co.  v.  O'Neil,  98  Cal.  1;  or,  168  Mo.  App.  686;  Baerenklau 
Willson  V.  Baltimore,  83  Md.  203,  v.  Peerless  R.  Co.,  SO  N.  J.  Eq.  26; 
55  Am.  St.  339;  Chaude  v.  Shep-  Dryer  v.  Kistler,  118  Minn.  112; 
ard,  122  N.  Y.  397;  March  v.  Alia-  Kay  Gee  A.  Co.  v.  Cave,  177  111. 
bough,  103  Pa.  335;  Brennan  v.  App.  250;  Brock  v.  Royal  L.  Co.,  17 
Clark,  29  Neb.  385;  Lansing  v.  Manitoba,  351;  Johnson  v.  South- 
Dodd,  45  N.  J.  L.  525;  Bradstreet  western  S.  Ins.  Co.,  206  Fed.  486; 
v.  Baker,  14  R.  I.  546;  Davis  v.  Biescar  v.  Pratt,  4  Cal.  App.  288; 
United  States,  17  Ct.  of  Cls.  201;  Lytle  v.  Scottish  Am.  M.  Co..  122 
Spear  v.  Smith,  1  Denio  464;  Den-  Ga.  458;  Westfal  v.  Albert,  212  Til. 
nis  v.  Cummins,  3  Johns.  Caa.  297,  08;  Walker  v.  Bement,  50  Ind.  App. 
2   Am.   Dec.    160;    Streeter   v.   Rush,  045;   Haffke  v.  (omn,  89  Neb.  134; 


884 


SU'lllKitLAJSTD    ON    DAMAGES. 


[§  289 


clear  to  liquidate  damages,  and  the  amount  is  either  not  greatly 
above  or  below  the  sum  which  would  otherwise  be  recoverable; 
or,  if  above,  was  fixed  specially  to  cover  contemplated  conse- 
quential losses,  not  provable  under  legal  rules,  and  is  not  an 
unreasonable  provision  therefor,  the  sum  fixed  may  be  sustained 
as  liquidated  damages.^*  But  if  the  intention  be  doubtful,  or 
the  amount  materially  varies  from  a  just  estimate  of  compen- 
sation,  the  stated  sum   will   be  considered   a   penalty.^^      The 


Mosler  S.  Co.  v.  Maiden  Lane  S.  D. 
Co.,  ]99  N.  Y.  479,  37  L.R.A.(N.S.) 
363,  138  App.  Div.  (N.  Y.)  905; 
Stony  Creek  L.  Co.  v.  Fields,  102 
Va.  1;  McDaniels  v.  Gowey,  30 
Wash.  412.  Compare  DIestal  v. 
Stevenson,  [1906]  2  K.  B.  345,  in 
which  the  word  "penalty"  was  used 
and  the  actual  damages  were  easy  of 
ascertainment;  notwithstanding,  the 
stipulation  was  binding. 

In  Spencer  v.  Tilden,  5  Cow.  144, 
the  defendant  liad  agreed  in  writing 
not  imder  seal,  for  value  received,  to 
pay  $360,  or  twelve  cows  and  calves, 
to  be  paid  or  delivered  at  a  place 
mentioned,  in  four  years.  It  was 
held  that  the  value  of  the  consider- 
ation, and  of  the  cows  and  calves, 
might  be  inquired  into  to  see 
vvliether  the  sum  expressed  was  in- 
tended by  the  parties  as  penalty  or 
liquidated  damages;  and  it  appear- 
ing that  that  sum  was  much  beyond 
the  value  of  either,  it  was  considered 
in  the  nature  of  a  penalty,  and  the 
plaintiff's  recovery  was  confined  to 
the  value  of  the  cows  and  calves. 
See  note  at  end  of  the  case. 

94  Phoenix  I.  Co.  v.  United  States, 
39  Ct.  of  Cls.  526,  quoting  the  text; 
Madler  v.  Silverstone,  55  Wash.  159, 
34  L.R.A.{N.S.)  1  (exchange  of 
realty)  ;  Witherspoon  v.  Duncan 
(Tex.  Civ.  App.),  131  S.  W.  660; 
May  V.  Crawford,  150  Mo.  504 ;  Hen- 
derson V.  Murphree,  109  Ala.  556; 
Burke  v.  Dunn,  55  111.  App.  25;  Bird 


V.  St.  John's  Episcopal  Church,  154 
Ind.  138;  Jaqua  v.  Headington,  114 
Ind.  309;  Nielson  v.  Read,  12  Fed. 
441;  Gallo  V.  McAndrews,  29  id. 
715;  Books  V.  Wichita,  114  id. 
297,  52  C.  C.  A.  209;  Hodges  v. 
King,  7  Mete.  (Mass.)  583;  Manice 
V.  Brady,  15  Abb.  Pr.  173;  Durst  v. 
Swift,  11  Tex.  273;  Walker  v.  Eng- 
ler,  30  Mo.  130 ;  Cotheal  v.  Talmage, 
9  N.  Y.  551,  61  Am.  Dec.  716;  Fitz- 
patrick  v.  Cottingham,  14  Wis.  219; 
Easton  v.  Pennsylvania  &  0.  C.  Co., 
13  Oliio  80;  Tardeveau  v.  Smith, 
Hardin,  175,  3  Am.  Dec.  727;  Brad- 
shaw  V.  Crayeraft,  3  J.  J,  Marsh. 
79;  Hodges,  Ex  parte,  24  Ark.  197; 
Talcott  V.  Marston,  3  Minn.  339; 
Shreve  v.  Brereton,  51  Pa.  175 ; 
Knapp  V.  Maltby,  13  Wend. 
587 ;  Powell  v.  Burroughs,  54  Pa. 
329 ;  Johnston  v.  Cowan,  59  id.  275 ; 
Keeble  v.  Keeble,  85  Ala.  552;  Sa- 
lem V.  Anson,  40  Ore.  339,  56  L.R.A. 
169;  Nilson  v.  Jonesboro,  57  Ark. 
168;  Indianola  v.  Gulf,  etc.  R.  Co., 
59  Tex.  594. 

95  Buchanan  v.  Louisiana  P.  Exp. 
Co.,  245  Mo.  337;  Chicago  H.  W. 
Co.  V.  United  States,  53  L.R.A.  122, 
45  C.  C.  A.  343,  106  Fed.  Rep.  385 
(disapproved  in  Sun  P.  &  P.  Ass'n 
V.  Moore,  supra)  ;  Dennis  v.  Cum- 
mins, 3  Johns.  Cas.  297,  2  Am.  Dec. 
160;  Lindsay  v.  Anesley,  6  Ired. 
188;  Mills  v.  Fox,  4  E.  D.  Smith, 
220;  Esmond  v.  Van  Benschoten,  12 


§    290]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHAEGES.         885 

reasonableness  of  the  sum  named  is  to  be  ascertained  from  tbe 
contract ;  the  continuance  of  delay  in  its  performance  is  imma- 
terial.^^ 

§  290.  Stipulation  when  damages  uncertain.  If  a  contract 
does  not  afford  anv  <Jala  from  which  actual  damages  can  be 
calculated  this  circumstance  affords  a  reason  for  regarding  the 
sum  designated  in  it  as  liquidated  damages.^^  This  test  would 
include  among  those  deemed  uncertain  all  contracts  which  re- 
quire any  intrinsic  evidence  to  ascertain  the  extent  of  the  actual 
injury.  Expressions  may  be  found  in  some  cases  favoring  this 
criterion  of  uncertain  damages.^^  J3ut  where  the  damages  can- 
not be  calculated  by  market  values  nor  by  any  precise  pecuniary 
standard,  or  where,  from  the  peculiar  circumstances  which  the 
contract  contemplates,  there  must  be  other  uncertainty  affecting 


Barb.    366;     Baird    v.    Tolliver,     6 
Humph.  186,  44  Am;  Dec.  298. 

The  Alabama  court  looks  with 
more  favor  upon  contracts  to  stipu- 
late damages  than  do  most  courts. 
It  does  not  apply  an  exceptional 
rule  of  construction  to  them,  nor 
protect  one  of  the  parties  from  the 
consequences  of  his  error  of  judg- 
ment or  improvidence  at  the  ex- 
pense of  the  other  who  may  be,  and 
in  the  case  of  any  otlier  contract 
would  be,  entitled  to  the  rights  given 
him  under  it.  "Whether  the  sum 
agreed  to  be  paid  is  out  of  propor- 
tion to  the  actual  damages,  which 
will  probably  be  sustained  by  a 
breach,  is  a  fact  into  which  the  court 
will  not  enter  on  inquiry  if  the  in- 
tent is  otherwise  made  clear  that 
liquidated  damages,  and  not  a  pen- 
alty, is  in  contemplation."  Keeble 
V.  Keeble,  85  Ala.  5.52,  quoted  with 
approval  in  Henderson  v.  Murphrec, 
109  Ala.  556.  This  is  in  harmony 
with  Sun  P.  &  P.  Ass'n  v.  Moore, 
183  U.  S.  642,  46  L.  ed.  366. 

96  United  S.  Co.  v.  Summers,  110 
Md.  95. 

97  Walton   v.   McKitrick,   141   Ky. 


415;  Nilson  v.  Jonesboro,  57  Ark. 
168;  Garst  v.  Harris,  177  Mass.  72; 
Guerin  v.  Stacy,  175  Mass.  595; 
Thorn  &  H.  L.  &  C.  Co.  v.  Citizens' 
Bank,  158  Mo.  272;  Coal  Creek,  etc. 
Co.  V.  Tennessee  C.  etc.  Co.,  106 
Tenn.  651;  Collier  v.  Betterton,  87 
Tex.  440;  Barry  v.  Harris,  49  Vt. 
392;  Everett  L.  Co.  v.  Maney,  16 
Wash.  552;  Sanders  v.  Carter,  91 
Ga.  450;  Fletcher  v.  Dyche,  2  T.  R. 
34;  Waggoner  v.  Cox,  40  Ohio  St. 
539;  Wolf  v.  Des  Moines  R.  Co.,  64 
Iowa,  380;  Ward  v.  Hudson  River 
B.  Co.,  125  N.  Y.  230;  Tode  v.  Gross, 
127  N.  Y.  480,  13  L.R.A.  652,  24 
Am.  St.  475;  De  Graff  v.  Wickham, 
89  Iowa,  720;  Talkin  v.  Anderson 
(Texas  Sup.  Ct.),  19  S.  W.  852; 
Tilton  V.  McLaughlan,  83  N.  J.  L. 
107 ;  Compania  Mexicana  De  Cemen 
to  Portland  v.  Waite,  196  Fed.  227. 
98  Bagley  v.  Peddie,  16  N,  Y.  469, 
69  Am.  Dec.  713;  Streeter  v.  Rush, 
25  Cal.  67;  Esmond  v.  Van  Ben- 
schoten,  12  Barb.  366;  Craig  v.  Dil- 
lon, 6  Up.  Can.  App.  116.  See 
Steelc-W.  Co.  v.  Shodoc  Pond  P.  Co., 
153  111.  App.  576. 


886 


SUTHERLAND    ON    DAMAGES. 


[§   290 


the  practical  ascertainment  of  the  amount  of  the  actual  loss 
the  law  favors  any  fair  adjustment  of  it  by  stipulation.^^     The 


99  New  Britain  v.  New  Britain 
Tel.  Co.,  74  Conn.  326,  333;  Mon- 
mouth Park  Ass'n  v.  Wallis  I. 
Works,  55  N.  J.  L.  132,  19  L.R.A. 
456;  Tennessee  Mfg.  Co.  v,  James, 
91  Tenn.  154,  15  L.R.A.  211;  Cbm- 
nionwealtli  v.  Ginn,  23  Ky.  L.  Rep. 
521;  Kilbourne  v.  Burt  L.  Co.,  23 
Ky.  L.  Rep.  985;  Wliiting  v.  New 
Baltimore,  127  INIicli.  66;  Taylor  v. 
Times  N.  Co.,  83  Minn.  523;  Keeble 
V.  Keeble,  85  Ala.  552;  St.  Louis, 
etc.  R.  Co.  V.  Jefferson  S.  Co.,  90 
Mo.  App.  171 ;  Emery  v.  Boyle,  200 
Pa.  249;  Jennings  v.  McCormick,  25 
Wash.  427;  Reichenbach  v.  Sage, 
13  Wash.  3G4,  52  Am.  St.  51; 
Menges  v.  Milton  P.  Co.,  96  Mo. 
App.  611;  American  C.  B.  &  I. 
Works  V.  Galland-B.  B,  &  M. 
Co.,  30  Wash.  178;  Wooster  v. 
Kisch,  26  Hun,  61 ;  Kemp  v.  Knick- 
erbocker I.  Co.,  69  N.  Y.  45;  Indian- 
ola  V.  Gulf,  etc.  Co.,  56  Tex.  594; 
Jones  V.  Binford,  74  Me.  439 ;  Lips- 
comb V.  Seegers,  19  S.  C.  425;  Gam- 
mon V.  Howe,  14  Me.  250;  Tingley 
V.  Cutler,  7  Conn.  291;  Cotheal  v. 
Talmage,  9  N.  Y.  551;  Bagley  v. 
Peddie,  5  Sandf.  192;  Mundy  v.  Cul- 
ver, 18  Barb.  336;  Wolf  D.  C.  Co.  v. 
Schultz,  71  Pa.  180;  Bingham  v. 
Richardson,  1  Winston,  217;  He 
Groff  V.  American  L.  T.  Co.  24 
Barb.  375;  Fessman  v.  Seeley  (Tex. 
Civ.  App.),  30  S.  W.  268  (advance 
payment  of  tuition)  ;  Kaplan  v. 
Gray,  215  Mass.  269;  Ludlow  Valve 
Mfg.  Co.  V.  City  of  Chicago,  181  111. 
App.  388;  Gile  v.  Interstate  Motor 
Car  Co.,  27  N.  D.  108,  L.R.A.1915B, 
109;  Los  Angeles  Olive  Growers' 
Ass'n  V.  Pacific  Surety  Co.,  24  Cal. 
App.  95;    Feyer   v.   Reiss,   154   App. 


Div.  ( N.  Y. )  272  :  Standard  Brewery 
V.  Schmalhausen,  175  111.  App.  029; 
Scott  V.  Mayfield,  153  Ky.  278; 
Whitson,  Sheffield  Farms-S.  D.  Co., 
76  N.  Y.  Misc.  180;  Filers  Music 
House  V.  Oriental  Co.,  69  Wash. 
618;  Webster  v.  Bosanquet,  [1912] 
App.  Cas.  394;  McManus  v.  Roths- 
child, 25  Ont.  L.  R.  138;  In  re  Van 
Horn,  167  Fed.  1021;  Davis  v. 
Alpha  P.  C.  Co.,  134  Fed.  274; 
Moyses  v.  Schendorf,  142  111.  App. 
293;  Chicago  &  S.  R.  Co.  v.  Mc- 
Ewan,  35  Ind.  App.  251;  Illinois  T. 
&  S.  Bank  v.  Burlington,  79  Kan. 
797;  Walton  v.  McKitrick,  141  Ky. 
415;  Werner  v.  Finley,  144  Mo.  App. 
554;  Deuninck  v.  West  Gallatin  I. 
Co.,  28  Mont.  255  (the  Code  pro- 
vides that  a  stipulation  shall  be 
valid  only  when  it  would  be 
impracticable  or  extremely  difficult 
to  fix  the  damages)  ;  Gussow  v. 
Beineson,  76  N.  J.  L.  209;  Jersey 
City  V.  Flynn,  74  N.  J.  L.  104; 
Mosler  S.  Co.  v.  Maiden  Lane  S.  D. 
Co.,  199  N.  Y.  479,  37  L.R.A.  (N.S.) 
363,  138  App.  Div.  (N.  Y.)  905; 
Peabody  v.  Richard  Realty  Co.,  69 
N.  Y.  Misc.  582;  Conried  Met.  O. 
Co.  V.  Brin,  66  N.  Y.  Misc.  282; 
Levy  V.  Freiman,  131  App.  Div. 
(N.  Y.)  298;  Doan  v.  Rogan,  79 
Ohio  372;  Van  Tuyl  v.  Young 
3  Ohio  C.  C.  (N.  S.)  183,  affirmed 
by  the  supreme  court  without 
opinion;  York  v.  York  R.  Co.,  229 
Pa.  236;  Fisk  v.  Fowler,  10  Cal. 
512.  In  this  case  an  ordinary  bond 
with  condition  for  delivery  of  title 
to  a  l)oat  within  a  specified  time 
was  held  to  liquidate  the  damages 
at  the  sum  stated  as  a  penalty. 
See  §  289. 


§    2U0]     CONVENTJOJVAJ.    LKiUlOATlOKS    AM)    DISCI!  AK(i  KS.  887 

clainages  resulting  from  breac-li  of  a  marrlagu  pronilse;  ^  of  an 
agroemcnt  not  to  engage  in  a  particular  occupation  or  business;  ^ 
from  delay  in  completing  j)articul:ir  works,  or  in  doing  some 
other  act  on  which  ulterior  transactions  depend  ;  ^  are  manifestlv 


1  Lowe  V.  Poors,  4  l>urr.  2225. 
See  Abrams  v.  Kouiits,  4  Oliio 
214. 

2Kimbio  V.  WoUs,  JJ2  Ark.  120; 
Harris  v.  Thous,  149  Ala.  133,  10 
L.R.A.CN.S.)  204,  123  Am.  St.  17; 
Shafer  v.  Sloan,  3  Cal.  App.  So.'i ; 
Merica  v.  Burget,  36  Ind.  App.  453 ; 
Augusta  S.  L.  Co.  v.  Debow,  98  Mo. 
496;  Wills  v.  Forester,  140  Mo.  App. 
321;  Clark  v.  Britton,  76  N.  II.  64; 
Robinson  v.  Centenary  Fund,  68  N. 
J.  L.  723;  Ewing  v.  Davis,  2  Ohio 
C.  C.  (N.  S.)  90;  Worrell  v.  Ilnrtig, 
11  Pa.  Dist.  788  (not  to  produce  a 
particular  play  at  any  otber  local 
theater)  ;  Eucker  v.  Campbell,  35 
Tex.  Civ.  App.  178  citing  the  text; 
Canady  v.  Knok,  43  Wash.  567; 
Gropp  v.-  Perkins,  148  Ky.  183;  Mc- 
Curry  v.  Gibson,  108  Ala.  451,  54 
Am.  St.  177;  Boyce  v.  Watson,  52 
111.  App.  36]  ;  Stover  v.  Spielman, 
1  Pa.  Super.  Ct.  526;  Tobler  v. 
Austin,  22  Tex.  Civ.  App.  99;  Bor- 
ley  V.  McDonald,  69  Vt.  309 ;  Snider 
V.  McKelvey,  27  Ont.  App.  339; 
Palmer  v.  Toms,  96  Wis.  367;  New- 
man v.  Wolfson,  69  Ga.  764;  Muel- 
ler v.  Kline,  27  111.  App.  473; 
Stevens  v.  Pillsbury,  57  Vt.  205; 
Tode  v.  Gross,  127  N.  Y.  480,  24 
Am.  St.  475,  13  L.R.A.  6.52;  Gras- 
selli  v.  Lowden,  ]1  Ohio  St.  349; 
Applegate  v.  Jacoby,  9  Dana,  206; 
Mott  V.  Mott,  n  Barb.  127;  Raw- 
linson  v.  Clarke,  14  M.  &  W.  187; 
Hitchcock  V.  Coker,  6  Ad.  &  El.  438; 
Galesworthy  v.  Strutt,  1  Ex.  659; 
Green  v.  Price,  13  M.  &  W.  695; 
Dakin  v.  Williams,  17  Wend.  447; 
Williams  v.  Dakin,  22  id.  210; 
Lange  v.   Wcrk,    2    Ohio    St.    519; 


Gushing  v.  Drew,  97  Mass.  445; 
Atkyns  v.  Kinnier,  4  lOx.  776;  Mer- 
cer v.  Irving,  1  K..  15.  &  K.  563; 
Reynolds  v.  Bridge,  6  K.  &  Ji.  528; 
Nobles  V.  Bates,  7  Cow.  307;  Pierce 
v.  Fuller,  8  Mass.  223,  5  Am.  Dec. 
102;  California  S.  N.  Co.  v.  Wriglit, 
6  Cal.  258;  Do  GrofT  v.  American  L. 
'J'.  Co.,  24  Barb.  375;  Stewart  v. 
Bedell,  79  Pa.  336;  Horner  v.  Flint- 
olT,  9  M.  &  W.  678;  Lightm-r  v. 
Menzel,  35  Cal.  452;  Saintcr  v. 
Ferguson,  7  C.  B.  716:  Davis 
v.  Ponton,  0  B.  &  C.  216;  Higony 
V.  Tyson,  75  Pa.  157;  Holbrook  v. 
Tobey,  66  Me.  410,  22  Am.  Rep. 
581;  Roilly  v.  Jones,  1  Bing.  302; 
Leighton  v.  \Vales.  3  M.  &  W.  545; 
Crisdce  v.  Bolton,  3  C.  &  P.  240; 
Geiger  v.  Cawley,  146  Mich.  550; 
Gerwitz  v.  Abraham,  J7I  111.  App. 
433;  Berghuis  v.  Schuitz,  119  Minn. 
87;  Orenbaum  v.  Sowell  (Tex.  Civ. 
App.),  153  S.  W.  905.  See  Mount 
Airy  M.  &  G.  Co.  v.  Runkles,  118 
Md."  371. 

The  intention  of  tiie  j)arties  and 
the  reasonableness  of  tlie  stipulated 
sum  must  be  shown.  Disosway  v. 
Edwards,  L34  N.  C.  254. 

3  Turner  v.  Fremont,  170  Fed. 
259,  95  C.  C.  A.  455;  Caldwell  v. 
Schmnlbacli,  175  Fed.  429;  Blodget 
V.  Columbia  L.  S.  Co.,  164  Fed.  305, 
90  C.  C.  A.  237;  Chapman  D.  Co. 
V.  Security  Mut.  L.  Ins.  Co.,  149 
Fed.  89,  79  C.  C.  A.  137,  145  Fed. 
434;  Simpson  v.  Wliite,  187  Fed. 
418,  —  C.  C.  A.  — ;  Ellicott  Mach. 
Co.  V.  United  States,  43  Ct.  of  Cls. 
232;  Phrenix  I.  Co.  v.  Same,  39  id. 
526;  Cox  v.  Smith.  93  Ark.  371,  137 
Am.   St.   89;    Blackwood   v.   Liebke, 


888 


SUTIIEIJLANI)    ON    J)AMAGES. 


[§   290 


uncertain  and  incapable  of  ascertainment  in  accordance  with 
any  recognized  standard  of  pecuniary  values.   Similarly  damages 


87  Ark.  545;  District  of  Columbia 
V.  Harlan,  30  App.  D.  C.  270; 
Escondido  0.  &  D.  Co.  v.  Glaser, 
144  Cal.  494;  Pogue  v.  Kaweah  P. 
&  W.  Co.,  138  Cal.  664;  Mayor,  etc. 
V.  Potomac  E.  &  C.  Co.,  132  Ga. 
849;  McCullough  v.  Moore,  111 
111.  App.  545;  Barker  A.  P.  Co.  v. 
Wabash,  43  Ind.  App.  167  (street 
paving)  ;  St.  Louis,  etc.  R.  Co.  v. 
Gaba,  78  Kan.  432;  Murray  v.  Barn- 
hart,  117  La.  1023;  Morrison  v. 
Richardson,  194  Mass.  370;  Ross  v. 
Loescher,  152  Mich.  386,  125  Am. 
St.  418;  Western  G.  C.  Co.  v. 
Dowagiac  G.  &  F.  Co.,  146  Mich. 
119;  Springwells  v.  Detroit,  etc.  R., 
140  Mich.  277;  Detroit  v.  People's 
Tel.  Co.,  135  Mich.  696;  Hardie-T. 
F.  &  Mach.  Co.  v.  Glen  Allen  0. 
Mill,  84  Miss.  259 ;  Thompson  v.  St. 
Charles  County,  227  Mo.  220; 
Coonan  v.  Cape  Girardeau,  149  Mo. 
App.  609;  Ramlose  v.  Dollman,  100 
Mo.  App.  347;  Van  Buskirk  v. 
Board  of  Education,  78  N.  J.  L. 
650;  Macey  Co.  v.  New  York,  144 
App.  Div.  (N.  Y.)  408;  Davin  v. 
Syracuse,  69  X.  Y.  Misc.  285; 
Shubert  v.  Sondheim,  138  App. 
Div.  (X.  Y.)  800;  Harris  v.  Snyder, 
55  X.  Y.  Misc.  306;  Couch  v. 
Xewtown  Council  B.  Ass'n,  109 
App.  Div.  (X.  Y.)  856:  Hattersly 
V.  Watcrville,  26  Oliio  C.  C.  226,  4 
Ohio  C.  C.  (X.  S.)  242;  Crown 
0.  Co.  V.  Probert,  28  Ohio  C. 
C.  739;  Carter  v.  Kaufman,  67 
S.  C.  456;  Granger  v.  Kishi  (Tex. 
Civ,  App.),  139  S.  W.  1002;  Wither- 
spoon  V.  Duncan  (Tex.  Civ.  App.), 
131  S.  W.  660;  Marshall  v.  Atkins 
(Tex.  Civ.  App.),  127  S.  W.  1148, 
citing  the  text;  Xeblett  v.  McGraw, 
41  Tex.  Civ.   App.   239;    Dickerman 


v.  Reeder,  59  Wash.  405;  Sheard  v. 
United  States  F.  &  G.  Co.,  58  Wash. 
29;  Williams  v.  Rosenbaum,  57 
Wash.  94;  Erickson  v.  Green,  47 
Wash.  613;  Charleston  L.  Co.  v. 
Friedman,  64  W.  Va.  151  ;  Wheeling 
M.  &  F.  Co.  V.  Wheeling  S.  &  I.  Co., 
58  W.  Va.  62;  Davis  v.  La  Crosse 
H.  Ass'n,  121  Wis.  579;  Morgan 
Park  V.  Gahan,  136  111.  App.  515; 
United  S.  Co.  v.  Summers,  110  Md. 
95;  Ambridge  Borough  v.  Pittsburg 
&  B.  St.  R.  Co.,  234  Pa.  157; 
Pressed  Steel  C.  Co.  v.  Eastern  R. 
Co.,  121  Fed.  609,  57  C.  C.  A.  635; 
Ward  V.  Hudson  River  B.  Co.,  125 
X.  Y.  230;  O'Brien  v.  Anniston  P. 
Works,  93  Ala.  582;  Law  v.  Local 
Board  of  Redditch,  [1892]  1  Q.  B. 
127;  De  Graff  v.  Wickham,  89  Iowa, 
720;  Hall  v.  Crowley,  5  Allen,  304, 
81  Am.  Dec.  745 ;  Curtis  \.  Brewer, 
17  Pick.  513;  Fletcher  v.  Dyche,  2 
T.  R.  32;  Hamilton  v.  Moore,  33 
Up.  Can.  Q.  B.  100  and  520;  Gaskin 
V.  Wales,  9  Up.  Can.  C.  P.  314;  Mc- 
Phee  V.  Wilson,  25  Up.  Can.  Q.  B. 
169;  Bergheim  v.  Blaenavon  I.  & 
S.  Co.,  L.  R.  10  Q.  B.  319;  Folsom 
V.  McDonough,  6  Cush.  208;  Har- 
mony V.  Bingham,  12  X.  Y.  100; 
Dunlop  V.  Gregory,  10  X.  Y.  241,  61 
Am.  Dec.  746;  Weeks  v.  Little,  47 
N.  Y.  Super.  Ct.  1;  Worrell  v,  Mc- 
Clinagan,  5  Strob.  115;  Young  v. 
White,  5  Watts,  460;  O'Donnell  v. 
Rosenberg,  14  Abb.  Pr.  (X.  S.)  59; 
Pettis  V.  Bloomer,  21  How.  Pr.  317; 
Crux  V.  Aldred,  14  Week.  Rep.  656; 
Legge  V.  Harlock,  12  Q.  B.  1015. 
But  see  Wilcus  v.  Kling,  87  111. 
107;  Schmulbach  v.  Caldwell,  196 
Fed.  16,  115  C.  C.  A.  650;  Graham 
V.  Cooper,  119  Md.  358;  McComber 
V.  Kellerman,  162  Cal.  749   (failure 


§    290]     CONVENTIONAL    LIQUIDATIONS    ANI>    I)ISriL\ROKS. 


889 


from  the  disclosure  of  the  secrets  of  business,*  or  from  ])reach  of 
an  agreement  to  abate  a  nuisance,*  are  obviously  of  that  nature; 
and  stipulations  fixiuii'  the  damages  for  the  total  loss  of  a  bar- 
gain for  the  exchange,  jjurchase  or  leasing  of  lands  and  real 
estate,^  or  personal  i)roperty,'  have  also  been  frequently  sus- 
tained. An  agreement  by  an  employer  to  pay  an  employee  a 
stated  sum  if  the  former's  business  shouhl  be  discontinued  with- 
in a  specified  time  is  for  stipulated  damages.'  Tlie  consequence 
of  failing  to  prosecute  operations  in  the  drilling  of  oil  wells 
U})on  leased  land  justifies  an  agreement  fixing  the  damages,' 
and  so  of  the  injury  which  may  result  from  the  dissolution  of 
a  partnership,^"  and  one  for  the  payment  of  an  agreed  sum  for 


to  commence  drilling  for  oil  on 
leased  land)  ;  De  Soysa  v.  De  Plesa 
Pol,  [1912]  App.  Cas.  194< 

4  Nessle  v.  Reese,  29  How.  Pr. 
382;  Reindel  v.  Scholl,  4  C.  B.  (N. 
S.)  97;  Bagley  v.  Peddio,  IG  N.  Y. 
469,  69  Am.  Dec.  713. 

5  Grasselli  v.  Lowden,  1 1  Ohio 
St.  349;  Taylor  v.  Times  N.  Co.,  83 
Minn.  523. 

6  Leggett  V.  ^Mutual  L.  Ins.  Co., 
50  Barh.  616,  53  N.  Y.  394;  Heard 
V.  Bowers,  23  Pick.  455;  Tingley  v. 
Cutler,  7  Conn.  291 ;  Knapp 
V.  Maltby,  13  Wend.  587 ;  Slosson  v. 
Beadle,  7  Johns.  72;  Lynde  v. 
Thompson,  2  Allen,  456;  Lampman 
V.  Cochran,  19  Barb.  388,  16  N.  Y. 
275;  Mundy  v.  Culver,  18  Barb. 
336;  Clement  v.  Cash,  21  N.  Y.  253; 
Hasbrouck  v.  Tappen,  15  Johns. 
200;  Harris  v.  Miller,  6  Sawy.  319; 
Hedrick  v.  Firke,  169  Mich.  549; 
Franceschini  v.  Chaucer,  110  N.  Y. 
Supp.  775;  Gobble  v.  Linder, 
76  111.  157;  Carlisle  v.  Green 
(Tex.  Civ.  App.),  132  S.  W.  1140; 
Selby  V.  Matson,  137  Iowa  97,  14 
L.R.A.(]Sr.S.)  1210;  Beury  v.  Fay, 
73  W.  Va.  460;  Keefe  v.  Fairfield, 
184  Mass.  334;  Calbeck  v.  Ford, 
140  Mich.  48;  Beveridge  v.  West 
Side  C.  Co.,  130  App.  Div.   (N.  Y.) 


139;  Vito  V.  Birkel,  209  Pa.  206; 
Lichetti  v.  Conway,  44  Pa.  Super. 
71;  Lipscomb  v.  Fuqua,  103  Tex. 
585.  See  Grear  v.  International  S. 
Yards,  43  Tex.  Civ.  App.  370; 
Feinsot  v.  Burstein,  141  N.  Y.  Supp. 
330;  Strode  v.  Smith,  66  Ore.  163; 
Barrett  v.  Monro,  69   Wash.  229. 

7  Berger  v.  Nants,  172  111.  App. 
623  (sale  of  uncertain  quantity,  de- 
livery in  instalments  covering  a 
period  of  two  months)  ;  Dyer  v. 
Cowden,  168  Mo.  App.  649;  Mon- 
damin  ^leadows  D.  Co.  v.  Brudi,  163 
Ind.  642;  Davis  v.  Alpha  P.  C.  Co., 
134  Fed.  274  (contract  covering  a 
long  period  during  which  prices 
might  fluctuate  materially)  ;  Dies- 
tal  v.  Stevenson,  [1906]  2  K.  B. 
345;  Frost  v.  Foote  (Tex.  Civ. 
App.),  44  S.  W.  1071;  Peirce  v. 
Jung,  10  Wis.  30;  Allen  v.  Brazier, 
2  Bailey,  55;  Main  v.  King,  10 
Barb.  59 ;  Knowlton  v.  ^lackay,  29 
Up.  Can.  C.  P.  601;  Sun  P.  &  P. 
Ass'n  V.  Moore,  183  U.  S.  642,  46 
L.  cd.   366. 

8  Glynn  v.  Moran,  174  Mass.  233. 

9  Crown  O.  Co.  v.  Probert,  8  Ohio 
C.  C.  (N.  S.)  489. 

10  Yatsuyanagi  v.  Shimamura,  59 
Wash.  24. 


890  SUTHERLAND    ON    DAT\rAOES.  [§    290 

the  discharge  of  an  employee,  it  not  being'  dependent  upon  the 
wages  paid  and  the  loss  resulting  to  him  being,  from  the  view- 
point of  the  parties  when  they  contracted,  uncertain.^^ 

There  is  more  or  less  uncertainty  in  everything  which  de- 
pends upon  the  opinions  or  memories  of  witnesses;  it  may  be 
increased,  in  the  sense  of  furnishing  a  motive  for  stipulating 
damages,  if  the  testimony  under  the  circumstances  contemplated 
by  the  contract  would  be  at  a  great  distance,^^  or  must  come 
solely  from  the  defendant. ^^  In  a  contract  for  the  purchase 
of  several  city  lots  from  one  having  still  a  large  number  to  sell 
the  purchaser,  in  consideration  of  having  the  property  conveyed 
to  him  for  $21,000,  covenanted  that  he  would  by  a  certain  day 
erect  on  the  lots  so  conveyed  two  brick  houses  of  specified  dimen- 
sions, or,  in  default  thereof,  would  pay  on  demand  to  the  seller 
the  sum  of  $4,000.  This  sum  was  held  to  be  liquidated  dam- 
ages. Whether  the  vendors  would  be  better  off  if  they  got  the 
money  than  they  would  have  been  had  the  houses  been  erected 
must  from  the  nature  of  the  case  be  a  difficult  question  to  de- 
cide; and  that  is  one  reason  why  the  parties  should  be  left  to 
settle  the  matter  for  themselves.^*  In  another  case  an  agreement 
was  made  simultaneously  with  a  sale  of  village  lots  by  the  pur- 
chaser that  he  would  not  sell  spirituous  liquors  on  the  premises 
purchased  or  in  the  buildings  erected  thereon,  and  if  he  did  so 
he  should  lie  liable  to  pay  the  vendor  in  the  first  case  a  fine  of 
$10,  in  the  second  case  a  fine  of  $20,  and  for  each  subsequent 
selling  $50.  It  was  held  that  the  contract  was  not  invalid  for 
being  in  restraint  of  trade ;  ^^  but  the  "fine''  was  a  penalty,^^ 
on  the  breach  of  an  employee's  contract  not  to  use  intoxicating 
li(piors  during  the  time  for  which  he  was  engaged  the  sum 
stipuhitcd  may  be  recovered  for  a  single  breach.^''' 

§  291.  Same  subject.  The  damages  for  breach  of  contracts 
for  the  purcliase  of  the  good   will  of  an   established   trade  or 

"Jacobs    V.    Sliannon    F.    Co.,    1.1        6:?(),   24   id.   244.      See   Chase  v.   Al- 

Ohio  r.  r.    (N.  S.)    140.  len,  13  Gray,  42. 

12Cotlieal    V.    Talmage,    9    N.    Y.  15  Laubenlieimer  v.  Mann,  17  Wis. 

551,  61  Am.  Dec.  71G.    •  ^'^'^■ 

16  Same    case,    19    Wis.    519.      See 
13Bagley  v.  Peddie,  5  Sandf.  192.       ^    .-.j^^- 

14  Pearson  v.  Williams,  20  Wend.  17  Keeble  v.   Keeble,   85   Ala.   552. 


^     201]     CONVKNTIONAL     Mq  NIDATIONS     AN'D     DISC  II  AKli  KS.  801 

business  or  for  the  witlidrawal  of  (•(Uiipcl  ilimi,  arc  sn  (ili\  ionsly 
luicertHiii    that   (•oiii'ls    liaxc    rccoiiniztMl    tlic    fullest    lihcrly    of 
parties  to  fix  bel'oreliainl  the  amount  tliereof  in   that  class  of 
eases.      In  the  decision  of  such  cases  the  strongest  expressions 
are  to  he  found  to  the  cITccI   that  the  iulcMticMi  of  the  parties  is 
all-controlling,  and  that  courts  have  no  power  to  defeat  it  on 
the  ])retext  of  relieving  from  a  bad  bai'gain.     Iv(d'erring  to  such 
a  stipidation,   Sedgwick,   »!.,    in    an   early    Massachusetts   case, 
said:     "The  parties  were  competent  in  law  to  make  a  contract 
im])osing  a  limited  restraint  on   the  defeudaut's  trade  for  tlie 
plaintiif's  bciietit  and  without  injury  to  the  public.     They  were 
competent   to   determine   on    wdiat   consideration    it   should    be 
made,   and   to  liquidate  the  damages   if   it  should   be   broken. 
The  consideration  of  one  dollar  is  a  valuable  consideration.     Tt 
would  be  sufficient  to  pass  by  sale  the  defendant's  stage  and 
stage  horses,  wdiere  no  fraud  or  imj)osition  was  pi-acticed.     The 
jiarties  have  considered  it  reasonable  and  a(le(piate  and  the  de- 
fendant, by  honestly  fultilling  his  agreement  might  have  pro- 
tected himself  from  the  forfeiture.     V>ut  he  has  broken  it,  and 
lie  shall  not  be  permitted  to  say  that,   although  the  contract 
was  fairly  and  honestly  made,  and  for  a  valuable  consideration 
to  which  he  assented,  the  consideration   was  inade(puite;  that 
he  made  a  bad  bargain,  and  that  when  the  jdaiutilT  has  suffered 
by  a  breach  of  it,  he  shall  be  relieved  from  the  terms  to  which 
he  had  voluntarily  submitted.""     The  tendency,  however,  of 
more  recent  decisions  is  against  holding  any  contract  for  liqui- 
dated damages  to  be  binding  in   this   absolute  sense,      (\iurts 
generally  assume  jurisdiction  to  declare  an  excessive  sum  men- 
tioned in  connection  with  the  breach  of  any  contract  a  ]->eualty.^^ 
If  the  disproportion  between  the  consideration  and  the  under- 
taking and  the  disparity  between  the  probable  advantages  of  per- 
formance and  the  sum  agreed  to  be  })aid  in  the  event  of  failure 

18  Pierce   v.    Fuller,   8    Mass.   223,       wliieli    is    incntidiKMl    in    a    note    to 
5  Am.  Dec.  102;  Dakin  v.  Williams,       §  283. 


17    Wend.   454,    per   Nelson,   C.   J.; 


19  Wagner  Co.  v.  Cawkcr,  112  Wis. 

.'532;    Scenian  v.  TJieiiiann,   108  Wis. 
Streeter   v.   Rush,   25    Cal.    67,    per       ^g.        ^^^^     ^,^^..^^^     ^.      ^^^.^,,^^     g 

Rhodes,  J.     Compare  Hathaway  v.       Hawaii      88;      Qui-rley      v.      C.      R. 
Lynn,    75    Wis.    ISO,   0   L.R.A.   558,       Brnckett  Co.,  124  Minn.  '.IGi). 


892  SUTHERLAND  ON  DAMAGES.  [§  291 

negative  the  intention  to  limit  the  amount  to  just  or  rea- 
sonable compensation,  they  say  it  should  be  deemed  a  penalty, 
however  uncertain  the  damages.  The  same  principles  govern 
this  stipulation  in  all  contracts,  but  courts  will,  in  gen- 
eral, enforce  such  stipulations  where  the  damages  are  uncer- 
tain;  ^°  because  the  parties,  where  no  fraud  or  oppression  is 
practiced,  know  better  their  situations,  and  can  form  a  more 
correct  estimate  of  the  injury  than  a  court  or  jury.  Because  the 
damages  are  not  susceptible  of  precise  measurement  the  judg- 
ment and  agreement  of  the  parties  should  have  large  scope ;  but 
when,  as  sometimes  happens,  it  is  discovered  that  such  stipula- 
tions are  not  based  on  the  idea  of  compensation  they  are  not 
sustained.^^  This  will  be  particularly  seen  in  the  instances  of 
contracts  which  provide  the  same  sum  to  be  paid  in  the  case  of 
a  partial  or  of  a  total  breach.  Stipulations  in  an  agreement  by 
the  vendor  of  a  business  and  its  good  will  that  he  will  not  go 
into  business  in  G.,  or  within  a  certain  distance  of  it,  either  for 
himself  or  as  clerk  for  another,  and  will  not  permit  his  wife  to 
do  so,  all  refer  to  the  same  thing,  and  the  objection  that  the 
sum  named  is  a  penalty,  because  the  forbidden  acts  are  of  dif- 
ferent degrees  of  importance,  is  without  force.^^  After  the  sale 
by  the  vendee  of  the  business  and  good  will  of  the  vendor  no 
beneficial  interest  in  the  contract  stipulating  "the  damages  re- 

20  Potter  V.  Ahrens,  110  Cal.  674;  liis  agreement,  after  which  he  and 
Seenian  v.  Biemann,  108  Wis.  365,  the  plaintiff  entered  into  a  con- 
375;  Simon  v.  Lanius,  9  Ky.  L.  Rep.  tract  in  which  the  defendant  cove- 
59;  Connelly  v.  Priest,  72  Mo.  App.  nanted  not  to  practice  in  the  local- 
673;  Seini  v.  Kraiise,  13  S.  D.  530;  ity  for  ten  years,  and  bound  himself 
Hurst  V.  Hurst,  4  Ex.  571;  Ponsen-  in  the  penal  sum  of  $400  to  that 
by  V.  Adams,  2  Brown  P.  C.  431  ;  effect.  This  contract  lie  also  vio- 
Roy  V.  Duke  of  Beaufort,  2  Atk.  lated.  It  was  ruled  that  the  sum 
190;  Allen  v.  Brazier,  2  Bailey  55;  mentioned  was  a  penalty;  that  it 
Chase  v.  Allen,  13  Gray  42;  Pearson  was  not  the  intention  of  the  parties 
V.  Williams,  26  Wend.  630.  See  §§  that  the  defendant  was  to  have  the 
289,  290.  privilege  of  practicing  on  the  pay- 

21  In  Wilkinson  v.  Colley,  164  Pa.  nient  of  it;  that,  because  of  the 
35,  26  L.E.A.  114,  one  physician  sold  uncertainty  of  the  damages,  an  in- 
his  practice  to  another,  stipulating  junction  would  issue  for  the  specific 
that  at  the  end  of  a  certain  time  performance  of  the  contract.  ^ 
he  would  cease  practicing.  The  22  Stover  v.  Spielman,  1  Pa.  Super, 
vendee  sold  the  practice  to  another  Ct.  526.  See  Liotta  v.  Abruzzo,  82 
physician.     The   defendant   violated  App.  Div.   (N.  Y. )   429. 


§    291]     CONVENTIONAL    LIQUIHATIONS    AND    DISCHARGES.         893 

mains  in  the  covenantee  and  he  cannot  enforce  the  covenant. 
The  purpose  of  the  contract  beinj;-  to  protect  the  property  or 
business  to  which  it  related,  it  was  an  incident  of,  and  adhered 
to,  such  property  and  business.^' 

The  damages  which  may  result  from  delay  in  fulfilling  con- 
tracts for  particular  works  or  for  performance  of  any  specified 
act  stipulated  to  be  done  and  completed  within  a  given  time 
are  not  always  of  the  most  uncertain  nature.  Damages  for 
failure  to  complete  a  house  or  any  other  structure  may  some- 
times be  ascertained  proximately  by  a  rental  •  standard.  But 
when  intended  for  a  particular  purpose  other  than  to  be  rented, 
and  when  delay  may  hinder  or  thwart  other  and  dependent  con- 
tracts or  enterprises  the  damages  will  be  more  uncertain.  In 
a  building  contract  containing  the  usual  clauses  fixing  the  days 
for  completing  the  various  parts  of  the  work  a  stipulation  to 
the  efi^ect  that  any  neglect  to  comply  with  the  conditions  of 
the  contract  and  finish  the  work  as  provided  should  entitle  the 
employer  to  claim  damages  at  the  rate  of  $10  per  day  for  every 
day's  detention  so  caused  was  held  a  covenant  for  stipulated 
damages.^*  There  are  authorities  to  the  effect  that  the  damages 
ordinarily  resulting  from  the  failure  to  fulfill  a  building  con- 

23  Palmer  v.  Toms,  90  Wis.  367,  ]4  Abb.  Pr.  (N.  S.)  59;  Pettis  v. 
approving  Gompers  v.  Rocbestor,  50  Bloomer,  21  IIow.  Pr.  317;  Curtis 
Pa.  194.  V.   Brewer,  17  Pick.  513;   Hamilton 

24  George  v.  Roberts,  186  Ala.  v.  Moore,  33  Up.  Can.  Q.  B.  100, 
521;  McClintic-Marsball  Const.  Co.  520;  Gaskin  v.  Wales,  9  Up.  Can. 
V.  Board  Chosen  Freeholders  Hud-  C.  P.  314;  McPhcc  v.  Wilson,  25 
son  Co.  83  N.  J.  Eq.  5.39;  Bankers'  Up.  Can.  Q.  B.  169;  Bergheim  v. 
Surety  Co.  v.  Elkborn  River  Drain.  Blaenavon  I.  &  S.  Co.,  L.  R.  10  Q. 
Dist.,  130  C.  C.  A.  050,  214  Fed.  B.  319;  Young  v.  Gaut,  69  Ark. 
342;  Crawford  v.  Heatwole,  110  Va.  114;  Brown  T.  Co.  v.  Norwood  (Tex. 
358,    34    L.R.A.(N.S.)     587    quoting  Civ.  App.),  69   S.   W.   25.?. 

the  text;   Monmouth  Park  Ass'n  v.  But  wliere  in  a  Iniilding  contract 

Wallis  Iron  Works,  55  N.  J.  L.  132,  a    certain    sum    was    designated    to 

19  L.R.A.  456,  39  Am.  St.  626;  Rail-  be  paid   as   liquidated   damages   for 

road  v.  Cabinet  Co.,  104  Tenn.  568,  each   day's   delay    in   completion    of 

50  L.R.A.  729,  78  Am.  St.  933;  Col-  the  work  and    the    same    provision 

lier     V.     Betterton,     87     Tex.     440;  was  embodied  in  a  contract  between 

Reichenbach  v.  Sage,  13  Wash.  364;  the  contractor  and  a  subcontractor, 

De  Graff  v.  Wickham,  89  Iowa  720;  the  contractor,  having  been  relieved 

Emack  v.  Campbell,   14  D.  C.  App.  of  tlie  provision  in  his  contract  with 

Cas.    186;    O'Donnell    v.    Rosenberg,  his  employer,  recovered  only  actual 


894 


SUTHERLAND    ON    DAMAGES. 


[§  291 


tract  which  contains  only  the  usual  conditions  are  not  so  uncer- 
tain as  to  be  the  subjects  for  such  stipulations,  tlie  extrinsic 
circiunstanccs  not  being  unusual ;  ^^  but  the  decisions  arc  far 
from  being  unanimous  on  the  question.  Where  a  party  cove- 
nants that  he  will  transport  and  deliver  goods  within  a  certain 
time,  and  also  that  he  will  deduct  a  sum  named  from  the  freight 


damages  from  the  subcontractor  for 
delay.  Bedford  v.  J.  Henry  Miller, 
Inc.,  129  C.  C.  A.  44,  212  Fed.  368. 

In  Fletcher  v.  Dyche,  2  T.  R.  32,  a 
stipulation  for  10/.  per  week  for  de- 
lay in  finishing  a  church  was  sus- 
tained; in  Duckworth  v.  Allison,  1 
M.  &  VV.  412,  51.  per  week  for  de- 
lay in  completing  repairs  on  a  ware- 
house; in  Legge  v.  Harlock,  12  Q. 
B.  Div.  1015,  H.  per  day  for  delay 
in  building  a  barn,  wagon-shed  and 
granary;  in  Law  v.  Eedditch,  [1892] 
1  Q.  B.  127,  lOOZ.  and  51.  per  week 
for  delay  in  constructing  sewerage 
works;  in  Ward  v.  Hudson  River  B. 
Co.,  125  N.  Y.  230,  $10  a  day  for 
delay  in  erecting  dwellings;  in  Ma- 
lone  V.  Pliiladelpliia,  in  Monmouth 
Park  Ass'n  v.  Wallis  I.  Works, 
supra,  $100  per  day  for  failure  to 
complete  a  grand  stand  for  a  race 
course. 

In  Curtis  v.  Van  Bergh,  IGl  N. 
Y.  47,  the  defendants  provided  for 
the  lease  of  a  building  to  be  erected 
when  there  was  less  than  six 
months'  time  within  which  to  com- 
plete it,  and  they  needed  protection 
from  the  consequences  of  failure  on 
account  of  their  business  which  re- 
quired more  room  and  machinery. 
In  view  of  the  expiration  of  their 
lease  of  the  premises  in  which  they 
were,  the  uncertainty  of  their  being 
able  to  secure  another  place  in 
which  to  do  business,  and  the  con- 
sequences of  a  removal,  a  stipula- 
tion for  the  payment  of  $50  per  day 
for  delay  in  the  construction  of 
such     building     was     sustained     al- 


tliough  the  rental  agreed  upon  was 
but  $2,000  a  year. 

In  Bird  v.  St.  John's  Episcopal 
Church,  154  Ind.  138,  a  stipulation 
for  $50  per  day  for  delay  in  com- 
pleting a  church  was  sustained. 

The  defendant  bound  himself  to 
complete  a  building  within  eleven 
months  and  was  to  receive  $100  for 
each  day  less  than  the  time  limit, 
and  to  pay  $1,000  for  each  day  that 
he  should  exceed  it.  He  made  a 
contract  with  the  plaintiff  for  the 
stone  and  granite  work,  and  the  lat- 
ter bound  himself  to  pay  $150  per 
day  as  a  penalty  for  each  and  every 
day  he  was  in  default  as  and  for 
liquidated  damages.  The  latter  was 
an  agreement  for  stipulated  dam- 
ages. Kunkel  v.  Wherry,  189  Pa. 
198,  09  Am.  St.  802. 

25  First  Nat.  Bank  of  San  Marcos 
V.  Smith,  —  Tex.  Civ.  App.  — ,  160 
S.  W.  311;  Wait  v.  Stanton,  104 
Ark.  9;  Stephens  v.  Phoenix  B.  Co., 
139  Fed.  248,  71  C.  C.  A.  374;  Will- 
son  V.  Baltimore,  83  Md.  212,  55 
Am.  St.  339;  Chicago  H.  W.  Co.  v. 
United  States,  45  C.  C.  A.  343,  352, 
53  L.R.A.  122,  106  Fed.  382,  quoting 
the  iext;  Wheedon  v.  American  B. 
&  T.  Co.,  128  N.  C.  69;  Clements  v. 
Railroad  Co.,  1.32  Pa.  445;  Bren- 
nan  v.  Clark,  29  Neb.  385;  Patent 
B.  Co.  V.  Moore,  75  Cal.  205.  But 
see  Ward  v.  Hudson  River  B.  Co., 
125  N.  Y.  230;  Sun  P.  &  P.  Ass'n 
V.  Moore,  183  U.  S.  642,  46  L.  ed. 
366 

A  contract  on  the  part  of  a  rail- 
road   bridge    builder    to    provide    a 


§    291]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.  805 

each  day  tliej  are  delayed  beyond  tlie  time  specified  for  the 
delivery,  such  agreed  deduction  is  liquidated  daraages.^^  Under 
peculiar  circumstances  an  agreement  to  pay  $500  for  failure 
to  surrender  possession  of  leased  premises  at  a  certain  date  was 
sustained  as  liquidating  the  damages.  The  lessor  was  hut  a 
lessee  himself,  under  stipulations  to  surrender  a  month  later. 
He  had  authority  from  his  lessor  to  put  additions  and  improve- 
ments on  the  ])reniises,  all  of  which  he  had  a  right  to  remove 
at  the  end  of  his  term.  It  was  considered  a  iiaturnl  and  I'casou- 
able  provision  that,  should  the  subtenant  bind  himself  to  leave 
the  premises  a  month  before  the  landlord's  term  expired,  he 
might  have  sufficient  time  to  remove  his  improvements  and  thus 
escape  a  forfeiture  to  his  lessor.^^  An  agreement  provided  that 
land  should  be  restored  to  a  prescribed  condition  and  in  default 
of  performance  the  person  bound  should  pay  £100  per  acre. 
The  condition  was  referred  to  in  one  clause  of  the  contract  as 
a  "penalty.''  The  house  of  lords  held,  reversing  the  Scotch 
court,  that  the  case  was  a  proper  one  for  stipulated  damages.''^ 
No  damages  could  be  more  uncertain  than  those  which  might 
result  from  delay  in  furnishing  for  publicatiou  the  biography 
of  a  man  for  the  time  being  attracting  public  notice.  Such  a 
man  undertook  to  furnish  his  biography  for  publication  within 
a  specified  time  and  for  every  day's  delay  beyond  that  time 
agreed  to  ]my  $105.  lu  a  suit  to  recover  for  a  delay  of  one 
hundred  and  sixty-one  days  the  court  held  the  agreement  could 
not  be  literally  enforced,  and  that  the  plaintitf  coul<l  oidy  i-e- 

crossing  for  trains  by  a  date  fixed  sliould    pay   $.'iO   per   day   as   stipu- 

or  pay  $1,000  a  week  if  he  was   in  lated    damages     for     every     day    he 

default    is    for    liquidated    damages.  sliould  liohi  over  after  the  termina- 

Texas,  etc.  R.  Co.  v.  Rust,  10  Fed.  tion  of  his  lease.     IJecause  the  pro- 

-^•'^*  vision    as    to    damages   was  highly 

26  Harmony    v.    Bingham,    12    N.  penal  and  the  Irase  admitted  ..f  two 

Y.   100:    Sparrow   v.   Paris,  7   IT.   &  .        .-  .       ii       .•  .i 

^  constructions    as    to    ilii-    tune    the 

N    .594 

„„  ^  .  „r  ,         .r,    .,,  .,  damages    should     begin     to    iicerue, 

27  Peine  v.  Weber,  47    111.  41.  ,        "  T,        , 

,,,.      ,  ...,,         .,    ,,,     .  ,„  they    were    not    considered    as    coin- 

In  Ivlingle  V.   Kitter,   ij4   111.   140, 

,  '  -J   J    r       ii  1  iiiencing  until   tiie    time     wlicii    tin- 

a    lease  provided   for   tlie   surrender  '^ 

by  the  lessee  of  portions  of  the  prop-  ''"^"-'^     premis.^s     were     to     be     sur- 

erty  at  different  times,  and  without  rendered. 

adverting    to    such    provision    there  28  Lord   Elphinstone   v.   Alonkland 

was     a     covenant     that     the     lessee  I.  A-  ('.  Co.,  11   App.  Cas.  .^32. 


896  SUTJIEKLAND    ON    DAMAGES.  [§    291 

cover  actual  damages.^  So  a  contract  to  put  machinery  in  a 
boat  for  $8,000  on  or  before  a  certain  day,  ''under  a  forfeiture 
of  $100  per  day  for  each  and  every  day  after  the  above  date 
until  the  same  should  be  completed  as  above,"  was  held  to  pro- 
vide for  a  penalty.^" 

§  292.  Same  subject.  The  damages  which  may  result  from 
a  mechanic  quitting  work  contrary  to  his  contract  are  uncer- 
tain ;  but  every  agreement  purporting'  to  fix  the  amount  he  shall 
forfeit  or  pay  in  such  an  event  will  not  be  treated  as  a  liquida- 
tion thereof.  Where  the  contract  of  hiring  required  that  if 
the  employee  quit  without  giving  thirty  days'  notice  he  should 
forfeit  all  wages  due  him  at  the  time  of  leaving,  Campbell,  J., 
said :  ''We  have  no  difficulty  in  holding  that  the  injury  caused 
by  a  sudden  breaking  off  of  a  contract  of  service  by  either  party 
involves  such  difficulties  concerning  the  actual  loss  as  to  render 
a  reasonable  agreement  for  stipulated  damages  appropriate.  If 
a  fixed  sum,  or  a  maximum  within  which  wages  unpaid  and 
accruing  since  the  last  pay-day  might  be  forfeited,  should  be 
agreed  upon,  and  should  not  be  an  unreasonable  or  oppressive 
exaction,  there  would  seem  to  be  no  legal  objection  to  the  stipu- 
lation if  both  parties  are  equally  and  justly  protected.  But 
the  facts  set  forth  in  this  record  do  not,  we  think,  bring  the 
case  within  any  such  rule.  *  *  *  The  forfeiture  under  the 
contract  covers  all  wages  due  at  the  time  of  leaving.  This  is 
open  to  the  objection  that  the  employer  may  have  been  in  ar- 
rears, and  thus  enabled  to  profit  by  his  own  wrong.  No  such 
forfeiture  could  be  enforced  against  wages,  as  such,  which  the 
workman  was  to  liave  paid  to  him  before  he  committed  any 
breach  of  his  duty.  Again,  it  does  not  appear  how  often  wages 
were  payable,  and  what  proportion  of  the  year's  earnings  could 
thus  be  withheld  for  a  breach  of  contract.  It  would  not  be 
reasonable  to  make  the  forfeiture  cover  a  very  long  period. 
The  inference,  in  the  absence  of  proof  to  the  contrary,  would 
be  that  the  price  of  work  done  by  the  piece  might  not  be  payable 

29  Grccr  v.  Tweed,  13  Abb.  Pr.  (N.       G43:  Col  well  v.  Foulks,  30  How.  Pr. 

o  <      An-T         a         T      u     u  •  316:  Van  Buren  v.  Digges,  11  How. 

S.)      427.       See     Laubenheiraer     v.  '  oe     > 

461,    13    L.    ed.    771  ;     Kennedy    v. 

Mann,  17  Wis.  .542,  19  id.  519.  t-   -^    i    o^.  *        oi    /  +      t   nio     loo 

'  Lnited   States,   24   C  t.   of   Cla.    122, 

30  Colwell   V.   Lawrence,   38   Barb.       242. 


292]     CONVENTIONAI.    I.IQ['ir)ATIO>;S    am;    DISCllAIJCiF.S. 


sii: 


at  the  same  intervals  as  ordinary  wages.  And  inasniucli  as 
the  periodical  earnings  of  such  Laborers  could  not  be  nniforin 
it  would  be  difficult  to  sustain  an  agreeiuent  for  stipulated  dam- 
ages unless  some  limit  should  be  fixed  beyond  which  the  for- 
feiture should  not  extend.  The  agreement  set  out  in  the  record 
is  also  defective  for  want  of  mutuality.  The  employer,  on  fail- 
ure to  give  notice  before  dismissal,  is  subjected  to  a  ])ayiiient  of 
thirty  days'  wages.  This  stipulation,  when  applied  to  the 
wages  of  piece  work,  is  entirely  vague  and  indeterminate.  It 
furnishes  no  standard  of  calculation,  and  lacks  the  iirst  essential 
of  stipulated  damages,  which  are  allowed  to  avoid   uncertain- 


ty- 


Where   the   employee's   contract   stipulalinii-   the   dam 


31  Richardson  v.  Woehler,  26 
Mich.  90;  Davis  v.  Freeman,  10 
Mich.  188. 

In  the  last  case  Manning,  J., 
said :  "The  plaintiffs  in  error  were 
to  have  $1.50  per  M.  for  drawing 
the  timber,  $1  of  which  was  to  be 
paid  as  the  timber  was  drtiwn,  in 
supplies  to  enable  them  to  carry  on 
the  job;  and  the  remaining  fifty 
cents  in  cash  when  all  the  timber 
was  drawn.  In  the  language  of  the 
contract,  'it  being  understood  that 
the  balance  kept  back  is  to  secure 
the  completion  of  this  contract; 
and  it  is  hereby  agreed  between  tlu; 
parties  that  the  fifty  cents  per 
thousand  feet  is  settled,  fixed  and 
liquidated  damages,  in  case  this  con- 
tract is  not  completed  by  the  said 
first  party.'  They  having  failed  to 
draw  all  the  timber,  the  question  is 
whether  the  fifty  cents  per  thousand 
feet  on  what  was  drawn,  and  wliieli 
was  to  be  paid  on  completion  of 
tlie  contract,  is  to  be  regarded  as 
stipulated  damages,  or  in  the  naturt- 
of  a  forfeiture  or  penalty  for  not 
completing  the  contract.  Tlie  court 
below  charged  the  jury  tliat  tlic  lifty 
cents  per  thousand  feet  on  wliat  liad 
lieen  drawn  was  stipulated  damages. 
In  tills  we  tliink  the  court  erred. 
Suth.  Dam.  Vol.  I.— 57. 


If  stipulated  damages  for  a  non- 
performance of  the  entire  contract, 
the  defendant  in  error  could  not  re- 
cover any  other  or  greater  damage 
for  a  nonperformance,  in  whole  or 
in  part.  And  it  would  follow  tliat 
he  would  recover  no  damages  what- 
ever on  the  contract  liad  the  plain- 
tiff in  error  refused  to  draw  anj'  of 
the  timber.  Such  clearly  could  not 
have  been  the  intention  of  tiie  par- 
ties. They  must  have  intended  that 
if  the  plaintiff  in  error  should  draw 
part  of  the  timber,  and  not  the 
whole,  tliey  should  not  be  paid  the 
fifty  cents  per  tliousand  feet  on 
what  had  l)ecn  drawn  by  them. 
That,  in  the  language  of  the  con- 
tract, should  be  'fixed  and  liquidated 
damages.'  If  tlio  contract  had  pro- 
vided for  the  ])iiyiiu'iit  of  fifty  cents 
per  tliousand  feet  as  liquidated 
damages  for  tlie  timber  not  drawn, 
tiie  case  would  be  altogetiier  differ- 
ent. For  the  nearer  sucli  a  con- 
tract was  completed  tlie  less  would 
be  the  damages.  The  damages 
would  be  proportioned  to  tlie  non- 
performance. Hut  tlie  contrary 
would  lie  the  ease  as  the  c<iiitraet  is, 
if  the  fifty  cents  per  tliousand  is 
to  lie  regarded  as  liquidated  dam- 
ages, and   not  as   penally.      i'Or  tlie 


898 


SUTHERLAND    ON    DAMAGES. 


[§   292 


ages  the  employer  might  recover  if  the  contract  of  employment 
was  violated  was  neither  unreasonable  nor  oppressive  the  stip- 
ulation was  sustained  under  the  facts  indicated  in  the  follow- 
ing excerpt  from  the  opinion:  The  plaintiff  in  error  was  a 
cotton  mill,  having  in  its  employment  hundreds  of  hands.  The 
work  is  divided  up  into  many  departments.  The  raw  material 
is  handled  by  one  set  of  hands  and  put  in  condition  for  another, 
and  the  second  department  still  further  advances  its  manufact- 
ure; and  so  on  through  the  successive  stages  of  progress.  The 
evidence  shows  that  each  department  is  dependent  upon  that 
immediately  below  it.  Now,  if  the  operatives  of  one  department 
quit  or  their  work  is  delayed,  its  effect  is  felt  in  all  to  a  greater 
or  less  degree.  It  is  also  shown  that  it  is  not  always  easy  to  re- 
place an  operative  at  once,  and  that  the  unexpected  quitting  of 
even  one  hand  will  to  some  extent  affect  the  results  throughout 
the  mill.  Yet  the  evidence  shows  that  it  would  be  impossible 
to  calculate  with  any  certainty  the  precise,  actual  loss  due  to  an 
unexpected  breach  of  an  employee's  engagement;  though  it  is 
shown  that  there  are  some  departments  of  work  where  the  quit- 
ting of  a  small  number  of  hands,  without  notice,  would  stop  the 
entire   mill    and   throw    other   hundreds    out   of   employment. 


nearer  the  contract  is  completed  the 
greater  are  the  damages  in  case  of 
failure.  The  damages  for  not  draw- 
ing five  thousand  of  five  hundred 
thousand  feet  would  be  $247.50, 
wliereas  the  damages  for  failing  to 
draw  four  Imndred  and  ninety-five 
of  the  five  hundred  thousand  would 
be  only  $2.50.  The  policy  of  the 
law  will  not  permit  parties  to  make 
that  liquidated  damages,  by  calling 
it  such  in  their  contract,  which  in 
its  nature  is  clearly  a  penalty  or 
forfeiture  for  nonperformance. 
While  it  allows  them,  in  certain 
cases,  to  fix  their  own  damages,  it 
will  in  no  case  permit  them  to  evade 
the  law  by  agreement.  See  Jaquith 
V.  Hudson,  5  Mich.  123."  Stearns 
v.  Barrett,  1  Pick.  443,  11  Am.  Dec. 
223. 


In  Schrimpf  v.  Tennessee  Mfg. 
Co.,  86  Tenn.  219,  8  Am.  St.  832,  a 
servant  agreed  to  give  notice  of  his 
intention  to  quit,  and  if  he  failed 
to  do  so  whatever  was  due  him  at 
the  time  he  left  the  service  was  to 
be  an  indebtedness  to  the  employer 
to  be  considered  as  liquidated  dam- 
ages. The  contract  was  void  be- 
cause  unreasonable   and   oppressive. 

In  Bilz  v.  Powell,  50  Colo.  482, 
38  L.R.A.(N.8.)  847,  a  stipulation 
providing  for  liquidated  damages  in 
favor  of  tlie  emploj'er,  to  be  retained 
out  of  conmiissions  to  be  earned  by 
the  employee,  was  sustained.  It 
was  recognized  that  this  is  in  op- 
position to  Davis  V.  Freeman,  10 
Mich.  188,  and  to  Stony  Creek  L. 
Co.  V.  Fields,  102  Va.  1. 


§    293]     CONVENTIOJSAI-    LKH'H^ATIONS    AND    DlSCJl  ARti  KS.  899 

-X-  *  *  'Yhc  case  is  one,  then,  where  the  certainty  of  sunu;  dam- 
age, and  the  uncertainty  of  means  and  standards  by  wliich  the 
actual  damage  can  be  determined,  requires  the  courts  to  uphold 
the  contract  as  one  for  liquidated  damages  and  not  as  providing 
for  a  penalty.^^  The  uncertainty  of  the  damages  which  follow 
the  breach  of  a  contract  by  actors  with  a  theatrical  manager 
for  their  services  for  a  stated  i)eriod  by  performing  in  another 
theatre  before  the  fulfillment  of  their  engagement  with  him 
sustains  a  stipulation  fixing  the  damages  for  its  breach. ^^ 

The  inquiry  whether  a  fixed  sum  is  intended  as  penalty  or 
liquidated  damages  is  generally  answered  according  to  the 
equity  and  justice  of  the  particular  case.  If  the  damages  are 
uncertain  in  their  nature  or  difficult  to  be  proved,  and  in  apply- 
ing the  stipulation  to  the  case  the  result  is  not  manifestly  at 
variance  with  the  principle  of  just  compensation  it  is  readily 
adopted  as  consistent  therewith.  In  such  cases  the  intention 
IS  referred  from  these  circumstances  and  the  language  of  the 
parties  is  very  liberally  construed  to  give  elfect  to  it.  The  sum 
may  be  called  a  penalty  or  forfeiture  or  the  form  and  phrase- 
ology may  be  vague  and  equivocal ;  but,  nevertheless,  the  sura 
stated  be  held  to  be  liquidated  damages.^* 

§  293.  Same  subject;  illustrations.  Some  differences  will 
be  noticed,  resulting  from  a  stricter  adherence  to  the  artificial 
•  rules  of  construction  by  some  courts  than  by  others.  On  the 
other  hand,  where  the  actual  damages  may  be  ascertained  by 

32  Teniicssoe  Mfg.  Co.  V.  James,  01  Atl.  615;  Eakin  v.  Scott,  70  Tex. 
Tcnn.  ]54,  161,  30  Am.  St.  865,  15  442;  Boys  v.  Anccll,  5  Bing.  X.  C. 
L.R.A.  2]];  Walsh  v.  Fisher,  102  ,'500;  Sticeper  v.  Williams,  48  Pa. 
Wis.  ]72,  76  Am.  St.  865,  4.3  L.R.A.  450;  Burr  v.  Todd,  -II  id.  206; 
810;  In  accord:  Myers-G.  N.  Co.  v.  Bigony  v.  Tyson,  75  id.  157;  IVar- 
Grossman,  167  Mo.  App.  722.  son    v.    Williams,     2(1     WCiid.     630; 

33  Pastor  V.  Solomon,  26  N.  Y.  Knapp  v.  ilaltby,  13  id.  5S7 ;  Up- 
.Misc.  125,  afTirniing  25  N.  Y.  Misc.  iiam  v.  Smith,  7  Mass.  265;  Fisk  v. 
322;  Bustonaby  v.  Revardel,  71  N.  Fowler,  10  Cal.  512;  Sparrow  v. 
Y.  Misc.  207.  Paris,     7     11.     &     X.     504;     Yennor 

34Tidwell    V.    Southern    E.    &    B.  v.  Hammond,  36  Wis.  277 ;  White  v. 

Works,  87  Ark.  52;  Santa  Fe  St.  R.  Arletli,   1    Bond,   310;    Haymaker   v. 

Co.    V.    Scliutz,    37    Tex.    Civ.    App.  Sehroers,  40  Mo.  406;   Fish  v.  Rob- 

14;    §  283n.;    Mathews  v.  Sharp,  00  inson,    14    Ohio    C.    C.    (X.    S.)    414 

Pa.  560;  Lennon  v.  Smith,  14  Daly  (covenant    against    reletting    prem- 

520;     Miller    v.     Rankin     (Pa.)     11  iscs). 


900  8UTHEKLAND    ON    DAMAGES.  [§    293 

mere  coiiipuiation  or  can  be  easily  established  by  proof,  and 
the  sum  stated  is  not  a  jnst  measnre  of  the  actual  loss  or  injury, 
these  circumstances  prevail  against  very  clear  and  positive  ex- 
pressions of  intention  to  liquidate  damages.^^  In  cases  of 
neutral  circumstances  the  language  and  form  of  the  contract 
may  alone  be  decisive.  All  doubts  as  to  the  justice  of  the  stip- 
ulated sum  or  as  to  the  actual  intention  of  the  parties  will  be 
resolved  by  treating  it  as  a  penalty.  Many  stipulations  osten- 
sibly providing  a  remuneration  to  be  paid,  or  in  some  way  to  in- 
ure to  the  party  entitled  to  the  benefit  of  the  contract  in  case  of 
a  breach,  have  l)een  held  not  to  have  the  effect  to  liquidate  dam- 
ages because  so  framed  as  to  be  inconsistent  in  their  effect  with 
the  idea  of  compensation  either  for  the  reason  that  the  intention 
to  limit  the  compensation  for  breach  to  such  amount  as  the 
provision  in  question  may  specify,  or  the  pur])ose  to  afford  com- 
pensation to  that  extent  is  doubtful  in  view  of  the  special  facts 
of  the  case.  A  few  cases  may  be  profitably  consulted  as  illus- 
trations of  the  uncertain  nature  of  such  stipulations,  and  how 
much  at  large  is  the  judicial  discretion  by  which  their  practical 
effect  is  governed.  In  a  case  in  New  York  two  parties  agreed 
upon  an  exchange  of  real  estate ;  each  was  to  deliver  a  deed  of 
his  property  or  "forfeit  the  sum  of  $500.'"  Upon  the  first  trial 
the  court  held  this  to  be  a  provision  for  liquidated  damages  and 
the  plaintiff  had  a  verdict  for  that  sum,  which  was  set  aside 
on  the  defendant's  motion  upon  the  ground  that  the  court  erred 
in  treating  that  sum  as  other  than  a  penalty.  The  case  was  re- 
tried upon  this  theory  and  resulted  in  a  verdict  for  the  plaintiff 
of  $1,000  against  his  request  and  exception  that  it  should  be 
regarded  as  stipulated  damages.  The  defendant  then  sought 
to  re\'erse  the  judgment  on  the  ground  that  the  sum  stated  in 
the  contract  was  not  a  penalty,  but  liquidated  damages.  Tiie 
ruling  that  it  was  a  penalty  Avas  in  harmony  with  the  defend- 
ant's argiimcnt  for  a  new  trial,  and  he  had  taken  no  exception 
to  a  like  construction  of  the  contract  on  that  trial.  He  was, 
therefore,  not  in  a  situation  on  appeal  to  allege  that  that  con- 
struction was  erroneous.     Church,  C  J.,  said:     ''It  is,  however, 

35  Keml)le  v.  Farrcn,  fi  Bine;.  141 ;  Horner  v.  Flintoff,  9  M.  &  W.  678. 


§    293]     CONVENTIONAL    LIQUIDATIONS    AND    DISCII AKUKS.  001 

jiToper  to  say  that,  if  the  question  was  before  us,  we  should 
hesitate  in  holding  it  a  penalty;  and  there  are  many  reasons  for 
regarding  it  as  a  provision  fixing  the  measure  of  damages  by  the 
parties.  The  word  'forfeit'  is  not  conclusive.  A  fundamental 
rule  upon  this  subject  is  that  the  words  employed  must,  in  gen- 
eral, yield  to  the  intention  of  the  parties  as  evinced  by  the 
nature  of  the  agreement,  the  amount  of  the  sum  named  and  all 
the  surrounding  circumstances.  The  sum  named  is  reasonable 
in  amount;  it  is  payable  for  one  breach,  viz. :  a  failure  to  deliver 
a  deed ;  and  the  injury  is  in  some  degree  uncertain  in  amount 
and  extent  and  might  depend  upon  many  unforeseen  contin- 
gencies. These  are  material  circumstances  favorable  to  an 
inference  that  the  parties  intended  to  fix  the  sum  as  the  nu'asiire 
of  damages."  But  that  question  being  precluded,  by  the  absence 
of  any  objection  on  the  appellant's  part,  the  judgment  was 
affirmed.^^ 

In  a  later  case  in  the  same  state  an  ice  company  agreed  to 
deliver  to  K.  four  thousand  tons  of  ice  in  1870,  for  retail. 
Afterwards  the  company,  by  fraudulent  representations,  pro- 
cured from  K.  a  written  exoneration  as  to  all  the  ice  above  live 
hundred  and  eighty-seven  tons.  By  the  original  agreement  K. 
agreed  to  pay  the  ice  company  $1  per  ton  for  each  and  every 
ton  that  he  failed  to  take  according  to  the  terms  of  the  agree- 
ment; and  the  ice  company  agreed  to  forfeit  $1  per  ton  l"or  each 
and  every  ton  that  they  failed  to  deliver  according  to  the  terms 
of  the  agreement.  The  contract  price  of  the  ice  delivered  was 
$2.50  per  ton,  and  the  market  price,  when  the  exonerated  quan- 
tity should  have  been  delivered,  was  from  $14  to  $1(1  per  Ion. 
A  suit  was  brought  for  rescission  of  the  agreement  obtained  by 
fraiul,  reducing  the  quantity,  and  for  damages.  The  ^'scission 
was  granted,  and  the  next  (luestion  was  between  iicnally  ;iiid 
liquidated  damages  under  the  $1  per  ton  clause  referred  lo. 
The  court  of  common  pleas  held  that  the  stipuhition  was  a  j)en- 
alty.^^  The  court  of  appeals  were  of  contrary  o]iinion.  l']arl, 
J.,  said:     "What  was  here  intended  by  the  parties:!     The  $1 

36Noy("S  V.  Phillips,  60  N.  Y.  408.       28  Mo.  :5!).     Soc  Cotlical  v.    Taima^ie, 
37  Kemp   V.   Knickerbocker   1.   Co., 
51  How.  Pr.  31;   Basye  v.  Ambrose,       0  N.  Y.  5.')!,  61   Am.  Dec.  716. 


902 


SUTHEKLAND    ON    DAMA(4ES. 


[§  293 


was  certainly  intended  at  least  to  limit  the  extent  of  damages 
to  be  paid  in  case  of  breach,  else  there  would  be  no  purpose  for 
inserting  it;  and  eifect  should  be  given  to  this  intention  if  it 
can  be  consistently  with  the  rules  of  law.  There  is  nothing 
decisive  in  the  language  used.  In  case  of  failure  by  the  plain- 
tiffs they  agreed  'to  ])ay'  the  $1,  in  case  of  failure  by  the  de- 
fendant it  agreed  'to  forfeit'  the  same  sum.  The  words  'to  pay' 
and  'to  forfeit'  were  evidently  used  in  the  same  sense,'^  and 
might  be  used  in  case  the  sum  was  intended  either  as  liquidated 
damages  or  as  a  penalty.  "^^     In  another  case,  a  building  con- 


38  §  283,  n. 

39  Kemp  V.  Knickerbocker  I.  Co., 
69  N.  Y.  45,  57;  Winch  v.  Mutual 
Ben.  I.  Co.,  9  Daly  117. 

In  Lowry  v.  Barelli,  21  Ohio  St. 
324,  one  partj^  offered  to  sell  and 
deliver  at  a  specified  time  and  place 
two  thousand  five  hundred  cubic 
feet  of  Italian  marble  at  $2.12^1 
per  foot,  and  there  was  added  the 
following:  "For  noncompliance  with 
this  contract  by  eitlier  party  the 
penalty  shall  be  as  follows:  If  the 
parties  of  the  first  part  are  not 
themselves,  or  agents,  on  the  spot 
twenty  days  after  the  stipulated  no- 
tice be  given,  then  the  parties  of  the 
second  part  shall  be  at  liberty  to 
sell  said  marble  just  as  if  consigned 
to  them,  and  claim  of  said  first  par- 
tics  the  difference  between  the  net 
amount  that  the  marble  sold  at,  and 
what  they  bound  themselves  to  pay 
for  it,  say  $2.1 2|  per  cubic  foot; 
provided  always,  that  said  difference 
shall  never  exceed  thirty-seven  and 
one-half  cents  per  cubic  foot,  which 
difference  shall  be  paid  down,  in 
cash  at  once,  without  any  difficulty ; 
and  should  the  parties  of  the  sec- 
ond part  fail  to  deliver  within  the 
specified  time  the  quantity  of  marble 
above  mentioned,  the  parties  of  the 
first  part  shall  be  at  liberty  to  buy 
the  same  quantity  of  marble  at  the 


market  price,  and  charge  the  differ- 
ence, if  any,  to  the  parties  of  the 
second  part;  provided  always,  that 
the  difference  of  the  marble  so  pur- 
chased shall  not  exceed  thirty-seven 
and  one-half  cents  per  cubic  foot  of 
the  price  fixed  by  this  agreement, 
and  that  tiie  terms  of  payment  be 
cash."  The  vendee  sued  the  vendor 
and  assigned  as  a  breach  the  non- 
delivery of  the  marble.  The  jury 
found,  among  other  things,  that 
'the  defendants  refused  to  perform 
the  agreement  on  their  part;  that 
the  plaintiffs  did  not  purchase,  nor 
attempt  to  purchase,  marble  corre- 
sponding to  that  described  in  the 
contract  before  bringing  suit;  that 
such  a  lot  of  marble  could  not  have 
been  purchased  in  New  Orleans 
where  the  contract  was  made ;  that 
the  difl"erence  between  tlie  market 
price  and  the  contract  price  on  the 
day  of  breach  was  greater  tlian  thir- 
ty-seven and  a  half  cents  per  foot; 
that  the  damages  of  tiie  plaintiff 
amount  to  $1,516.62,"  for  which 
sum  they  returned  a  verdict.  A 
motion  for  a  new  trial  was  made  on 
the  ground,  among  others,  that  the 
verdict  was  contrary  to  the  law 
and  the  evidence.  On  this  motion  it 
was  contended  on  behalf  of  the  de- 
fendants "that  the  sum  of  thirty- 
seven   and  a  half  cents  per  foot  is 


§    20o]     CONVENTTONAI,    TJQUIDATIONS    AND    DISCHAKOER.  !M);5 

tract,  the  builder  was  to  receive  for  the  completed  house  .$4,r)00  ; 
the  contract  contained  the  provision  that  the  Imilder,  who  was 
the  plaintiff,  should  "forfeit  ten  per  cent  on  the  whole  amount 
if  the  said  house  is  not  entirely  com])leted  and  fit  to  occii]ty  at 


in  the  nature  of  a  limitation  of 
damages,  and  not  actual  or  liqui- 
dated damages,  and  is  the  utmont 
that  tiie  parties  can  recover."  Tliis 
point  was  not  noticed  in  the  opinion, 
which  was  adverse  to  the  motion, 
and  judgment  was  ordered  to  be  ren- 
dered on  the  verdict.  Mcllvaine,  J., 
said:  "It  is  no  doubt  competent  for 
parties  to  limit  by  express  stipula- 
tion tlie  amount  of  damages  to  be 
recovered  in  the  event  of  a  breach 
of  their  contract;  or  to  make  the 
right  to  recover  at  all  to  depend 
upon  a  particular  event;  or  they 
may  agree  that  damages  shall  not 
be  recovered  in  any  event  for  a  vio- 
lation of  the  contract;  thus  making 
what  would  otlierwise  be  a  con- 
tract binding  in  law  a  mere  option 
on  the  part  of  the  promisor  to  do 
or  not  to  do  as  he  may  choose.  In 
our  opinion  the  contract  between  the 
parties  in  this  case  was  of  the  first 
and  not  of  the  second  or  third 
classes  named.  Taking  it  alto- 
gether, we  believe  tlie  parties  in- 
tended to  secure  the  performance  at 
what  they  supposed  would  be  a  rea- 
sonable compensation  to  the  injured 
party  in  case  of  a  default  by  the 
other  in  not  receiving  or  delivering 
the  marble. 

"It  cannot  be  doubted  that  the 
parties  intended  to  bind  each  other 
by  this  contract  to  the  purchase  and 
sale  upon  the  terms  named  tlierein. 
For  tlie  l)reacli  of  very  contract 
the  law  implies  damages;  and  to 
escape  the  consequences  of  this  rule 
of  law  the  party  in  default  should 
be  able  to  show  that  damages  had 
been    waived.      Tn    this    contract   no 


waiver  or  exemption  from  damagf« 
upon  the  estate  of  facts  found  in 
the  special  verdict  is  expressed,  nor 
can  it  i>e  ijiferred  except  upon  tln' 
principle  that  exprcusio  unius  est 
cxclusio  alterivs.  Tliis  maxim,  how- 
ever, should  not  be  applied  in  a 
case  where,  by  fair  construction  of 
the  whole  instrument,  a  dilVcrent  in- 
tention can  be  ascertained.  *  »  • 
Wliatever  might  have  been  the  law 
of  tins  cas(\  had  there  been  such 
niarl)le  in  the  market  at  the  time  of 
the  defendant's  default,  we  are  of 
opinion  that  the  plaintiffs,  un<ler 
the  state  of  facts  found  in  tlie 
special  verdict,  were  excused  not 
only  from  making  a  purchase  of  a 
like  quantity  of  marble  in  the 
market,  but  also  from  any  vain  and 
fruitless  effort  to  do  so." 

In  Grand  Tower  Co.  v.  Phillipf?, 
2.3  Wall.  471,  23  L.  ed.  71,  a  com- 
pany having  coal  mines  agreed  to 
deliver  one  hundred  and  fifty  thous- 
and tons  of  coal,  the  product  of 
its  mines,  to  P.  at  $3  a  ton  during 
the  year  1870,  in  equal  daily  propor- 
tions, between  the  15th  of  February 
and  the  1.5th  of  December;  that  is 
to  say,  fifteen  tliousand  tons  each 
month.  The  contract  contained  tliis 
provision :  "If  through  no  fault  of 
the  parties  of  the  second  part  (P.K 
the  party  of  the  first  part  (tlie  com- 
pany) shall  fail  in  any  one  montii 
to  deliver  all  or  any  part  of  the 
quota  of  coal  to  which  the  parties 
of  the  second  part  may  be  entilh'd 
in  siu'li  month,  tlie  party  of  the  first 
part  shall  pay  the  parties  of  the 
second  parts  as  licpiidated  dam- 
ages  twenty-five   cents    per    ton    for 


904 


SUTHERLAND    ON    DAMAGES. 


[§  29J 


the  time  agreed  upon."  Daniel,  J.,  said:  "The  clause  '"  *  * 
cannot  properly  be  regarded  as  an  agreement  or  settlement  of 
liquidated  damages.  The  term  'forfeiture'  imports  a  penalty; 
it  has  no  necessary  connection  with  the  measure  or  degree  of 
injury  which  may  result  from  a  breach  of  contract  or  from  an 
imperfect  performance.  It  implies  an  absolute  infliction,  re- 
gardless of  the  nature  and  extent  of  the  causes  by  which  it  is 
superinduced.  Unless,  therefore,  it  shall  have  been  expressly 
adopted  and  declared  by  the  parties  to  be  a  measure  of  injury 


each  and  every  ton  which  it  may 
have  so  failed  to  deliver ;  or  in- 
stead thereof,  the  parties  of  the 
second  part  may  elect  to  receive  all 
or  any  part  of  the  coal  so  in  default 
in  the  next  succeeding  month,  in 
which  case  the  quota  which  the 
party  of  the  first  part  would  other- 
wise have  been  bound  to  deliver  un- 
der this  contract  shall  be  increased 
in  such  succeeding  month  to  the  ex- 
tent of  the  quantity  in  default." 
Coal  rose  in  value  from  about  $3 
a  ton  to  $9 ;  and  without  the  fault 
of  P.  the  company  did  fail  to  de- 
liver the  quota — fifteen  thousand 
tons — due  in  October,  and  P.  there- 
upon elected  and  gave  notice  of  the 
election  to  take  the  said  quota  in 
November.  But  the  company  failed 
to  deliver  it  tlien,  and  failed  also  to 
deliver  the  quota — fifteen  thousand 
tons — due  in  November.  P.  then 
elected  and  gave  notice  of  his 
election  to  take  in  December  the 
quota  due  in  November,  as  also 
that  due  in  October.  No  coal,  how- 
ever, was  delivered  at  any  time,  and 
P.  brought  suit  for  damages.  It 
was  held  that  the  plaintiffs  were 
entitled  to  their  actual  damages  and 
were  not  limited  to  twenty-five  cents 
per  ton.  Bradley,  J.,  .said:  "The 
question  whether  this  view  is  right 
or  not  depends  upon  tlie  triie  con- 
struction of  the  agreement  made  by 
the  parties.     ...     It    is    evident 


from  an  inspection  of  the  contract 
that  the  election  given  to  the  plain- 
tiffs to  receive  in  the  following 
month  the  coal  which  they  were  en- 
titled to  receive  and  did  not  receive 
in  a  particular  month  was  a  sub- 
stitute for  the  liquidated  damages  of 
twenty-five  cents  per  ton.  With  re- 
gard to  that  particular  amount  of 
coal,  the  rule  of  liquidated  damages 
was  at  an  end.  The  agreement  did 
not  carry  it  forward  to  the  follow- 
ing month.  It  imposed  upon  the 
defendant  the  obligation,  if  the 
plaintiffs  so  elected  to  furnish 
the  coal  itself  instead  of  paying  the 
liquidated  sura.  If  not  so,  what 
was  the  option  worth  ?  It  amounted 
to  nothing  more  than  the  riglit  of 
giving  to  the  defendant  another 
month  to  furnish  the  coal.  Surely 
they  would  have  had  that  right 
without  stipulating  for  it  in  this  sol- 
emn way.  Had  not  this  option  been 
given  to  the  plaintiffs,  the  defend- 
ant would  have  had  the  option 
either  to  furnish  the  coal  or  to  pay 
the  twenty-five  cents  per  ton  for  not 
furnishing  it — a  sum  which  they 
could  very  well  afford  to  pay  upon 
a  slight  rise  in  the  market  prices. 
It  was  evidently  the  very  purpose  of 
the  option  given  to  the  plaintiffs  to 
avoid  this  oppressive  result.  They 
could  require  the  coal  to  be  delivered 
at  all  events,  and  if  they  elected  to 
do  this  it  was  the  dutv  of  tlie  de- 


293]     CONVENTIONAI.    LIQUIDATIONS    AND    DISCHARGES. 


!)o; 


or  compensation  it  is  never  taken  as  such  by  courts  of  justice."" 
The  lessor  for  years  of  part  of  a  steam  mill  covenanted  with 
his  lessee  to  furnish  him  with  a  certain  amount  of  steam-j)owrr 
during  every  working  (hij  in  the  year,  and  tiiat  if  at  any  time 
he  should  fail  to  do  so  the  rent  shouhl  cease  during  the  time  of 
such  failure.  'I'he  lessee  Juid  taken  a  lease  for  five  years  for 
the  purpose  of  carrying  on  husiness,  and  had  placed  machinery 
on  the  premises  on  the  faith  of  the  lessor's  covenant  to  furnish 
him  steam-power  to  work  it.  Soon  after  his  work  coimnenced 
the  lessor  withheld  all  the  power  and  thus  hroke  up  tlie  busi- 
ness. On  these  facts  the  court  held  that  the  suspension  of  rent 
was  not  full  satisfaction  of  the  damages;  it  was  not  satisfied  that 
the  lessee  had  agreed  to  accept  such  suspension  as  a  full  com- 
pensation for  an  entire  breach  of  the  covenant.*^ 


fendant  to  furnish  it.  Tlie  contrary 
construction  would  make  the  stipu- 
lation worse  than  useless.  The 
plaintiffs  might  continue  to  exercise 
their  election  to  receive  the  coal 
month  after  month,  without  avail, 
and,  at  the  end,  find  themselves 
exactly  at  the  point  they  started 
from — forced  to  accept  the  twenty- 
five  cents  per  ton." 

40  Van  Buren  v.  Digges,  11  How. 
461,  13  L.  ed.  771;  Ward  v.  Haren, 
18,3  Mo.  App.  569,  citing  the  text. 
See  p.  847n. 

41  Fisher  v.  Barret,  4  Cush.  381 ; 
Pengra  v.  Wheeler,  24  Ore.  532,  21 
L.R.A.  726. 

In  Nowlin  v.  Pyne.  40  Iowa,  106, 
there  was  an  agreement  for  an  ex- 
change of  farms,  which  contained 
this  clause:  "It  is  also  understood 
that,  in  case  the  said  P.  fails  to 
make  said  conveyance,  as  aforesaid, 
then  he  agrees  to  pay  said  N.  for 
all  plowing  done  by  him  on  said 
land."  The  question  was  whether 
N.  was  entitled  to  any  other  dam- 
ages. It  was  contended  by  the  other 
party  that  he  was  not.  Day,  J.: 
"This  position  would  be  correct   if 


the  parties  to  a  contract  must  stipu- 
late for  the  damages  to  be  recovered 
in  order  that  they  may  recover  any. 
But  the  law,  of  itself,  attaches  to 
the  breach  of  every  contract  the 
right  to  recover  proper  damages. 
That  the  parties  have  expressly  pro- 
vided for  the  payment  of  some  of 
the  damages,  which,  perhaps,  the 
law  would  not  have  awarded  with- 
out such  provision,  cannot  be  con- 
strued to  be  a  waiver  of  the  right 
to  recover  other  damages  which  the 
law  permits.  In  order  to  defeat  the 
recover}'  of  such  damages  it  must 
clearly  appear  that  tlie  parties  have 
stipulated  for  all  the  consequences 
which  they  intend  sliall  follow  a 
breach  of  their  agreement.  It  in 
plain  that  this  agreement  more  par- 
ticularly refers  to  certain  incidental 
damages  which  might  not  arise  at 
all,  wliilst  as  to  the  principal  dam- 
ages, and  which  are  certain  to  fol- 
low a  breach  of  the  contract  if  it 
was  an  advantageous  one  to  the 
plaintiff,  the  contract  is  silent." 

In  Potter  v.  McPherson,  61  Mo. 
240,  there  was  a  contract  between 
the  parties  for  constructing  a  rail- 


906 


SUTHERLAND    ON    DAMAGES. 


[§  293 


The  general  doctrine  was  well  summed  up  in  a  Pennsylvania 
case.     The  owners  of  a  hotel  had  agreed  to  sell  it  for  $14,000, 


road,  by  the  terms  of  which  pay- 
ments were  to  be  made  by  the  em- 
ployer in  monthly  instalments,  ten 
per  cent,  being  reserved  by  him  until 
the  completion  of  the  work,  "as 
security  for  the  faithful  performance 
of  the  contract;"  and  in  case  of  cer- 
tain breaches  on  the  part  of  the 
contractor  the  amounts  reserved 
were  to  be  absolutely  forfeited  to 
the  other  party.  Held,  that  tlie 
amounts  so  to  be  retained  were 
not  liquidated  damages  for  such 
breaches,  but  the  contractor  could 
recover  the  entire  sum  agreed  upon, 
less  the  damages  which  in  fact 
might  be  sustained  by  reason  of  his 
noncompliance  with  the  contract. 
Hough,  J.,  said:  "To  hold  otlierwise 
in  such  a  case  would  produce  the 
grossest  inequality  and  injustice. 
The  amovmt  forfeited  might  bear  no 
just  relation  to  the  damage  suffered. 
The  more  nearly  the  contract  ap- 
proaches completion,  the  greater 
would  be  the  reserve,  and  the  less 
would  be  the  damage.  As  the  dam- 
age diminished,  the  sum  forfeited 
would  increase."  Savannah,  etc.  R. 
Co.  V.  Callahan,  56  Ga.  331.  See 
Phelan  v.  Albany,  etc.  R.  Co.,  1 
Lans.  258;  Jemmison  v.  Gray,  29 
Iowa,  537;  Faunce  v.  Burke,  16  Pa. 
469,  55  Am.  Dec.  519;  Hennessey  v. 
Farrell,  4  Cush.  267;  Jackson  v. 
Cleveland,  19  Wis.  400. 

Easton  v.  Pennsylvania  &  0.  C. 
Co.,  13  Ohio,  79,  was  a  similar  case, 
the  contract  providing  for  monthly 
payments,  and  a  reserve  of  fifteen 
per  cent,  to  insure  the  completion 
of  the  work;  and  also  that  in  case 
of  its  too  slow  progress,  and  in  cer- 
tain other  contingencies,  tlie  presi- 
dent of  the  company  or  the  engi- 
neer should  have  power  to  determine 


that  the  contract  had  been  aban- 
doned, and  such  determination 
should  put  an  end  to  it,  and  exon- 
erate tlie  company  from  every  obli- 
gation arising  therefrom,  and  then 
the  job  might  be  disposed  of  as 
though  the  contract  had  never  exist- 
ed. It  was  declared  abandoned  be- 
cause, in  the  opinion  of  the  engineer, 
the  work  was  not  being  prosecuted 
witli  sufficient  force  to  insure  its 
completion  within  the  time  agreed 
on.  Suit  was  brouglit  by  the  con- 
tractor to  recover  the  fifteen  per 
cent,  resei'ved  in  monthly  payments 
for  work  done.  Woods,  J.,  said: 
"The  contract  may  be  supposed  to 
be  severe  upon  the  plaintiffs.  They 
were,  however,  by  no  means  forced 
to  execute  it.  It  was  voluntary. 
By  its  terms,  extensive  control  over 
the  work  is  conferred  upon  the  de- 
fendant, and  great  confidence  re- 
posed in  the  honest  and  faithful 
exercise  of  his  discretion.  If  the 
defendant  has  violated  neither  its 
letter  nor  its  spirit  it  is  difficult 
to  see  what  reasons  the  plaintiffs 
have  for  complaint.  We  sit  here  to 
enforce  the  contracts  made  by 
others,  but  we  have  no  authority  to 
impose  upon  them  obligations  to 
which  they  have  never  assented. 
The  plaintiffs  were  to  be  paid 
monthly  on  estimates  made  monthly 
by  the  engineer.  It  has  been  done. 
Fifteen  per  cent,  was  to  be  retained 
to  insure  the  completion  of  the 
work.  The  defendant  kept  back  this 
amount.  If  the  contract  was  de- 
clared abandoned,  the  determination 
of  the  president  or  engineer  is  con- 
clusive. The  contract  is  at  an  end, 
and  the  defendant  exonerated  from 
every  ol)ligation  thence  arising  by 
express    agreement.      It    is    insisted 


§    293]     CONVENTIONAL    LIQUIDATIONS    AND    DISC  II AHOKS.  907 

of  which  $3,000  was  to  be  paid  at  a  specific  time,  when  a  deed 
was  to  be  made;  part  possession  was  to  be  delivered  at  once, 
and  in  the  contract  the  parties  agreed  to  forfeit  $500  in  case 
either  failed  to  comply  with  its  terms.  It  was  IicM  tliat  tlH>  for- 
feiture was  intended  bv  them  as  a  com})ensation  to  either  in  case 
the  other  wholly  abandoned  the  contract  and  was  li(|iiidated 
damages,  not  a  penalty.  As  the  general  i-ulc  of  (himages  might 
not  embrace  all  the  compensation  the  parties  deemed  would  be 
due  in  view  of  the  probable  risk,  trouble,  loss  and  expense  in- 
cident to  the  contemplated  change  on  the  part  of  either  party 
they  were  regarded  as  having  fixed  the  sum  stipnhitod  as  the 
amount  of  damage  each  would  sufter  from  a  total  failure;  and 
the  word  ''forfeit"  was  outweighed  by  the  other  elements  of  in- 
terpretation and  meant  ''to  pay."  Agnew,  J.,  said :  "It  is 
unnecessary  to  examine  the  numerous  authorities  in  detail,  for 
they  are  neither  uniform  nor  consistent.  No  definite  rule  to 
determine  the  question  is  furnished  by  them,  each  being  deter- 
mined more  in  direct  reference  to  its  own  facts  than  to  any 
general  rule.  In  the  earlier  cases  the  courts  gave  more  weight 
to  the  language  of  the  clause  designating  the  sum  as  penalty  or 
as  liquidated  damages.  The  modern  authorities  attach  greater 
importance  to  the  meaning  and  intention  of  the  parties.     Yet 

that  when   the  whole   worl<   is  com-  interfere    and    npset    their    arrange- 

pleted  the  fifteen  per  cent,  may  he  nients  when  an  lionest  discretion  has 

recovered    by    the    plaintiffs.      fTad  been  exercised,  wliere  neither  fraud 

they  finished  the  work  the  position  nor    circumvention    has    intervened, 

would  be  correct,  but  if  the  contract  I    am    instructed    by    my    brethren, 

is  abandoned,  relet  and  others  com-  however,  to  say,  as  the  opinitm   of 

plete  the  work,  the  amount  retained  the  court,  that  in  this  class  of  cases 

as   security    is    in    its   nature    licjui-  the  subject  is  ojjcn  to  inquiry  wheth- 

dated  damages.     If   it  were  not  so  er  tiie  contractors  had  done  any  act, 

intended,    there    would    be   no    seen-  or  omitted  the  performance  of  any 

rity  in  tlic  retention  of  tliis  amount.  duty  which,  witliin  the  terms  of  the 

*     *     *     The  president  or  engineer  contract  between  tlie  parties,  would 

is  the  umpire  between   the   parties.  justify  the  president  or  engineer  in 

His  determination  ends  the  contract  declaring  it   abandoned:    and    if   no 

and  exempts  tlie  company  from  its  such    act   had,    in    fact,    been    done, 

obligations.     The  agreements  of  the  nor   duty  omitted,   the   honest   exer- 

parties  are  the  law  by  which  their  cise   of   the    discretion    conferred    to 

rights  are  to  be  determined,  and   I  abandon   tlie  contract  ought  tu)t   to 

am     extrenu'ly     doubtful,    at    least,  shield   the  defendant   from   tlie  pay- 

whether  any  court  can  legitimately  nienl  nf  (lie  |i.t  ceiitniii  sn  retained." 


908  SUTHERLAND    ON    DAMAGES.  [§    293 

the  intention  is  not  all-controlling,  for  in  some  cases  the  snbject- 
matter  and  surroundings  of  the  contract  will  control  the  in- 
tention where  equity  absolutely  demands  it.  A  sum  expressly 
stipulated  as  liquidated  damages  will  be  relieved  from  if  it  is 
obviously  to  secure  payment  of  another  sum  capable  of  being 
compensated  by  interest.  On  the  other  hand,  a  sum  denomi- 
nated a  penalty  or  forfeiture  will  be  considered  liquidated 
damages  where  it  is  fixed  upon  by  the  parties  as  the  measure  of 
the  damages,  because  the  nature  of  the  case,  the  uncertainty 
of  the  proof  or  the  difficulties  of  reaching  the  damages  by  proof 
have  induced  them  to  make  the  damages  a  subject  of  previous 
adjustment.  In  some  cases  the  magnitude  of  the  sum  and  its 
proportion  to  the  probable  consequence  of  a  breach  will  cause 
it  to  be  looked  upon  as  minatory  only.  Upon  the  whole,  the 
only  general  observation  we  can  make  is  that  in  each  case  we 
must  look  at  the  language  of  the  contract,  the  intention  of 
the  parties  as  gathered  from  all  its  provisions,  the  subject  of 
the  contract  and  the  surroundings,  the  ease  or  difficulty  of 
measuring  the  breach  in  damages  and  the  sum  stipulated,  and 
from  the  whole  gather  the  view  which  good  conscience  and 
equity  ought  to  take  of  the  case."  ^^ 

A  contract  for  the  use  of  a  patent  right  for  six  years  desig- 
nated the  annual  license  fee  to  be  paid  by  the  licensee  and 
bound  him,  if  he  used  it  after  the  expiration  of  the  term  with- 
out a  new  license,  to  pay  double  the  stipulated  rate.  This  was 
sustained  as  an  agreement  for  stipulated  damages.  "As  the 
parties  could  not  know  in  1888  what  the  value  of  the  use  of 
the  patent  might  be  after  1894,  it  was  certainly  a  proper  sub- 
ject for  agreement  between  them  as  to  what  should  be  paid  as 
damages  should  the  defendant  continue  to  use  the  patent  with- 
out license  after  the  expiration  of  the  term,  and  this  they  did 
by  agreeing  on  the  sum  of  $500.     It  could  hardly  have  been 

42  Streeper    v.    Williams,    48    Pa.  them  as  of  the  stock  of  the  seller, 

450;  Shreve  V.  Brereton,  51  id.  175;  except    as    to    the    goods    actually 

Emery  v.  Boyle,  200  id.  249;  Robe-  bought,   and   in   case   of  the   breach 

son  V.  Whitesides,  16  S.  &  R.  320.  of   the   contract  the   purchaser  was 

It  was  a  condition  of  the  sale  of  bound  "in  the  penal  sum   of  $5,000 

goods  by  one   firm  to  another  that  as   liquidated   damages."     Tlie   diffi- 

the  purchaser   should  not  advertise  culty  of  establishing  the  actual  loss 


§    293]     CONVENTIONAL    LIQl'l  DATIONS    AND    DISC  II  AK( ;  KS. 


!)09 


tho  intention  of  the  ptirties  that  the  right  of  tlic  plaintiH',  in 
ease  use  should  be  made  of  tlie  patent  after  tlie  expiration  of 
five  years,  shouhl  he  limited  each  voai-  lo  the  actual  damages 
he  might  ho  aide  to  show  that  he  sustained  fi'din  the  use  made. 
It  would  he  difficult  to  lay  down  a  princii)h!  hy  which  such 
damages  could  be  estimated  by  a  jury.*'  There  is  general  con- 
currence in  the  view  that  the  uncertainty  concerning  the  amount 
of  coal,  ore  or  oil  the  lessee  of  a  mine  may  take  therefrom  and 
the  corresponding  uncertainty  as  to  the  royalties  the  lessor  will 
receive  make  provisions  stipulating  that  not  less  than  a  certain 
quantity  of  coal,  ore  or  oil  shall  he  taken  each  year  binding  as 
agreements  for  stipulated  damages.**  In  a  case  where  the  lan- 
guage used  was  not  explicit  as  to  the  intention  of  the  parties, 
the  words  "stipulated  damages,"  or  any  similar  term  not  being 
used,  their  omission  was  regarded  as  of  some  sigiiificance  as  to 
such  intention ;  and  the  uncertainty  of  the  damages  was  urged 
as  a  reason  for  construing  the  contract  as  one  for  stipulated 
damages.  That  argument  was  thus  answered  :  There  is  no  pre- 
sumption in  the  law  that  damages  resulting  from  the  breach  of 
an  obligation  to  convey  a  mining  claim  cannot  be  calculated  by 
market  value  or  estimated  by  reference  to  pecuniary  standards; 
nor  is  there  a  presumption  that  it  would  be  impracticable  or 
extremely  difficult  to  fix  the  actual  damage  in  such  case.  True, 
evidence  of  a  character  different  from  that  adduced  to  show  the 
value  of  lands  used  for  purposes  other  than  mining  may  he  re- 
quired,  and  its  procurement  may  be  attended  with  difficulty  and 

caused    by    a   breach    was    so   great  (X.   Y.)    04,  allirmed  witliout  opiii- 

that  the  stipulated  sum  was  recover-  ion,  105  X.  Y.  628. 
able.     May   v.   Crawford,     142    Mo.  43  Knox   R.   B.   Co.   v.   Grafton   S. 

390,  150  Mo.  504.  Co.,  (i4  Ohio  St.  301,  10  Oliio  Cir.  Ct. 

Where  a  street  railroad  company  o], 
and  a  village  contracted  for  the  con-  ^^  ^.^^j  ^j.^^,,.^  ^,^^    ^^    ^.    -i^,,,,^^.^. 

struction  of  a  road  and  the  former  ^^^  ^^  ^^^    ^^^  ^^^  ^^^^    ^^.^    ^.-g. 

deposited  $10,000  as  a  guaranty  of  ^  ^    ^^  ^    ^^    ^    Bamford,  150 

its  good  faith   and  stipulated  that  ^    ^-  ^,  ^^    ^^    ^^^.^  ^^^^^^^  ^. 

the   same   should   become   the   prop-  ^  ^^  • 

erty    of    the    village    as    liquidated 

damages  in  case  of  its  default,  such  73S:    Consolidated    C.   Co.   v.   Peers, 

stipulation  was  binding.     Peekskill,  I^>"   'H-   ■'•^^■-    l^'^^ril   v,    I'.urronghs, 

etc.  R.  Co.  V.  Peekskill,  21  App.  Div.  54  Pa.   320. 


910  SUTHERLAND    ON    DAMAGES.  [§    293 

expense ;  but,  nevertheless,  the  law  does  not  raise,  and  the  courts 
do  not  indulge,  the  presumption  that  proof  of  the  value  of  such 
a  claim  is  impracticable.  In  the  absence  of  exceptional  cir- 
cumstances a  promise  to  pay  a  certain  sum  of  money  if  the 
promisor  fail  to  perform  his  agreement  to  convey  land  is  mere 
security  and  a  penalty ;  *^  and  this  rule  is  applicable  to  mines 

as  well.*^ 

§  294.  Stipulation  for  payment  of  a  fixed  sum  for  partial  or 
total  breach.  Contracts  often  contain  a  variety  of  stipulations 
of  unequal  importance  and,  therefore,  admitting  of  many 
breaches  for  which  the  damages  would  be  diiferent  in  amonnt. 
In  such  a  case  a  total  breach  would  involve  an  injury  greater 
than  that  which  would  result  from  the  infraction  of  a  particular 
stipulation.  Hence  it  is  self-evident  that  a  sum  stipulated  to  be 
paid,  either  for  breach  of  one  of  the  minor  provisions  or  of  the 
whole  contract,  could  not  be  a  liquidation  of  damages  on  the 
principle  of  compensation  for  actual  injury.  The  sum  would 
either  be  too  great  for  a  partial  breach  or  wholly  inadequate  to 
one  which  involved  the  loss  of  the  whole  contract.^'  Hence,  if  the 

45Dooley  v.  Watson,  1  Gray,  414.  retained     as     stipulated     damages. 

46  O'Keefe  v.  Dyer,  20  Mont.  477,  No  sum  is  fixed  eitlier  as  a  penalty 
483.  or    as    liquidated     damages.       It    is 

47  Sledge  V.  Arcadia  Orchards  Co.,  manifest  that  if  the  defendants  pro- 
77  Wash.  477,  quoting  the  text;  duced  all  the  results  agreed  upon 
Madler  v.  Silverstone,  55  Wash.  159,  except  a  deficiency  of  one  or  two 
34  L.R.A.  (N.S.)  1;  Miller  v.  barrels  in  the  daily  product,  the 
Moulton,  77  Wash.  325;  Mansur  &  forfeiture  of  the  entire  contract 
T.  I.  Co.  V.  Tissier  A.  &  H.  Co.,  130  price  of  the  machinery  would  be 
Ala.  597 ;  Hoagland  v.  Segur,  38  N.  entirely  out  of  proportion  to  the 
J.  L.  230.  damage  sustained.  Again,  the  let- 
in  Pennypacker  v.  Jones,  106  Pa.  ter  of  this  provision  of  the  contract 

237,  the  stipulation  was  that  ma-  is  that  the  machines  may  be  re- 
chines  put  into  a  mill  should  have  tained  if  the  results  are  not  as 
a  designated  capacity  to  make  high  promised.  This  relates  only  to  the 
grades  of  flour,  and  if  the  results  non-production  of  the  results  con- 
were  not  as  promised  the  machines  tracted  to  be  produced,  that  is,  that 
were  to  be  retained  without  payment  tlie  mill  should  have  a  capacity  of 
being  made  for  them.  The  court  two  hundred  barrels  daily,  with  full 
observe  that  nothing  was  "said  to  modern  percentage  of  high  grade 
the  effect,  either  that  for  any  breach  flour  equal  in  quality  to  best  in 
the  entire  machinery  may  be  re-  market.  It  makes  no  provision  for 
tained  without  payment  for  it,  or  damages  for  other  breaches  of  con- 
that  for  a  gross  breach   it  shall  be  tract,  which  may  occur  consistently 


§    294]     CONVENTIONAL    LIQUIDATIONS    AND    DISCHARGES.  911 

agreement  caiiiiot  he  ;i])i)i'()[)ri;it('(l  td  a  tolal  hrcacli.  Imt  applies 
by  necessary  constriiclioii  to  such  as  would  cause  IriHing  loss  or 
inconvenience,  as  well  as  to  those  of  gTeat  importance,  sncli  sum 
is  a  penalty.  Parke,  B.,  said:  "The  rule  laid  down  in  Kemble 
V.  Farreii  *^  was  that  when  an  agreement  contained  several  stip- 
ulations of  varvious  degrees  of  iui]»oi'taiicc  aud  value,  tlie  suui 
agreed  to  be  paid  by  way  of  damages  for  In-each  of  any  of  them 
shall  be  construed  as  a  penalty,  and  not  as  li(piidated  damages, 
even  though  the  parties  have  in  exi)ress  terms  stated  the  con- 
trary. ""■'■  '■'■  *  When  the  ])arties  say  that  the  sauie  ascci'taincd 
sum  shall  be  paid  for  the  In-each  of  any  article  of  the  agreement, 
however  minute  or  unimportant,  they  must  be  considered  as  not 
meaning  exactly  what  they  say ;  and  a  contrary  intention  may  be 
collected  from  the  other  parts  of  the  agreement."' ^^  Ihit  in  a 
later  case  ^°  he  is  reported  to  have  said  of  the  same  case:  "That 
decision  has  since  been  acted  upon  in  several  cases,  and  I  do  not 
mean  to  dispute  its  authority.  Therefore,  if  a  party  agree  to  pay 
1,000L  on  several  events,  all  of  which  are  capable  of  accurate 
valuation,  the  sum  must  be  construed  as  a  penalty,  and  not  as 
liquidated  damages.  But  if  there  be  a  contract  consisting  of 
one  or  more  stipulations,  the  breach  of  which  cannot  be  meas- 
ured, then  the  parties  must  be  taken  to  have  meant  that  the  sum 
agreed  on  was  liquidated  damages  and  not  a  penalty."     And 

with  the  production  of  the  results  We  thinlv  it  clear  tliat  none  of  these 
stated.  One  of  the  items  of  dam-  items  come  witliin  the  terms  of  the 
age  sustained  by  the  plaintiffs  was  stipulation  for  tlie  retention  of  the 
that  it  took  a  greater  quantity  of  machines,  and  tiiat  it  was  not  witli- 
grain  to  produce  a  barrel  with  the  j-j  ^j^^.  eontemplation  of  the  parties 
defendants'  maeliines  than  with  that  they  should.  We  therefore  con- 
the  ordinary  process,  and  the  referee  ^.^^^.^  ^,,^^  ^,^^^  provision  for  the  re- 
has  found  especially  that  from  this  ^^_^^.^^^^  ^^  ^,^^  ,„acl.ines  was  only  in 
source  alone  there  was  a  positive  ,  1,  . 
,  ^,  ^„„  „^  ™  •  •  •  the  nature  of  a  penalty,  and  tiiat 
loss  of  $1,096.75.     This  is  a  species                                           ,        '  .     ,, 

.    „      ^    ,         r  ,  ■  1  4.U-   1,  the  true  measure  of  damages  is  the 

of   direct   loss   for   which   we   think  " 

there  can  be  a  recovery.     The  cost  ^^^^  ^^^"^"y   sustained,   flowing  di- 
to    which    the    plaintiffs    were    sub-  meetly   from   the   defects   in   the  de- 
jected   in    repairing   the   mill    after  fendants'  machines." 
the  defendants  ceased  work  is  also  *^  ^>  l^i"?-  ^41. 
a  direct  loss  arising  from  the  defect-  *»  Horner  y.   FlintofT,  0   M.  &  W. 
lye  machinery   furnished,   and   it   is  <i7S. 
not  provided    for    in    the    contract.  50  Atkyns  y.  Kinnier,  4  Ex.  77G. 


912 


SUTJIEKLAND    ON    DAMAGES. 


[§  294 


the  same  antithesis  is  stated  by  him  in  another  case:  ''Where  a 
deed  contains  several  stipuhitions  of  various  degrees  of  import- 
ance, as  to  some  of  which  the  damages  might  be  considered 
liquidated,  whilst  for  others  thej  might  be  deemed  unliquidated, 
and  a  sum  of  money  is  made  payable  on  a  breach  of  any  of  them, 
the  courts  have  held  it  to  be  a  penalty  only,  and  not  liquidated 
damages.  But  when  the  damages  are  altogether  uncertain,  and 
yet  a  definite  sum  of  monej'  is  expressly  made  payable  in  respect 
to  it  by  way  of  liquidated  damages,  those  words  must  be  read  in 
the  ordinary  sense,  and  cannot  be  construed  to  import  a  pen- 
alty."^^  This  latter  distinction  has  been  recognized  and  fol- 
lowed in  other  cases    in  England  and  in  America.^^ 


51  Green  v.  Price,  13  M.  &  W. 
69.5;  affirmed,  ]6  id.  346;  Weber  v. 
Moy,  183  111.  App.  200.  See  Berg- 
huis  V.  Schultz,  119  Minn.  87. 

52  Wilson  V.  Godkin,  136  Mich. 
106;  Gottschall  v.  Kapp,  47  Pa. 
Super.  102;  Emery  v.  Boyle,  200  Pa. 
249;  Carpenter  v.  Lockhart,  1  Ind. 
434. 

Cotheal  v.  Talmage,  9  N.  Y.  551, 
61  Am.  Dec.  716,  was  decided  on 
this  distinction.  Ruggles,  J.,  said: 
"It  is  contended  that  because  the 
contract  referred  to  in  the  bond 
bound  the  defendant  to  do  several 
things  of  different  degrees  of  im- 
portance, and  the  sum  of  $500  was 
made  payable  for  the  nonperform- 
ance of  any  or  either,  it  must  be 
a  penalty,  and  not  liquidated  dam- 
ages. Tills  doctrine,  in  the  cases  in 
which  it  is  asserted,  is  traced  to 
the  cases  of  Astley  v.  Weldon,  2 
Bos.  &  Pul.  346,  and  Kemble  v. 
Farren,  6  Bing.  141.  But  I  do  not 
understand  either  of  these  cases  as 
establishing  any  such  rule.  The 
principle  to  be  deduced  from  them 
is,  that  where  a  party  agrees  to  do 
several  things,  one  of  ichich  is  to 
pay  a  sum  of  money,  and  in  case  of 
a  failure  to  perform  any  or  cither 
of  the  stipulations  agrees  to  pay  a 


larger  sum  as  liquidated  damages, 
the  larger  sum  is  to  be  regarded  in 
tlie  nature  of  a  penalty;  and  being 
a  penalty  in  regard  to  one  of  the 
stipulations  to  be  performed  is  a 
penalty  as  to  all.  In  Kemble  v. 
Farren,  Tindal,  C.  J.,  says  that  if 
the  clause  fixing  the  sum  for  liqui- 
dated damages  'had  been  limited  to 
breaches  which  were  of  uncertain 
nature  and  amount,  we  should  have 
thought  it  would  have  the  effect  of 
ascertaining  the  damages  upon  any 
such  breach;'  thus  rejecting  the 
doctrine  contended  for  by  the  de- 
fendant's counsel  in  the  present 
case.  It  is  true  that  the  doctrine 
thus  contended  for  has  been  adopted 
in  some  English  and  in  several 
American  cases;  hastily,  I  should 
think,  and  without  careful  examina- 
tion of  the  cases  from  which  it  is 
supposed  to  be  derived.  But  if  it 
sliould  be  considered  as  having  any 
solid  foundation  in  principle,  it 
should  be  applied  only  in  subor- 
dination to  the  general  rule,  which 
requires  the  courts  in  these,  as  in 
all  other,  cases  to  carry  into  effect 
the  true  intent  of  the  parties.  It 
sliould  never  be  applied  to  cases  like 
the  present,  where  the  amount  of 
damages  is  uncertain  from  the  na- 


§    294]     CONVENTIONAL    LKjP  1 1  )A  Tlo.NS    AM) 


DISCIIAKUES. 


9i;5 


In  a  recent  En<ilisli  case  there  is  ;i  verv  full  disciissioii  of  the 
earlier  eases,  and  the  coii('liisi(ui  rcnchcd  is  that  a  coiitract  to 
pay  a  snm  of  nionev  if  there  shall  he  a  l)reach  of  the  stipuhi- 
tions  contained  in  it,  they  heiiio-  of  varied  importance  and  none 
of  them  trivial  nor  conditioned  foi-  tlie  payment  of  specified 
amonnts  of  money,  provides  for  liquidated  damages."  Iji  the 
case  referred  to  the  plaintiff  agreed  to  sell  an  estate  for  70,000/. 
to  the  defendant;  the  latter  was  to  hnild  uj)on  it  and  complete 
the  Iniildings  within  ten  years.     A  dei)osit  of  5,000/.  was  to  be 


turo  of  the  subject  itself;  and  in- 
capable of  proof,  not  only  from  that 
uncertainty,  but  from  the  circum- 
stances already  stated;  and  where, 
for  these  reasons,  there  was  a  neces- 
sity for  ascertaining  them  by  esti- 
mate by  the  parties  in  their  con- 
tract. The  only  plausible  ground 
for  withholding  the  doctrine  in  any 
case  is,  that  the  party  might  be 
made  responsible  for  the  whole 
amount  of  damages  for  the  breach 
of  an  unimportant  part  of  his  con- 
tract, and  so  be  made  to  pay  a  sum 
by  way  of  damages  grossly  dispro- 
portionate to  the  injury  sustained 
by  the  other  party.  Without  under- 
taking to  deny  that  this  rule  may 
properly  be  applied  to  some  cases, 
I  cannot  think  it  ought  to  be  ap- 
plied to  the  present.  The  injustice 
it  professes  to  avoid  is  no  greater 
than  that  which  is  tolerated  in  many 
other  cases  for  the  purpose  of  en- 
forcing a  faithful  perforiiuxnce  of 
contracts."  Bagley  v.  Peddie,  16 
N.  Y.  469,  69  Am.  Dec.  713. 

It  is  said  in  Morrison  v.  Richard- 
son, 194  Mass.  370:  Thei-e  is  no  sug- 
gestion of  a  penalty,  and  the  fact 
that  the  contract  provided  for  the 
delivery  of  different  things  at  dif- 
ferent times  does  not  render  it 
necessary  to  construe  the  stipulation 
as  penal  in  its  nature.  It  is  true 
that  the  things  to  be  delivered  might 
vary  with  respect  to  tlieir  import- 
Suth.  Dam.  Vol.  I.— 58. 


ance  and  to  tlic  daMingc  resulting 
from  failure  to  deliver  at  the  times 
named;  hut  tlu-  stipulation  must  be 
construed  as  relating  to  a  substan- 
tial and  not  a  tritling  or  unimport- 
ant breach. 

In  Eilers  Music  House  v.  Oriental 
Co.,  09  Wash.  618,  there  was  a  con- 
tract to  sell  a  nuisical  instrument, 
payment  to  be  made  in  instalments, 
the  title  to  remain  in  tlie  vendor  un- 
til the  price  was  paid,  and  he  to 
retain  all  payments  as  liquidated 
damages  if  the  vendee  siiould  fail  to 
pay  in  full,  remove,  attempt  to  re- 
move or  sell  the  instrument.  Tliese 
stipulations  were  of  equal  import- 
ance; the  increase  in  the  amount  of 
the  stipulated  sum  as  payiuents  were 
made  was  considered  to  be  the 
equivalent  in  tlie  dtqireciation  of  tlio 
value  of  the  instrument. 

53Wallis  v.  Smith,  21  Ch.  Div. 
243,  followed  in  Sdirader  v.  Liilis, 
10  Ont.  358,  notwitlistanding  the 
court  of  appeal  had,  previous  to  the 
decision  of  Wallis  v.  Smith,  an- 
nounced tlie  contrary  doctrine  in 
Craig  v.  Dillon,  0  Ont.  App.  116; 
Pye  V.  British  Auto.  Com.  Syndi- 
cate, [1906]  1  K.  B.  425  (The  exist- 
ence of  a  variety  of  stipulations  of 
varying  importance  is  material,  but 
not  decisive.  The  deposit  of  the 
agreed  sum  is  also  significant,  but 
not  conclusive) . 


914  SUTHERLAND  ON  DAMAGES.  §  294] 

paid  by  the  det'endaiit.  The  agTeenieiit  provided  that  ''if  the 
defendant  shoukl  coiiiuiit  a  substantial  l)reach  of  the  contract, 
either  in  not  proceeding  with  due  diligence  to  carry  out  and 
complete  the  works,  or  in  failing  to  perform  any  of  the  pro- 
visions therein  contained,  then,  and  in  either  of  the  said  events, 
the  deposit  money  of  5,000^  was  to  be  forfeited;  and  if  the 
bahnice  of  such  deposit  had  not  then  been  paid  the  defendant 
should  forfeit  and  pay  a  sum  of  money  equal  to  such  balance, 
the  intention  being  that  if  default  was  made  by  the  defendant 
as  aforesaid  he  should  forfeit  and  pay  to  the  plaintiff  by  way 
of  liquidated  damages  the  sum  of  5,000L,  and  the  agreement  to 
be  void  and  of  no  eifect."  The  defendant  paid  no  part  of  the 
deposit,  expended  nothing  on  the  estate  and  performed  none  of 
the  acts  stipulated  for,  A  suit  was  brought  to  recover  5,000?. 
as  liquidated  damages,  and  the  court  of  appeal  held,  affirming 
the  judgment  of  Fry,  J.,  that  such  sum  was  recoverable.  It 
was  pointed  out  by  Jessel,  M.  R.,  that,  although  the  dicta  in  the 
earlier  cases  ^*  seemed  to  lay  down  a  positive  rule,  the  actual 
decisions  were  in  cases  where  one  or  more  of  the  stipulations 
Avas  or  were  for  the  payment  of  a  sum  of  money  less  than  that 
named  as  liquidated  damages.  He  said :  "Although  I  wish  to 
leave  the  question  open,  where  there  are  several  stipulations, 
and  one  or  more  is  or  are  of  such  a  character  that  the  damages 
must  be  small,  I  do  not  wish  for  a  moment  to  abstain  from  stat- 
ing my  opinion  that  there  is  no  such  doctrine  where  there  are 
several  stipulations  irrespective  of  importance,  which  is  the 
doctrine  laid  dowai  by  Mr.  Justice  Heath,**  and  apparently  ap- 
proved of  by  Lord  Justice  James.*^  There  is  neither  authority 
nor  principle  for  such  doctrine,  and  I  cannot  see  that  it  is  estab- 
lished by  any  case  which  is  binding  on  this  court."  Lord 
Justice  Cotton  said:  "It  is  not  sufficient,  in  my  opinion,  to 
say  that  the  covenants  to  the  breach  of  which  this  applies  are  of 
varying  importance.     That  may  be  so,  but  yet  the  parties  may 

54Astley    V.    Weldon,    2    B.    &    P.       Law    v.    Local    Board    of    Redditch, 
346,  353;  In  re  Newman,  4  Ch.  Div.       figg-?]  l  O   B    127 
731;  Reynolds  v.  Bridge,  6  E.  &  B.  "  '     '         ' 

^.'    .,,  T'-      •        ^  T-      "Qo  55  Astlev  V.  Weldon,  siipra. 

540;   Atkyns  v.  Kinnier,  4  Ex.  /83; 

Galsworthy  v.  Strutt,  ]  id.  659.    See  ^^  I"  re  Newman,  si>,pra. 


§    29  t]     CONVENTIONAL    I.KiUIDATlONS    AND    1  »IR(' 1 1  AR(;  KS.  1)15 

very  reasonably  eoiiie  to  the  coiK-lusion  tliat  tlicy  will  ag'ree 
between  themselves  that  the  sum  mentioned  shall  he  assessed  be- 
tween them  as  the  damages  in  consequence  of  tlie  breaches  of 
these  various  covenants.  Probably  there  may  be  an  exception, 
that  where  some  of  the  covenants  are  of  snch  a  character  that 
obviously  the  damages  which  can  possibly  arise  from  a  breach 
in  any  way  of  that  covenant  would  be  very  insignificant  com- 
pared with  tlio  sum  which  has  been  fixed  by  the  parties,  there 
the  court  will  give  the  non-natural  construction  to  the  terms 
used  by  the  parties.  In  my  ojyinion  that  comes  within  the  same 
principle  as  where  the  courts  have  interfered,  where  one  of  the 
covenants  has  been  for  payment  of  a  sum  of  money  where  the 
damage  is  capable  of  being  assessed  accurately,  and  is  very 
much  below  the  sum  named."  This  decision  is  correctly  inter- 
preted to  mean  "that  an  agreement  with  various  covenants  of 
different  importance  is  not  to  be  governed  by  any  inflexible  rule 
peculiar  to  itself,  but  is  to  be  dealt  with  as  coming  under  the 
general  rule  that  the  intention  of  the  parties  themselves  is  to 
be  considered.  If  they  have  said  that  in  the  case  of  any  breach  a 
fi^xed  sum  is  to  be  paid,  then  they  will  be  kept  to  their  agree- 
ment unless  it  would  lead  to  such  an  absurdity  or  injustice  that 
it  must  be  assumed  that  they  did  not  mean  what  they  said."" 
This  doctrine  has  been  adhered  to  in  the  court  of  appeal  in 
a  case  in  which  the  lease  of  a  farm  contained  a  covenant  by 
the  lessees  not  to  sell  hay  or  straw  off  the  premises  during  the 
last  twelve  months  of  the  term,  but  to  consume  the  same ;  it  also 
provided  that  an  additional  rent  of  3Z.  per  ton  should  be  ]iay- 
able  by  way  of  penalty  for  every  ton  of  hay  or  straw  so  soKl. 
It  appeared  that  there  was  a  substantial  dilference  between  the 
manurial  value  of  hay  and  that  of  straw.  This  difference  was 
sufficient  to  make  the  stipulation  one  for  a  penalty,  regardless 
of  the  use  of  that  word  by  the  parties.  Lord  Esher,  connuent- 
ing  on  the  following  language  used  by  the  court  in  Lord  Eli)hin- 
stone  V.  Monkland  I.  and  0.  Co.^^  "When  a  single  lumj)  sum 
is  made  payable  by  way  of  compensation  on  the  occurrence  of 
one  or  more  or  all  of  several  events,  some  of  which  may  occasion 

57Mayno  on  Dam.,  Stli  London  od.,  58  L.   |;.   ]  ]    Aji]).  Cas.  Xi2,  :142. 

p.  184. 


916  SUTIIEKLAND    ON    DAMAGES.  [§    294 

serious,  and  others  but  trifling,  damage,  the  presumption  is  that 
the  parties  intended  the  sum  to  be  penal,  and  subject  to  modifi- 
cation," said :  I  think  the  effect  is  substantially  the  same  as  if, 
instead  of  the  words  "some  of  which  may  occasion  serious  and 
others  but  trifling  damage,"  he  had  said  "some  of  which  may 
occasion  serious  and  others  less  serious  damage. "^^ 

§  295.  Same  subject.  Whether  the  damages  are  certain  or 
not  a  fixed  sum  made  payable  on  the  happening  of  one  or  of 
several  events,  each  of  which  will  be  the  occasion  of  some  loss, 
cannot  be  deemed  a  sum  intended  for  compensation  unless  the 
stipulations  are  all  of  primary  importance  and  the  damages  re- 
sulting from  their  breach  are  equally  uncertain,  or  the  pro- 
visions are  parts  of  one  whole,  steps  in  the  accomplishment  of 
one  end,  and  to  be  regarded  as  a  single  contract.  Otherwise,  no 
stipulation  can  operate  on  that  principle.  In  many  courts  the 
law  is  held  to  be  that  a  sum  is  stijuilated  damages  when  it  con- 
clusively appears  that  the  parties  have  intentionally  adopted  it 
for  that  purpose.  But  where  the  courts  proceed  on  the  theory 
that  there  can  be  no  such  intention  when  the  stipulation  is  so 
framed  that  it  cannot  by  any  possibility  operate  to  adjust  the 
recompense  to  the  actual  injury,  a  sum  made  payable  indifl^er- 
ently  for  one  breach  or  for  many,  for  a  breach  attended  with  a 
small  loss  or  a  large  one,  can  have  no  effect  to  liquidate  damages. 
In  case  the  damages  are  easily  computed  the  extent  of  the  in- 
equality of  the  provision  is  seen  at  once;  but  even  if  they  are 
uncertain  the  inequality  is  logically  certain.  Ryan,  C.  J., 
stated  the  point  with  great  clearness:  "Where  the  sum  is 
agreed  to  be  paid  for  any  of  several  breaches  of  the  contract  and 
the  damages  resulting  from  the  breach  of  all  of  them  are  un- 
certain, and  there  is  no  fixed  rule  for  measuring  them,  but  the 
breaches  are  apparently  of  various  degrees  of  importance  and 
injury,  the  cases  are  conflicting  on  the  rule  whether  the  sum 
should  be  held  as  a  penalty  or  as  liquidated  damages.   On  prin- 

59  Wilson  V.  Love,   [1896]   1  Q.  B.  one  sum  was  to  be  paid  in  the  event 

626.    One  of  the  judges  was  in  doubt  of  the  breach  of  any  one  of  several 

as  to  whether  the  conclusion  arrived  stipulations   of    varying   degrees   of 

at  was  correct.    A  majority  of  them  importance.    Earp  v.  Gilliam,  1  New 

disapproved  Wright  v.  Tracey,  Irish  South    Wales    St.    Rep.    281,    is    in 

Rep.   7   C.  L.   134,  which  held  that  accord  with  the  principal  case. 


§    295]     CONVENTIONAL    LKiTI  DA  TIONS    AND    DISCHARGES.         917 

ciple,  we  arc  very  clear  that  in  such  a  case  llio  sum  should  ho 
held  as  a  jjcnalty.  For  it  ajipears  to  us  that  it  wonhl  he  as  \iiijust 
to  sanction  a  recovery  of  the  sum  aiii'eed  to  he  paid  alike  for  oiu? 
trivial  hreach,  or  for  one  important  breach,  or  for  breach  of  the 
whole  contract,  as  it  would  be  to  sanction  such  a  i-ccovery  e(pial- 
ly  for  damages  certain  and  vnicertain  in  tlicir  nature.  ^Fho 
rule  holding  the  sum  to  he  a  ]i('iiaity  in  tlic  hitter  case  goes 
upon  the  injustice  of  allowing  such  a  recovery  etpially  in  case 
of  damages,  uncertain  indeed,  but  manifestly  and  materially 
different  in  amonnt ;  equally  for  breach  of  part  of  the  contract, 
and  for  breach  of  the  entire  contract.  Such  a  rule  would  not 
only  put  the  same  value  on  a  small  pail;  as  on  a  large  part,  but 
would  put  the  same  value  on  any  part  as  on  the  whole. "^°  This 
is  believed  now  to  be  the  doctrine  generally  held ;  if  a  gross 
sum  is  stipulated  to  be  paid  for  any  failure  to  fuliill  an  agree- 
ment consisting  of  several  parts  and  requiring  several  things 
to  be  done  or  omitted  it  is  a  penalty.^^ 


60  Lyman  v.  Babcock,  40  Wis.  503. 
In  3  Parsons  on  Cont.  161,  the  au- 
thor says:  "Let  us  suppose  a  con- 
tract between  parties,  one  of  whom, 
for  good  consideration,  promises  to 
the  other  to  do  several  things,  and 
then  it  is  agreed  that  the  promisor 
shall  pay,  by  way  of  liquidated  dam- 
ages, a  lai-ge  sum,  if  the  promisee 
recover  against  him  in  an  action 
for  a  breach  of  this  contract.  It 
must  be  supposed  that  this  sum  is 
intended  and  regarded  as  adequate 
compensation  for  the  breach  of  tlie 
whole  contract;  for  it  is  all  that 
the  promisor  is  to  pay  if  he  breaks 
the  whole.  It  would,  of  course,  be 
most  unjust  and  oppressive  to  re- 
quire him  to  pay  this  whole  sum 
for  violating  any  one  of  the  least 
important  items  of  the  contract. 
But  such  would  be  the  effect,  if  the 
words  of  the  parties  prevailed  over 
the  justice  of  the  case.  The  sum 
to  be  paid  would,  therefore,  he  treat- 
ed  as   penalty,  and   reduced   accord- 


ingly, unless  tlie  agreement  provided 
that  it  sliould  be  paid  only  wlicn 
the  whole  contract  was  broken,  or 
so  much  of  it  as  to  leave  the  re- 
mainder of  no  value;  or  unless  the 
sum  agreed  upon  was  broken  up  in- 
to parts,  and  to  each  breach  of  the 
contract  its  appropriate  part  as- 
signed; and  the  sum  or  sums  pay- 
able came  in  otlier  respects  within 
the  principles  of  liquidated  dam- 
ages." Astley  V.  Weldon,  2  B.  &  P. 
346,  per  Heath,  J.;  Boys  v.  Ancell, 
5  Bing.  N.  C.  390;  Reilly  v.  Jones, 
1  Bing.  302;  People  v.  Central  Pac. 
R.  Co.,  76  Cal.  24,  36;  Keeble  v. 
Keeble,  85  Ala.  552:  Mausur  &  T.  I. 
Co.  V.  Tissier  A.  &  11.  Co.,  136  Ala. 
507. 

61  Los  Angeles  Olive  Growers' 
Ass'n  V.  Pacific  Surety  Co.,  24  Cal. 
App.  05;  Gougar  v.  Buffalo  Special- 
ty Co.,  26  Colo.  App.  8;  Greenblatt 
v.  McCall  &  Co..  67  Fla.  165;  Giliba 
v.  Cooper,  86  N.  J.  L.  226;  City  of 
Summit  v.  Morris  Countv  Traction 


0  1  s 


SUTHERLAND    ON    DAMAGES. 


[§   295 


A  distinction  is  taken  in  England  where  a  deposit  is  made 
and  it  is  to  be  forfeited  for  the  breacli  of  a  number  of  stipula- 


Co.,  85  N.  J.  L.  193;  Moses  v.  Aii- 
tuono,  56  Fla.  499,  20  L.R.A.(N.S.) 
350;  Mayor  v.  ^tna  Ind.  Co.,  4 
Ga.  App.  722;  Sanders  v.  McKim, 
138  Iowa  122;  Evans  v.  Moseley, 
84  Kan.  322;  Cunningham  v.  Stock- 
ton, 81  Kan.  780;  Bolvvare  v.  (^rolin, 
122  Mo.  App.  571;  Caesar  v.  Rubin- 
son,  174  N.  Y.  492;  Brownold  v. 
Robdell,  130  App.  Div.  (N.  Y.)  371; 
Raymond  v.  Edellirock,  15  N.  D.  231, 
citing  the  text;  Davison  v.  Smith, 
18  Pa.  Dist.  709;  American  I.  Co. 
V.  Luff,  12  Pa.  Dist.  381  ;  Colonna 
D.  D.  Co.  v.  Colonna,  108  Va.  230; 
Bell  v.  Scranton  C.  M.  Co.,  59  Wash. 
659  ;  Myers  v.  Ralston,  57  Wash.  47  ; 
Wilkes  V.  Bierne,  68  W.  Va.  82,  31 
L.R.A.(N.S.)  937;  Madison  v. 
American  S.  E.  Co.,  118  Wis.  480; 
Floding  V.  Floding,  137  Ga.  531,  cit- 
ing the  text;  Chicago,  etc.  R.  Co. 
V.  Dockery,  195  Fed.  221,  115  C. 
C.  A.  173;  Hahn  v.  Horstman,  12 
Bush,  249;  Palestine  I.  F.  &  G.  Co. 
V.  Connally  (Tex.  Civ.  App.),  148 
S.  W.  1109;  Quid  v.  Spartanburg 
R.  Co.,  94  S.  C.  184;  O'Brien  v.  Illi- 
nois S.  Co.,  203  Fed.  436,  121  C. 
C.  A.  .546;  Dilley  v.  Thomas,  106 
Ark.  274;  Nichols  &  S.  Co.  v.  Beyer, 
168  Mo.  App.  686;  Iroquois  F.  Co. 
v.  Wilkin  Mfg.  Co.,  181  111.  582; 
Wilhelm  v.  Eaves,  21  Ore.  194,  14 
L.R.A.  297,  citing  the  text;  Keck 
V.  Bieber,  148  Pa.  645,  33  Am.  St. 
846;  Wilkinson  v.  Colley,  164  Pa. 
35,  26  L.R.A.  114;  Krutz  v.  Robbins, 
12  Wash.  7,  14,  28  L.R.A.  676,  50 
Am.  St.  871;  East  Moline  Co.  v. 
Weir  P.  Co.,  37  C.  C.  A.  02,  95  Fed. 
250;  People  v.  Central  Pac.  R.  Co., 
76  Cal.  24,  37,  quoting  the  text; 
Radroff  v.  Haase,  96  111.  App.  74, 
quoting  the  text;  El  Reno  v.  CuUi- 
nane,  4  Okla.  457 ;  Watts  v.  Camors, 


115  U.  S.  353,  29  L.  ed.  406;  Big- 
nail  V.  Gould,  119  U.  S.  495,  30  L. 
ed.  491;  St.  Louis,  etc.  R.  Co.  v. 
Shoemaker,  27  Kan.  677;  Higbie 
V.  Farr,  28  Minn.  439;  Carter  v. 
Strom,  41  Minn.  522;  Dickson  v. 
Lough,  18  L.  R.  Ir.  518;  Charles  F. 
Co.  V.  Bond,  26  Fed.  18;  McPherson 
V.  Robertson,  82  Ala.  459;  Moore  v. 
Colt,  127  Pa.  289,  14  Am.  St.  845; 
Farrar  v.  Beeman,  63  Tex.  175; 
Lar.sing  v.  Dodd,  45  N.  J.  L.  525; 
\Miitfield  V.  Levy,  35  id.  14;  Tayloe 
V.  Sandiford,  7  Wheat.  13,  5  L.  ed. 
384;  Van  Buren  v.  Digges,  11  How. 
461,  13  L.  ed.  ^71;  Carpenter  v. 
Lockhart,  1  Ind.  434;  Cook  v.  Finch, 
19  Minn.  407;  Lee  v.  Overstreet,  44 
Ga.  507  ;  Owens  v.  Hodges,  1  McMull. 
106;  Hammer  v.  Breidenbach,  31 
Mo.  49 ;  Goldsborough  v.  Baker,  3 
Cranch  C.  C.  48;  Nash  v.  Hermosil- 
la,  9  Cal.  581 ;  Foley  v.  McKeegan,  4 
Iowa,  1,  66  Am.  Dec.  107;  Martin 
V.  Taylor,  1  Wash.  C.  C.  1;  Hender- 
son V.  Cansler,  65  N.  C.  542;  Lord 
V.  Gaddis,  9  Iowa  265;  Hallock  v. 
Slater,  id.  599;  Brown  v.  Bellows, 
4  Pick.  1 79 ;  Moore  v.  Platte  County, 
8  Mo.  467;  Jackson  v.  Baker,  2 
Edw.  Ch.  471;  Thoroughgood  v. 
Walker,  2  Jones  15;  Curry  v.  Larer, 
7  Pa.  470,  49  Am.  Dec.  486;  Fitz- 
patrick  v.  Cottingham,  14  Wis.  219; 
Trower  v.  Elder,  77  111.  452;  Hoag- 
land  V.  Segur,  38  N.  J.  L.  230;  Long 
v.  Towl,  42  Mo.  545,  97  Am.  Dec. 
355;  Gower  v.  Saltmarsh,  11  Mo. 
271;  Watts  v.  Sheppard,  2  Ala.  425; 
Cheddiek  v.  Marsh,  21  N.  J.  L.  463 ; 
Nivcr  V.  Rossman,  18  Barb.  50; 
Berry  v.  Wisdom,  3  Ohio  St.  241; 
Clement  v.  Cash,  21  N.  Y.  253; 
Chase  v.  Allen,  13  Gray  42;  Trus- 
tees v.  Walrath,  27  Mich.  232;  Eliza- 
bethtown,  etc.  R.  Co.  v.  Geoghegan, 


§    295]     CONVENTIONAL    LIQUIDATIONS    AND    DLS(  •  H  AK( ;  K.S.  DIK 

tions  of  vai-viiii;-  iiiiportaiicc.  Tlioui;!!  some  of  tliciii  iiiav  he 
triHiiig  or  rc(Hiire  the  payinenr  of  a  desig-nated  sum  of  money 
on  a  given  (hiy,  if  the  eoiili'ad  proviih-s  for  sti|iiihitc(l  (hiniages 
it  will  be  carried  out.  Coiiniientiug  on  this  ride  l''ry,  ,1.,  said: 
"In  that  there  seems  to  inc  to  be  great  good  sense,  and  for  this 
reason,  that  if  a  fund  is  set  apart  to  meet  a  particuhii-  contin- 
gency wbicli  is  described,  and  that  contingency  arises,  it  is 
difficult  to  say  that  the  stakeholder,  or  other  person  haviiii;  the 
fund,  is  not  to  hand  it  over  at  once  to  the  person  wlio  claims  it 
under  the  contingency  which  has  happened."  '^^  There;  are 
American  cases  which  hohl  that  where  the  inslrnmcnt  refers  to 
a  sum  deposited  as  security  for  performance,  the  forfeiture,  if 
reasonable  in  amount,  will  be  enforced  as  liquidated  damages, 
the  intention  being  evident  that  the  money  shall  be  i)ai(l  over 
upon  breach  of  the  contract.^^  J3ut  this  rule  does  not  extend  to 
the  case  of  a  deposit  made  by  a  bidder  where  his  bid  does  not 


!)  Bush  56;  Daily  v.  Litchfield,  10 
Mich.  29;  Staples  v.  Parker,  41 
Barb.  648;  Magee  v.  Lavell,  L.  R. 
9  C.  P.  107;  Shute  v.  Taylor,  5  IMetc. 
(Mass.)  61;  Beckham  v.  Drake,  9 
M.  &  VV.  79;  Hoag  v.  McGiiinis,  22 
Wend.  163;  Higginson  v.  \\'eld,  14 
Gray  165;  Lea  v.  Whitaker,  L.  R. 
8  C.  P.  70;  In  re  Newman,  4  Ch. 
Div.  724;  Hooper  v.  Savannah  &  M. 
R.  Co.,  69  Ala.  529;  Heatwole  v. 
Gorrell,  35  Kan.  692 ;  Bryton  v. 
Marston,  33  111.  A  pp.  211. 

In  some  of  tlie  foregoing  cases  the 
rule  is  quoted  as  applicable  to  agree- 
ments for  performance  or  omission 
of  various  acts,  in  respect  to  one. 
or  more  of  which  the  damages  on  a 
breach  would  be  readily  ascertain- 
able, because  the  particular  case  em- 
braced such  stipulations;  but  with- 
out any  expression  to  indicate  that 
the  determination  would  have  been 
different  if  all  the  damages  had 
been  of  an  uncertain  nature. 

In  Hathaway  v.  Lynn,  75  Wis. 
186,   6   L.R.A.   551    (see   Palmer   v. 


Toms,  96  Wis.  367 ) ,  there  was  a 
single  stipulation  for  a  scries  of 
acts  of  the  same  nature  from  each 
of  which  the  j)romisee  might  expect 
a  benefit,  but  it  was  contingent,  and 
$200  was  stipulated  as  damages  for 
violation  or  disregard  of  the  terms 
of  the  agreement;  it  was  held  that 
for  a  partial  breacli  only  nomiiuil 
damages  could  be  recovered  in  tlie 
absence  of  proof  of  substantial  dam- 
ages. See  McCullough  v.  .Maiiiiiiig, 
132  Pa.  43. 

The  fact  tiiat  i)roperty  of  vary- 
ing values  is  covered  by  tiie  stipu- 
lation does  not  I)ring  it  within  tlic 
rule  stated.  Dieslal  v.  Stevenson, 
[1906]  2  K.  B.  345. 

62Wallis  V.  Smith,  21  Ch.  Div. 
243,  250,  258;  Ilinton  v.  Sparkcs, 
L.  R.  3  C.  P.  161 ;  Lea  v.  Whitaker, 
8  id.  70;  Magee  v.  Lavell,  9  id.  107. 

63  Sanford  v.  First  Nat.  Bank,  94 
Iowa  (ISO;  Maxwell  v.  .Alien,  78  Me. 
33,  57  -\ni.  Rep.  783;  Sanders  v. 
Carter,  91   Ga.  450. 


920  SL'l'JlKKl.A.M)    ON     DAMAGES.  [§    295 

refer  to  it  as  either  liquidated  damages  or  a  penalty,  the  pro- 
posals providing  simply  that  if  the  successful  bidders  enter  into 
contract  with  bond  without  delay  their  checks  will  be  returned. 
The  only  implication  from  such  language  is  that  a  failure  to 
enter  into  bond  shall  entitle  the  party  inviting  the  bids  to  so 
much  of  the  deposit  as  will  be  a  just  compensation  for  any  loss 
that  may  result  from  the  failure  of  the  bidder  to  furnish  the 
bond.  ''A  failure  to  give  the  bond  is  a  breach  of  the  contract 
and  the  damages  which  Avould  result  from  that  breach  would  be 
the  difference  the  city  paid,  if  anything,  in  excess  of  the  amount 
of  the  unexecuted  bid,  and  also  the  expense  of  a  re-advertise- 
ment for  new  bids.  These  elements  of  damage  are  neither  un- 
certain nor  difficult  of  ascertainment."  ®*  This  view  is  in 
accord  with  a  New  York  case  in  which  a  tenant  deposited  with 
the  landlord  a  sum  of  money  wdiich  the  lease  provided  should  be 
held  as  security  for  the  tenant's  performance  of  his  covenants, 
the  same  to  be  ap])lied  on  payment  of  rent  for  the  last  three 
months  of  the  term  if  the  lease  was  not  sooner  terminated  by  the 
tenant's  failure  to  perform,  in  w^hich  event  the  money  was  to  be 
forfeited  and  become  the  landlord's.  After  default  in  paying 
one  month's  rent  the  tenant  was  dispossessed,  and  the  landlord 
refused  to  pay  any  part  of  the  deposit.  The  tenant  was  en- 
titled to  recover  it  except  so  much  as  was  necessary  to  pay  the 
one  month's  rent.^^     Where  the  agreement  is  that  the  money 

64  Willson  V.  Baltimore,  83  Md.  arise  from  breach.  And  in  that 
202,  213.     But  see  §  284.  view    the    plaintiff    was    entitled    to 

65  Chaude  v.  Shepard,  122  N.  Y.  the  surplus  remaining  after  such 
307.  The  opinion  contains  this:  In  claim  of  the  defendant  was  satisfied, 
view  of  the  intention  of  the  parties  Scott  v.  Montells,  109  N.  Y.  1.  It 
as  derived  from  the  entire  provision  is,  however,  urged  for  the  defend- 
in  respect  to  this  deposit,  there  was  ant  that,  as  the  money  was  actually 
notliing  within  their  contemplation  placed  in  the  possession  of  the  de- 
in  its  purpose,  in  the  event  of  the  fendant  pursuant  to  the  contract  at 
premature  termination  of  their  re-  the  time  of  the  execution  of  the 
lation  given  by  the  lease,  other  than  lease,  the  disposition  of  it  is  gov- 
such  damages  as  should  result  from  erned  by  a  different  rule  than  that 
the  default  of  the  plaintiff.  This  is  which  would  have  been  applicable 
evident  from  the  fact  that  the  de-  if  the  claim  to  it  had  been  founded 
posit  was  made  as  security  for  per-  upon  the  executory  agreement  of  the 
formance  of  the  covenants  and  held  plaintiff  to  pay  it.  That  would  have 
as  indemnity  for  such  loss  as  should  been  so  if  the  money  had  been  paid 


§    295]     CONVENTIONAL     1.1(^1  IDATIONS    AND    DISC  II  AR(iES.  921 

deposited  may  be  retained  by  the  landlord  as  liquidated  daina,i!:es 
if  the  tenant  is  dispossessed,  without  any  rebate  or  allowanf-e, 
the  rights  of  the  parties  are  fixed  by  it.'^'^  l>ut  the  sum  paid  :iii<l 
the  value  of  the  property  exercise  a  ])otent  influence  in  the 
judicial  mind  to  the  same  extent  as  where  tlie  stipulation  is 
not  accompanied  by  a  deposit,  or  provision  is  not  made  tliat  tlie 
sum  paid  as  part  of  the  purchase  ])rice  sliall  become  I  he  property 
of  the  vendor  if  the  vendee  fails  to  ])erform.  Where  a  contract 
for  the  purchase  of  oranges  upon  the  trees  providei]  for  the  pay- 
ment of  a  lump  sum,  fifteen  hundred  dollars  of  whicli  was  j)aid 
at  the  time  it  was  made,  and  that  if  tlie  vendee  did  not  coiii]ily 
with  its  conditions  such  payment  was  to  be  forfeitcil,  tlie  court 
refused  to  treat  that  sum  as  liquidated  damages.®'^ 

There  is  one  class  of  contracts  in  wdiich  the  general  con- 
struction of  stipulations  liquidating  damages  may  at  first  sight 
seem  to  be  in  conflict  with  the  doctrine  stated :  contracts  of  a 
negative  character,  requiring  a  party  to  abstain  continuously 
from  doing  certain  acts,  as  to  discontinue  a  nuisance.^^  or  to 
secure  enjoyment  of  the  good  will  in  a  certain  trade  or  business. 
A  contract  of  the  latter  description  contains  a  guaranty  against 

upon  the  contract  by  way  of  partial  rent  for  tlic  tlireo  months  ending 
performance  by  the  plaintiff.  In  with  its  close.  Tlie  provision  re- 
such  ease  the  party  so  paying,  and  lating  to  the  deposit  and  expressive 
afterwards  by  reason  of  his  default  of  forfeiture  cannot,  therefore,  he 
is  deprived  of  or  denied  the  benefits  treated  as  indicative  of  intention  of 
of  his  contract,  cannot  recover  the  ^,,g  parties  to  give  it  the  character 
money  so  paid  by  him  upon  it.  ^^  liquidated  damages,  but  rather 
Page  V.   McDonnell,   55  N.   Y.   299;  ^^^^^  .^  ^,^^^,jj  ,^^^,^.  ^,^^  ^^^^^^^^^  ^^  ^ 

Lawrence  v.  Miller,   86  N.  Y.  ]31;  ix       •       .,  x    ., 

,.    ^,^  penalty     in    the    event    there    men- 
Havens  V.  Patterson,  43  N.  Y.  218.  '  /      ^,  ^ 

...  tioned.       Carson     v.     Arvantes,     10 

And  these  views  are  not  inconsistent  ^  ,      .         ,.^    .    .     .,  «•    x 

.,,     ,,  ,  1-    1    A     ii       f     J.  Colo.  App.  382,  IS  to  tile  same  effect, 

with   the  rule   applied  to  the  tacts  1 1  ' 

,,  f  /-»  1  ,„,i„„   „    TT^r^Kr        as    is    Cunningiiam    v.    Stockton,    81 

in  the  cases  of  Ockenden  v.   Henly,  i-" 

Ellis,   Bl.  &   E.   485,   and  Ilinton   v.  J<»"-   '«0-     ^f''  »•*"'-  ^^'''^'C^  ^'^  ^'".v- 

Sparkes,  3  C.  P.  Div.  101.     Tiiere  is  ^^'^  'H-  -^PP-  200. 

no    provision    in    the   lease    in   ques-  66  Longobardi  v.  Vuliano,  33  X.  ^  . 

tion     that     tlie     money     deposited  Misc.   472. 

should  be  treated  as  a  payment,  or  ^"^  Nicholas  v.  TIaines,  39  C.  C.  A. 

to   make   it   such,   unless   the   plain-  235.  98  Fed.  f.92. 

tiff's  tenancy   continued   to  the  end  68  drasselii  v.  Lowden,  11  Ohio  St. 

of  the  term.     In  that  event  only,  it  349;    not  to  poacli,  Koy   v.   Duke  of 

was  to  be  applied  in  iiaymeiit  of  tlie  P.i-aufort,  2  Atk.   190. 


922 


SUTIIKELAND    ON    DAMAGES. 


[§  295 


competition  from  the  promisor  for  a  certain  time  and  at  a  speci- 
fied place,  or  in  some  limited  district.  He  agrees  not  to  engage 
in  that  business  for  such  time  within  that  place,  and  if  he  does, 
or  violates  the  contract  or  fails  to  fulfill  it,  he  will  pay  a  certain 
sum.  In  general,  a  single  violation,  though  it  be  accomplished 
in  one  day,  and  is  confined  to  a  small  part  of  the  district,  sub- 
jects him  to  liability  for  the  stated  sum,  and  a  repetition  of 
such  acts  or  a  failure  to  abstain  at  all  may  subject  him  to  no 
greater  liability.®^  These  agreements  are  in  general  such  as  to 
require  one  continuous  act  of  abstention,  and  the  consideration 
and  the  amount  required  to  be  paid  evince  the  intention  that 
such  stipulated  sum  be  paid  for  a  minimum  of  violation.  The 
agreement  may  be  so  framed  that  there  may  be  repeated  re- 
coveries for  successive  infractions,  or  so  that  only  one  infraction 
is  possible.''"     A  contract  which  stipulates  the  liability  for  the 


69  See  Hathaway  v.  Lynn,  75  Wis. 
186,  6  L.R.A.  551.  Contra,  Town- 
send  V.  Rumball,  19  Ont.  L.  R.  433 
(divisional  court).  Compare  Broad- 
brooks  V.  Tolles,  114  App.  Div.  (N. 
Y.)    G4(). 

70Dakin  v.  Williams,  17  Wend. 
447;  Dunlop  v.  Gregory,  10  N.  Y. 
241,  61  Am.  Dec.  746;  Mott  v.  Mott, 
11  Barb.  127;  Streeter  v.  Rush,  25 
Cal.  67;  Duffy  v.  Shockey,  11  Ind. 
70,  71  Am.  Dec.  348;  Spicer  v. 
Hoop,  51  Ind.  365;  Jaquitb  v.  Hud- 
son, 5  Mich.  123;  Mercer  v.  Irving. 
El.,  B.  &  E.  563 ;  Reynolds  v.  Bridge, 

6  El.  &  B.  528 ;  Sainter  v.  Ferguson, 

7  C.  B.  716;  Muse  v.  Swayne,  2  Lea 
251,  31  Am.  Rep.  607;  Galsworthy 
V.  Strutt,  1  Ex.  659;  Rawlinson  v. 
Clarke,  14  M.  &  W.  187.  See  Wer- 
ner V.  Finley,  144  Mo.  App.  554. 

It  is  held  in  Kansas  that  con- 
tracts not  to  engage  in  business 
must  be  sued  upon  as  breaches 
thereof  occur.  Heatwole  v.  Gorrell, 
35  Kan.  692.  But  this  is  not  in  ac- 
cord with  the  weight  of  authority. 
Streeter  v.  Rush,  25  Cal.  67;  Gush- 
ing V.  Drew,  97  Mass.  445;  Gressel- 


li  v.  Lowden,  11  Ohio  St.  349;  Moore 
V.  Colt,  127  Pa.  289,  14  Am.  St.  845. 
See  Leary  v.  Lallin,  101  Mass.  334. 
Under  a  statute  of  New  York  a 
contract  was  authorized  to  be  made 
vvitli  certain  officers  for  the  publi- 
cation of  the  reports  of  the  decisions 
of  the  court  of  appeals.  The  officers 
were  given  power  to  impose  terms 
beneficial  to  the  public  on  the  con- 
tracting publisher,  and  to  make  pro- 
vision in  the  contract  that  a  party 
injured  liy  tlie  refusal  of  the  con- 
tractor to  sell  and  deliver  as  pre- 
scribed in  the  contract  should  be  en- 
titled to  recover  damages  and  might 
fix  a  sum  as  liquidated  damages.  A 
contract  so  entered  into  required 
the  contractor  to  furnish,  at  the 
contract  price,  any  volume  pub- 
lished under  it  to  any  other  law- 
book seller  in  the  city  of  New  York 
or  Albany  applying  therefor,  "in 
quantities  not  exceeding  one  hun- 
dred copies  to  each  applicant,"  un- 
less the  contractor  chose  to  deliver 
more.  The  contract  also  provided 
that  for  any  failure  on  the  part  of 
tlie  contractor  "to  keep  on  sale,  fur- 


§    ^95]     CONVENTIONAL    J^lQUl  OATJONS    AM>    l)l«C  II  AlJt; KS.  !>2;{ 


failure  to  receive  or  (Iclivcr  ^■(»ods  ul"  iliU'ci'iMit  (|iialilics  is  not 
open  to  the  objection  lliat  it  ])n)vides  the  same  sum  for  a  partial 
as  a  total  breach.'^ 

Where  the  stated  sum  obviously  and  g'russly  exceeds  any  just 
measure  of  compensation  there  is  the  same  recognized  discretion 
in  such  cases  as  in  others  to  declare  it  a  penalty.'^ 


nish  and  deliver  the  volumes,  or 
any  of  them,  as  agreed,  he  shall  for- 
feit and  pay  *  *  *  the  sum  of 
$100,  hereby  fixed  and  agreed  upon, 
not  as  penalty,  but  as  liquidated 
damages,"  to  be  sued  for  and  re- 
covered by  the  persons  aggrieved. 
The  plaintiff,  a  bookseller,  applied 
on  six  different  occasions  for  a  num- 
ber of  copies  required  by  him  in  his 
business,  of  certain  volumes  pub- 
lished under  the  contract,  tendering 
the  contract  price,  wiiich  defendant 
refused  to  deliver.  In  an  action  on 
the  contract  it  was  held  a  valid 
stipulation  of  damages,  not  a  penal- 
ty, and  tliat  the  plaintiff  was  en- 
titled to  recover  the  damages  for 
each  refusal.  Miller,  J.,  delivering 
the  opinion  of  the  court,  treats  the 
question  as  one  depending  on  the  in- 
tention of  the  parties,  ascertained 
from  the  language  of  the  contract 
and  from  the  nature  of  the  sur- 
rounding circumstances  of  the  case. 
Referring  to  the  case  he  says :  "The 
breach  provided  for  was  a  single 
one — a  failure  to  keep  on  sale,  fur- 
nish and  deliver  the  volumes  named 
at  a  price  fixed.  The  agreement  ex- 
pressly provides  that  the  sum  named 
is  fixed  and  agreed  upon  'not  as  a 
penalty.'  The  failure  to  sell  and  de- 
liver embraced  not  only  a  single 
volume,  but  might  be  one  hundred 
volumes  at  one  time.  The  damages 
for  a  failure  to  deliver  a  single  vol- 
ume might  be  verj^  small,  wliile  for 
a  larger  number  it  would  be  far 
greater;  and,  in  case  of  a  bookseller, 
disposing  of  them  in  the  course  of 


liis  tiade,  might  lie  lievoml  the 
amount  actual^'  fixed.  The  dam- 
ages for  a  single  breai-li  were  also 
u!icertain,  and  could  not  I)e  deter- 
mined without  extrinsic  evidence, 
and  without  some  embarrassment. 
The  mere  loss  of  profits  on  a  vohnne 
to  a  bookseller  might  also  be  of  Imt 
trilling  amount  when  compared  witli 
the  injury  to  iiis  trade  by  being  un- 
able to  furnish  to  his  customers  vol- 
umes of  the  reports  as  recpiired. 
Under  the  circumstances  it  is  easy 
to  see  that  there  would  be  consider- 
able difficulty  in  making  proof  of 
the  actual  damages  incurred.  In 
view  of  the  facts,  although  the  ques- 
tion is  by  no  means  free  from  em- 
barrassment, it  is,  perhaps,  a  fair 
inference  that  the  parties  actually 
intended  to  guard  against  these  diffi- 
culties by  fixing  the  amount  named 
in  the  contract  as  liquidated  dam- 
ages. As  the  damages  which  might 
possibly  be  incurred  by  a  failure  to 
supply  a  larger  number  of  copies 
provided  for  by  the  contract  might 
be  greater,  we  think  tiie  amount  was 
not  unreasonable,  or  grossly  disjiro- 
portionate  to  the  proliable  ("stimate 
of  actual  damages."  Little  v. 
Bnuks,  85  N.  Y.  258. 

7iDiestal  v.  Stevenson,  [liKMJ]  2 
K.  ^^.  :U5. 

72  Wlicatlaiid  v.  Taylor.  2<.)  ihin 
70;  Burrill  v.  Daggett,  77  Me.  545; 
Smith  V.  Wedgwood,  74  id.  457; 
Stearns  v.  Barrett,  1  Pick.  44.1,  11 
Am.  Dec.  22.3;  Grant  v.  Pratt,  52 
App.  Div.   (N.  Y.)  540,  549. 

In  Perkins  v.  Lvman,  9  Mass.  522, 


924 


SUTllEKLAND    ON    DAMiXGKS. 


[§  296 


§  296.  Effect  of  part  performance  accepted  where  damages 
liquidated.    For  the  same  reason  that  one  sum  cannot  eonsist- 


11  id.  7(i.  6  Am.  Dec.  158,  the  de- 
fendant covenanted  for  a  valuable 
consideration  that  he  would  not  be 
directly  or  indirectly  interested  in 
any  voyage  to  the  northwest  coast 
of  America  or  in  any  traffic  with 
the  natives  of  that  oftast  for  seven 
years,  in  the  penal  sum  of  $8,000. 
It  was  held  a  violation  of  such  cove- 
nant to  own  and  fit  a  vessel  for 
such  voyage,  although  before  her  de- 
parture the  covenantor  divested 
himself  of  all  interest  in  the  vessel 
and  cargo;  but  also  held  that  the 
$8,000  was  penalty.  "The  question 
whether  a  sum  of  money  mentioned 
in  an  agreement  shall  be  considered 
as  a  penalty  and  so  subject  to  the 
chancery  powers  of  this  court  or  as 
damages  liquidated  by  the  parties 
is  always  a  question  of  construction, 
on  which,  as  in  other  cases  where  a 
question  of  the  meaning  of  the  par- 
ties in  a  contract,  provable  in  a 
written  instrument,  arises,  the  court 
may  take  some  aid  to  themselves 
from  circumstances  extraneous  to 
the  writing.  In  order  to  determine 
upon  the  words  used  there  may  be 
an  inquiry  into  the  subject-matter 
of  the  contract,  the  situation  of  tlie 
jiarties,  the  usages  to  which  they 
may  be  understood  to  refer,  as  well 
as  to  other  facts  and  circumstances 
of  their  conduct;  although  their 
words  are  to  be  taken  as  proved  by 
the  writing  exclusively."  The  court 
considered  there  was  nothing  in  the 
transaction  and  subject-matter  to 
indicate  whether  the  simi  stated  was 
penalty  or  liquidated  damages.  It 
might  be  either  consistently  with 
the  object  of  the  contract.  But  the 
court  say:  "If  the  sum  of  $8,000, 
mentioned  in  the  agreement,  is  to 
be    treated    as    liquidated    damages. 


then  for  one  instance,  in  which  the 
contract  should  be  broken,  and  for 
a  thousand  in  which  the  defendant 
should  interfere  in  the  trade  con- 
templated by  the  parties  to  be  se- 
cured to  the  plaintiffs  for  seven 
years,  exclusively  of  him  and  of  all 
acting  under  him,  the  same  dam- 
ages, the  amount  of  demand,  would 
be  recovered,  and  having  been  once 
paid,  if  demanded  as  a  penalty, 
there  would  be  an  end  of  the  con- 
tract; but  if  demanded  as  damages, 
then,  it  seems,  the  demand  might 
be  repeated.  Examined  in  this  view 
we  see  notliing  which  gives  this  con- 
tract any  other  determinate  mean- 
ing than  that  of  penalty.  If  there 
is  nothing  to  prevent  the  plaintiffs, 
in  case  the  defendant  should  have 
injured  them  in  the  breach  of  his 
contract  to  a  greater  amount  than 
$8,000  from  recovering  upon  his 
co\enant,  and  in  that  form  of  ac- 
tion, tlio  extent  of  the  damage  act- 
ually sustained,  although  greatly  ex- 
ceeding the  sum  mentioned,  it  would 
be  a  severe  construction,  indeed, 
wliicli  should  consider  him  liable  to 
that  amount  upon  one  breach,  how- 
ever slight  the  injury  and  loss  may 
have  been.  *  *  *  He  binds  him- 
self in  the  sum  of  $8,000  for  his 
faithfully  and  strictly  adhering  to 
tl)is  contract.  It  is  not  said,  if  he 
does  so,  contrary  to  his  agreement, 
then  he  will  pay  that  sum  as  a  sat- 
isfaction. Nor  is  there  anything  ex- 
pressed which  would  conclude  the 
plaintifl's,  unless  it  be  their  form  of 
action  (debt),  when  the  amount  of 
damages  should  exceed  $8,000,  from 
demanding  to  the  extent  of  their 
loss." 

Where    there    was    a    contract    to 
purchase  a  certain  number  of  wag- 


§    296]     CONVENTIONAL    LIQUIDATIONS    ANK    DI  S< '  1 1 AHGES.         025 

eutly  be  compensation  alike  for  a  lolal  am!  jiaiiial  lircai-Ii,  a 
stated  sum  made  payable  for  the  former  cannot  bv  const rn'-iiMti 
be  applied  to  any  infraction  after  acceptance  of  part  perform- 
ance.'^ In  case  of  such  a  stipulation  the  stated  sum  is  only 
recoverable  upon  the  happening-  of  the  very  event  mentioned  in 
the  contract.  If  a  partial  breach  occurs  it  has  sometimes  been 
said  the  stated  sum  is  as  to  that  breach  only  jienalty,  and  dam- 
ages are  given  on  proof  without  regard  to  it.'*  In  other  instances 
it  has  been  held  that  the  damages  for  a  partial  breach  arc  a  con- 
stituent of  the  sum  stipulated  for  an  entire  failure  to  perform. 
Thus,  where  there  were  liquidated  damages  for  a  failure  to 
convey  land  and  a  part  only  of  it  was  conveyed  and  a  failure 
as  to  the  residue,  the  damage  allowed  was  a  sum  which  boi-e  the 
same  ratio  to  the  stipulated  sum  that  the  value  of  the  land  not 
conveyed  bore  to  that  of  the  whole.'^  If  the  owner  of  the  build- 
ing, with  the  consent  of  the  contractor,  who  has  bound  himself 


ons  at  a  stipulated  price  and  tlie 
specified  sum  was  payable  without 
regard  to  the  time  the  breach  might 
occur,  the  court  said :  It  can  read- 
ily be  seen  that,  if  the  purchaser 
had  given  notice  of  his  intention  to 
cancel  on  the  day  after  the  contract 
was  made,  the  damage  to  the  seller 
would  in  all  probability  have  been 
less  than  if  he  had  waited  until  the 
seller  had  gone  to  the  trouble  and 
expense  of  getting  the  wagons  to- 
gether and  of  packing  them  and  pre- 
paring them  for  shipment,  and  yet 
the  contract  makes  no  difTerencc  be- 
tween the  effect  of  a  cancellation  re- 
ceived at  one  time  and  tlie  effect 
of  a  cancellation  received  at  a  time 
when  in  the  nature  of  things  tlic 
damages  would  have  been  wholly 
different.  Hence,  tlie  sum  named 
was  a  penalty.  Florence  W.  Works 
V.  Salmon,  8  Ga.  App.  197. 

73  Mount  Airy  M.  &  G.  Co.  v. 
Runkles,  118  Md.  371;  lloagland 
V.  Segur,  38  N.  J.  L.  230;  Shute  v. 
Taylor,  5  Mete.  (Mass.)  61;  Taylor 
V.    The    Marcella,     1     Woods    302; 


Watts  v.  Shcpi)ard,  2  Ala.  425; 
Berry  v.  Wisdom,  :{  Ohio  St.  241; 
Lampnian  v.  Cociiran,  16  N.  V.  275, 
per  Sliankland,  J. ;  Sheill  v.  McNitt, 
n  Paige  101;  Mundy  v.  Culver,  18 
Barb.  3:56:  Smith  G.  Co.  v.  Newall, 
22  R.  1.  29.5.  The  text  is  approved 
in  Wil)aux  v.  Grinnell  L.  S.  Co.,  9 
]Mont.  l.')4,  16;").  In  tlie  last  case  a 
contract  for  tlie  sale  and  purchase 
of  cattle  stipulated  that  a  sum 
should  lie  paid  if  tlie  vendor  failed 
to  dclixer  tlie  entire  number  called 
for;  no  provision  was  made  for  the 
delivery  of  a  less  number.  Less  than 
the  wliole  were  delivered  and  ac- 
cepted. As  a  result  tlie  agreement 
for  stipulated  damages  was  convert- 
ed into  one  in  the  nature  of  a  penal- 

ty- 

74  Sledge  V.  Arcadia  Orchards  Co., 
77  Wash.  477,  quoting  the  text; 
Myers  v.  Ralston,  ri7  Wash.  47, 
quoting  the  text;  Wheatland  v.  Tay- 
lor, 29  llun  70;  Shute  v.  Taylor,  5 
Mete.   (.Mass.)    61. 

76  Watts  V.  Sheppard,  2  Ala.  42.'>. 
See  Chase  v.  Allen,  13  Gray  42. 


926  SUTHERLAND    ON    DAMAGES.  [§    296 

to  pay  $10  per  day  as  li({uidated  damages  for  delay  in  complet- 
ing it,  occupies  a  part  of  the  building  after  the  time  stipulated 
for  its  completion,  l:)nt  before  it  is  finished,  the  liability  for  the 
stipulated  sum  terminates  with  such  occupancy ;  thereafter  the 
contractor  is  only  liable  for  the  actual  damages.'^ 

§  297.  Liquidated  damages  are  in  lieu  of  performance.  It  has 
been  held  that  in  all  cases  where  a  party  relies  on  the  payment 
of  liquidated  damages  it  must  clearly  appear  from  the  contract 
that  they  are  to  be  paid  and  received  in  lieu  of  performance.'' 
Where  the  stipulated  sum  covers  the  loss  of  the  whole  contract, 
and  does  not  apply  wdiere  there  is  merely  a  violation  of  some 
detail  of  it,  they  are  in  lieu  of  the  performance  of  the  entire 
contract;  they  satisfy  the  whole  and  every  particular  of  it. 
Thus,  if  in  an  agreement  for  submission  of  a  controversy  to 
arbitration  it  is  mutually  agreed  that  either  party  failing  to 
fulfill  it  shall  pay  to  the  other  a  specified  sum  as  stated  damages, 
not  so  large  in  itself  as  to  imply  a  penalty,  it  would  be  recover- 
able from  the  party  who  should  revoke  the  power  of  the  arbi- 
trators, for  he  would  thereby  repudiate  the  submission  and 
defeat  the  entire  object  of  the  agreement.  But  if  there  be  no 
revocation  and  after  an  award  is  made  one  party  refuses  to  per- 
form it,  the  refusal  is  not  such  a  breach  as  the  stated  sum  applies 

The  sum  named  must  be  regarded  Whitfield  v.  Levy,  35  id.  149,  156; 
as  liquidated  as  to  all  the  pro-  Laurea  v.  Bernauer,  33  Hun  307. 
visions  to  which  it  shall  extend,  or  If  the  acts  of  one  in  whose  favor 
it  will  not  be  so  regarded  as  to  any.  damages  are  stipulated  are  re- 
It  cannot  be  liquidated  damages  in  sponsible  for  part  of  the  delay  in 
one  case  and  not  in  the  otlier.  If  the  execution  of  a  building  contract, 
the  contract  applies  to  the  covenant  there  cannot  be  an  apportionment 
of  one  party  to  convey,  and  to  that  of  the  stipulated  sum.  Willis  v. 
of  the  other  party  to  pay  the  con-  Webster,  1  App.  Div.  (N.  Y.)  301. 
sideration  money  on  tlie  delivery  of  76  Collier  v.  Betterton,  87  Tex. 
the  deed,  the  measure  of  damages  in  440. 

one    case    is    the    unpaid    purchase-  77  Hedrick    v.     Firke,    169    Mich, 

money,    which    can    be    ascertained,  549;  Koch  v.  Streuter,  218  111.  546, 

and   as  to  that  covenant  it  cannot  2  L.R.A.(N.S.)  210;  Gray  v.  Crosby, 

be    considered    liquidated    damages,  18    Johns.    219;    W^inch    v.    Mutual 

and    if    not    liquidated    as    to    that  Benefit   Ice   Co.,   9    Daly    177.      See 

covenant  it  is  not  as  to  the  other.  Cape  May  R.   E.  Co.  v.  Henderson, 

Lansing  v.  Dodd,  45  N.  J.  L.  525;  42  Pa.  Super.  1,  231  Pa.  82. 


§    297]       CONVENTIONAL    LTQITIDATIOXS    AND    DISCHAROKS.       927 

to.^^  And,  if  sucli  s\ini  is  made  pavaMc  as  li<iiiidat('(l  dainng'ca 
for  a  breach  of  some  jjarticular  onlv  of  the  iigreement,  tlicn  it 
may  still  be  a  question  whether  that  feature  of  the  contract  will, 
notwithstanding  the  breach,  and  the  claim  or  even  ])ayinent  of 
those  damages,  be  of  continning  obligation  so  as  to  admit  of 
other  breaches  and  snccessive  claims  and  recoveries  of  the  same 


78  Id.  In  Lowe  v.  Nolte,  10  111. 
475,  an  action  vva.s  brought  on  an 
award.  The  submission  stated  that 
several  suits  were  pending  between 
the  parties,  arising  out  of  a  contract 
in  relation  to  the  purchase  of  grain ; 
and  it  was  agreed  that  all  matters 
connected  with  the  contract  and  the 
suits  were  to  be  referred;  that  the 
decision  be  conclusive,  and  that 
judgment,  on  ten  days'  notice, 
should  be  entered  on  the  award.  It 
was  also  provided  that  the  submis- 
sion should  not  operate  to  dismiss 
any  of  the  pending  suits  until  final 
judgment  on  the  award,  or  the  per- 
formance of  it;  the  parties  binding 
themselves  to  abide  by  the  award 
"in  the  penalty  of  $1,000  as  stipu- 
lated damages,  to  be  paid  by  the 
party  delinquent  to  the  party  com- 
plying." The  award  was  for 
$5,876.46.  Scates,  C.  J.  (speaking 
of  causes  of  demurrer  to  the  declara- 
tion), said:  "The  most  important 
is  the  want  of  an  averment  of  a  fail- 
ure to  pay  the  liquidated  damages, 
stipulated  to  be  $1,000,  for  non- 
compliance with  the  award,  and 
which  it  is  here  contended  is  all 
that  can  be  recovered  under  the  sub- 
mission and  award.  If  this  view 
is  sustainable  no  action  will  lie  up- 
on the  award  as  it  is  here  brought, 
but  alone  upon  the  submission.  To 
solve  this  objection  it  is  necessary 
to  ascertain,  from  the  nature  of 
the  matters  in  controversy  and  the 
terms  and  language  of  the  parties 
in  their  submission,  whether  they 
intended  by  this  part  of  the  agree- 


ment that  the  $1,000  fixed  as  liqui- 
dated damages  siiould  be  strictly 
and  tfi'hiiically  so  held,  or  only  aa 
a  penalty.  Courts  have  not  been 
confined  and  controlled  alone  by  the 
literal  terms,  stipulated  damages, 
used  bj'  the  parties,  when  inquiring 
into  their  true  intention  and  mean- 
ing; but  they  have  looked  to  the 
subject-matter  of  the  dispute,  the 
situation  and  condition  of  the  par- 
ties, and  all  the  circumstances,  to- 
gether with  the  effects  and  conse- 
quences, as  aids  in  arriving  at  the 
true  meaning.  Where  a  covenant  is 
made  concerning  an  existing  cause 
of  action,  that  cause  may  or  may 
not  be  merged  in  the  covenant.  If 
it  be  merged,  and  the  covenant  be 
broken,  the  party  is  liable  alone  on 
the  covenant,  and  not  on  the  origi- 
nal cause  of  action.  If  it  is  not 
merged,  then  the  covenant  affords 
a  new  and  additional  cause  of  ac- 
tion and  remedy  upon  it.  In  this 
latter  case,  if  the  amount  named  in 
the  covenant  or  agreement  be  fixed 
as  liquidated  or  stipulated  damages, 
and  is  intended  by  the  parties  to  be 
paid  in  lieu  of  performance,  then 
the  recovery  will  be  confined  to  that 
amount  for  the  breach,  as  well  as 
to  his  action  on  the  covenant  or 
agreement  for  his  remedy,  and  can- 
not preserve  his  original  cause  of 
action.  I'ut  when  such  intention 
does  not  ajjpt-ar,  the  sum  named  as 
stipulated  or  liquidatrd  damages 
will  be  rec(i\c(|  iinil  treated  as  a 
penalty:  and  llif  parly  may  rt-cover 
ui>i)ti  till'  original  cause." 


928  SUTltKRJ.ANI)    ON    BAMAOES.  [^    297 

stipulated  damages.  This  question  is  not  to  be  settled  by  any 
rule  peculiar  to  the  construction  of  such  stipulations;  it  depends 
on  the  intention  of  the  parties  as  ascertained  by  a  fair  inter- 
pretation of  the  contract.  Where  certain  work  is  required  to  be 
done  within  a  specified  time  it  may  be,  and  often  is,  agreed  that 
a  stated  sum  shall  be  paid  for  every  week,  month  or  other  period 
during  which  its  completion  is  delayed  beyond  that  time.  In 
such  cases  there  is,  by  necessary  implication,  a  continuing  ob- 
ligation as  well  as  right  to  finish  the  work,  though  the  stipulated 
time  of  performance  has  elapsed.  These  sums  are  recoverable 
and  may  be  aggregated,'''^  and  they  are  severally  payable  only  as 
complete  satisfaction  for  the  delay  of  performance  and  not  in 
lieu  of  it. 

§  298.  Effect  of  stipulation  upon  right  of  action.  It  is  not 
the  effect  of  the  ordinary  contract  which  stipulates  for  damages 
to  constitute  the  person  who  claims  the  benefit  of  the  stipulation 
a  tribunal  to  determine  his  rights  thereunder.  Hence,  where  a 
contractor  has  not  performed  according  to  his  agreement  the 
contractee  may  sue  for  the  sum  which  the  other  has  agreed  shall 
be  the  damages ;  ^"  and  where  the  amount  is  to  be  deducted  from 
the  payment  last  due,  if  such  deduction  has  been  made,  the  fact 
may  be  shown  in  bar  of  the  action. ^^  A  plaintitf  who  elects  to 
take  liquidated  damages  cannot  have  an  injunction ;  he  may 
elect  between  the  two  remedies,  but  cannot  have  both.^^  If  it  is 
not  apparent  that  the  payment  of  the  stipulated  sum  is  to  be 
made  as  an  alternative  in  lieu  of  strict  performance  equity  will 
enjoin  the  defendant  from  breaching  his  covenant,  ^^  or  will 

79  Fletcher  v.  Dyche,  2  T.  R.  32;  683;  Stillwell  v.  Temple,  28  Mo. 
Pettis  V.  Bloomer,  21  How.  Pr.  317;        156. 

Hall    V.    Prowley,    5    Allen    304,    81  82  General  Accident  Assur.  Co.  v. 

Am.  Dec.  745.     See  §  291;  Weeks  v.  Xoel,   [1!)02]   1  K.  B.  377. 

Little,  47  N.  Y.  Super.  Ct.  1.  83  Heinz     v.     Roberts,     135     Iowa 

80  Mitchell  V.  McKinnon,  65  Mich.  748  (unless  the  contract  indicate.s 
683;  Lea  v.  Whitaker,  L.  R.  8  C.  that  tlie  rtipulation  was  intended  to 
P.  70.  l)c  the  e.xclusive  remedy)  ;   Wills  v. 

Recovery  will   be   confined   to  the  Forester,    140    Mo.    App.    321,    and 

damages  stipulated.     Stone,  Sand  &  oases  cited;  Ewing  v.  Davis,  2  Ohio 

Gravel    Co.    v.    United    States,    234  C.  C.   (N.  S.)  90;  Davies  v.  Daniels, 

U.  S.  270,  58  L.  ed.  1308.  8    Hawaii    88;    Augusta    S.    L.    Co. 

81  Mitchell  v.  McKinnon,  05  Mich.  v.  Debow,  98  Me.  496;  Wilkinson  v. 


§    299]     CONVENTIONAL    LIQUIDATIONS    AND    DISOIIAROES.  929 

specifically  enforce  pcrfonnance  of  the  coveiiiiiit  wliore  the 
circumstances  justify  it.^* 

§  299.  Waiver  of  right  to  stipulated  damages.  Tf  part  per- 
formance of  an  entire  contrai-t  is  accei)te(l,  a  stipu[atit)n  concern- 
ing fntnre  damages  is  waived.**  An  exception  has  been  made 
where  a  city  consented  to  the  operation  of  a  street  railway  ])ar- 
tially  constructed  and  from  the  operation  of  which  it  received 
the  license  fees  and  stipulated  percentage  of  receipts,  though 
there  was  no  election  to  declare  a  forfeiture.*^  The  waiver  of 
the  right  to  annul  a  building  contract  waives  a  chiiiii  to  stip- 
ulated damages  for  either  non-])erfornuince  or  dehiy  by  the  con- 
tractors, in  the  absence  of  an  express  agreement  to  the  contrary," 
as  where  the  contract  gives  the  emi)l(>ver  the  absolute  right  to 
the  reserved  percentage.**  There  is  no  waiver  of  the  right 
to  such  damages  on  the  ground  of  part  performance  where  the 
obligee  performs  for  and  at  the  request  of  the  obligor ;  no  con- 
sent that  an  existing  breach  shall  be  disregarded  can  be  implied 
from  the  obligee's  act.*^  Action  taken  in  pursuance  of  the  con- 
tract does  not  affect  the  right  to  recover  the  stipulated  sum.^° 
Nor  does  the  making  of  payments  to  subcontractors  who  are  not 
responsible  for  the  delay  in  performance  of  the  contract.^^  Ac- 
ceptance of  the  work  without  asserting  a  claim  for  the  stipulated 
sum  in  accordance  with  the  contract  is  a  waiver  of  the  right 

Colley,  164  Pa.  35,  26  L.R.A.   114;  Poppenberg  v.  R.  M.  Owon  &  Co.,  84 

Harris  v.  Theus,   149  Ala.  133,  123  N.  Y.  Misc.  126. 

Am.    St.    17,   10   L.R.A. (N.S.)    204;  86  Wriglit     v.     Chicago,     137     111. 

Hickey    v.    Brinkley,    88    Neb.    3.56.  App.  240. 

Contra,  Rucker  v.  Campbell,  35  87  Henderson  B.  Co.  v.  O'Connor. 
Tex.  Civ.  App.  178,  if  the  defendant  88  Ky.  303,  331 ;  O'Connor  v.  Hen- 
is  not  insolvent.  '^-^'•««"    ^-    Co.,    95    Ky.    633.      See 

84  Johnston  V.  Blanchard,  3  6  Cal.  ^^^'y    ^'«-   ^-    ^ew   York,   144   App. 

A         001     T     u        oi       A       01Q  Til  I^i^'-     (^^-    Y.)     408,    and    compare 

App.  321;  Koch  v.  Streuter,  218  111.  ,  ^         ^^    '            '         ^          .,'     , 

^  ^  .    ,n.-r.r,      ^,^     T^-            ,  Couch    V.    Newtown    C.    Council    B. 
546,  2  L.R.A.  N.S.      210;   Diamond 

Assn,  109  App.  Div.  (N.  \.)   Sou. 

M.  Co.  V.  Roeber,  106  N.  Y.  473,  60  ..   '      .     .,   "^^  ^   r>   n          xr„  ^ 

'  88  Louisville  &  N.  K.  Co.  v.  Mason, 

Am.  Rep.  464.  Contra,  Mallory  v.  ,^6  Ky.  844,  distinguishing  the 
Globe-B.  C.  M.  Co.,  11  Ariz.  296.  ^^^^^  because  of  the  difference  in  the 

85  Wibaux   V.   Grinnell   L.   S.   Co.,       j^.,.,,,^  ^f  ^i,,.  contracts. 

9  Mont.  154;   Fruin-B.  C.  Co.  v.  Ft.  89  Parr  v.  Greenbush,  42  Hun,  232. 

Smith  &  W.  R.  Co.,   140  Fed.  465.  90  Lamson  v.  Marshall.  133  Mich. 

So  in  case  of  acceptance  of  per-  250. 

formance  otherwise  than   in  accord-  91  Stepliens    v.    Essex    County    P. 

ance  with  the  terms  of  the  contract.  Com.,  143  Fed.  844,  75  C.  C.  A.  60. 
Suth.  Dam.  Vol.  I.— 59. 


030  SUTHEKT>AND    ON    DAMAGES.  [§    299 

thereto,^^  as  where  payment  of  the  first  instalhnent  for  work 
done  after  it  should  have  been  completed  is  made.^^  But  this 
does  not  affect  the  right  to  recover  the  liquidated  amount  for 
subsequent  defaults.^*  Where  it  is  provided  that  a  sum  shall 
be  deducted  from  the  contract  price  for  the  performance  of  work 
for  each  week's  delay  beyond  a  time  fixed,  the  right  thereto  is 
not  waived  because  the  amount  is  not  deducted  from  the  month- 
ly estimates  or  claimed  from  month  to  month,  if  the  contract  is 
silent  as  to  the  time  when  the  claim  shall  be  asserted.^^  If  the 
defendant's  right  to  retain  the  money  which  has  been  agreed 
upon  as  stipulated  damages  depends  upon  the  failure  of  the 
plaintiff  to  perform  and  the  termination  of  the  contract  for  that 
reason,  the  fact  that  the  contract  is  ended  by  consent  does  not 
waive  the  right  to  the  damages.^^  But  such  damages  cannot  be 
recovered  if  the  delay  in  the  performance  of  a  building  contrg-ct 
in  whole  or  in  part  is  owing  to  the  failure  of  the  person  for 
whom  it  is  being  performed  to  perform  a  condition  precedent.^' 
If  such  a  contract  provides  for  the  completion  of  the  building  by 
a  day  designated,  and,  in  default,  that  the  contractor  shall  pay 
liquidated  damages,  and,  further,  that  other  work  may  be 
ordered  in  addition  to  that  expressly  provided  for,  and  such  work 
is  ordered  with  the  necessary  result  that  the  completion  of  the 
building  is  delayed,  the  contractor  is  not  liable  for  the  liquida- 
ted damages  unless  he  has  agreed  that,  whatever  additional 
work  may  be  ordered,  he  will  complete  the  whole  within  the 

92  Central  B.  P.  Co.  v.  Mt.  Clem-  bach,  175  Fed.  429 ;  Ittner  v.  United 
ens,  H3  Mich.  259.  States,  43  Ct.  of  Cls.  336;  Wallis  v. 

93  Erickson    v.    Green,    47    Wash.  Wenham,  204  Mass.  83 ;  Holland  T. 
613.  B.  Co.  V.  Nixon,  61  N.  Y.  Misc.  469; 

94  Keefe    v.    Fairfield,    184    Mass.  Callanan  Road  Imp.  Co.  v.  Oneonta, 
334.  117  App.  Div.   (N.  Y.)   332;  Beattie 

95  Texas,   etc.   R.   Co.   v.  Rust,   19  Mfg.  Co.  v.  Heinz,  120  Mo.  App.  465; 
Fed.  239,  245.  8trohel   S.   Co.   Sanitary   Dist.,   KiO 

96  Wolf  V.  Des  Moines  R.  Co.,  64  jjj     ^^^     ^^^       ^^^    Chamberlin    v. 
Iowa,  380.  Booth,  135  Ga.  719,  35  L.R.A.(N.S.) 


1223 ;    Moore  v.   Board   of   Regents, 
215  Mo.  705;  Starr  v.  Gregory  C.  M. 


97  Long  V.  Pierce  County,  22 
Wash.  330,  348;  Eldridge  v.  Fuhr, 
59  Mo.  App.  46;  Standard  G.  Co. 
V.  Wood,  9  C.  C.  A.  362,  61  Fed.  ^o.,  0  Mont.  485,  13  Pac.  195;  King 
74;  Kerr  E.  Co.  v.  French  River  T.  T.  B.  &  Mfg.  Co.  v.  St.  Louis,  43 
Co.,  21  Ont.  App.  160;  Jefferson  H.  Fed.  768,  10  L.R.A.  826;  Ortmann  v. 
Co.  V.  Brumbaugh,  168  Fed.  867,  First  Nat.  Bank,  49  Mich.  56;  Dan- 
94  C.  0.  A.  279;  Caldwell  v.  Schmul-       nat  v.  Fuller,  120  N.  Y.  554. 


§299]     CONVENTIONAI,     I.K^  L' I  l»AT10iNS    AND    iJlSUll  AKUES.  931 

specified  tiiiie.''^  Ami  wliere  Uie  dehi.y  in  I  he  perl'ofuiaiice  is 
caused  by  the  dofaidt  of  both  parties  and  the  damages  cannot 
be  apportioned  the  sti]ndatiou  for  compensation  cannot  be  en- 
forced.®^ If  delay  in  the  completion  of  a  contract  results  from 
radical  alterations  provided  for  therein  a  deduction  will  be 
made  for  the  time  consumed  in  makiui;-  them.^  Where  the  em- 
ployer was  in  default  in  furnishing-  machinery,  in  consequence 
of  which  the  contractor  could  not  finish  the  work  in  the  stip- 
ulated time,  the  time  was  treated  as  extended  so  as  to  permit 
the  installation  of  the  machinery  after  it  was  furnished  though 
it  could  not  have  been  installed  in  time  if  deli\'ered  earlier; 
damages  were  allowed  for  the  delay  beyond  the  extemled  time.'^ 
The  employer  is  deprived  of  his  right  to  the  stipulated  damages 


98Dodd  V.  Churtoii,  [1897]  1  Q. 
B.  5G2;  Holmes  v.  Guppy,  3  M.  & 
W.  387 ;  Westwoocl  v.  Secretary  of 
State  for  India,  11  Week.  Rep.  261, 
7  L.  T.  736.  (Jones  v.  St.  John's 
College,  L.  R.  0  Q.  B.  115,  was  dis- 
tinguished on  the  ground  that  the 
court  had  no  opportunity  to  con- 
strue the  contract,  the  allegation 
tliat  the  builder  had  entered  into 
the  contract  pleaded  being  admitted 
by  the  demurrer)  ;  Bloomington  li. 
Co.  V.  Garthwait,  227  111.  G13;  Cal- 
lanan  v.  Road  Imp.  Co.,  117  App. 
Div.  (N.  Y.)  332;  Small  v.  Burke, 
92  App.  Div.  (X.  Y.)  338.  See 
Reardon  v.  Cusliing,  90  Minn. 
360 ;  Bagwell  v.  American  S.  Co., 
102  Mo.  App.  707;  Ottawa  Northern 
&  W.  R.  Co.  V.  Dominion  B.  Co.,  3G 
Can.  Sup.  Ct.  347. 

The  owner  of  a  building  may  not 
claim  any  advantage  because  an 
oral  order  of  his  for  alterations 
from  the  plans  was  accepted  by  the 
contractor  as  a  compliance  witli  tlie 
contract  which  specified  tliat  extra 
work  should  be  ordered  in  writing. 
Focht  V.  Rosenbauni,  176  Pa.  14. 

99  Mitchell  &  McNecley  v.  Davis, 
73  W.  Va.  403,  citing  the  text; 
Early   v.    Tussing,    182    Midi.    314; 


Caldwell  v.  Sclimulbach,  Jefferson 
IT.  Co.  V.  Brumbaugli,  168  Fed.  807, 
94  C.  C.  A.  279;  Vilter  Mfg.  Co. 
V.  Tygart's  Valley  B.  Co.,  168  Fed. 
1002;  Mosler  S.  Co.  v.  Maiden  Lane 
S.  D.  Co.,  199  N.  Y.  479,  37  L.R.A. 
(N.S.)  363,  138  App.  Div.  (N. 
Y.)  905;  Champlain  C.  Co.  v. 
O'Brien,  ^17  Fed.  271;  Holland  T. 
B.  Co.  v.  Nixon,  61  N.  Y.  Misc.  469; 
Wiley  v.  Hart,  74  Wash.  142. 

The  exercise  of  any  right  arising 
from  tile  breach  of  the  contract  is 
not  a  waiver  of  the  right  to  recover 
llie  sum  stipulated  to  be  paid  for 
its  breacii.  Barrett  v.  ilonro,  69 
Wash.  229,  40  L.R.A. (N.S.)   763. 

In  a  late  case  it  is  laid  down  that 
the  exercise  of  tlic  autiiority  given 
I)y  the  contract  to  require  the  per- 
formance of  additional  work  gives 
tlie  contractor  a  reasonable  exten- 
sion of  time  in  wliich  to  perform  it; 
but  would  not  excuse  unnecessary 
dela}'  in  tlie  cnmpletion  of  the  con- 
tract or  relieve  from  the  stipulated 
liability  therefor.  Coal  &  T.  R.  Co. 
V.  Reherd    (C.  C.  A.)    204  Fed.  859. 

1  Williams  v.  Rosenlmum,  57 
Wash.  94;  Wilk.ns  v.  Wilkerson 
(Tex.  Civ.  App.),  41    S.  W.   178. 

2  Morse   D.   D.   &.   R.    Co.   v.   Sea- 


932  SUTHERLAND  ON  DAMAGES.  [§  299 

only  in  so  far  as  he  is  responsible  for  the  delay  which  has  en- 
sued,^ By  exercising  the  option  to  re-enter  because  of  the  non- 
payment of  rent  a  landlord  waives  the  right  to  claim  a  deposit 
made  by  the  tenant  except  as  to  rent  accrued,*  and  so  where  the 
tenant  remains  in  possession  pursuant  to  the  landlord's  solici- 
tations; there  can  be  no  recovery  beyond  the  rent  agreed  upon.® 
Ac(|uiescence  in  delay  may  make  it  inequitable  to  enforce  the 
stij)ulated  liability.^  By  discharging  the  contractor  and  taking 
over  the  work  the  employer  waives  his  right  to  the  agreed  dam- 
ages/ and  so  by  bringing  an  action  to  enforce  the  payment  of 
the  contract  price.*  A  waiver  does  not  result  from  making 
partial  payments  to  a  contractor  after  the  time  fixed  for  perform- 
ance if  a  sufficient  sum  is  retained  to  cover  the  stipulated  dam- 
ages, nor  by  using  the  building  being  erected ;  ^  nor  from  the 
payment  of  the  agreed  price  for  property  undelivered  at  the 
time  stipulated  though  no  rights  are  reserved. ^°  Compliance 
with  the  conditions  upon  which  the  stipulated  sum  is  to  be  paid 
must  be  shown,  as  the  written  statement  of  the  architect  showing 
responsibility  for  the  delay.^^ 

In  e(^uity  the  acceptance  of  money  under  a  contract  after  the 
right  to  declare  a  forfeiture  has  accrued,  without  giving  the 
party  bound  notice  of  intention  to  insist  upon  strict  performance 
of  the  contract,  is  a  waiver  of  the  right  to  declare  a  forfeiture.^^ 
Apportionment  of  the  damages  caused  by  delays  in  consequence 
of  the  default  of  the  respective  parties  will  be  made  when,  either 
by  competent  and  satisfactory  evidence,  or  by  a  contractual 
standard  fixed  by  the  parties,  this  can  be  done  with  reasonable 
certainty.  The  contractor  must  show  the  number  of  days  he  is 
exempt  from  liability  for  the  stipulated  sum  by  reason  of  the 
(contract.  ^^ 

board  T.  Co.,  161  Fed.  99,  88  C.  C.  8  Garrison  v.  Glass,  139  Ala.  512. 

A.  445.  9  Lawrence  County  v.  Stewart,  72 

3  Wallis    V.    Wenhara,    204    Mass.       Ark.  525. 

83.  10  Clydebank     E.     &     S.     Co.     v. 

4  Cunningham  v.  Stockton,  81  Yzquierdo  y  Castaneda,  (1905) 
Kan.  780.  App.  Cas.  6. 

B  Kenwood  H.  Co.  v.  Hiland,   153  "  Swift  v.  Dolle,  39  Ind.  App.  653. 

111.  App.  108.  l2Baercnklau  v.   Peerless  R.   Co., 

6  Coryell  v.  Dubois,  226  Pa.  103.  80  N.  J,  Eq.  26. 

7  New  Haven  v.  National  S.  E.  13  Schmulbach  v.  Caldwell,  196 
Co.,  79  Conn.  482.  Fed.  16,  115  C.  C.  A.  650. 


INTEREST.  933 


CHAPTER  VIII. 

INTEREST. 

§  300.  DeCinitions  and  pcnoral  view. 

301.  Interest  by  the  early  common  law. 

302.  Interest  in  England  legalized  by  statute. 

303.  Interest  at  common  law  in  America. 

304.  Agreements  for  interest. 

Section  1. 

general  promise  to  pay  money  "witii  interest." 

305.  Eule  of  construction. 

306.  Law  or  custom  fixes  tbe  rate. 

307.  Legal  or  stipulated  rate  applies  from  date. 

308.  309.  Whether  same  rate  will  apply  after  debt  due. 

Section  2. 

agreements  for  interest  "until  paid." 

310.  Agreements  for  interest  from  date  until  debt  paid. 

311,  312.  Agreements  for  a  different  rate  after  debt  due. 

Section  3. 

agreements  for  more  than  legal  rate  before  matl'ritv. 

313.  Effect  of  usury  found. 

314.  Who  may  take  advantage  of  usury. 

315.  When  contracts  not  void  for  usury. 

316.  317.  Recoveries  under  usury  statutes. 

Section  4. 

agreements  for  more  than  legal  rate  after  m,\trrity. 

318.  Not  usury;   but  penalty. 

319.  Same  subject;  when  debtor  relieved   in   Illinois. 

Section  5. 

interest  as  compensation. 

320.  Scope  of  section. 

321.  Right  not  absolute. 

322.  Tacit  agreements  to  pay   interest  on  accounts. 

323.  Interest   where   paynient    unreasonably   and    voxatiously    delayed 


934  SUTHEELAND  ON  DAMAGES. 

§  324.  Quantum  meruit  claim  to  interest. 

325.  Allowed  on  money  loaned. 

326,  327.  Allowed  on  money  paid. 

328.  Quantum  meruit  claim  to  interest  between  vendor  and  purchaser. 

329.  Interest  allowed  from  time  wlien  money  ought  to  be  paid. 

330.  No  interest  on  penalties  nor  statutory  liability  for  riots. 

331.  When  allowed  on  penalty  of  bonds. 

332.  Interest  against  government. 

333.  334.  Judgments  bear  interest. 

335.  Not  allowed  on  revival  of  judgment  by  scire  facias. 

336.  Interest  in  condemnation  proceedings. 

337.  Interest   on    taxes,    license    fees,    special    assessments    and    customs 

duties. 

338.  Infants  liable  for. 

339.  Interest  as  between  landlord  and  tenant. 

340.  Interest  on  damages  for  infringing  patents. 

341.  Right  to  interest  as  affected  by  the  marital  relation. 

342.  Interest  as  between  partners. 

343.  Interest  on  stockholders'  statutory  liability. 

344.  Allowed  on  annuities  and  legacies. 

345.  Interest  on  advancements. 

346.  On  money  due  on  policy  of  insurance,  and  on  premiums. 

347.  348.  Not  allowed  on  unliquidated  demands. 
349,  350.  Interest  on  accounts. 

351.  When  demand  necessary. 

352.  When  allowed  on  money  had  and  received. 

353.  When  allowed  against  agents,  trustees  and  officers. 

354.  On  money  obtained  by  extortion  or  fraud,  or  wrongfully   withheld 

or  disposed  of. 

355.  Interest  in  actions  for  torts. 

Section  6. 
the  law  of  what  pi.act;  and  time  governs. 

356.  Importance  of  subject. 

357.  General  rule  as  to  contracts. 

358.  Rule  as  to  notes  and  bills. 

359.  Bonds  to  the  United  States. 

360.  361.  Between  parties  in  different  states. 
362-365.  Where  usury  is  involved. 

366.  The  law  of  what  place  governs  tlit  rate  as  damages. 

367.  Pleading  and  proof  of  foreign  law. 

368-370.  Effect  of  change  in  law  of  place  of  contract. 

Section  7. 
interest  as  an  incident  to  the  i'rincirai  . 

371.  Interest  due  by  agreement  a  debt 

372.  Interest  as  damages  accessory  to  principal. 


§    300]  INTEREST.  935 

Section  8. 

interest  upon  interest. 

§  373.  Compound  interest. 

374.  Instances  of  interest  on  interest. 

375.  Interest  on  instalments  of  interest. 

376.  Separate  agreements  for  interest. 

377.  Periodical  interest  after  maturity  of  del)t. 

378.  379.  Computation,  application  and  effect  of  partial   pavnienls. 

Section  !). 

suspension  of  interest. 

380.  Miscellaneous  cases. 

381.  Where  payments  prevented  by  legal  process. 

382.  Where  war  prevents  payment. 

383.  Tender  stops  interest. 

384.  Tender  not  allowed  for  unliquidated  damages. 

385.  386.   When  tender  may  be  made. 

Section  10. 

pleading. 

387.  How  interest  claimed  in  pleading. 

Section  li. 

INTEREST   DURING   PROCEEDINGS    TO   COLLECT   A    DEBT. 

388.  Interest  on  verdict  before  judgment. 

389.  On  judgments  pending  review. 

Interest  as  an  element  of  damage  lias  already  been  several 
times  mentioned,  and  will  frequently  be  considered  in  the  chap- 
ters which  treat  of  special  branches  of  the  law  of  da  in  ages. 
But  as  such  and  otherwise  it  is  an  elementary  topic  deserving 
more  particular  treatment,  and  this  seems  the  most  aj)jii'(t|)riat(' 
place  to  introduce  it. 

§  300.  Definitions  and  general  view.  Interest  is  the  com- 
pensation fixed  by  agreement  or  allowed  by  law  for  the  use  or 
detention  of  moneys,  oi-  for  the  loss  thereof  to  the  ]);iity  cntitlcij 
to  such  use.  It  is  computed  at  a  certain  rate  i)er  centum  by  the 
year,  unless  stipulated  for  ujjon  some  other  periotl  of  time.  In 
a  strict  sense,  it  is  the  compensation  agreed  to  be  paid  for  the 
use  of  money  while  the  debtor  Ims  a  riiilit  to  retain  the  j)rinci|ial 


936 


SUTIIEKLAND    ON    DAMAGES. 


[§  300 


and  during  a  stipulated  period  of  credit;  in  other  words,  before 
the  principal  is  dne  and  payable.  A  creditor  is  not  entitled  to 
be  paid  for  the  use  of  money  owing  to  him  before  it  is  due  unless 
by  agreement,  express  or  implied.'^  And  this  should  be  for  the 
prospective  use  of  money ;  otherwise  it  has  been  held  not  to  be 
strictly  interest.^  But  past  use  may  be  a  valid  consideration  for 
a  ])romise  to  pay  money  by  way  of  compensation.^  When  ex- 
pressly stipulated  for  to  accrue  during  the  period  of  forbearance 
it  becomes,  as  it  accrues,  a  positive  addition  to  the  principal  and 
is  thence  a  distinct  and  integral  part  of  the  debt,*  payable,  un- 
less otherwise  agreed,  when  the  princijial  is  due,^  and  in  the 
same  funds,^     As  such   it  has  a  substantive  character.      The 


iMinard  v.  Beans,  64  Pa.  411; 
Thorndike  v.  United  States,  2 
^lason  1 :  Beardslee  v.  Horton, 
.•3  Mich.  560;  Robinson  v.  Bland,  2 
Burr.  1077 ;  Rensselaer  G.  Factory 
V.  Reid,  5  Cow.  587 ;  Robinson  v. 
Brock,  1  Hen.  &  M.  211;  White 
V.  Walker,  31  111.  422;  Pollard  v. 
Yoder,  2  A.  K.  Marsh.  264;  Brain- 
erd  V.  Champlain  T.  Co.,  29  Vt.  154; 
Evans  v.  Beckwith,  37  Vt.  285;  Tan- 
ner V.  Dundee  L.  I.  Co.,  8  Sawyer, 
187,  12  Fed.  648;  In  re  Cole's  Es- 
tate, 85  N.  Y.  Misc.  630. 

2  Daniels  v.  Wilson,  21  Minn.  530. 
The  action  was  on  a  note  given  for 
a  sum  agreed  upon  for  interest  after 
the  time  for  which  it  was  computed 
had  elapsed,  and  at  a  rate  in  excess 
of  tliat  antecedently  specified  in  the 
contract  for  the  principal.  The 
court  say :  "A  contract  to  pay  in- 
terest is  a  contract  to  pay  a  con- 
sideration for  the  future  use  of 
money.  The  contract  in  this  case 
was  a  contract  to  pay  a  considera- 
tion for  the  past  use  of  money,  and, 
therefore,  not  a  contract  to  pay  in- 
terest in  any  proper  or  legal  sense." 
Adams  v.  Hastings,  6  Cal.  126,  65 
Am.  Dec.  496. 


3  Wilcox  V.  Howland,  23  Pick.  167. 

4  Southern  Cent.  R.  Co.  v.  Mora- 
via, 61  Barb.  181 ;  West  Branch 
Bank  v.  Chester,  11  Pa.  282,  51 
Am.  Dec.  547;  Foster  v.  Harris,  10 
Pa.  457. 

Interest  is  also  an  incident  of  the 
principal,  in  analogy  to  the  doctrine 
of  accession,  in  cases  of  breach  of 
trust.  Stickney  v.  Parmenter,  74 
Vt.  58  {sub  nom.  .lohnson's  Adm'r 
V.  Parmenter ) . 

5  Tanner  v.  Dundee  L.  I.  Co.,  su- 
pra ;  Koehringer  v.  MuemminghofiF, 
60  Mo.  400;  Ramsdell  v.  Hulett,  50 
Kan.  440;  Motsinger  v.  Miller,  59 
Kan.  573;  Saunders  v.  McCarthy,  8 
Allen,  42;  Cooper  v.  Wright,  23  N. 
J.  L.  200. 

6  McCalla  v.  Ely,  64  Pa.  254. 

It  was  expressed  in  a  note,  pay- 
able subject  to  collateral  agree- 
ments, that  interest  was  payable 
semiannually.  Such  agreements 
gave  the  creditor,  if  the  note  was 
not  paid  when  due,  the  right  to  look 
to  certain  securities  for  its  pay- 
ment, and  waived  his  right  to  any 
other  remedy.  By  failing  to  col- 
lect the  semiannual  interest  it  be- 
came  a   part   of   tlic   principal,   and 


§   300] 


INTEREST. 


1);J7 


creditor  is  nut  obliged  to  forego  what  is  iincanied  of  tlie  interest 
for  an  agreed  period  on  a  tender  of  the  prin('ii)ah  The  borrower 
or  debtor  cannot,  by  tendering  the  money  to  ]>ay  the  debt  before 
it  is  dne,  stop  the  interest;  for  the  time  of  payment  is  part  of 
the  contract  and  is  fixed  for  the  mutual  benetit  and  convenience 
of  tlie  parties^    The  lender  is  entitled  to  rely  upon  the  receipt 


sul)ject  to  the  conditions  in  such 
agreements.  Reed  v.  Cassatt,  153 
Pa.  156. 

7  Davis  V.  Yuba  County,  75  Cal. 
452;  Ellis  v.  Craig,  7  Johns.  Ch.  7. 

In  the  last  case  interest  was  pay- 
able at  stated  periods  before  the 
principal  was  due.  This  circum- 
stance appears,  in  some  measure,  to 
have  influenced  the  decision,  but  tlie 
general  course  of  reasoning,  as  well 
as  the  force  of  the  authorities  cited, 
are  in  favor  of  the  broader  doctrine 
stated  in  the  text.  The  chancellor 
said:  "There  can  be  no  doubt  that 
the  parties  may,  by  express  stipula- 
tion, agree  that  a  debt  shall  not  be 
paid  before  a  given  time,  and  until 
that  time  arrives  the  debtor  cannot 
tender  the  debt  and  stop  interest. 
The  question  then  occurs,  what  was 
the  intention  of  the  parties  in  this 
case,  upon  a  fair  and  sound  inter- 
pretation of  the  terms  of  the  con- 
dition of  this  bond?  The  time  of 
payment  was  made  an  essential  part 
of  the  contract  for  the  loan  of  the 
money.  The  terms  of  this  bond  were 
equally  the  agreement  of  both  par- 
ties, and  in  which  their  mutual  in- 
terest and  convenience  are  presumed 
to  have  been  consulted.  A  pro- 
longed time  of  i)ayment,  when 
money  is  loaned  upon  interest  pay- 
able periodically,  is  not  always 
given  for  the  accommodation  of  tlie 
debtor:  the  time  is  intended  to 
meet  the  will  and  wishes  of  both 
parties;  under  the  case  of  persons 
who  are  unable  to  earn  money  by 
their   own    exertions,   or   to   employ 


themselves  profitably  in  business, 
such  as  aged  and  infirm  persons, 
women  and  infants,  and  also  in  the 
case  of  literary  and  charitable  in- 
stitutions, a  safe  investment  of 
money  with  a  prolonged  time  of 
payment  of  the  principal  and  short 
times  of  payment  of  the  interest  is 
most  likely  to  meet  their  wants  and 
promote  their  welfare.  The  interest 
of  money  is  liable  to  fluctuation, 
and  money  itself  is  a  niarketal)le 
commodity,  and  subject  to  greater 
or  less  demand  according  to  the 
vicissitudes  of  trade  and  credit. 
These  considerations  may  be  sup- 
posed to  have  had  a  material  in- 
fluence upon  the  terms  of  the  loan. 
We  can  hardly  believe  that  both 
parties  in  this  case  had  not  equally 
in  view  their  own  convenience  in 
fixing  upon  a  distant  day  of  pay- 
ment of  the  principal,  or  that  it 
was  the  meaning  of  the  contract 
tliat  the  ol)ligor,  should  he  be  able 
on  the  next  day,  or  the  next  month 
after  the  loan,  to  force  back  the 
money  upon  the  plaintiff,  and  break 
up  an  advantageous  investment. 
^Vhy  were  the  usual  words  or  before 
omitted  in  the  condition  of  the  bond 
but  to  show  the  intentions  of  the 
parties  that  the  principal  was  not 
to  be  paid  before  the  day  specified 
in  the  condition? 

"The  cases  in  the  common-law 
courts  do  not  appear  to  have  settled 
tiie  question  by  any  direct  or  defini- 
tive decision.  I  think,  however,  the 
language  of  the  books  is  against  the 
defendant;  and  it  would  seem  to  be 


93  S 


SUTHERLAND    ON    DAMAGES. 


[§  300 


of  the  returns  fruiii  his  iuvestmeut  during  the  period  covered 
by  the  contract.    After  it  accrues  and  is  due  it  may  be  recovered 


everywhere  conceded  that  in  no  case 
was  a  tender  before  the  day  good. 
If  the  condition  of  a  bond  be  pay- 
able on  or  before  such  a  day,  a  plea 
of  payment  before  the  day,  to  wit, 
on  such  a  day,  is  good.  Anonymous, 
2  Wils.  173.  But  if  the  condition 
of  the  bond  be  payable  on  such  a 
day,  a  plea  of  payment  before  the 
day  is  bad,  and  the  defendant  must 
either  plead  it  by  way  of  accord  and 
satisfaction,  or  plead  solvit  ad 
diem,  and  prove  payment  before  the 
day  (Jernegan  v.  Harrison,  1  Str. 
317;  Anonymous,  2  Wils.  150; 
Winch  V.  Pardon,  Bullcr's  N.  P. 
174).  These  cases  turned  upon  the 
technical  terms  of  pleading;  and 
whatever  subtleties  exist  on  that 
subject,  there  can  be  no  doubt  that 
if  money  be  tendered  and  accepted 
before  the  day  appointed  it  would, 
when  skilfully  pleaded,  amount  to 
a  dischurge  of  the  bond ;  for  if,  as 
Lord  Col<e  says  (Coke,  Litt.  2126), 
'If  the  obligor  pay  a  lesser  sum  be- 
fore the  day  and  the  obligee  re- 
ceives it,  it  is  a  satisfaction.'  The 
bearing  of  tliese  cases  upon  the 
point  now  under  discussion  consists, 
liowever,  in  tlie  distinction  whicli 
they  assume  between  a  bond  pay- 
able on  such  a  day,  and  on  or  before 
such  a  day,  and  in  the  doctrine 
which  they  necessarily  convey  tliat 
it  requires  the  assent  and  concur- 
rence of  the  creditor  to  discharge, 
before  the  day,  a  bond  payable  on  a 
given  day. 

"The  language  of  Lord  Hardwicke, 
as  chief  justice  of  the  king's  bench, 
in  Tryon  v.  Carter  (2  Str.  994),  is 
still  more  explicit  on  the  subject. 
The  bond  in  that  case  was  payable 
on  or  before  the  5th  of  December, 
and  payment  was  made  on  that  day. 


The  case  itself  is  not  applicable, 
but  the  observations  of  the  chief 
justice  are  much  in  point.  'In  the 
case,'  he  observes,  'of  a  bond  con- 
ditioned for  payment  at  a  certain 
day,  or  upon  such  a  day,  there  can 
properly  be  no  legal  payment  or 
legal  performance  of  the  condition 
till  that  day.  Payment  before  the 
day  may,  indeed,  be  given  in  evi- 
dence on  solvit  ad  diem,  but  that 
goes  upon  the  reason  that  the  money 
is  looked  upon  as  a  deposit  in  the 
Iiands  of  the  obligee  until  tlie  day 
comes,  and  then  it  is  actual  pay- 
ment.' The  argument  in  favor  of 
tlie  right  of  the  obligor  to  pay  be- 
fore the  day  stipulated  is  founded 
on  the  assumption  of  the  fact  that 
the  delay  of  the  time  of  payment  is 
introduced  into  the  contract  solely 
for  the  benefit  of  the  debtor,  and 
that  he  may  waive  a  benefit  or  re- 
nounce a  time  given  on  his  account 
according  tq  the  maxim  that  quis- 
quis  potest  renuntiare  jure  pro  se 
introducto.  But  this  is  asking  the 
concession  of  the  very  point  in  dis- 
pute. When  a  specific  sum  without 
interest  is  made  payable  at  a  dis- 
tant day,  or  perhaps,  where  the  sum 
may  be  on  interest,  but  the  interest 
is  not  payable  periodically  in  the 
intermediate  time,  there  is  color  for 
tlie  construction  that  the  time  is 
given  solely  for  the  accommodation 
of  the  debtor;  and  if  I  am  not  mis- 
taken, the  doctrine  contended  for 
on  the  part  of  the  defendant  is 
founded  entirely  on  that  ground. 
But  when  money  is  loaned  upon  in- 
terest, payable  quarter  yearly,  and 
a  distant  day  is  mentioned  for  the 
payment  of  the  principal,  the  delay 
is  evidently  as  much  for  the  benefit 
of  the  creditor  as  of  the  debtor,  and 


§    300]  INTEREST.  9.39 

by  action  wlietber  the  principal  be  then  due  or  not,'  or  whether 
the  principal  has  been  paid  or  not.^  In  pleading  to  show  a  case 
for  snch  interest,  the  agreement  must  be  specially  counted  on 
and  a  breach  of  it  alleged.  Interest  is  also  recoverable  for  the 
detention  of  money  after  it  is  due.  Jt  is  in  many  such  cases  re- 
coverable of  right  and  as  a  uuittor  of  law,  independently  of  the 
discretion  of  a  jury.^°  It  may  also  be  claimed  of  right  under 
various  circumstances  of  contract  and  tort,  on  the  value  of  ])rop- 
erty  or  things  in  action,  and  on  the  value  of  services,  though 
such  value  has  to  be  ])roved ;  on  money  lent,  j)ai(I,  Imd  and 
received,  as  well  as  on  divers  other  forms  of  loss  to  the  ])laintiff 
or  gain  to  the  defendant,  capable  of  pecuniary  estimate;  and  in 
snch  cases  it  is  immaterial  that  there  is  no  agreement  for  inter- 
est or  forbearance.  When  the  principal  is  duo  upon  contract,  of 
course  the  obligation  or  duty  to  pay  interest  for  its  detention 
results  from  the  same  contract  and  is  recoverable  thereon  as 
damages  for  failure  to  perfonn;  and  when  recoveral)le  in  tort  it 
is  chargeable  on  general  principles  as  an  additional  element  of 
damage  for  the  purpose  of  full  indemnity  to  the  injured  party. 

As  damages  interest  is  an  inseparable  incident  to  the  princi- 
pal demand;  follows  it  as  the  shadow  follows  the  substance. 
Whenever  the  demand  is  satisfied  and  discharged  the  accrued 
interest  which  was  accessory,  whether  paid  or  not,  is  exti li- 
the law  itself  moat  clearly  implies  Am.  Rep.  20.') ;  Sparliawk  v.  Willis, 
it.  The  one  party  wants  the  princi-  G  Gray  Ifi.'};  Andover  Sav.  liank  v. 
pal  to  employ  as  capital  in  his  busi-  Adams,  1  Allen  28;  French  v. 
ness,  and  the  other  party  relies  TJatcs,  14fl  Mass.  7.3,  4  L.K..\.  2(iS; 
upon  the  enjoyment  of  a  portion  of  Smart  v.  McKay,  10  Ind.  4"). 
the   profits   of   that   capital,   in   the  9  King  v.  Phillips,  m  N.  C.  245, 

shape   of   interest   periodically   paid       59  Am.  Rep.  238;  Kurz  v.  Suppiger, 
for  his  support  and  comfort.     These       IS    III.   App.    G30.      See    Eames   v. 
cases   of   loans    upon     interest    are,       Cushman,   135  Mass.  573. 
therefore,  cases  of  mutual  accommo-  I0"]5otli     reason     and     autliorily 

dation,  and  each  party  has  an  equal  say  that  if  by  the  terms  of  tlie  con- 
intere.st  in  the  preservation  of  the  tract,  whether  oral  or  written,  a 
definite  period  of  payment;  and  debt  be  due  at  a  certain  time,  then 
neither  can  violate  it  without  a  vio-  it  by  law  carries  interest  from  that 
lation  of  the  terms  and  intention  (iinc  in  the  absence  of  any  agroe- 
of  the  contract."  nicnt     otherwise     l)y     tiie     jjartiea." 

8  Walker  v.  Kimball,  22  111.  537;        Henderson    C.    Mfg.    Co.    v.    Lowell 
Dulaney   v.    Pay"f^.    T"    ''l-   •5-'>.    *"        Mach.  Shops.  8«  Ky.  OOS,  G73. 


940 


SUTHERLAND    ON    DAMAGES. 


[§  300 


giiished."  lu  pleading  it  is  sufficient  to  declare  on  a  default  in 
not  paying  the  principal  demand  ;  the  interest  as  damages,  when 
not  made  special  by  contract  but  left  to  be  measured  by  law,  may 
be  recovered  under  a  general  allegation  of  damages,  without 
being  speciallj^  claimed. ^^  In  another  class  of  cases,  similar  to 
those  last  mentioned,  but  where  the  right  to  interest  is  less  ob- 
vious, and  in  some  others  where  the  injury  cannot  be  measured 
by  any  precise  pecuniary  standard,  interest  is  allowable  under 
the  advice  of  the  court  in  the  discretion  of  the  jury.  These 
distinctions  will  be  made  more  manifest,  and  the  authorities 
which  recognize  and  support  them  cited,  when  we  come  to  dis- 
cuss particular  interest  topics  and  the  law  of  damages  in  connec- 
tion with  particular  subjects. 

301.  Interest  by  the  early  common  law.  By  the  ancient  com- 
mon law  it  was  not  only  unlawful,  but  criminal,  to  take  any 
kind  of  interest.  As  late  as  the  reigns  of  Henry  VII.,  of 
Edward  VI.,  and  of  Mary,  every  rate  of  interest  was  forbidden 
by  express  statute, ^^ 


11  Louisville  &  N.  R.  Co.  v.  Al- 
ford,  5  Ga.  App.  428;  Southern  R. 
Co.  V.  Dunlop  Mills,  22  C.  C.  A.  302, 
76  Fed.  505;  Stewart  v.  Barnes,  1,53 
U.  S.  456,  38  L.  ed.  781;  Hayes  v. 
Chicago,  etc.  R.  Co.,  64  Iowa  753; 
Devlin  v.  Mayor,  60  Hun  68;  Cut- 
ter V.  Mayor,  92  N.  Y.  366;  Hamil- 
ton v.  Van  Rensselaer,  43  id..  244. 
See  Southern  Cent.  R.  Co.  v.  Mo- 
ravia, 61  Barb.  181;  Consequa  v. 
Fanning,  3  -Johns.  Ch.  587 ;  Gillespie 
V.  Mayor,  3  Edw.  512;  Jacot  v.  Em- 
mett,  11   Paige,  142;    §  372. 

12  Heiman  v.  Schroeder,  74  111. 
158;  McConnel  v.  Thomas,  3  id.  313; 
Padley  v.  Catterlin,  64  Mo.  App. 
629,  645,  summarizing  the  forego- 
ing propositions  and  citing  '  the 
text. 

13  Earl  of  Chesterfield  v.  Jansen, 
1  Wils.  290;  Schwitters  v.  Springer, 
2.36  111.  271. 

In  Hougliton  v.  Page,  2  N.  H.  42, 
9    Am.    Dec.    30,    Judge    Woodbury 


says:  "To  take  it  (interest)  was 
also  in  foro  conscientiw  punished  as 
a  crime,  and  not  only  subjected  the 
offender  to  the  forfeiture  of  all  his 
estate,  but  in  the  'Mirror  of  Jus- 
tice,' 191  and  248,  one  of  the  first 
English  lawbooks  e.xtant,  it  is  la- 
mented, as  'an  abusion  of  the  com- 
mon law,'  that  the  offender  was 
not  likewise  deprived  of  Christian 
burial."  After  referring  to  the  pro- 
liibitory  statutes  in  England,  he 
remarks :  "It  therefore  follows  that 
if  tlie  common  law  of  England  con- 
cerning interest  should  be  adopted, 
we  must  hold  void  all  contracts  for 
any  quantity  of  interest,  however 
small  and  reasonable.  But  in  this 
enlightened  age  such  a  rule  could 
no  more  be  tolerated  than  the 
absurd  principles  of  the  common  law 
concerning  witchcraft  and  heresy." 
Laycock  v.  Parker,  103  Wis.  161; 
Pfkin  V.  Reynolds,  31  111.  529,  83 
Am.  Dec.  244. 


§    303]  INTEREST.  941 

§  302.  Interest  in  England  legalized  by  statute.  In  1545  tlie 
statute  of  37  Henry  VLII.  was  enacted.  The  preamble  .shows 
that  the  taking  of  interest  was  still  illegal  and  criminal,  but  the 
act  gave  a  negative  sanction  to  it  hy  providing  that  ^'none  shall 
take  for  the  loan  of  any  money  or  commodity  above  tlie  rate  of 
ten  pounds  for  one  hundred  pounds  for  one  whole  year."  It  is 
said  that  the  first  legal  interest  was  taken  in  England  under 
this  statute.  The  rate  was  suhsequently,  in  (jueen  Anne's  time, 
reduced  to  five  per  cent.^*  And  in  the  reign  of  William  IV., 
and  by  various  statutes  of  Victoria,  interest  has  been  directly 
and  affirmatively  provided  for.  The  existing  statutes  repealed 
the  law  against  usury,  and  parties  are  at  liberty  to  contract  for 
any  rate  of  interest.^* 

§  303.  Interest  at  common  law  in  America.  There  are  some 
cases  in  which  judges  have  declared  interest  to  be  of  statutory 
creation. ^^  But  the  general  course  of  judicial  decision  and  legis- 
lation in  this  country  assumes  the  validity  of  contracts  for 
interest  without  statutory  sanction  and  the  legal  obligation  to 
pay  it  in  many  cases  not  provided  for  either  by  contract  or  stat- 
ute.^^    That  the  law  recognizes  the  use  of  money  as  valuable  is 

H  12  Anne,  St.  2,  ch.  16.  cited;   Young    v.    Godbe,    15    Wall. 

15  17-18  Victoria,  ch.  90  (August  562,  21  L.  ed.  250;  Parnielee  v. 
10,  1854).  Lawrence,     48     111.     .3.31;    Davis    v. 

16  Close    V.    Fielda,    2    Tex.    2.32;  Greely,  1  C'al.  422. 

Isaacs  V.   McAndrew,   1   Mont.  437;  In  Young  v.   Polack,   .3   Cal.  208, 

Eastin   v.   Vandorn,   Walk.    (Miss.)  the  plaintiff  and  the  defendant  had 

214;    Hamer  v.  Kirkvvood,  25  Miss.  a  joint  lease  for  improving  certain 

95;    Harts   v.    Fowler,   53    111.    App.  property;  tlic  plaintiff,  witli  consent 

245.  of   tlie   defendant,   made   a   contract 

In   some   states   interest,   as   such,  in  his  own  name  for  making  the  im- 

is  only  recoverable  in  the  cases  pro-  provement   and    performed     it.       He 

vided  for  by  statute.    Vietti  v.  Nes-  paid  all  the  expenses  out  of  his  own 

bitt,  22  Nev.  ,390;   Hurlburt  v.  Du-  funds.      That    contract    was    drawn 

senbury,    26    Colo.    240;     Board    of  by     the     defendant,     of     whom     the 

Com'rs  V.   Flanagan,  21    Colo.   App.  plaintiff    claimed    damages    for    not 

467;    Cobb   v.   Stratton's   Estate,   5ti  paying  his  share  of  the  expense  as 

Colo.    278;    Thompson     v.     Tonopah  (lie    l)nilding    advanced.      Tlie   court 

Lumber   Co.,   —   Nev.   — ,    141    Pac.  decreed  that  he  should  pay  his  con- 

69;    Richardson   v.   Investment   Co.,  tribution     of    one-half,    with    three 

66  Ore.  353.  per    cent,    interest    per    niontii,    the 

17  Thomas  v.  Clarkson,  125  Ca.  current  rate,  which  decree  was 
72,   6  L.R.A.(N.S.)    658,  and  cases  affirmed. 


942  SUTHERLAND  ON  DAMAGES.  [§  303 

placed  bejond  question  by  the  allowance  of  interest  as  damages 
for  its  detention  when  the  debtor  is  in  default  or  guilty  of  fraud. 
Interest  is  now  universally  treated  as  a  legitimate  consideration 
for  the  use  of  money.  To  take  it  is  deemed  morally,  as  well  as 
legally,  just  in  the  general  commerce  of  the  world ;  and  not  only 
where  private  interests  may  be  subserved  by  credit,  but  also  in 
those  public  exigencies  which  induce  states  and  nations  to  be- 
come borrowers.  Statutes  generally  exist  providing  what  shall 
be  the  rate  when  it  is  not  fixed  by  agreement,  and  in  many  states 
a  maximum  rate  is  established  beyond  which  interest  is  ex- 
pressly or  impliedly  prohibited.  In  some  states  the  conse- 
quences of  transcending  this  limit  are  2>rescribed;  these  are 
various. 

§  304.  Agreements  for  interest.  There  is  no  difference  in 
principle  between  agreements  to  pay  for  the  use  of  money  and 
those  to  make  compensation  for  anything  else  that  is  valuable. 
And,  as  a  general  rule,  contracts  are  valid  and  will  be  enforced 
although  there  is  a  great  disproportion  between  the  burden  of 
the  undertaking  on  one  side  and  the  value  of  the  consideration 
for  it  furnished  on  the  other.  The  theory  of  the  law  is,  and  its 
practical  operation  is  consistent  therewith,  that  a  small  con- 
sideration will  support  an  onerous  agreement.  The  comparative 
benefits  to  be  derived  from  the  mutual  considerations,  executed 
or  executory,  which  are  technically  valuable  in  character  are  not 
weighed.  It  is  enough  that  a  valuable  consideration  exists ;  its 
adequacy  is  not  an  element  in  determining  whether  or  not  an 
agreement  founded  upon  it  is  valid.  A  few  examples  of  un- 
conscionable bargains  are  to  be  found  in  the  books, — examples 
of  contracts  so  immensely  unequal,  and,  if  held  valid,  so  certain 
to  be  disastrous  to  one  party,  that  on  the  ground  of  being  un- 
conscionable they  were  held  not  obligatory.  Still,  it  is  an  axiom 
of  the  law  of  contracts  that  mere  inadequacy  of  consideration  is 
no  defense. 

The  compensation,  however,  for  the  use  of  money  or  for  its 
detention,  there  being  always  a  customary  or  legal  rate,  is  sus- 
ceptible of  precise  measurement.  Therefore,  contracts  for  a 
higher  rate,  though  intended  to  have  effect  only  after  the  prin- 
cipal sum  is  due  and  to  measure  the  damages  for  delaying  its 


§    304]  INTEREST.  943 

payment,  are  liable  to  be  treated  in  respect  h.  llic  interest  they 
provide  for  as  contracts  Cor  penalties. ^^  iMit  wlien  parties  are 
authorized  by  statute  to  contract  for  more  tlian 'the  ordinary 
legal  rate  of  interest,  either  with  or  witliout  restriction,  such 
contracts  are  permitted  to  ha\e  a  mk.ic  liberal  elfect.  A  contract 
to  pay  interest  at  a  given  rate,  wliile  the  dehtoi-  has  a  right  l"<ir 
a  definite  period  to  the  use  of  the  princi])al,  is  dilferent  in  its 
nature  and  incidents  from  a  contract  to  pay  interest  aftei-  that 
right  has  expired;  in  the  one  case  it  is  the  price  of  a  rightful 
use  and  possession  of  the  money;  in  ihe  other  it  is  a  li(piidatiou 
of  the  damages  for  detaining  it  withont  right;  in  tlie  former  case 
the  contract  creates  the  law;  in  the  latter  interest  as  damages  is 
imposed  by  law,  though  the  rate  nuiy  be  rcgnlated  j)y  agreement. 
In  the  computation  of  interest,  however,  beginning  before  and 
continuing  after  maturity  of  the  debt,  no  rest  is  to  be  made  at 
maturity  or  at  the  commencement  of  the  suit,  but  the  interest  is 
to  be  computed  continuously  from  the  time  when  it  commences 
to  the  settlement,  judgment  or  decree.''^ 

Where  there  is  an  agreement  for  the  payment  of  money  at  a 
future  day  and  it  contains  or  is  accompanied  with  an  ex|)ress 
promise  to  pay  interest  ^°  from  date  to  the  time  specified  for 
payment,  the  law  is  settled  that  interest  is  chargeable  afterwards 
if  the  principal  remains  unpaid  although  the  contract  is  silent 
in  regard  to  interest  after  maturity.  This  results  from  the  gen- 
eral principle  that  all  contracts  to  pay  money  give  a  right  to 
interest  from  the  time  the  principal  ought  to  be  paid.^^     It  can 

18  Dunn  V.  Malonc,  6  Ont.  L.  R.  Ten  E.yi-lv  v.  Iloufilitaiinj,',  \-2  How. 
484;  Mosby  v.  Taylor,  Gilmer,  172;  Pr.  r>23;  Cartmill  v.  I'.rown,  1  A.  K. 
Taul  V.  Evcret,  4  J.  J.  Marsli.  TO;  Marsh.  ,570,  H>  Ami.  Dvv.  7ti."{ ;  \aii 
Gould  V.  Bishop  Hill  Colony,  35  Kcnsaclaer  v.  Jewi-tt,  2  X.  Y.  135; 
111.  324.     See  §  280.  Hunt  v.  Jucks,    1    Ilayvv.   inO;    Mc- 

19  Lamprey  v.  Mason,  148  Mass.  Kiiiley  v.  Blaclilcdge,  2  llayw.  28; 
231;  Barker  v.  International  Bank,  Knickerbocker  Ins.  Co.  v.  Gould,  80 
80  111.  96;  Brewster  V.  Wakefield,  1  111.  388;  Purdy  v.  Phillips,  11  N. 
Minn.  352,  69  Am.  Dec.  343;  Fol-  Y.  406;  Farquhar  v.  Morris,  7  T. 
som  V.  Plumer,  43  N.  H.  469.  R.    124;    \Venman   v.    Mohawk    Ins. 

20  See  Harts  v.  Fowler,  53  111.  Co.,  1.'!  Wend.  207:  Robinson  v. 
App.  245.  I!l:iii(l,    2    r.urr.     1077;     (  hapin     v. 

21  Boddam  V.  Riley,  2  Bro.  Ch.  2;  Miirjihy,  5  Minn.  274;  West  Rc- 
Williams  v.  Sherman,  7  Wend.  109;  public  M.  Co.  v.  Jones,  108  Pa.  55; 


944  SUTHEKLAND    ON    DAMAGES.  [§    304 

make  iio  dilference  with  the  application  of  this  principle  that 
the  contract  contains  an  express  stipulation  for  interest  until  the 
day  fixed  for"payment,  for  that  is  not  inconsistent  with  the  im- 
plication that  if  not  paid  on  that  day  interest  is  to  be  paid  after- 
wards ;  since,  without  such  express  stipulation,  no  interest  could 
accrue  until  a  default  of  payment.  The  maxim  expressiini  facit 
cessarc  taciturn  does  not  apply,^^  for  the  contract  does  not  speak 
to  the  particular  case.^^ 

The  law  will  not  presume  the  existence  of  a  contract  to  pay 
interest  where  a  direct  agreement  to  pay  it  would  have  been  a 
felony ;  in  such  a  case  interest  cannot  be  recovered  as  profits.^* 
One  who  holds  money  in  readiness  for  another  who  has  given  an 
interest-bearing  obligation  for  it  is  entitled  to  interest  though  it 
is  not  actually  called  for.^^ 

Contracts  relating  to  interest  have  not  been  enforced  with 
uniform  construction  and  effect.  The  English  and  American 
courts  have  not  entirely  harmonized ;  and  there  is  a  diversity  in 
the  decisions  of  the  latter.  For  the  purpose  of  showing  more 
clearly  and  in  detail  the  distinctions  which  have  been  made  and 
the  conflict  of  judicial  decisions  the  classifications  of  subjects  in 
the  following  sections  has  been  adopted  as  convenient  and  suffi- 
ciently comprehensive. 

Section  1. 


GENERAL  PROMISE  TO  PAY  MONEY  "wiTH  INTEREST." 

§  305.  Rule  of  construction.  Under  the  first  point  it  is  to  be 
observed  that  such  contracts,  in  connuon  with  all  others,  are  to 

Henderson  C.  Mfg.  Co.  v.  Lowell  M.  amounts   from   date   of   payment   to 

Shops,  86  Ky.  668;   Fleming's  Est.,  January  1,  1894.    Barnes  v.  Mendcn- 

184  Pa.  80.  hall,  89  Minn.  383,  62  L.R.A.  757. 

Where  a  trust  company  bound  it-  22  See  Spaulding  v.  Lord,  19  Wis. 

self  to  pay  the  debts  of  M.,  not  to  533. 

exceed   $130,000,    and   the    indebted-  23  Thorndike   v.    United    States,   2 

ness  was  computed  with  interest  to  Mason  1. 

January   1,   1S94,  and  amounted  to  24  Los  Angeles  v.  City  Bank,  100 

$140,000,    creditors    who    had    been  Cal.  18. 

paid  in  part  prior  to  that  date  were  25  Primley  v.  Shirk,   163  111.  389, 

not    entitled    to    interest    on    such  aff'g  60  111.  App.  312. 


§  305] 


INTEREST. 


945 


have  a  reasonable  construction  with  a  view  to  carrying  out  tlie 
actual  lawful  intention  of  the  parties.  The  construction  as  to 
unrecompensed  sureties  will  be  strict. ^^     It  is  liberal  in  respect 


26  Bowery  Sav.  Bank  v.  Clinton, 
2  Sandf.  113.  The  bond  of  J.  to 
the  plaintiffs  bore  interest  at  six 
per  cent.  C.  indorsed  a  covenant 
binding  himself  to  them  for  "an  ad- 
ditional one  per  cent,  per  annum  in- 
terest, making  in  all  seven  per  cent, 
per  annum  on  the  principal  secured 
by  the  bond,  until  the  principal 
should  be  paid;  the  interest  to  be 
paid  at  the  time  and  in  the  manner 
mentioned  in  the  bond.  It  was  held 
that  C.  was  not  bound  to  pay  seven 
per  cent,  interest  but  only  one  per 
cent,  on  the  amount  of  the  bond; 
that  he  was  bound  to  pay  one  per 
cent,  until  the  bond  was  paid  off." 

In  Hamilton  v.  Van  Rensselaer, 
43  Barb.  117,  28  How.  Pr.  192,  it 
was  held  that  a  surety  who  guar- 
anties the  payment  of  the  interest 
on  a  money  bond  not  bearing  inter- 
est by  its  terms  is  liable  for  interest 
accruing  after  the  bond  becomes 
due. 

In  Hamilton  v.  Van  Rensselaer,  43 
N.  Y.  244,  the  defendant  guarantied 
"the  punctual  payment  of  the  in- 
terest" upon  a  bond  payable  in  six 
years  and  six  months  from  date, 
with  interest  semiannually.  It  was 
held  that  the  guaranty  only  extend- 
ed to  the  interest  falling  due  be- 
fore the  time  of  the  payment  of  the 
principal;  and  that  after  the  prin- 
cipal sum  has  fallen  due,  interest 
is  payable,  not  by  the  original  terms 
of  the  agreement,  but  as  damages 
for  its  breach.  Church,  C.  J.,  said: 
"He  (the  guarantor)  neither  agreed 
to  pay  the  principal  nor  to  be  liable 
for  the  consequences  of  its  nonpay- 
ment. The  intent  of  the  defendant, 
ascertained  by  legal  rules,  was  to 
Suth.  Dam.  Vol.   I.— 60. 


agree  to  pay  tlie  interest  expressly 
provided  for  in  tlie  bond  only;  but 
when  the  plaintiff  urges  that  tlie  de- 
fendant lias  emph)yed  general  words 
guarantying  tlie  payment  of  interest 
upon  tlie  bond  without  limitation, 
and  that  these  words  include  inter- 
est after  as  well  as  before  default, 
and  claims  to  enforce  the  rigid  rule 
of  liability  therefor.  It  is  pertinent 
to  answer  that  by  strict  legal  rules 
interest  as  sucii  cannot  be  recovered 
after  default  in  the  payment  of  the 
principal;  and  that  sucii  interest 
is  not  therefore  within  the  language 
of  the  contract.  We  do  not  place 
the  decision  upon  this  narrow 
groiuid,  but  prefer  to  rest  it  upon 
the  proposition  that  by  the  plain, 
ordinary  meaning  of  the  language 
used  in  the  contract,  when  applied 
to  the  facts  existing  at  the  time  it 
was  made,  the  interest  recoverable 
after  the  principal  became  due, 
whether  it  is  regarded  as  interest 
upon  a  continuing  contract,  or  as 
damages  for  its  non-performance, 
was  not  in  the  contemplation  of  the 
parties  at  the  time,  and  was  not  the 
interest  specified  and  provided  for 
in  the  defendant's  contract.  The 
construction  contended  for  liy  the 
plaintiff  might  render  the  contract 
as  burdensome  as  if  it  had  been  a 
guaranty  of  the  payment  of  Mie 
principal  itself.  The  defendant 
miglit  never  be  able  to  discharge  the 
obligation  except  by  the  payment 
of  the  principal,  and  in  that  case 
the  resTilt  would  be  to  compel  him 
substantially  to  perform  a  contract 
which  it  is  conceded  he  never  entered 
into." 

A   promise   to  pay  a  debt   which, 


946 


SUTHERLAND    ON    DAMAGES. 


[§  305 


to  the  ordinary  short  hand  expressions  by  which  interest  is  coni- 
niouly  sti[)uhited  for  orally,  and  which  frequently  tind  their 
way  into  written  promises.  Contracts  for  interest  at  a  given 
rate  per  cent  will  be  treated  as  contracts  for  that  rate  per  an- 
num,^' and  even  an  abbreviation  like  ''interest  at  ten  per  cent," 
has  received  the  same  construction.^^  These  characters  in  a  note 
were  interpreted  to  mean  interest  at  the  rate  of  six  j^er  cent 
per  annum,  ''int.  at  6  \).  a."  ^^  A  bond  payable  "$2,000  within 
two  years  from  date;  balance  in  annual  payments,  with  interest, 
until  aggregate  sum  is  paid,"  carries  interest  from  its  date.^° 
An  agreement  to  pay  a  given  per  cent  has  been  construed  as 
though  it  were  an  agreement  in  terms  to  pay  interest  at  that 
per  cent.^^  "With  the  interest  at  the  rate  of  one  and  one- 
quarter"  was  construed  to  mean  that  no  rate  was  specified; 


otherwise,  would  be  barred  will  en- 
able tlie  creditor  to  recover  interest 
as  well  as  principal,  though  interest 
was  never  demanded  and  notliing 
was  said  concerning  it  between  the 
parties.     Fritz's  Est.,   19  Phila.  95. 

27  Thompson  v.  Hoagland,  65  111. 
310. 

"Annual  interest"  means  interest 
payable  annually.  Kiirz  v.  Suppi- 
ger,  18  III.  App.  630. 

If  a  note  is  silent  as  to  interest 
and  is  described  in  a  mortgage  con- 
temporaneously executed  as  col- 
lateral security  as  bearing  interest 
the  description  will  be  imported  into 
the  note.  Prichard  v.  Miller,  86 
Ala.  500. 

A  testator,  two  years  after  he  had 
compromised  with  his  creditors  and 
nine  years  after  he  had  failed  in 
business,  made  his  will  expressing 
"that  the  balance  due  my  old  cred- 
itors whose  claims  were  compro- 
mised be  paid  in  full."  This  was 
construed  to  provide  for  interest  on 
the  unpaid  principal.  Sinclair's 
App.,  116  Pa.  316. 

28  Fitzgerald  v.  Lorenz,  181  111, 
411,  aff'g  79  111.  App.  651;   Durant 


v.  IMurdock,  3  D.  C.  App.  Cas.  114; 
Gramer  v.  Joder,  65  111.  314.  See 
Strickland  v.  Holbrook,  75  Gal.  268. 

Where  the  jury  were  instructed 
that  if  they  found  for  the  plaintiff 
they  should  allow  him  interest,  a 
verdict  allowing  interest  on  the 
amount  due  "at  .07  per  cent,  per 
annum"  from  a  given  date  until  ver- 
dict supported  a  judgment  for  the 
sum  found  due  with  interest  at 
seven  per  cent,  per  annum.  Lake 
Sliore  C.  Co.  v.  Modoc  L.  &  L.  Co., 
130  Gal.  669. 

29Belford  v.  Beatty,  145  111.  414. 

30  Kilmer  v.  Gallahcr,  107  Iowa 
676. 

31  Davis  V.  Rider,  53  111.  416; 
Higley  v.  Newell,  28  Iowa  616.  But 
see  Griffith  v.  Furry,  30  111.  251,  83 
Am.  Dec.  186,  which  was  a  suit  on 
a  note  in  these  words :  "One  day 
after  date,  we  promise  to  pay  D.  F., 
or  order,  four  hundred  and  fifty- 
six  and  75-100  dollars,  value  re- 
ceived, ten  per  cent."  It  was  held 
that  the  words  "ten  per  cent."  in 
their  connection  were  without  mean- 
ing. The  note  being  described  in 
the   declaration   as   a   note   bearing 


§   306] 


INTEREST. 


947 


hence  the  legal  rate  was  duoJ^  One  who  aiivees  to  enntrihiite  to 
the  cost  of  a  work  if  it  is  successfully  completed  and  to  i)ay 
interest  on  expenditures  is  liable  for  interest  from  the  time  of 
making  the  expenditures.^'  An  obligation  to  pay  interest  on 
condition  will  be  construed  according  to  its  terms.'*  A  promise 
to  pay  money  ^'with  interest"  means  simph'  interest  only;'* 
and  a  promise  to  pay  "accrning  interest"  means  running  or  ac- 
cnmulating  interest;  it  does  not  include  interest  due  at  the  time 
it  was  made.'^  A  statute  providing  for  interest  on  recogizances 
taken  under  the  direction  of  a  court  ^\■ill  nn|  be  read  into  a 
recognizance  entered  into  between  the  parties,  without  action 
by  the  court,  the  instrument  being  silent  as  to  interest.'^ 

§  306.  Law  or  custom  fixes  the  rate.  If  the  promise  is  to  pay 
interest  simply  the  law  supplies  the  rate  if  one  is  fixed  by  stat- 
ute, for  the  parties  are  supposed  to  contract  in  that  general  way 
with  reference  to  the  law.'^     Where  no  rate  is  established  by 


ten  per  cent,  interest,  it  was  reject- 
ed when  offered  in  evidence  on  the 
ground  of  variance. 

In  Patterson  v.  McNeely,  16  Ohio 
St.  348,  the  action  was  upon  a  prom- 
issory note  made  payable  one  year 
after  date,  and  wliich  contained  this 
clause:  "the  above  to  be  at  ten  per 
cent,  annually."  It  was  held  that 
the  word  "annually"  should  be  un- 
derstood as  relating  to  and  defining 
tlie  rate  of  interest  and  as  equiva- 
lent to  the  words  per  annum;  it 
did  not  bind  the  debtor  for  the  an- 
nual payment  of  interest.  English 
v..  Smock,  34  Ind.  115,  7  Am.  Rep. 
215.  But  see  Kurz  v.  Suppiger,  18 
111.  App.  G30. 

The  omission  of  the  words  "with 
interest"  from  a  note  which  ex- 
pressed that  "five  years  from  date 
at  the  rate  of  six  one-half  per  cent, 
per  annum,  payable  semi-annually," 
was  taken  to  be  a  clerical  error. 
Marston  v.  Bigelow,  150  Mass.  45, 
5  L.R.A.  43. 

32  Salazar  v.  Taylor,  18  Colo.  538. 


33  Union  I.  Co.  v.  Markle,  ini  Pa. 
329. 

34  Folmar  v.  Carlisle,  117  Ala. 
449. 

35  Sawyer  v.  Child,  08  Vt.  3G0. 

36  Gross  V.  Parieiiheimer,  159  Pa. 
556. 

37  Meyers'  Est.,  179  Pa.  157. 

38  Patrick  v.  Kirkland,  53  Fla. 
708,  125  Am.  St.  1096;  In  re  Tm- 
manuel  P.  Church,  112  La.  348; 
Gay  V.  Berkey,  137  Mich.  658; 
Jersey  City  v.  Flynn,  74  X.  J.  L. 
104;  Edwards  v.  Sartor,  69  S.  C. 
540;  Salazar  v.  Taylor,  18  Colo. 
538;  Prevo  v.  Lathrop,  2  111.  305; 
Clay  V.  Drake,  Minor,  164;  Everett 
v.  billey,  39  Kan.  73;  O'Brien  v. 
Young,  95  N.  Y.  428;  Genet  v.  Kis- 
sam,  53  N.  Y.  Sup.  Ct.  43;  Pear- 
son V.  Treadwell,  179  Mass.  462, 
467. 

The  rate  of  interest  in  a  future 
contract  must  be  fixed  by  the  par- 
ties as  a  component  part  of  the 
price  to  be  paid  and  received.  Kap- 
lan V.  Whitworth,  116  La.  337. 


948  SUTHERLAND  ON  DAMAGES.  [§  306 

statute  it  is  assumed  that,  in  making  and  accepting  a  promise 
for  interest  generally,  the  parties  have  in  view  the  rate  which 
is  customary  where  the  contract  is  made  and  to  be  executed. 
That  rate  will  govern  in  respect  to  liquidated  debts  on  which  the 
law  permits  interest  to  be  recovered  as  damages  for  delay  of  pay- 
ment after  it  is  due.^^  In  the  absence  of  a  statute  limiting  the 
rate  of  interest  on  contract  if  parties  to  an  account  acquiesce  in 
the  statements  of  credits  and  charges  made  and  stated  they  adopt 
the  rate  of  interest  charged  with  the  same  effect  as  if  there  had 
been  an  express  agreement  in  writing  to  i)ay  it.*"  In  transac- 
tions with  banks  if  it  is  the  custom  to  compute  interest  at  thirty 
days  to  the  month  and  twelve  months  to  the  year  and  no  mode  of 
computation  was  agreed  upon  such  custom  may  be  followed 
though  it  is  not  the  ordinary  legal  rule.*^  A  corporation  which 
has  assumed  liability  for  the  payment  of  bonds  and  which  cir- 
culates among  their  holders  a  notice  to  the  effect  that  if  they 
forebore  demanding  payment  until  a  fixed  date  it  would  pay  the 
contract  rate  of  interest — the  legal  rate  being  less — is  liable  for 
the  former  rate.*^  If  parties  may  agree  for  the  payment  of  any 
rate  of  interest  the  statute  so  providing  binds  a  court  of  equity 
as  well  as  a  court  of  law  and  neither  may  set  aside  nor  annul 
contracts  because  the  stipulated  rate  is  largely  in  excess  of  the 
current  rate.*^  Where  a  contract  expressed  that  the  plaintiff 
shall  pay  to  the  defendant  "a  fair  proportion  of  the  interest  of 
the  investment"  of  the  defendant  "in  its  power  house  and  equip- 
ment, and  in  car  houses  and  equipment"  there  was  no  "legal  in- 
debtedness" within  the  meaning  of  a  statute  providing  that 
interest  for  any  "legal  indebtedness"  shall  be  at  the  rate  of  seven 
per  cent;  neither  was  the  case  one  where  the  analogy  of  the 
statute  was  applicable.  The  plaintiff  was  not  liable  for  the  rate 
of  interest  the  defendant  incurred  in  constructing  such  property, 
nor  the  rate  which  it  then  paid  or  was  paying  at  the  time  the 

39  Seton  V.  Hoyt,  U  Ore.  266,  43  Naglee,    74   Cal.    60 ;    Van   Vleet   v. 
L.R.A.  634,  75  Am.  St.  641;  Young  Sledge,     45     Fed.     750;     McKnight 
V.   Godbe,   15   Wall.   562,   21   L.   ed.  v.  Taylor,  1  How.  168,  11  L.  ed.  89. 
250;    Reeves  v.   Lane,   8   New  Zeal.  «  Pool  v.  White,  175  Pa.  459. 
44;  Willard  v.  Mellor,  19  Colo.  534.  42  Kelley  v.  Phenix  Nat.  Bank,  17 

40  Say  ward  v.  Dexter,  19  C.  C.  A.  App.  Div.   (N.  Y.)   496. 

176,     72     Fed.     758;     Auzerais     v.  43  Boyce  v.  Fisk,  110  Cal.  107. 


§    307]  INTEREST.  949 

action  was  brought  on  anj  sucli  indebtedness  but  was  liable  for 
a  reasonable  interest  or  income  on  the  investment.** 

§  307.  Legal  or  stipulated  rate  applies  from  date.  A  promise 
to  pay  interest  on  money  payable  at  a  future  day  will  be  con- 
strued as  an  agreement  to  pay  it  before,  rather  than  exclusively 
after,  maturity.*^  Statutes  exist  in  England  and  in  many 
states  of  the  Union  authorizing  parties  to  contract  for  a  greater 
than  the  legal  rate  which  is  applied  in  the  absence  of  any  agree- 
ment on  money  due.  When  agreements  of  this  kind,  oi'  for  less 
than  the  legal  rate  are  made  in  general  terms,  not  specifying 
when  the  stipulated  rate  shall  commence,  or  how  long  it  shall 
continue,  and  the  principal  is  payable  at  a  future  day  the 
promise  is  uniformly  held  to  apply  from  date  to  maturity ;  *" 
but  whether  it  shall  continue  afterwards  to  operate,  if  the  prin- 
cipal remain  unpaid,  the  adjudications  are  not  harmonious. 
Some  cases  hold  that  the  contract  operates  ex  vujore  only  imtil 
the  debt  by  the  agreement  becomes  due  and  that  if  it  be  not  then 
paid  the  contract  has  no  longer  any  effect  whatever  to  govern 
the  rate,  and  the  damages  for  detention  afterwards  are  limited 

44  Lakeside   R.   Co.  v.   Duluth   St.  delivered.      Elwood    v.    IMcDill,    ^0^> 

R.  Co.,  78  Minn.  129.  Iowa  437. 

«Ralazar  V.  Taylor,  18  Colo.  S.-^S;  restate  Nat.  Bank  v.  Board  of 
Conners  v.  Holland,  113  Mass.  50;  Cora'rs,  121  La.  269.  See  au- 
Dewey  v.  Bowman,  8  Cal.  145 ;  tliorities  last  cited. 
Hackenberry  v.  Shaw,  11  Ind.  392;  Interest  is  allowable  on  a  certifi- 
Pittman  v.  Barret,  34  Mo.  84;  Ayres  cate  of  deposit  providing  for  the 
V.  Hayes,  13  Mo.  252;  Winn  v.  payment  thereof  if  the  deposit  re- 
Young,  1  J.  J.  Marsh.  51,  19  Am.  mains  a  stated  time  only  from  the 
Dec.  52;  Ely  v.  Witherspoon,  2  Ala.  time  suit  is  brought,  that  being  done 
131;  Campbell  P.  P.  &  M.  Co.  v.  'before  expiration  of  said  time,  and 
Jones,  79  Ala.  475;  Kennedy  v.  "«  previous  demand  being  made. 
Nash,  1  Starkie  152.  Beardsley  v.  Wel,ber,  104  Mich.  S8. 

.        ,      ,                   .n    ,                 .,,  A  note  pavable  in  two  vears  after 

A  note  for  a  speciiied  sum,  witli  '    • 

.,,..,         J            ,  date    with    interest   at   the   rate    of 

interest,  provided  for  the  return  of  . 

SIX  per  cent,  per  annum  from — until 

the    horse    on    account    of    the    pur-  .ji             ..         .,           -xii 

'^  paid    bears   interest   from    its   date, 

chase  of  which  it  was  given  and  for  ^„j   ^^^   ^^^^j^   ^^^^^    ^^^^   ^^   ^^. 

the  sale  of  another  horse  in  lieu  of  ^.^^J.^^^,     ^^-^^^j.  ,.   Cavanaugh,  99  Ky. 

the  first,  and  that   a   credit  should  377    59  j^^^    g^    4(53 

be   given    on    it    on    account   of   the  in  Johnson  v.  Pullman   S.   Bank, 

exchange.     Interest  was  due  on  the  40   Wash.    64,    the    stipulated  rate 

note  from  its  date,  and  not  merely  seems  to  have  governed  as  to  money 

from  the  time  the  second  horse  was  due  before  the  note  was  executed. 


950  SUTHERLAND  ON  DAMAGES.  [§  307 

to  the  ordinary  legal  rate  of  interest ;  other  cases  hold  the  con- 
tract rate  to  be  prima  facie  the  rate  after  maturity,  but  subject 
to  be  put  aside  by  consideration  of  whether  it  be  a  reasonable 
rate  or  there  is  a  mutual  intention  to  continue  it;  and  a  third 
class  that  the  contract  operates  by  its  own  vigor  after  the  rate 
commences  until  the  debt  is  paid  or  merged  in  a  judgment  or 
decree. 

§  308.  Whether  same  rate  will  apply  after  debt  due.  If  the 
stipulated  rate  is  less  than  the  legal,  and  the  principal  is  made 
payable  at  a  distant  day,  so  that  it  is  obvious  from  this  circum- 
stance, or  from  this  and  others,  that  the  time  of  credit  expressly 
given  is  the  whole  time  of  forbearance  mutually  intended  the 
creditor  would  seem,  in  reason,  entitled  on  the  expiration  of  that 
period  to  receive  the  principal,  or  have  that  rate  of  interest  after- 
wards which  the  law  gives  generally  upon  default  in  the  payment 
of  money.  This  would  appear  more  especially  his  right  if  he,  with 
reasonable  promptness,  asserts  his  claim  to  the  money  by  actual 
demand  or  resorts  to  legal  measures  for  its  collection.  But 
silence  and  inaction  after  the  maturity  of  the  debt  might  imply 
acquiescence  in  tlie  debtor's  retention  of  the  money  and  justify 
the  inference  that  the  creditor  is  satisfied  to  prolong  the  credit 
on  the  original  terms.  A  prompt  demand,  however,  or  notice 
that  such  is  not  his  intention,  or  any  conduct  which  negatives 
acquiescence  in  the  delay  of  payment  on  the  terms  which  gov- 
erned before  the  debt  was  due  will  prevent  the  old  rate  being  ex- 
tended by  implication  from  extraneous  facts  or  otherwise  than 
1)}^  necessary  legal  construction.  Where  a  mortgagee  contracted 
to  receive  a  rate  of  interest  less  than  the  legal  rate  during  the 
time  of  credit  agreed  upon  it  was  held  that  if  he  suffers  the 
mortgagor  to  remain  in  possession  after  the  mortgage  money 
becomes  due  an  understanding  of  the  parties  will  be  presumed 
that  the  interest  shall  continue  at  the  same  rate  until  the  mort- 
gagee thinks  proper  to  demand  payment ;  but  that  no  such 
presumption  can  be  raised  where  the  mortgagee  attempts  to  fore- 
close his  mortgage  or  take  possession  of  the  mortgaged  premises 
on  the  supposition  that  he  has  actually  acquired  the  equity  of 
redemption  as  a  substitute  for  his  debt.*^     Two  other  equity 

47  Bell    V.    Mayor,    10    Paige,    49.       See  Lawrence  v.  Trustees,   2  Denio 

577. 


308] 


INTEREST. 


951 


cases  in  New  York  seem  to  hold  I  lie  rate  to  be  the  sniiu^  ahsohile- 
ly  after  maturity  as  before  by  virtue  of  the  eoiiti-act  tixiin;  it." 
In  both  of  these  the  rate  was  less  than  the  leiial  rate.  In  thi; 
latter  the  vice-chancellor  decided  that  the  creditor  was  not  en- 
titled to  the  lepii  rate  after  maturity,  ihouLih  the  .|cI)tor  had 
regularly  paid  interest  at  that  rate  for  over  si.x  years  alter  the 
debt  became  due.  Such  payments  were  held  not  to  be  evidence 
of  a  continuing  agreement  to  pay  more  than  the  rate  specified  in 
the  bond  as  the  rate  before  maturity.  Later  cases  have  been 
decided  at  law  in  the  same  manner;  *°  though  the  latest  expres- 
sion of  the  court  of  api)ea]s  assumes  the  rule  to  be  settled  to  the 
contrary. ^°  In  a  case  decided  in  1^^80  it  was  held  that  the  riiilit 


*8  Miller  V.  liurroujilis,  4  Jolms. 
Ch.  43G;  New  York  L.  Ins.  &  T. 
Co.  V.  Manning,  3  Sandf.  Ch.  58. 

49  Andrews  v.  Keeler,  19  Hun  87 ; 
Association  v.  Eagleson,  60  How. 
Pr.  9. 

50  Savage  v.  Beeclier  (N.  Y. 
Misc.),  139  X.  Y.  Supp.  173,  citing 
Pryor  v.  Buflalo,  ]97  N.  Y.  142; 
Zeller  v.  Leiter,  114  App.  Div.  (X. 
Y. )    155,  and  other  local  cases. 

It  is  assumed  in  O'Brien  v.  Young, 
95  X.  Y.  428  (followed  in  Oswego 
City  Sav.  Bank  v.  Board  of  Educa- 
tion, 70  App.  Div.  (X.  Y.)  538, 
543),  that,  in  the  absence  of  a  stipu- 
lation to  pay  the  contract  rate  until 
the  discharge  of  tlie  ol)ligation,  the 
legal  rate  will  govern,  and  tliat  this 
is  according  to  the  weight  of  author- 
ity in  tliat  state.  Earl  J.,  refers  to 
^lacomber  v.  Dunham,  8  Wend.  550; 
I'nited  States  Bank  v.  Chapin,  9  id. 
471;  Hamilton  v.  Van  Rensselaer,  43 
X.  Y.  244;  Bitter  v.  Phillips,  53  id. 
586;  Southern  Cent.  R.  Co.  v.  Mo- 
ravia, 61  Barb.  180. 

In  Ferris  v.  Hard,  135  X.  Y.  354, 
365  it  is  said:  If  an  instalment 
were  not  paid  when  due,  the  con- 
tract was  violated,  and  interest 
after  tiiat  upon  such  instalment 
could  only  be  recovered  as  damages, 


and  at  the  rate  of  interest  author- 
ized by  law.  Hewett  v.  Cliadw  ick,  8 
App.  Div.  (X.  Y.)  23. 

The  law  in  New  York  on  this  sub- 
ject is  not  settled,  or  is  not  regard- 
ed as  settled,  by  the  late  cases  re- 
ferred to.  In  Elmira  I.  &  S.  R.  M. 
Co,  V.  Elmira,  5  X.  Y.  Misc.  194, 
tJie  cases  are  reviewed,  and  the  con- 
clusion stated  that  O'Brien  v. 
Young  and  Ferris  v.  Hard,  supra, 
are  not  adjudications  on  the  ques- 
tion. Smith,  J.,  said:  I  luivc  ex- 
amined carefully  the  authorities 
cited  l)y  Judge  Earl  [in  O'Brien  v. 
Young]  from  the  New  York  courts, 
and  they  do  not  state  to  me  the 
rule  of  law  which  he  seems  to  de- 
rive therefrom.  In  none  of  those 
cases  was  the  question  squarely  dis- 
cussed and  decided.  This  question 
was  not  before  Judge  Earl  when  the 
opinion  was  written,  and  his  atten- 
tion does  not  seem  to  have  been 
called  to  the  cases  in  this  state  hold- 
ing a  contrary  doctrine.  In  Ferris 
v.  Hard,  Judge  Peckham  seems  to 
indicate  that  the  interest  would  be- 
at the  statutory  rate  after  tlie  ma- 
turity of  the  contract.  But  in  the 
case  he  was  discussing  there  was  no 
rate  specified  in  the  contract.  It 
seems  to  be  settled  beyond  dispute, 


952 


SUTllEKLAND    ON    DAMAGES. 


[§   308 


to  the  same  rate  after  maturity,  which  was  fixed  by  contract 
before,  is  a  contract  right  which  cannot  be  impaired  by  sub- 
sequent legislation.^^  In  a  case  in  Illinois  ^^  there  was  a  stip- 
ulation for  "five  per  cent  per  month  as  damages  from  maturity." 
The  payee,  from  time  to  time  after  maturity,  accepted  interest 
at  ten  per  cent  per  annum  until  the  death  of  the  maker.  It  was 
held  that  such  acceptance  of  interest  evidenced  an  agreement  to 
substitute  ten  per  cent  per  year  in  place  of  five  per  cent  per 
month  and  was  a  waiver  of  the  higher  rate.  But  in  the  absence 
of  a  waiver  the  rate  stipulated  to  be  paid  after  maturity  is  re- 
coverable.^" In  a  Pennsylvania  case  ^*  it  was  held  that  a  note 
payable  at  a  future  day  with  three  per  cent  interest  from  date 
carried  that  rate  till  the  day  of  payment  fixed  in  the  contract, 


where  the  rate  is  not  specified  in 
the  contract,  that  after  maturity  in- 
terest is  to  be  reckoned  at  tlie  statu- 
tory rate.  In  Ferris  v.  Hard  there 
was  no  occasion  to  present  to  the 
court  the  authorities  which  I  thinic 
must  control  the  construction  of  a 
contract  wherein  the  rate  of  interest 
is  specified,  and  those  authorities 
are  not  discussed  in  tlie  opinion. 
The  same  remarks  apply  to  Loos  v. 
Wilkinson,  113  N.  Y.  485,  10  Am. 
St.  495,  4  L.R.A.  353.  Reference  is 
made  to  Miller  v.  Burroughs,  4 
Johns.  Ch.  436;  Van  Beurcn  v.  Van 
Gaasbeck,  4  Cow.  497;  Sullivan  v. 
Fosdick,  ]0  Hun  81;  Association  v. 
Eagleson,  60  How.  Pr.  9 ;  Patteson 
V.  Graham,  16  N.  Y.  St.  Rep.  703 
and  Genet  v.  Kissam,  53  N.  Y. 
Super.  Ct.  43,  as  holding  contrary 
to  the  cases  first  referred  to.  But 
see  Oswego  City  Sav.  Bank  v. 
Board  of  Education,  supra. 

In  Zimmerman  v.  Klauber,  139 
App.  Div.  (N.  Y.)  26,  the  rule  is 
said  to  be  that  where  the  parties 
have  stipulated  for  interest  at  a 
fixed  rate  until  payment,  that  rate 
prevails  up  to  judgment;  but  where 
a  rate   is  provided   without   limita- 


tion as  to  time  it  is  determined  as 
fixed  by  the  contract  up  to  the  time 
of  default,  and  the  legal  rate  gov- 
erns thereafter.  See  City  R.  E.  Co. 
v.  MacFarland,  67  N.  Y.  Misc.  286. 

Special  interest  contracts  with  an 
insolvent  trust  company  bear  inter- 
est at  the  stipulated  rate  to  the 
time  a  receiver  takes  possession  of 
its  assets;  thereafter  the  legal  rate 
prevails  as  against  the  claims  of 
stockholders  to  the  surplus.  Peo- 
ple v.  Merchants'  T.  Co.,  187  N.  Y. 
293. 

In  equity  the  legal  rate  of  inter- 
est governs.  Pryor  v.  Buffalo,  197 
N.  Y.  123. 

51  Association  v.  Eagleson,  60 
How.  Pr.  0.  See  Morrisania  Sav. 
Bank  v.  Bauer,  3  N.  Y.  L.  Bull.  102; 
Taylor  v.  Wing,  84  N.  Y.  471. 

52  Bradford  v.  Hoiles,  66  111.  517. 
•3  Hennessey    v.    Walsh,    142    111. 

App.  237. 

64  Ludwig  V.  Huntzinger,  5  W.  & 
S.  51.  The  rule  of  this  case,  which 
involved  a  long  time  bond,  does  not 
apply  to  a  note  payable  one  day 
after  date  and  bearing  less  than 
the  legal  rate  of  interest.  Neal's 
Est.,  14  Pa.  Dist.  227. 


§  309]  INTEREST.  f)r.:^. 

and  after  that  legal  interest.  A  similar  rule  was  laid  down  in 
South  Carolina,"  and  in  Kentucky,  the  jjnmu.se  being  to  jiay 
"from  date,"  ^^  and  in  North  Carolina." 

§  309.  Same  subject.  A  contract  for  tlie  iniyment  of  money 
at  a  definite  future  time  with  a  stipulation  for  intfrcst  at  a 
specified  rate  stands,  if  not  ])erformed  after  the  dutc  tixcd  I'oi- 
the  payment  of  the  principal,  simply  as  a  diosc  in  action.  1 1 
has  then  no  future;  the  time  has  ela})sed  for  performance;  there 
remains  but  a  right  of  action  for  damages.  'I'here  is  no  con- 
tinuing contract  to  pay  interest  in  any  other  sense  than  there  is 
to  pay  the  principal.  The  promise  was,  as  to  both,  to  pay  at  a 
day  which  is  past.**  If  the  princijjal  had  been  loaned  tor  a  term 
of  years  with  an  agreement  to  pay  interest  semi-annually  this 
agreement,  while  it  runs,  would  impose  the  duty  to  pay  interest 
only  at  those  half-yearly  periods.  Ihit  no  periodicity  would  be 
recognized  in  the  obligation  to  pay  interest  after  the  maturity  of 
the  debt.*^  Jn  a  suit  brought  three  months  after  that  date  there 
can  be  no  doubt  that  the  creditor  would  be  entitled  to  a  computa- 
tion of  interest  for  that  time  or  for  any  time  to  the  day  of  ob- 
taining judgment  or  decree.^"  I'he  creditor's  claim  for  such 
interest  could  not  be  defeated  by  the  argument  that  the  interest 
contract  continues  by  implication  until  payment  of  the  debt,  and 
by  such  contract  the  debtor  is  bound  to  pay  only  once  in  six 
months.  Such  an  argument  would  be  entitled  to  prevail  if  the 
interest  contract  were  a  continuing  one — if  by  its  own  prolonged 

56Langston  v.  South  Carolina  11.  57  Sykos  v.   Life  Ins.  Co.,   14S   N. 

Co.,  2  S.  C.  248.  C.  13. 

A  clause   in   a  bank  charter   giv-  A    depository   of   jjuhlie   funds    i.s 

ing  the  corporation  power  to  make  liable    for    the    agreed    rate    of    in- 

discount   at   prescribed   rate   on    in-  terest  so  long    as    it    retains  tlieui. 

struments   having   less  than   twelve  though  circumstances  may  seem   to 

months  to  run  does  not  establish  a  make   it  imprudent    for    it    to    ime 

rule   as    to    the    rate    of    interest.  them.     State  Nat.  Mank  v.  C.tmmi.n- 

Chambliss   v.    Robertson,     23     .Miss.  wealth,  ]2!t  Ky.  (VM . 

302;  United  States  Rink  v.  Chapin,  68  The  text  is  .jiKited  in  raliii.r  v. 

9  Wend.  471.     See  Tuffli  v.  Ohio  L.  Lai)eree,  23  Wash.  40!t,  -121. 

Ins.  &  T.  Co.,  2  Disney  121.  89  Hut  see  O'Xeall  v.   15....kman.  0 

seSanford  v.  City  Nat.  Bank,   If)  Rieli.  sn. 

Ky.  L.  Rep.  007:  McNeil  v.  Watkins,  60  \\  h,  atun    v.    Pike.   !l    H.    I.    132, 

id.  780.  11    -^'ii-   It'-P    --''• 


954  SUTIIEKT.AND    ON    DAMAGES.  [§    309 

operation  and  effect  it  ahsolntely  regulated  the  interest  after, 
as  it  did  before,  the  debt  was  due. 

Parties  may  by  agreement  liquidate  damages  to  be  paid  in 
ease  of  a  future  breach  of  contract,  and  may,  in  like  manner  and 
upon  the  same  principle,  fix  the  rate  of  interest  within  reason- 
able limits  to  be  paid  after  the  debt  is  due.^^  But  an  agreement 
in  general  terms  to  pay  interest  on  a  time  debt  is  primarily  for 
the  same  time  as  the  agreement  for  the  payment  of  the  principal. 
The  intention  of  the  parties  is  to  be  ascertained  from  its  lan- 
guage, and  thus  ascertained  the  debtor  intends  to  pay  and  the 
creditor  to  receive  the  debt,  consisting  of  principal  and  agreed 
interest,  on  the  day  fixed  for  such  payment.  To  put  any  other 
construction  on  the  agreement  is  to  infer  bad  faith  or  that  the 
parties  do  not  intend  what  they  clearly  say.  Strictly,  therefore, 
such  an  agreement  does  not  operate  beyond  the  pay  day.  What- 
ever influence  it  has  in  determining  the  interest  afterwards  is 
secondary  and  probative. 

If  the  debtor  does  not  pay  when  the  debt  is  due,  and  this 
omission  occurs  by  his  default,  the  expectation  that  he  will  pay 
interest  at  the  same  rate  at  least  as  during  the  period  of  sti])- 
ulated  credit  is  natural  and  reasonable;  and  the  existence  of  a 
legal  obligation  to  do  so  is  agreeable  to  the  analogy  of  other  con- 
tracts and  by  such  analogy  is  liable  to  be  modified  by  circum- 
stances. The  question  of  interest  after  maturity  is  much 
governed  by  the  equity  of  the  case;  circumstances  may  take 
away  the  right  altogether.  Those  which  will  have  this  effect 
will  readily  occur  to  the  professional  mind.  Among  them  is  a 
tender  of  the  debt  which  puts  an  end  to  the  default  and  stops 
interest ;  ®^  the  continued  absence  of  the  creditor  from  the  state 
in  which  the  debt  is  payable ;  ^^  a  state  of  war  which  places  the 
debtor  and  creditor  in  the  relation  of  alien  enemies  to  each 
other's  government. ^^  The  failure  of  a  creditor  to  present  his 
demand  for  payment  at  the  place  stipulated  therefor  is  cause 

61  Hubbard  v.  Callalian,  42  Conn.  &  R.  348n;  Gage  v.  McSweeney, 
524,  ]9  Am.  Rep.  564.     See  Palmer       74  Vt.  .370. 

V.   LefHer,    18   Iowa   125;    Taylor   v.  64  Mease   v.    Stevens,    ]    N.    J.    L. 

Meek,  4  Blackf.  388.  433;   Bean  v.  Chapman,  62  Ala.  58. 

62  §§  276,  383.  The  rate  of  interest  stipulated  for 

63  Du  Belloix  v.  Waterpark,   1    D.  is  not  affected  by  the  payee's  refusal 


§  309] 


INTEREST. 


055 


for  limiting  liiw  recovery  of  interest  to  les.s  tlian  tlie  st ipiilaU'd 
rate,  iind  therefore  as  damages.^^ 

So  the  rate  of  interest  which  was  ohligatoi-y  hy  agreement 
during  the  life  of  the  contract  may  he  so  low  or  so  high  as  to 
negative  the  intention  when  the  contract  was  made  or  (hiring 
the  default  that  it  should  continue  after  the  contract  had  ex- 
pired;  and  that  circumstance  may  inlincncc  the  court  to  i-cject 
the  rate  so  agreed  on  as  a  rule  in  determining  the  inlcrcst  to  he 
allowed  as  damages.^°     To  the  rate  specified  in  the  contract  the 


to  furnish  tlie  paj^or  with  a  state- 
ment of  the  amount  due,  no  tender 
being  made.  Lamprey  v.  Mason, 
]48  Mass.  231. 

65  Skinner  v.  Franklin  County, 
no  Fed.  862. 

66  Henry  v.  Thompson,  Minor,  209. 
This  case  is  thus  succinctly  stated 
by  Loomis,  J.,  in  Hubbard  v.  Calla- 
han, 42  Conn.  524,  19  Am.  Rep.  564: 
"The  suit  was  for  the  recovery  of  a 
large  number  of  notes,  differing  in 
their  terms,  and  no  particular  de- 
scription of  tliem  reported;  but  they 
were  reduced  to  four  general  classes 
in  the  briefs  of  counsel:  '1st.  To 
pay  the  principal  at  a  future  day, 
and  if  not  punctually  paid,  to  pay 
the  premium  or  interest  at  the  rate 
expressed  from  the  date.  2d.  To  pay 
the  principal  at  a  future  day,  with 
interest  at  the  rate  expressed  from 
the  date  till  paid.  3d.  To  pay  the 
principal  at  a  future  day,  witli  a 
distinct  agreement  to  pay  tlie  in- 
terest, not  stating  tlie  time  from 
which  or  till  whicli  it  was  to  run. 
4th.  To  pay  tlie  principal  at  a  future 
day,  witli  interest  from  the  matur- 
ity of  tlie  note.'  The  rates  of  in- 
terest stipulated  for  were  in  some 
cases  one  hundred  and  twenty  per 
cent,  per  annum;  in  others  sixty 
per  cent.;  and  the  very  lowest  was 
thirty  per  cent.  The  statute  of  Ala- 
bama then  in  force  provided  'that 
any  rate  of  interest  or  premium  for 


the  loan  or  use  of  money,  wares, 
merchandise,  or  other  cimimodity, 
fairly  and  buna  fiiir  stipulated  and 
agreed  upon  by  the  parties  to  such 
contract,  expressed  in  writing  and 
signed  by  the  party  to  be  charged 
therewith,  sliall  be  legal.'  A  ma- 
jority of  the  judges  concurred  in 
refusing  to  allow  the  stipulated 
rates  of  interest,  but  they  did  not 
agree  as  to  the  grounds  of  the  de- 
cision. Judges  Crenshaw  aiul  j\!int)r 
delivered  very  alile  dissenting  opin- 
ions sustaining  the  stipulations  for 
interest  as  valid  contracts.  The 
majority  opinions  were  given  by  the 
chief  justice  and  by  Judge  Safford. 
Judges  Ellis  and  Gayle  concurred 
with  the  chief  justice  in  the  opinion 
that  the  contract  on  its  face  fails  to 
show  tliat  the  consideration  was  a 
loan.  One  reason  for  giving  sudi 
a  literal  application  of  the  statute 
is  stated  to  be  the  unparalleled  rate 
of  interest.  lUit  in  the  cour.se  of 
the  opinion  tiie  chief  justice  says: 
'As  to  the  second,  third  and  fourtii 
classes  of  cases  as  arranged  in  the 
lirief  and  arguments  of  counsel,  I 
am  of  opinion  that  if  tlie  considera- 
tion had  Iieeii  a  fair  and  bona  fnic 
loan,  the  i)iirties  had  a  right  to 
stipulate  any  rate  of  interest  with- 
out limiting  it  to  a  future  day,  «r 
to  the  maturity  of  the  note,  pro- 
vided the  contract  for  interest  be 
absolute  and  uiicoiulitioiial.'     .Iiulge 


956 


SUTllEKLAND    ON    DAMAGES. 


[§  309 


parties  have  thereby  given  a  sanction  by  adopting  it  before 
maturity ;  they  have  admitted  it  to  be  a  fair  compensation  for 


SaflFord  held  (in  which  Gayle  also 
concurred)  that  where  the  rates  of 
interest  were  exorbitant,  and  there 
was  no  time  of  forbearance  fixed  by 
the  contract,  they  were  not  within 
the  statute."  Bell  v.  Mayor,  10 
Paige  49. 

Cook  V.  Fowler,  L.  R.  7  H.  of  L. 
Cas.  27,  was  an  action  upon  a  war- 
rant of  attorney  given  to  secure 
the  payment  of  £1,.3.30  "on  the  2d 
day  of  June  next,"  with  interest  at 
five  per  cent,  per  month,  "judgment 
to  be  entered  up  forthwith."  The 
ford  chancellor  remarked  upon  the 
stipulation  for  interest  up  to  a  cer- 
tain day,  without  any  mention  of 
subsequent  interest  upon  the  face  of 
the  instrument.  He  says:  "No 
doubt,  prima  facie,  the  rate  of  in- 
terest stipulated  up  to  the  time 
certain  might  be  taken,  and  gener- 
ally would  be  taken,  as  the  measure 
of  interest;  but  this  would  not  be 
conclusive.  It  would  be  for  the  tri- 
bunal to  look  at  all  the  circum- 
stances of  the  case  and  to  decide 
what  was  the  proper  sum  to  be 
awarded  by  way  of  damages."  The 
house  of  lords  declined  to  award 
damages  at  the  rate  of  sixty  per 
cent,  because  it  was  highly  inequita- 
ble. The  holder  not  having  entered 
up  judgment,  nor  made  any  definite 
claim  against  the  debtor's  estate 
(such  debtor  having  died),  for  the 
space  of  four  years  and  upward,  it 
was  held  that  the  tribunal  before 
which  the  claim  at  last  came  was 
justified  in  awarding  by  way  of 
damages  such  a  rate  of  interest  as 
the  holder  of  the  warrant  of  attor- 
ney would  have  been  entitled  to,  ac- 
cording to  the  ordinary  rule  of  the 
court   of   chancery,   had   he   entered 


up  judgment  on  the  day  named  in 
the  defeasance  to  the  warrant  of  at- 
torney, namely,  at  the  rate  of  four 
per  cent.  It  was  held,  also,  tliat 
there  is  no  rule  of  law  that  upon 
a  contract  for  the  payment  of  money 
on  a  certain  day,  with  interest  at 
a  fixed  rate  down  to  that  day,  a 
further  contract  for  the  continuance 
of  the  same  rate  of  interest  is  to 
be  implied.  Reeves  v.  Lane,  8  New 
Zeal.  44. 

In  Brewster  v.  Wakefield,  22 
How.  118,  it  was  held  that  such  a 
contract  is  spent  when  the  day  of 
payment  arrives;  that  there  is  no 
stipulation  in  relation  to  interest 
after  the  debt  becomes  due;  and 
tliat  if  the  right  to  interest  depend- 
ed altogetlier  on  contract,  and  was 
not  given  by  law  in  such  a  case, 
the  creditor  would  be  entitled  to  no 
interest  whatever  after  the  day  of 
payment.  The  contract  being  en- 
tirely silent  as  to  interest,  if  the 
notes  be  not  punctually  paid,  the 
creditor  is  entitled  to  interest 
after  that  time  by  operation  of  law, 
and  not  by  any  provision  of  the 
contract.  Therefore  the  interest 
after  maturity  should  be  after  the 
rate  established  by  law,  where  there 
is  no  contract  to  regulate  it.  There 
were  two  notes  sued  on,  one  stipu- 
lating interest  at  the  rate  of  twenty 
and  tlie  other  twenty-four  per  cent, 
per  annum.  Taney,  C.  J.,  said: 
"Nor  is  there  anything  in  the  char- 
acter of  this  contract  that  should 
induce  tlie  court  by  supposed  intend- 
ment of  the  parties,  or  doubtful  in- 
ferences, to  extend  the  stipulation 
for  interest  beyond  the  time  speci- 
fied in  the  written  contract.  The 
law    of    Minnesota   has    fixed    seven 


§  ^ou] 


INTEREST. 


957 


the  use  of  the  money.  The  dchior's  omission  to  pay  the  <lcht 
when  due  should  have  the  same  cfTccl  to  continue  tliat  rate  after 
maturity,  on  the  ground  hotli  of  iiilciitinii  and  a(hnission  of  its 
fairness,  where  it  exceeds  the  legal  rate,  as  the  silence  and  in- 
action of  the  creditor  where  the  rate  is  less.®"''     The  statutory 


per  cent,  per  annum  as  a  reasonable 
and  fair  compensation  for  the  use 
of  money ;  and  wliere  a  party  de- 
sires to  exact  from  the  necessities 
of  a  borrower  more  than  three  times 
as  much  as  the  legislature  deems 
reasonable  and  just,  he  must  take 
care  that  the  contract  is  so  written 
in  plain  and  unambiguous  terms; 
for  with  such  a  claim  he  must 
stand  upon  his  bond." 

67  Eastern  T.  Co.  v.  Gushing  S.  F. 
Co.,  3  New  Bruns.  Eq.  392;  Beck- 
wLth  V.  Trustees  of  Hartford,  etc. 
R.  Co.,  29  Conn.  268,  76  Am.  Dec. 
699.  A  railroad  company  issued 
bonds,  by  virtue  of  a  statute,  bear- 
ing interest  payable  semiannually 
at  the  rate  of  seven  per  cent,  per 
annum ;  the  interest  coupons  were 
paid  up  to  the  time  when  the  prin- 
cipal of  the  bonds  fell  due.  And 
the  question  was  submitted  to  the 
court  whether  the  bondholders  were 
legally  entitled  to  seven  per  cent, 
interest  or  only  to  six,  the  legal 
rate.  Hinman,  J.,  says:  "We  are  of 
opinion  that  the  plaintiff  in  this 
case  is  entitled  to  seven  per  cent. 
per  annum  for  the  detention  of  his 
money  after  the  principal  became 
due.  Technically  speaking,  it  is  no 
doubt  true  that  the  sum  recoverable 
for  such  detention  is  treated  as 
damages  for  the  breach  of  the  con- 
tract rather  than  interest  for  the 
money  loaned,  because,  strictly 
speaking,  interest  can  only  be 
claimed  under  a  contract  to  pay  it, 
either  express  or  implied,  and  the 
express   contract,   of   course,   ceased 


on  the  day  when  the  principal  was 
to  be  paid,  and  no  implied  contract 
can  be  raised  from  a  total  refusal 
to  pay  anything.  But  damages  arc 
recoverable  for  the  breach  of  the 
contract;  and  courts,  in  order  to 
give  to  him  to  whom  the  iiKuiey  is 
due  what  be  may  fairly  l)e  suppo.sed 
to  have  suffered  l)v  withholding  it 
from  him,  and  at  the  same  time  to 
prevent  tiic  borrower  from  making 
a  profit  by  tlie  breach  of  his  con- 
tract, have  regulated  the  damages 
for  such  breach  by  the  usual  rate  of 
interest  at  the  place  where  the 
money  is  detained.  This,  though 
an  arbitrary  rule,  will  generally 
operate  justly  and  is  much  more 
convenient  than  any  other  which 
could  be  adopted.  But  the  usual 
rate  of  interest  at  any  place  is  it- 
self as  arbitrary  a  provision  of  law 
as  the  damages  dependent  upon  it, 
and  is  by  no  means  uniform.  It  is 
not  only  known  to  differ  in  differ- 
ent states  and  countries,  generally 
depending  upon  positive  statiites, 
but  may  vary  from  the  ordinary  or 
more  general  rate  by  tlie  parties 
agreeing  upon  a  Jesser  rate,  or  if 
authorized  so  to  do,  as  in  the  case 
under  consideration,  by  tiieir  agree- 
ment upon  a  higher  rate;  or  there 
may  be  a  general  statute  autlioriz- 
ing  a  higlier  rate  for  money  bor- 
rowed for  some  particular  purpose, 
or  by  a  particuhu"  class  of  persona 
or  corporations ;  .  .  .  and  the 
different  rates  thus  agreed  upon  be- 
come the  legal  rates  of  interest  in 
respect  to   the   particular  contracts 


IT)"^ 


SUTHERLAND    ON    DAMAGES. 


[§  309 


provisions,  enacted  in  many  states,  that  judgments  shall  bear 
the  same  rate  of  interest  as  that  expressed  on  the  face  of  the  con- 
tract or  the  contract  rate  is  a  legislative  sanction  of  the  same 
rate  after  as  before  maturity.^* 

In  some  states  the  rate  stipulated  to  be  paid  during  the  period 
of  credit  has  no  influence  in  determining  the  rate  afterwards, 
but  the  legal  rate  is  uniformly  applied.  This  is  so  in  Minne- 
sota,^^ Kansas,'^"  Kentucky,'^  Maine,'^  Alabama,'^  Maryland,'^* 
Arkansas,'*  Khode  Island,'^  South  Carolina,'^  Georgia  (accord- 
ing to  the  judge  of  the  federal  circuit  court),''  California  (in 


during  tlieir  existence.  And  the 
rates  of  interest  thus  established  by 
agreement  must  be  presumed  to  bo 
just  and  equitable  under  the  cir- 
cumstances ;  tliat  is,  a  fair  com- 
pensation in  such  case  for  the  use  of 
the  money  between  the  parties  dur- 
ing the  time  the  contract  liad  to 
run.  Tlien,  why  should  we  not  pre- 
sume, as  between  the  same  parties, 
that  such  continues  a  fair  compensa- 
tion for  its  use  until  the  contract  is 
jjerformed ;  as  well  after  as  before 
the  day  when  the  principal  was  to 
he  paid;  and  thus  permit  the  rate 
of  interest  agreed  upon  to  control 
the  damages  to  be  paid  for  the  de- 
tention of  the  money,  as  well  as  the 
interest  for  its  use.  There  is  no 
equity  in  favor  of  one  rate  of  inter- 
est ratiier  tlian  another,  where  they 
are  both  legal  and  witliin  reasona- 
ble limits,  and  the  defendants  ought 
not  to  complain  as  long  as  it  is  in 
their  power,  by  paying  the  principal, 
to  protect  themselves  from  paying 
wiiat  they  tliought  a  reasonable  rate 
when  tliey  borrowed  the  money." 

68  Hand  v.  Armstrong,  18  Iowa 
324. 

69Talcott  V.  Marston,  3  Minn. 
339;  Mason  v.  Callender,  2  id.  350, 
72  Am.  Dec.  102;  Kent  v.  Brown,  3 
Minn.  347 ;  Cliapin  v.  Murphy,  5  id. 
474;  Lash  v.  Lambert,  15  id.  416,  2 


Am.    Rep.    142;    Moreland    v.    Law- 
rence, 23  Minn.  84. 

70  Robinson  v.  Kinney,  2  Kan. 
184;  Searle  v.  Adams,  3  id.  515,  89 
Am.  Dec.  598. 

71  Gray  v.  Briscoe,  0  Busli  687; 
Rilling  v.  Thompson,  12  id.  310; 
White  V.  Curd,  86  Ky.  191. 

72Duran  v.  Ayer,  67  Me.  145; 
Eaton  V.  Boissonnault,  id.  540,  24 
Am.  Rep.  52. 

73  Kitchen  v.  Brancli  Bank,  14 
Ala.  233. 

74  Brown  v.  Hardcastle,  63  Md. 
484. 

75  Newton  v.  Kennerly,  31  Ark. 
626,  25  Am.  Rep.  592;  Woodruff  v. 
Webb,  32  Ark.  612;  Pettigrew  v. 
Summers,  id.  571;  Gardner  v.  Bar- 
nett,  30  id.  476;  Harbison  v.  Ham- 
mons,  113  Ark.  120;  Johnson  v. 
Downing,  76  Ark.  128. 

76  Pearce  v.  Hennessy,  10  R.  I. 
223.  Contra,  in  ecjuity.  Silverman 
V.  Shattuck,  33  R.  I.  67. 

77Earle  v.  Owings,  72  S.  C.  362; 
Langston  v.  South  Carolina  R.  Co., 
2  S.  C.  248;  Manor  v.  Wilson,  16 
id.  469;  Thatcher  v.  Massey,  20  id. 
542;  Bell  v.  Bell,  25  id.  149. 

78  Slierwood  v.  Moore,  35  Fed.  109. 
But  see  Daniel  v.  Gibson,  72  Ga. 
367,  53  Am.  Rep.  845;  Trippe  v. 
Wynne,  76  Ga.  200. 


309] 


INTEREST. 


or.  9 


certain  cases)  by  virtue  of  the  code,'''^  Wasliin2:ton,'°  Missouri, 
so  far  as  coupon  interest  notes  are  concerned, ^^  and  Oreiioii,  in 
cases  of  implied  contracts,®-^  and  formerly  in  Indiana.*^  The 
same  principle  is  held  by  the  supreme  court  of  the  United 
States,**  where  the  question  does  not  come  before  it  from  a  state 
in  v\diich  the  law  is  settled  to  the  contrary.®^  It  has  been  said 
of  the  cases  cited  that  tlioy  recognize  tlie  principle  that  if  tln^ 
parties  have  fixed  a  rate  to  be  paid  u])  to  the  time  of  the  ex- 
tinguishment of  tlio  debt  that  rate  will  be  respected;  tliis  rule 
was  applied  where  the  s])ecified  rate  was  payable  until  tli(^ 
obligation  was  paid.*^  Such  is  the  I'ulc  in  Connecticut  thougli 
the  stipulated  rate  is  less  than  the  legal  rate,*'     The  circuit 


79  United  States  Nat.  Bank  v. 
Waddingham,  7  Cal.  App.  172;  Sec. 
1917,  Civil  Code;  Nash  v.  El  Dorado 
County,  24  Fed.  252;  Malone  v.  Roy, 
107  Cal.  518;  Randall  v.  Duff,  107 
Cal.  33;  Lambert  v.  Schraalz,  118 
Cal.  33.  See  Falknor  v.  Ilendy, 
80  Cal.  630. 

The  California  statute  liraitint,' 
the  rate  of  interest  on  judgments 
does  not  include  claims  against 
solvent  estates;  hence  an  allowed 
claim  against  such  an  estate  based 
upon  a  contract  bearing  a  rate  of 
interest  exceeding  that  which  judg- 
ments carry  continues  to  bear  the 
contract  rate  until  it  is  paid.  Rich- 
ardson V.  Diss,  127  Cal.  58. 

Under  sec.  1910,  Civil  Code,  a 
contract  providing  that  deferred  in- 
stalments of  interest  shall  bear  in- 
terest at  a  higher  rate  than  that 
borne  by  the  principal  is  void. 
Yndart  v.  Den,  116  Cal.  533,  58  Am. 
St.  200.  As  is  the  whole  interest 
agreement.  Bell  v.  San  Francisco  S. 
Union,  153  Cal.  04. 

80  Bank  v.  Doherty,  42  Wash.  317, 
4  L.R.A.(N.S.)  119],  114  Am.  St. 
123  (note  executed  in  another  state 
is  governed  by  the  Wasliington  stat- 
ute) . 

81  Citizen's  Nat.  Bank  v.  Donnell, 
172  Mo.  384. 


82  Thompson  v.  Hibbs,  45  Ore. 
141;  Craham  v.  Merchant,  43  Ore. 
294. 

83  Burns  v.  Anderson,  08  Ind.  202, 
overruling  Kilgore  v.  Powers,  5 
Blackf.  22;  Richards  v.  McPherson, 
74  Ind.  158.  Burns  v.  Anderson  is 
overruled  by  Shaw  v.  Rigbj%  84 
Ind.  375,  43  Am.  Rep.  90. 

84  Brewster  v.  Wakefield,  22  How. 
ns,  10  L.  ed.  301;  Burnhisel  v.  Fir- 
man, 22  Wall.  170,  22  L.  ed.  700; 
Holden  v.  Trust  Co.,  100  U.  S.  72. 
25  L.  ed.  567. 

If  the  obligation  does  not  specify 
tlie  rate  after  maturity  and  provides 
that  tlie  interest  due  In'forc  it  is 
payable  shall  be  added  to  tlie  prin- 
cipal, the  legal  rate  will  govern 
thereafter.  Elwell  v.  Daggs,  108  U. 
S.  143,  27  L.  ed.  082. 

85  Cromwell  v.  County  of  Sac,  ill! 
U.  S.  57,  24  L.  ed.  OSO  (an  Iowa 
case),  the  conventional  v:\ir  was 
continued;  Ohio  v.  Frank,  103  id. 
697;  Massachusetts  Ben.  Ass'n  v. 
Miles,  137  id.  689;  Vermont  !..  & 
T.  Co.  v.  Dygert,  89  Fed.  123.  See 
Perry  v.  Taylor,  1  Utah  03. 

86  New  Orleans  v.  Warner,  175  U. 
S.  120,  147.  44  L.  ed.  96.  109. 

87  \\  insted  Sav.  Bank  v.  New 
Hartford,  78  Conn.  319. 


960  SUTHERLAND    ON    DAMAGES.  [§    309 

court  for  the  eastern  district  of  Wisconsin  has  deemed  the  rule 
of  the  federal  supreme  court  applicable  to  bonds  which  have 
been  declared  due  because  of  default  in  the  payment  of  interest 
coupons.  ''The  stipulation  of  the  trust  deed  which  authorizes 
the  trustee,  at  its  election,  to  mature  the  principal  upon  default 
in  the  payment  of  interest  does  not  purport  to  abrogate  the  rate 
of  interest  which  the  obligor  agreed  to  pay  during  the  stated 
period.  The  exercise  of  the  election  matured  the  princii)al,  but 
left  untouched  the  stipulation  for  interest.  The  rate  was  agreed 
upon  by  the  parties  to  the  contract,  and  was  to  continue  during 
a  stated  period  of  time,  notwithstanding  that  by  the  election  of 
the  trustee  the  principal  was  matured  at  an  earlier  date  than 
that  specified  in  the  contract."  As  to  the  coupons  which  ma- 
tured by  their  own  terms,  no  rate  of  interest  being  fixed  after 
their  maturity,  they  carried  the  legal  rate.*^ 

In  several  of  the  enumerated  states  the  question  is  solved 
according  to  the  intention  of  the  parties.  Thus,  where  the  stip- 
ulation is  for  an  unusually  low  rate  of  interest  there  is  no 
presumption  that  it  was  contemplated  to  be  continued  after 
maturity,  and  the  legal  rate  will  govern.*^  A  note  payable  one 
day  after  date,  with  interest  in  excess  of  the  minimum  legal 
rate,  bears  the  stipulated  rate  after  maturity,^"  and  so  if  it 
bears  less  than  the  legal  rate.^^  The  expressions  of  the  parties 
also  control,  though  they  fall  short  of  being  distinct.^^    In  Eng- 

88  Farmers'  L.  &  T.  Co.  v.  North-  fore  the  execution  of  the  note — 
ern  Pae.  R.  Co.,  94  Fed.  454.  made   it   possible   to   count   the    in- 

89  Brown  v.  Hardeastle,  63  Md.  terest  for  a  'month'  without  going 
484.  beyond   its   maturity,   and   excluded 

90  Capen  v.  Crowell,  66  Me.  282 ;  the  conclusion,  otherwise  necessary, 
Paine  v.  Caswell,  38  Me.  80 ;  Castcd  that  the  phrase  'per  month'  could 
V.  Walker,  40  Ark.  117,  48  Am.  Rep.  not  have  its  full  effect  without 
5 ;  Gray  v.  Briscoe,  6  Bush  687 ;  touching  time  beyond  the  maturity 
White  V.  Curd,  86  Ky.  191 ;  Piester  of  the  note."  The  court  remark 
V.  Piester,  22  S.  C.  139,- 53  Am.  Rep.  that  "this  may  look  like  a  small  dif- 
731.  ference  to  produce  such  consequen- 

But    a    note    dated    in    February,  ces,  but  we  think  it  is  founded  on 

payable  one  day  after  date,  with  in-  principle    and    the    decided    cases." 

terest   at   one   per   cent,   per   month  Smith  v.  Smith,  33  S.  C.  210. 

from  the  first  of  the  preceding  Janu-  91  Neale's  Est.,  14  Pa.  Dist.  227. 

ary,  bears  only  the  legal  rate  after  92  A  note   payable   with   "ten   per 

maturity.      "The   time   named    from  cent,   per   annum    from    date,"    and 

which   the   interest    was     to    run —  stipulating   that    if    the    interest    is 

something   more  than   a   month   be-  not   paid   annually   it   sliall   become 


509] 


INTEREST. 


001 


land  the  stipulated  rate  before  niatnritv  would  soeui  to  he  prima 
facie  the  rate  afterwards,^'  but  subject  to  easier  relaxatiou  and 
broader  discretion  conceded  to  the  jury  ^*  than  is  consistent  with 


principal  and  bear  the  same  rate  of 
interest,  continues  to  carry  tlio  con- 
tract rate  after  maturity.  Vaughan 
V.  Kennan,  38  Ark.  114;  Miller  v. 
Hall,  18  S.  C.  141.  And  so  with  a 
note  payable  one  day  after  date 
"with  interest  from  date  at  the  rate 
of  twelve  per  cent,  per  annum,  in- 
terest to  be  paid  annually."  Sharpe 
V.  Lee,  14  S.  C.  341 . 

A  note  payable  twelve  montlis 
after  date  "with  interest  from  date, 
interest  payable  annually,"  was 
described  in  a  mortgage  contempo- 
raneously executed  by  tlie  same  per- 
son as  a  note  "with  interest  there- 
on at  the  rate  of  twelve  and  a  half 
per  cent,  per  annum  until  paid." 
The  language  of  both  instruments 
indicated  an  indefinite  extension  of 
credit  and  interest  at  the  specified 
rate.  Mobley  v.  Davega,  ]6  S.  C. 
73,  42  Am.  Rep.  632. 

93  Cook  V.  Fowler,  L.  R.  7  H.  of 
L.  Cas.  27 ;  Keene  v.  Keene,  3  C.  B. 
(N.  S.)  144;  Morgan  v.  Jones,  8 
Ex.  620;  Das  v.  Lai,  L.  R.  22  India 
App.  199. 

A  note  conditioned  for  the  pay- 
ment of  the  principal  sum  with  in- 
terest "until  the  repayment  there- 
of" means  until  the  day  fixed  for 
payment,  and  is  not  a  contract  to 
pay  the  agreed  rate  beyond  that 
time.  In  re  European  Cent.  R.  Co., 
4  Ch.  Div.  33.  See  Ex  parte  Few- 
ings,  25  id.  399. 

Where  the  promise  was  to  pay 
seven  per  cent,  so  long  as  the  prin- 
cipal or  any  part  thereof  should  re- 
main due  a  judgment  did  not  merge 
the  contract  in  it  so  as  to  prevent 
the  creditor  from  recovering  the 
difference  between  the  judgment 
and  the  contract  rate.  Popjile  v. 
Suth.  Dam.   No!.    1.— (11. 


Sylvester,  22  CIi.  Div.  98;  Lowry  v. 
Williams,  [1895]  1  Irisli  274. 

The  two  last  preceding  cases  and 
Kx  parte  Fewings,  supra,  are  dis- 
cussed in  Usborne  v.  Limerick 
Market  Trustees,  [lUOO]  1  Ch.  85. 
In  tlie  last  case  a  mortgagor  cove- 
nanted to  pay  the  principal  sum  on 
a  day  named,  and  also,  if  it  sliouhl 
not  tlien  be  paid,  tliat  so  long  as 
the  same  or  any  part  of  it  was  un- 
paid, he  would  pay  tlie  stipulated 
rate  of  interest.  A  judgment 
against  the  mortgagor  for  principal 
and  interest  merged  the  covenant 
therein,  and  the  mortgagee  was  only 
entitled  to  recover  the  legal  rate  of 
interest  thereafter.  To  tlie  same 
effect,  Hanford  v.  Howard,  1  New 
Bruns.  Eq.  24],  following  St.  John 
V.  Rykert,  10  Can.  Sup.  Ct.  278,  and 
People's  L.  &  D.  Co.  v.  Grant,  18 
id.  362. 

"Interest  is  payable  as  interest, 
and  not  as  damages,  under  a  bond 
having  a  condition  or  defeasance  to 
make  void  the  same  upon  paj'inent 
of  a  lesser  sum  at  a  day  or  place 
certain,  even  although  no  express 
mention  of  interest  is  made  in  the 
bond;  and  I  cannot  see  any  just  rea- 
son for  holding  that  tlie  amount  of 
interest  recoverable  is  diminished 
by  reason  only  of  the  bond  being 
conditioned  for  payment  of  principal 
and  interest  up  to  or  at  a  certain 
date.  The  bond  may  he  so  framed 
as  to  show  an  inteiit  to  limit  in- 
terest recoverable  as  u|i  to  a  speci- 
fied date;  but  in  my  judgment  it 
wants  more  than  the  circumstance  I 
have  referred  to  to  show  sjich  an 
intent."  llaynes  v.  Dixon,  [1H!»<I]  2 
Ch.  niil. 

94  Dii    Helloix  V.   \Vat.'r|.ark,    1    I). 


962 


SUTHERLAND    ON    DAMAGES. 


[§   309 


the  rule  establisjied  by  a  preponderance  of  American  authority, 
which  is  believed  to  be  that  the  rate  stipulated  for  in  general 
terms  before  maturity  will  be  continued  until  verdict,*^  upon 


&   R.    348n;    Cameron   v.    Smith,    2 

B.  &  Aid.  305 ;  Bann  v.  Dalzel,  Moo. 
&  M.  228;  Page  v.  Newman,  9  B.  & 

C.  378;  Arnott  v.  Redfern,  3  Biiig. 
353;  Higgins  v.  Sargent,  2  B.  &  C. 
348;  Calton  v.  Bragg,  15  East  223; 
Keene  v.  Keene,  3  C.  B.  (N.  S.)  144; 
Gibbs  V.  Fremont,  9  Ex.  25. 

95  Morris  v.  Baird,  72  W.  Va.  1; 
Evans  v.  Rice,  96  Va.  50 ;  Wyoming 
Nat.   Bank  v.   Brown,   7   Wyo.   494, 

75  Am.  St.  935 ;  Hallam  v.  Telleren, 
55  Neb.  255;  Meaders  v.  Gray,  60 
Miss.  400,  45  Am.  Rep.  414;  Tisli- 
mingo  Sav.  Inst.  v.  Buclianan,  60 
Miss.  496;  Hydraulic  Co.  v.  Chat- 
field,  38  Ohio  St.  575 ;  Shaw  v.  Rig- 
by,  84  Ind.  375,  43  Am.  Rep.  96, 
overruling  cases  to  the  contrary; 
Kimball  v.  Burns,  84  Ind.  370; 
Hume  V.  Mazelin,  id.  574;  Shipman 
V.  Bailey,  20  W.  Va.  140;  Brown 
V.  Steck,  2  Colo.  70;  Buckingham  v. 
Orr,  6  id.  587 ;  Broadway  Sav.  Bank 
V.  Forbes,  79  Mo.  226,  affirming  9 
Mo.  App.  575;  Kerr  v.  Haverstick, 
94  Ind.  178;  Kellogg  v.  Lavender, 
]5  Neb.  256,  48  Am.  Rep.  339; 
Hager  v.  Blake,  16  Neb.  12;  Jeffer- 
son County  V.  Lewis,  20  Fla.  980, 
1009;  Borders  v.  Barber,  81  Mo. 
636;  Bowers  v.  Hammond,  ]39  Mass. 
360;  Parks  v.  O'Connor,  70  Tex. 
377;  Bressler  v.  Harris,  19  111.  App. 
430;  Joiner  v.  Enos,  23  id.  224; 
Thorn  v.  Smith,  71  Wis.  18;  Bar- 
bour V.  Tompkins,  31  W.  Va.  410; 
Kohler  v.  Smith,  2  Cal.  597,  56  Am. 
Dec.  369;  Beckwith  v.  Trustees  of 
Hartford,  etc.  R.  Co.,  29  Conn.  268, 

76  Am.  Dec.  599;  Adams  v.  Way, 
33  Conn.  419;  Hubbard  v.  Calla- 
han, 42  id.  524,  19  Am.  Rep.  564; 
Kilgore  v.  Powers,  5  Blackf.  22; 
Gordon    v.    Phelps,   7    J.   J.   Marsli. 


619;  Pate  v.  Gray,  Hemp.  155; 
Henderson  v.  Desha,  id.  231;  Spen- 
cer V.  Maxfield,  16  Wis.  179;  Pruyn 
v.  Milwaukee,  18  id.  367;  Marietta 
I.  Works  V.  Lottimer,  25  Ohio  St. 
621;  Monnett  v.  Sturges,  id.  384; 
Besser  v.  Hawthorn,  3  Ore.  129; 
Etnyre  v.  McDaniel,  28  111.  201; 
Williams  v.  Baker,  67  111.  238; 
Brewster  v.  Wakefield,  1  Minn.  352, 
09  Am.  Dec.  343;  Van  Beuren  v. 
Van  Gaasbeck,  4  Cow.  496;  Mont- 
gomery V.  Boucher,  14  Up.  Can.  C. 
P.  45 ;  Pridgen  v.  Andrews,  7  Tex. 
461 ;  Hopkins  v.  Crittenden,  10  id. 
189;  Harden  v.  Wolf,  2  Ind.  31; 
Engler  v.  Ellis,  16  id.  475;  Hand 
v.  i^rmstrong,  18  Iowa  324;  Thomp- 
son V.  Pickel,  20  id.  490;  Wilson 
V.  King,  Morris,  106;  Burkhart  v. 
Sappington,  1  G.  Greene  66;  Guy 
V.  Franklin,  5  Cal.  416;  Corcoran  v. 
Doll,  32  Cal.  82 ;  McLane  v.  Abram, 
2  Nev.  199;  Overton  v.  Bolton,  9 
Heisk.  762,  24  Am.  Rep.  367;  War- 
ner V.  Juif,  38  Mich.  662;  Cecil  v. 
Hicks,  29  Gratt.  1,  26  Am.  Rep.  391 ; 
Burgess  v.  Southbridge  Sav.  Bank, 
2  Fed.  500;  Brannon  v.  Hursell,  112 
Mass.  63,  37  Am.  Rep.  305;  Union 
Inst.  V.  Boston,  129  Mass.  82; 
Cromwell  v.  County  of  Sac,  96  U. 
S.  5],  24  L.  ed.  681;  Fauntleroy  v. 
Hannibal,  5  Dill.  219;  Hovey  v. 
Edmison,  3  Dak.  449  (it  is  so  pro- 
vided in  the  code)  ;  United  States 
M.  Co.  V.  Sperry,  26  Fed.  727 ;  Gage 
V.  McSweeney,  74  Vt.  370;  Rew  v. 
Independent  School  Dist.,  125  Iowa 
28,  106  Am.  St.  282  (by  statute)  ; 
Clark  V.  Nichols,  79  Kan.  612  (in 
favor  of  a  stranger  to  the  mortgage 
during  the  period  the  mortgagor 
might  redeem)  ;  Milwaukee  T.  Co. 
V.  Van  Vallvenburgh,  L32  Wis.  638. 


J 


§  309] 


INTEREST. 


963 


the  theory,  according  to  some  authorities,  that  it  was  the  inten- 
tion of  the  parties  that  the  agi-eed  rate  should  so  continue,  while 


If  the  stipulation  is  for  the  pay- 
ment of  a  rate  in  excess  of  the  mini- 
mum legal  rate  "until  maturity," 
the  latter  will  be  the  limit  there- 
after.   Hamer  v.  Rigby,  65  Miss.  41. 

Under  statutes  to  the  effect  that 
where  there  is  no  express  agreement 
fixing  a  different  rate  of  interest 
bonds,  notes,  etc.,  shall  bear  in- 
terest at  seven  per  cent,  after  they 
have  become  due,  and  that  judg- 
ments shall  bear  interest  at  the  rate 
agreed  upon  in  the  contracts  upon 
which  they  were  rendered,  a  note 
which  bears  an  agreed  rate  of  in- 
terest, but  is  silent  as  to  the  rate 
after  its  maturity,  carries  interest 
at  the  stipulated  rate.  Greenhaw 
V.  Holmes,  8  Ariz.  94,  citing  Kohler 
V.  Smith,  2  Cal.  597,  56  Am.  Dec. 
369;  Hand  v.  Armstrong,  18  Iowa 
324;  Brannon  v.  Hursell,  112  Mass. 
63;  Marietta  I.  Works  v.  Lottimer, 
25  Ohio  St.  621 ;  McLane  v.  Abrams, 
2  Nev.  199;  Phinney  v.  Baldwin,  16 
111.  108,  61  Am.  Dec.  62;  Hopkins  v. 
Crittenden,  10  Tex.  189;  Spencer 
v.  Maxfield,  16  Wis.  185;  Borders 
v.  Barber,  81  Mo.  636;  Warner  v. 
Juif,  38  Mich.  662;  Kellogg  v. 
Lavender,  15  Neb.  256,  48  Am.  Rep. 
339;  Wyckoff  v.  Wyckoff,  44  N.  J. 
Eq.  56;  Cromwell  v.  County  of  Sac, 
96  U.  S.  51,  24  L.  ed.  681. 

In  Spencer  v.  Maxfield,  16  Wis. 
178,  the  action  was  upon  a  note 
payable  at  a  future  day  with  inter- 
est at  the  rate  of  twelve  per  cent. 
It  was  silent  as  to  interest  after 
maturity.  The  statute  in  force  per- 
mitted parties  to  contract  for  any 
rate  not  exceeding  twelve  per  cent., 
and  seven  was  the  ordinary'  legal 
rate.  The  stipulated  rate  was  held 
to  govern  after  maturity  as  a  rate 
legally   fixed.      Cole,  J.:    "We  have 


no  doulit  i)ut  tlic  general  under- 
standing among  business  men  has 
been  that  notes  in  the  form  of  the 
one  under  consideration  draw  inter- 
est at  the  rate  of  twelve  per  cent, 
after  as  well  as  before  maturity. 
Such  we  believe  to  be  the  construc- 
tion placed  upon  tliese  contracts  by 
the  community,  and  we  think  it  is 
tlie  correct  one.  ...  It  seems 
to  be  strictly  analogous  to  the  case 
where  a  tenant  holds  over,  wliere  the 
law  implies  an  agreement  to  pay 
rent  according  to  the  terms  of  the 
express  lease."  The  contract,  on 
this  theory,  imports  an  agreement 
to  pay  the  same  rate  of  interest 
after  as  before  maturity.  There  is 
supposed  to  be  a  tacit  agreement  as 
distinguished  from  a  duty  or  obli- 
gation which  is  to  be  enforced  on 
the  fiction  of  a  promise;  or  as  dis- 
tinguished from  a  measurement  of 
compensation  for  detaining  money, 
by  the  standard  of  tlie  rate  of  in- 
terest stipulated  for  its  use  immedi- 
ately before  such  detention. 

In  Spaulding  v.  Lord,  19  Wis. 
5.3.),  where  the  agreement  was  to 
pay  interest  "until  the  time  when 
the  principal  sum  will  be  payable," 
the  inference  of  a  contract  to 
pay  the  specified  rate  after  matur- 
ity was  repelled  by  the  particular 
language. 

In  Etnyre  v.  McDaniel,  28  111. 
201,  suit  was  brought  on  a  promise 
to  pay  money  and  ten  per  cent,  in- 
terest. Breese,  J.,  said :  "Here  are 
two  rates  of  interest  provided  for; 
one  conventional,  the  other  statu- 
tory. The  ten  per  cent,  rate  i.s  ex- 
pressly stipulated  by  the  parties 
and  must  prevail  over  the  statute 
rate.  This  contract  must  be  con- 
strued like  all  other  contracts,  and 


964 


SUTIIEKLAND    ON    DAMAUKS, 


309 


others  reason  that  the  stipuhited  rate  shoiikl  be  adopted  as  the 
just  lueasurc  of  damages  for  nonpayment  at  maturity.     This 


the  intention  of  the  parties  must 
prevail.  Now  what  did  the  parties 
intend  when  making  a  contract  to 
pay  ten  per  cent.?  Can  any  one 
doubt  it  was  the  intention  as  well 
of  the  maker  as  of  the  payer  of 
this  note,  tliat  ten  per  cent,  should 
be  paid  until  the  note  was  fully  dis- 
chai'ged.  Such  is  the  common- 
sense  understanding  of  the  contract, 
and  the  statutory  interest  does  not 
control  at  all.  Such  contracts  are 
made  every  day.  It  is  the  rate  of 
interest  fixed  by  the  parties  them- 
selves, and  to  attach  to  the  debt 
until  it  should  l)e  fully  paid,  and  so 
long  as  it  remains  a  note,  conven- 
tional, not  legal,  interest  was  the 
contract,  and  such  contracts  are 
sanctioned  by  law." 

The  conclusion  that  the  contract 
rate  shall  govern  after  maturity  is 
reached  by  substantially  the  same 
reasoning  in  Wisconsin,  Illinois,  and 
Iowa.  The  construction  of  the  con- 
tract is  different  from  that  put  upon 
the  notes  in  Brewster  v.  Wakefield, 
and  on  the  bonds  in  Beckwith  v. 
Trustees.  These  cases  agree  that 
such  contracts  for  interests  do  not 
extend  beyond  the  day  fixed  for  the 
payment  of  the  principal.  In  the 
former  ( Brewster  v.  Wakefield ) , 
for  that  reason  it  was  lield  that  the 
conventional  interest  ceased  at  ma- 
turity ;  but  the  Connecticut  case, 
while  it  concedes  that  the  contract 
operates  only  to  the  time  when  the 
principal  is  due,  holds  nevertheless 
that  the  conventional  rate  of  inter- 
est should  be  adopted  as  the  just 
measure  of  damages  after  maturity, 
having  been  the  conventional  rate 
immediately  before,  and  because  if 
the  debtor  is  unwilling  to  pay  dam- 


ages at  tliat  rate  he  can  avoid  them 
by  paying  the  debt. 

In  Montgomery  v.  Boucher,  14  Up. 
Can.  C.  P.  45,  tlie  defendant  having 
made  his  promissory  note  payable 
two  montiis  after  date,  with  interest 
at  the  rate  of  twenty  per  cent,  per 
annum,  and  having  made  default  in 
payment  thereof  at  maturity,  in  an 
action  by  the  holder  thereon  the 
question  was  submitted  to  the  jury 
as  to  the  amount  they  would  allow 
after  the  note  became  due,  not  ex- 
ceeding twenty  per  cent.  The  jury 
allowed  only  six  per  cent,  after  the 
note  matured.  Upon  motion  to  in- 
crease the  verdict  bj'  the  difi"erencc 
between  six  and  twenty  per  cent.,  it 
was  held  that  the  rate  of  interest 
agreed  upon  by  the  terms  of  the  note 
is  the  amount  which  should  be  al- 
lowed by  the  jury,  when  allowing 
interest  in  the  nature  of  damages, 
from  the  maturity  of  the  note  to  the 
entry  of  the  judgment. 

In  Rowland  v.  Jennings,  11  Up. 
Can.  C.  P.  272,  on  the  authority  of 
Keene  v.  Keene,  3  C.  B.  (N.  S.)  144, 
the  court  refused  to  reduce  the  ver- 
dict of  a  jury  which  had  allowed  in- 
terest for  the  whole  period  from  the 
date  at  the  rate  of  twenty  per  cent, 
per  annum,  on  a  promissory  note 
payable  one  month  after  date,  with 
interest  at  tliat  rate.  The  defendant 
contended  that  from  the  time  tht 
note  became  due  only  six  per  cent, 
should  liave  been  allowed;  and  the 
judge,  at  nisi  prius,  gave  him  leave 
to  move  the  full  court  to  reduce  the 
verdict,  which  they  refused  to  do. 
"On  the  whole,"  say  the  court,  "we 
think  the  weight  of  authority  is  in 
favor  of  the  interest  agreed  upon 
by  the  parties  being  the  proper 
amount   to  be  allowed  by  the  jury 


§309] 


INTEREST. 


965 


rule  has  been  applied  where  bonds  had  coupons  attached  for  the 
annual  interest  up  to  maturity,  but  no  couj^ons  therefor  after 


as  interest,  when  allowinf^  intcri'st 
in  the  nature  of  damages,  from  tlie 
time  the  note  matures  to  the  time 
the  judgment  is  to  be  entered.  It 
may  also  be  argued  this  is  tlie 
proper  mode  of  estimating  the  in- 
terest or  damages  to  be  allowed,  as 
being  that  whicli  was  in  the  con- 
templation of  tlic  parties  wlion  they 
entered  into  the  contract,  according 
to  the  doctrine  laid  down,  in  Hadley 
V.  Baxendale,  9  Ex.  341." 

It  may  be  doubted  whether  these 
cases  are  to  be  relied  upon  as  the 
law  of  Canada  at  present.  It  is 
held  in  St.  John  v.  Ryl<ert,  10  Can. 
Sup.  Ct.  278,  following  some  Eng- 
lish cases  stated  ante,  n.  §  309,  that 
a  promise  to  pay  interest  until  the 
principal  is  paid  means  until  the 
time  fixed  for  the  payment  of 
the  principal. 

In  Keene  v.  Keene,  3  C.  B.  (N. 
S.)  144,  the  suit  was  against  the 
drawer  on  a  bill  of  exchange  pay- 
able with  interest  at  ten  per  cent, 
per  annum.  The  master  computed 
interest  at  that  rate  after  maturity 
to  judgment.  A  motion  was  made 
on  behalf  of  the  defendant  to  refer 
to  the  master  for  reconsideration ; 
and  it  was  stated  in  support  of  the 
motion  tliat  the  acceptor,  whose  lia- 
bility measures  that  of  the  drawer, 
is  liable  only  to  interest  at  five  per 
cent,  after  due.  Counsel  was  in- 
terrupted by  Willes,  J.,  who  said: 
"That  clearly  is  not  so;  until  ma- 
turity of  the  bill  the  interest  is  a 
debt;  after  its  maturity  the  interest 
is  given  as  damages,  at  +he  discre- 
tion of  tlie  jury.  Col.  Fremont  had 
to  pay  twenty-five  per  cent,  (the 
California  rate  of  interest)  upon  tlie 
bills  which  he  drew  there  on  Jlr. 
Buchanan,  the  secretary  of  state,  at 


Washington,  and  wiiieii  wore  pro- 
tested for  non-acceptance.  Giljbs  v. 
Fremont,  9  Ex.  25.  The  jury  saw 
tit  to  adopt,  as  tlie  measure  of  dam- 
ages, the  rate  of  interest  which  tlie 
parties  themselves  have  fixed,  and 
tiie  nuister  is  sul)stituted  for  the 
jury."  On  the  decision  of  tlie  case, 
Cockburn,  C.  J.,  said:  "The  master 
has,  as  he  well  might,  given  in  the 
shape  of  damages  the  rate  of  inter- 
est the  parties  themselves  have  con- 
tracted for.  1  think  he  has  done 
quite  right."  Crowther,  J.,  said: 
"The  master  would,  I  think,  have 
acted  very  unreasonably  if  he  had 
not  assessed  the  damages  l)y  the  rate 
which  the  parties  had  stipulated  as 
the  value  of  the  money."  Pujol  v. 
McKinlay,  42  Cal.  559. 

By  statute  in  Nevada  the  rate  of 
interest  or  damages  for  detention  is 
the  same  after  breach  as  that  fixed 
by  the  contract  before  breach.  So 
that  though  the  statute  gives  dam- 
ages at  the  rate  of  ten  per  cent,  per 
annum  for  withholding  money  gen- 
erally, it  allows  a  higher  latc  cor- 
res])onding  to  tlie  contract  riifc  when 
money  is  withheld  which  linrc.  Iiv 
contract,  a  higher  rate  hefure  ma 
turity.  McLane  v.  Abraiiis,  2  Nev. 
1!)!). 

Nutting  V.  .MeCutcheon,  5  Minn. 
382,  was  a  suit  on  a  note  for  $1,1)00, 
and  interest  at  two  and  a  half  jier 
cent,  per  month,  secured  by  nmrt- 
gage.  W  lien  the  note  became  due 
the  maker  obtained  the  privilege  of 
retaining  the  money  longer,  upon 
ctmdition  that  he  would  pay  interest 
thereon  (juarterly  at  the  current 
rates.  No  contract  for  forbearance 
for  any  specific  time  was  entered 
into,  nor  did  the  maker,  at  the  be- 
ginning   of    the    several    extension* 


966 


SUTHKRLAND    ON    DAMAGES. 


[§  309 


iiiaturity.^^  A  mere  change  in  the  form  of  a  security  does  not 
work  a  reduction  of  the  interest  from  the  agreed  to  the  legal 
rate.^'  If  an  instrument  which  is  barred  bj  the  statute  of  limi- 
tations is  revived  by  a  new  promise  the  conventional  rate  of 
interest  therein  specilied  may  be  collected,  notwithstanding  it  is 
higher  than  that  allowed  by  law  when  such  promise  is  made.^' 
A  stipulation  as  to  semi-annual  rests  has  no  effect  after  the 
maturity  of  the  obligation  in  the  absence  of  an  express  agree- 
ment to  that  end.^^ 

A  statute  requiring  that  an  express  contract  be  made  for  in- 


that  were  granted,  specially  agree 
to  pay  any  particular  rate  of  in- 
terest and  no  writings  were  executed 
in  relation  to  the  same;  but  at  the 
end  of  each  quarter  the  parties 
would  meet  and  agree  upon  the 
value  of  money  for  the  past  quarter, 
and  the  maker  would  pay  and  the 
payee  would  receive  such  amount  in 
satisfaction  of  the  interest  accrued, 
and  indorse  the  same  upon  the  note 
as  payment  up  to  that  date,  with 
the  consent  of  the  maker.  It  was 
held  that  the  absence  of  a  definite 
contract  for  forbearance  on  the  one 
side,  and  payment  on  the  other,  at 
the  beginning  of  each  quarter,  did 
not  affect  the  validity  of  the  pay- 
ments, as  the  parties  obviated  any 
such  difficulty  by  stipulating  the 
precise  terms  at  the  end  of  the  time, 
and  immediately  executing  them  as 
settled.  When  a  contract  lacking 
the  essential  feature  of  mutuality 
at  its  inception  is  subsequently,  l)y 
the  act  of  the  parties,  corrected  in 
this  particular,  and  executed,  the 
question  of  mutuality  between  the 
parties  is  put  to  rest,  although  the 
statute  requires  that  the  contract 
for  the  payment  of  such  interest 
shall  be  in  writing;  yet  where  it  is 
made  without  writing,  and  executed 
by  the  parties,  money  paid  there- 
under   cannot    be    recovered    back. 


The  rule  that  wliere  contracts  are 
made  in  violation  of  statutory  pro- 
visions, or  in  contravention  of  pub- 
lic policy,  they  are  void,  and  money 
paid  thereunder  may  be  recovered 
back,  is  confined  in  its  application 
to  such  contracts  as  involve,  by 
their  subject-matter,  some  substan- 
tial violation  of  the  spirit  of  the 
law  or  policy,  and  not  such  as  stipu- 
late some  matter  recognized  and  per- 
mitted by  law  or  policy,  but  in  a 
manner  other  than  the  one  pre- 
scribed. 

A  stipulation  for  interest  annual- 
ly extends  only  to  the  maturity  of 
the  note;  after  that  it  is  to  be  com- 
puted at  the  rate  stipulated  without 
annual  rests.  Ingram  v.  Scatter- 
good,  15  Ohio  C.  C.    (N.  S.)   93. 

In  West  Virginia  the  stipulated, 
if  less  than  the  legal,  rate  controls 
after  judgment.  Peirpoint  v.  Peir- 
point,  71  W.  Va.  431,  43  L.R.A. 
(N.S.)    783. 

96  People  V.  Getzendaner,  137  111. 
234;  Pruyn  v.  Milwaukee,  18  Wis. 
367;  Kendall  v.  Porter,  120  Cal. 
106. 

97  Union  Mut.  L.  Ins.  Co.  v.  Slee, 
110  111.  35. 

98  Vines  v.  Tift,  79  Ga.  301. 

99  Rcw  V.  Independent  School 
Dist.,  125  Iowa  28,  106  Am.  St. 
282. 


§    310]  INTEREST.  007 

terest  in  excess  of  seven  per  cent  does  not  govern  the  i-ate  re- 
coverable on  an  account  stated  where  interest  has  been  regularly 
charged  at  a  higher.^ 

The  rate  of  interest  stipulated  for  in  a  note  does  not  bind  one 
who  assumes  its  payment;  his  liability  is  for  the  legal  rate  of 
interest.* 

Section  2. 

AGREEMENTS  FOR  INTEREST  "l'NTIL  PAID." 

Agreements  for  interest  at  higher  than  legal  rates,  both  bef<  re 
and  after  maturity,  will  be  discussed  in  the  next  section.  Two 
classes  of  contracts  will  receive  present  attention :  first,  those 
which  provide  expressly  for  interest  from  date  at  a  uniform  rate 
until  the  debt  is  paid ;  and  second,  those  which  provide  for  in- 
terest from  date,  in  case  the  debt,  not  otherwise  bearing  interest, 
shall  not  be  punctually  paid,  or  for  interest  to  commence  at 
maturity,  or  thenceforth  to  bear  an  increased  rate  in  case  of 
default. 

§  310.  Agreements  for  interest  from  date  until  debt  paid. 
Agreements  which  belong  to  the  first  class  have,  of  course,  no 
other  effect  than  to  give  interest  before  maturity,  if  the  rate 
stipulated  is  the  legal  rate,  and  this  will  continue  until  the  debt 
is  paid  or  collected.^  Where  the  conventional  rate  is  higher 
than  the  ordinary  legal  rate,  but  does  not  exceed  that  which  the 
parties  are  authorized  by  law  to  stipulate  for,  the  contract  is 
binding  according  to  its  terms;  that  is,  until  the  debt  is  paid  or 
the  contract  merged  in  a  judgment  or  decree,*  except  in  ]\Iin- 

1  Atkinson  v.  Golden  Gate  T.  Co.,  4  Augusta  Nat.  Bank  v.  TIcwins, 
21  Cal.  App.  168.  90  Me.  255;   Freehold  L.  Co.  v.  .\Ic- 

2  Continental  State  Bank  v.  Tra-  Lean,  8  Manitoba  116;  Manitoba 
bue  (Tex.  Civ.  App.),  150  S.  W.  &  N.  L.  Co.  v.  Barker,  id.  296; 
209.  Fisher    v.    Bidwell,    27    Conn.    :}63; 

3  Interest  does  not  cease  on  the  Palmer  v.  I^^ffler,  18  Iowa  125;  Pu- 
death  of  a  mortgagor  Ixtcause  no  de-  jol  v.  McK inlay.  42  ("al.  559;  Tay- 
mand  was  made,  there  being  no  ad-  lor  v.  Meek,  4  Blackf.  388;  Mead 
ministrator  or  curator  on  wliom  it  v.  Wheeler,  13  N.  H.  351  ;  Dudley 
could  be  made.  Tatum  v.  Gibbs,  19  v.  Keynolds,  1  Kan.  285,  affirmed  in 
Ky.  L.  Rep.  665.  Young    v.    Thomp.son,    2    Kan.    8.'}; 


968  SUTHEKLAND    ON    DAMAGES.  [§    310 

nesota.  In  Iowa  the  contract  rate  is  computed  on  the  judgment 
in  furtherance  of  the  spirit  and  intent  of  the  contract,^  but  the 
interest  included  in  the  judgment  bears  interest  only  at  the 
legal  rate.^  In  Minnesota  the  statute  authorizing  parties  to 
contract  for  any  rate  of  interest  is  construed  strictly ;  the  rate 
stipulated  for  does  not  extend  beyond  the  date  fixed  for  payment. 
It  is  held  there  that  interest  as  damages  cannot  be  increased  by 
contract  above  the  ordinary  legal  rate ;  such  contracts  are  treated 
as  providing  penalties  to  secure  punctuality  of  payment  and, 
consequently,  as  having  no  legal  effect.' 

The  courts  which  hold  that  a  general  promise  of  interest  be- 
fore maturity  at  a  given  rate  will  operate  afterwards  by  sup- 
posed intention  of  the  parties  will  and  do  enforce  a  continuance 
of  the  same  rate  when  that  intention  appears  expressly  or  infer- 
entially.*  And  other  courts  which  enforce  the  same  rate  after 
as  before  maturity,  not  on  tlie  ground  mainly  of  intention,  but 
because  the  rate  adopted  by  the  parties  for  one  period  is  pre- 
sumed to  be  fair  and  just  for  another  immediately  succeeding, 
will  continue  that  rate  when  the  parties  have  given  a  like  assur- 
ance of  its  fairness  for  the  whole  period  that  they  contemplated 
the  possibility  of  the  money  being  retained.^  Wherever  the 
privilege  given  to  parties  to  stipulate  special  rates  of  interest 
above  the  general  rate  is  held  to  apply  to  the  time  the  debtor  re- 
tains the  money  after  it  is  due  it  would  seem  to  be  matter  of 
course  to  enforce  such  agreements  if  the  agreed  rate  is  the  same 
before  and  after  the  specified  day  of  payment. ■'° 

New  Orleans  v.   Warner,   175  U.   S.  han,  42  Conn.  524,  537,  19  Am.  Rep. 

120,  147,  44  L.  ed.  96,  109.  5G4. 

5  Wilson  V.  King,  Morris,  106.  9  Beckwith    v.    Trustees   of    Hart- 

6Burkhart    v.    Sappington,    1    G.  ford,  etc.   R.  Co.,  29   Conn.  268,  76 

Greene  66.  Am.  Dec.  599. 

7  Kent  V.  Bown,  .3  Minn.  347 ;  Tal-  An   obligation   stipulating  for  in- 

cott  V.  Marston,  id.  339;   Mason  v.  terest  from  its  date  until  a  specified 

Callender,   2   id.    350,    72   Am.    Dec.  day  draws  interest  at  the  legal  rate 

102;  Daniels  v.  Ward,  4  Minn.  168;  after  that  day.     Ehrliardt  v.  Varn, 

Brown   v.    Nagel,   21    id.   415;    ITol-  51  S.  C.  550. 

brook  V.  Sims,  39  id.  122.  10  It  is  obvious  that  the  final  de- 

8§  309;  Capen  v.  Crowell,  66  Me.  cisions  in  Brewster  v.  Wakefield,  22 

282;    Paine  v.   Caswell,   68   Me.    80,  How.  118   (see  New  Orleans  v.  War- 

28  Am.  Rep.  21;   Hubbard  v.  Calla-  ner,     175    U.    S.    120,    147,    44    L. 


§    311]  INTEREST.  !)(;0 

§  311.  Agreements  for  a  different  rate  after  debt  due.  Tlie 
second  (.'lass  of  cases  comprises  those;  in  which  interest  hv  agree- 
ment is  made  retrospectively  to  attach  for  the  period  of  credit, 
or  prospectively  at  a  severer  rate  in  conseiinencc  of  the  prin- 
cipal not  beino-  paid  when  dne.  An  ajurecnnent  in  advance  that 
if  the  principal  he  paid  at  niahirity  the  debt  may  be  discharn^ed 
without  interest,  but  otherwise  to  bear  interest  from  date  at  a 
legal  rate,  is  an  undertaking  conditionally  to  do  something 
which  the  parties  had  a  right  to  stipulate  for  at  first  absolutely. 
Wor  is  there  any  intrinsic  difference  between  such  an  agreement 
and  one  for  payment  of  the  princi])al  at  a  certain  day  with  in- 
terest, with  a  proviso  that  if  such  principal  be  punctually  paid  no 
interest  shall  be  charged.  There  can  be  no  other  legal  objection 
to  making  money  as  interest  payable  on  a  contingency,  or  upon 
the  happening  of  a  default,  than  to  make  the  principal  itself  de- 
pend on  an  uncertain  event.  The  question  in  both  cases  is  wheth- 
er the  payment  required  on  one  alternative — the  other  dispens- 
ing with  it — is  a  ])enalty.  The  fact  of  there  l)eing  an  alternative 
or  contingency  in  the  contract  does  not  decide  the  cpiestion.  A 
party  may  have  two  prices  for  goods,  one  for  cash,  and  another 
and  higher  price  when  time  is  given  for  payment.  A  purchaser 
who  is  advised  of  these  terms  and  chooses  to  buy  on  time  would 
not  be  heard  to  object  that  the  time  price,  or  its  excess  over  the 
cash  price,  was  a  penalty.  He  is  as  firmly  boimd  for  the  price 
at  which  he  purchased  as  though  no  opportunity  to  purchase  on 
other  terms  had  been  offered.  Either  price  being  legal  when  the 
purchaser  made  his  contract,  it  is  binding;  and  an  alternative 
price,  determinable  by  default,  may  become  absolute  and  collect- 
ible.^^   There  is  not  the  same  latitude  allowed  concerning  agree- 

ed.    109),    and    Cook    v.    Fowler,    7  Florence   v.   Jennings,   2   C.   ^^.    (X. 

H.  of  L.  Cas.  27,  turned  on  tlic  ab-  S.)  454,  tlie  promise  of  a  guarantor 

scnce   of   an   express  agreement   fix-  to  pay  a  specified  interest  after  ma- 

ing  or  intending  to  fix  the  rate  after  turity  was  enforced.     Popple  v.  Syl- 

maturity.     It  was  held  in  l)oth  that  vester,  22  Ch.  Div.  9S.     See  §  309n. 
the    agreed    rate    before    is    not,    in  11  "Usury    can   only    attach    to    a 

every  instance   at   least,  the  agreed  loan    of   money   or    the    forbearance 

rate  after  maturity,  and  the  intima-  of  a  debt.     It  is  well  settled  that  on 

tions    were   that   an    express   agree-  a   contract    to    secure   the    price    or 

ment  to  continue  the  rate  after  ma-  value  of  work  and  labor  done  or  to 

turity  would  be  eflfectual.     And  in  be  done,  or  of  property  sold,  the  con- 


970  SUTHERLAND    ON    DAMAGES.  [§    311 

merits  for  iuterest  as  for  prices  of  property,  but  there  is  entire 
freedom  to  contract  for  interest  not  above  legal  rates.  A  party 
who  is  a  delator  or  who  makes  a  loan  and  to  whom  forbearance 
for  one  period  is  offered  without  interest,  and  another  and  longer 
period  on  terms  of  paying  interest,  may  choose  either  offer  with- 
out advantage  by  way  of  mitigation  of  his  agreement  for  having 
rejected  the  other.  Nor  is  a  contract  any  less  binding  in  respect 
to  either  alternative,  which  may  become  absolute,  when  one  of 
the  parties  has  a  continuing  option  until  the  time  of  performance 
and  may  then  make  his  election  by  performance.^^ 

It  is  true,  one  of  the  test  rules  for  distinguishing  a  penalty 
from  liquidated  damages  is  that  if  a  larger  sum  is  agreed  to  be 
paid  for  default  in  paying  a  smaller  the  larger  is  a  penalty.  A 
note  made  payable  for  a  sum  certain  on  a  specified  day,  without 
interest  if  punctually  paid,  otherwise,  with  interest  from  date, 
comes  wdthin  the  letter  of  the  rule.  If  the  letter  controlled,  the 
stipulation  for  interest  would  be  held  to  be  a  penalty.  The  rule, 
however,  does  not  apply  to  such  a  case."  It  is  designed  to  pre- 
vent agreements  to  pay  a  large  sum  in  consequence  of  default  in 
paying  a  small  one,  which  is  the  actual  debt,  because  interest  is 
the  established  measure  of  damages  for  such  default.  It  does 
not  apply  to  invalidate  any  legal  rate  promised  on  the  event  of  a 
default. 

No  damages  for  the  mere  non-payment  of  money  can  ever  be 
so  liquidated  between  the  parties  as  to  evade  the  provisions  of 
the  law  which  fixes  the  rate  of  interest.^*  In  all  such  cases  the 
law,  having  fixed  the  rate  by  positive  rules,  has  bounded  the 

tracting  parties  may  agree  upon  one  or     property     sold."       Graeme     v. 

price  if  cash  be  paid,  and  upon  as  Adams,  23  Gratt.  234,  14  Am.  Rep. 

large  an  addition  to  the  cash  price  130,  quoted  with  approval  in  Evans 

as  may  suit  themselves,  if  credit  be  ^.    j^j^^g^   gg  Va.  50,  54;    Garrity  v. 

given;   and  it  is  wholly  immaterial  Qj.jpp^  4  Baxter  86;  Brown  v.  Gard- 

whether  the  enhanced   price  be  as-  ^^^^  ^  j^^^  ^^^ .   ^^^^  ^    ^^^^^  94 

certained  by  the  simple  addition  of  ^^^^    ^^    ,,7   L.R.A.   565.     But  see 

a  lumping  sum  to  the  cash  price  or  ^   windmill  Co.,  96  Tenn.  361. 

by  a  percentage  thereon.    In  neither 

case  is  the  transaction  usurious.    It  S  "     • 

is  neither  the  loan  nor  the  forbear-  "  Finger  v.  McCaughey,  114  Cal. 

ance  of  a  debt,  but  simply  the  con-  64. 

tract  price  of  work  and  labor  done  14  Sedgw.  on  Dam.  216. 


311] 


INTEREST. 


971 


measure  of  damages. ^'^  This  is  the  rule,  the  other  the  corollary ; 
because  interest  is  the  measure  of  damages  for  breach  of  con- 
tract to  pay  money  the  law  will  treat  as  a  penalty  any  larger  sum 
which  a  debtor  may  agree  to  pay  for  such  a  default.  Hut  within 
the  bounds  of  the  legal  rate  of  interest  parties  may  li(iiii(hite 
damages  for  not  paying  money  when  it  is  due.^® 


iSOrr  V.  Churchill,  1  H.  Black. 
232. 

16  Wrenn  v.  University  L.  Co.,  G5 
Ore.  432;  Linton  v.  National  L.  Ins. 
Co.,  44  C.  C.  A.  54,  104  Fed.  584; 
Thompson  v.  Corner,  104  Cal.  168, 
43  Am.  St.  81;  Sheldon  v.  Pruessner, 
52  Kan.  579,  22  L.R.A.  709;  Have- 
meyer  v.  Paul,  45  Neb.  373,  388, 
overruling  Richardson  v.  Campbell, 
34  Neb.  181;  Connecticut  Mut.  L. 
Ins.  Co.  V.  Westerhoff,  58  Neb.  379, 
76  Am.  St.  101 ;  Hackenberry  v. 
Shaw,  11  Ind.  392;  Brown  v.  Mauls- 
by,  17  Ind.  10;  Gully  v.  Remy,  1 
Blackf.  69;  Wakefield  v.  Beckley,  3 
McCord  480;  Daggett  v.  Pratt,  15 
Mass.  177.  See  Richards  v.  Mar- 
sham,  2  G.  Greene  217. 

In  Alexander  v.  Troutman,  1  Ga. 
469,  judgment  had  been  entered 
without  including  the  back  interest, 
and  this  judgment  satisfied  by  exe- 
cution; afterwards  the  judgment 
was  amended,  under  the  order  of 
the  court,  so  as  to  include  the  in- 
terest from  date.  Nesbitt,  J.:  "The 
several  assignments  of  error  in  this 
cause  resolve  themselves  into  one 
question,  and  that  is,  is  the  agree- 
ment upon  the  face  of  the  papers  to 
pay  interest  from  date,  if  the  princi- 
pal sum  is  not  punctually  paid  at 
its  maturity,  in  the  nature  of  a  pen- 
alty? The  court  below  decided  it 
to  be  an  undertaking  to  pay  the 
back  interest  as  damages  for  a  fail- 
ure to  pay  the  principal  sum  at  the 
maturity  of  the  note.  ...  If 
this  back  interest  is  stipulated  dam- 
ages, then  the  plaintiff  below  is  en- 


titled to  recover  it;  if  a  penalty,  lie 
is  entitled  under  the  contract  to  re- 
cover whatever,  in  the  proper  form 
of  action,  he  could  prove  to  be  the 
qnantum,  of  his  injury.  The  par- 
ties do  not  call  it  either  the  one  or 
the  other;  if  they  did  the  name 
they  gave  to  it  would  not  change  its 
nature.  That  is  settled  by  the  au- 
thorities. Story's  Eq.,  sec.  1318. 
The  amount  in  this  case  is  liqui- 
dated, whether  it  be  penalty  or  dam- 
ages; for  the  agreement  is  in  case 
of  non-payment  punctually,  then  to 
pay  'interest  from  date;'  that  is, 
the  interest  which  the  law  allows, 
to  be  computed  from  the  date  of  the 
note.  By  referring  to  the  note,  and 
the  law  of  the  state,  the  amount 
will  be  ascertained,  id  certum  est 
quod  certum  reddi  potest.  One  thing 
is  very  clear;  that  is,  that  neither 
the  courts  of  Great  Britain  nor  of 
our  Union  have  established  any  rule 
by  which  it  can  always  with  cer- 
tainty be  determined  wliat  is  a  pen- 
alty and  what  liquidated  damages. 
^^'e  shall,  of  course,  undertake  to 
establish  none.  It  is  settled  by  the 
later  cases  that  in  order  to  ascer- 
tain whether  the  sum  specified  in 
the  agreement  is  to  be  considered  a 
penalty  of  liquidated  damages,  the 
court  must  look  at  the  whole  of  the 
agreement;  and  imless  it  clearly  ap- 
pear thereby  to  have  been  intended 
by  the  parties  as  licjuidatcd  dam- 
ages, it  will  be  considered  as  a  pen- 
alty. Tidd's  Pr.  877;  6  Barn.  & 
Cress  216;  11  Mass.  81.  In  com- 
menting on  this  subject  Mr.  Justice 


972 


SUTHEKLAND    ON    DAMAGES. 


[§   312 


§  312.  Same  subject.  A  rate  of  interest  fixed  bj  statute  is  en- 
tirely arbitrary ;  but  if  it  fixes  an  absolute  limit  wliicli  cannot  be 


Story  remarks:  'But  we  are  care- 
fully to  distinguish  between  cases  of 
penalties,  strictly  so  called,  and 
cases  of  liquidated  damages.  The 
latter  properly  occur  when  the 
parties  have  agreed  that  in  case 
one  party  shall  do  a  stipulated  act, 
or  omit  to  do  it,  tlie  otlier  party 
shall  receive  a  certain  sum  as  the 
just,  appropriate  and  conventional 
amount  of  the  damages  sustained  by 
such  act  of  omission.  In  cases  of 
this  sort,  courts  of  equity  will  not 
interfere  to  grant  relief;  but  deem 
the  parties  entitled  to  their  own 
measure  of  damages;  provided  al- 
ways, that  the  damages  do  not  as- 
sume the  character  of  gross  extrava- 
gance, or  of  wanton  or  unreasonable 
disproportion  to  the  nature  or  ex- 
tent of  the  injury.'  Story's  Eq. 
Jur.,  sec.  1318;  Eden  on  Injunc- 
tions, 41. 

"Upon  a  careful  review  of  the 
authorities,  we  are  prepared  to  say 
that  this  extract  affords  the  best 
general  rule  upon  a  question  of  no 
little  complexity.  We  do  not  see 
why  its  application  may  not,  in 
most  cases,  determine  what  is  a  pen- 
alty, and  what  damages.  Its  appli- 
cation relieves  us  from  doubt  as  to 
what  is  the  law  of  the  case  before 
us.  It  is  a  safe  general  rule  not  to 
interfere  with  the  contract  which 
parties  have  thought  proper  to 
make;  it  is  the  business  of  courts 
of  justice  not  to  make,  but  to 
enforce,  contracts.  If  the  mean- 
ing of  the  parties  is  reasonably 
plain,  the  court  will  not  be  as- 
tute to  find  out  a  different  mean- 
ing. The  parties  in  this  case,  and 
in  all  others  of  like  character,  have 
the  unquestionable  right  to  fix  their 
own  measure  of  damages.     They  are 


presumed  to  know,  better  than  a 
jury  could  determine  for  them,  what 
injury  would  result  from  any  given 
act  or  omission.  And  if  the  parties 
have  made  their  contract,  and  it  is 
not  in  contravention  of  the  law,  let 
it  even  be  conceded  to  be  unreason- 
able, it  is  right  to  compel  them  to 
abide  by  it.  In  Lowe  v.  Peers  (4 
Burr.  2229),  Lord  Mansfield  sus- 
tains these  general  views  in  these 
words :  'When  the  precise  sum  is 
fixed  and  agreed  upon  between  the 
parties,  that  very  sum  is  the  ascer- 
tained damages,  and  the  jury  is  con- 
fined to  it.'  In  that  case  Peers  had 
in  writing  bound  himself  to  marry 
Mrs.  Lowe,  and  in  default  to  pay 
her  one  thousand  pounds.  This  was 
held  to  be  a  case  of  damages.  A 
reason  for  abiding  the  damages 
which  the  parties  have  agreed  upon 
is  found  in  the  difficulty  which  a 
jury  would  find,  in  many  cases,  of 
ascertaining  the  amovmt  of  the.  in- 
jury sustained.  6  Bing.  141.  In 
the  case  we  are  now  determining  we 
know  of  but  one  criterion  which  the 
jury  would  have  by  which  to  fix  the 
damages  which  the  payee  sustained, 
and  that  is  the  very  one  by  which 
the  parties  themselves  ascertained 
them;  to  wit,  the  legal  rate  of  in- 
terest on  the  money.  *  *  *  On 
the  other  hand,  it  may  be  considered 
as  settled,  that  where  a  larger  sum 
is  stipulated  to  be  paid  in  order  to 
secure  the  prompt  payment  of  a 
lesser,  it  is  a  case  of  penalty.  2 
Bos.  &  Pul.  346.  So,  too,  where  a 
specified  sum  is  agreed  upon  to 
cover  different  breaches,  and  would 
be  in  some  cases  too  large,  and  in 
others  too  small,  that  is  a  case  of 
penalty.  6  Barn.  &  Cress.  216.  In 
all  cases  where  the  damages  are  ex- 


312] 


INTEREST. 


973 


transcended  by  any  interest  contract,  while  payment  is  expressly 
postponed,  any  agreement  for  a  greater  rate  after  maturity, 


cessive  they  are  held  to  be  penalty. 
Story's  Eq.,  sec.  1318.  Such  was 
the  case  read  from  Alabama  deter- 
mined by  the  supremo  court  of  tluit 
state.  There  the  back  interest  re- 
served ranged  from  two  and  a  half 
to  ten  per  cent,  per  niontli." 

After  showing  that  the  facts  ful- 
fil the  other  conditions  of  Judge 
Story's  rule  in  respect  to  liquidated 
damages,  the  opinion  continues: 
"The  benefits  of  these  contracts  upon 
time,  contrary  to  the  received  opin- 
ion, according  to  the  legal  view  of 
them  are  reciprocal.  When  A.  sells 
property  or  lends  his  money  to  B. 
and  takes  his  note  at  twelve  months, 
the  possession  of  the  property  or  the 
money  passing  at  the  time  to  B., 
the  legal  inference  is  tliat  tlie  price 
of  the  property  or  money  is  en- 
hanced by  tlie  interest  on  the  cash 
price  of  the  property,  or  the  actual 
sum  loaned  for  twelve  months.  This 
interest  is  added  to  the  note.  Now 
if  there  be  a  stipulation  that  in  case 
of  non-payment  at  maturity  the 
note  shall  bear  interest  from  date, 
and  it  is  not  paid  and  the  back  in- 
terest is  collected,  the  common  opin- 
ion is  that  A.  in  the  above  case 
realizes  sixteen  per  cent,  upon  this 
contract.  .  But  is  this  true?  It  is 
true  that  he  does  in  fact  receive  six- 
teen per  cent.,  but  eight  per  cent,  of 
that  interest  is  off-setted  by  the  use 
of  the  property  or  the  money  in  tiie 
hands  of  B.,  the  use  being  worth 
eight  per  cent,  to  him.  The  conse- 
quence is  that  in  cases  where  the 
damages  thus  stipulated  do  not  ex- 
ceed eight  per  cent,  tlie  payee  real- 
izes only  eight  per  cent,  upon  his 
money  or  the  price  of  his  property. 
Then  the  result  of  such  a  contract 
as    the    one    before    us,    enforced,    is 


that  the  payee  gets  eight  per  cent., 
the  lawful  interest  upon  money. 
Now  is  sucli  an  amount  otherwise 
tlian  just?  We  tliink  not.  And  if 
just  it  is  not  grossly  extravagant  or 
wanton,  or  unnecessarily  dispropor- 
tioned  to  the  injury. 

"We  know  that  in  point  of  fact 
the  giving  of  time  does  often  en- 
hance the  price  of  property  or 
money  far  beyond  eiglit  per  cent.,  as 
stated.  But  how  do  we  judicially 
know  that  to  be  the  case  here?  We 
reason  from  the  record.  The  rea- 
sonableness and  justness  of  the  dam- 
ages may  be  variously  illustrated. 
We  refer  only  to  the  instance  of  ad- 
ministrators whose  notes  are  taken 
at  twelve  montlis,  and  very  often 
witli  the  condition  found  in  tiiis 
note.  It  is  of  serious  importance 
to  the  estate  which  he  represents 
that  tlie  debts  thus  contracted  be 
promptly  paid.  At  the  expiration 
of  twelve  montlis  he  is  liable  not 
only  to  be  called  upon  but  to  be 
sued,  if  the  estate  which  he  repre- 
sents, which  is  very  generally  the 
case,  has  no  resources  to  pay  its 
debts  but  the  proceeds  of  sales;  and 
the  debts  contracted  on  account  of 
such  sales  are  not  promptly  met; 
then  he  is  put  to  great  incon- 
venience, and  tlie  estate  of  his  in- 
testate injured.  He  is  compelled, 
perhaps,  to  borrow  money  at  exorbi- 
tant rates;  to  8ul)niit  to  be  sued  and 
pay  costs,  or  to  sue  upon  the  notes 
ill  his  liands  and  pay  commission 
for  collecting.  In  this  case  eight 
per  cent,  for  twelve  months  cannot 
be  considered  unjust  or  excessive  as 
damages."  Tiiis  opinion  seems  to 
rest  on  tiie  fallacious  assumption 
that  though  agreements  to  pay  on 
tiiiu'  tlic  jiricc  of  jiropcrty  or  a  loan 


974  SUTHERLAND    ON    DAMAGES.  [§    312 

by  reference  to  that  standard,  provides  for  more  than  com- 
pensation. This,  however,  is  the  case  only  in  a  technical  point 
of  view;  for  the  default  in  paying  may  occur  under  such  cir- 
cumstances, that  the  higher  rate  will  be  no  more  than  just  com- 
pensation. Treating  a  sum  agreed  to  be  paid  at  a  future  day  as 
representing  the  actual  debt  due  on  that  day,  and  the  credit  or 
forbearance  to  that  time  as  having  been  in  some  way  fully  com- 
pensated in  the  transaction  in  which  the  debt  originated,  an 
agreement  to  pay  an  additional  sum,  whether  under  the  name 
of  interest  or  not,  in  case  of  default  in  not  paying  that  debt 
when  it  becomes  due,  is  essentially  an  agreement  for  a  penalty; 
but  unless  the  statute  arbitrarily  fixes  a  rate  not  to  be  exceeded, 
it  cannot  be  said  that  any  rate  is  so  perfectly  a  compensation 
that  any  larger  rate  would  be  more  than  that.  If  a  debtor  owing 
a  sum  certain  agrees  to  pay  it  at  a  future  day,  with  interest  at 
a  given  rate,  he  should  be  deemed  to  have  discharged  his  precise 
legal  duty  and  obligation  by  paying  when  due  that  sum,  together 
with  interest  computed  at  that  rate.  An  additional  provision 
in  the  agreement  that  if  he  makes  default  in  paying  such  prin- 
cipal and  interest  when  due  he  shall  pay  a  higher  rate  of  interest 
from  date  is  an  agi'eement  that  by  its  terms,  if  literally  enforced, 
would  make  the  debtor  liable  on  the  day  following  the  maturity 
of  his  debt  for  an  extra  sum  which  would  be  greatly  dispropor- 
tioned  to  the  interest  for  one  day ;  "  still,  could  it  be  treated  as 
penalty  if  it  would  not  be  such  had  the  same  rate  been  adopted 
alisolutely  in  the  contract?  Where  additional  interest,  depend- 
ing on  default,  is  stipulated,  and  this  higher  rate  does  not  exceed 
the  legal  rate,  or  is  a  reasonable  one  not  exceeding  any  limit 
below  which  parties  are  authorized  to  contract  for  any  rate,  it 
should  probably  be  legally  assumed  that  the  consideration  was 
deemed  by  the  parties,  when  contracting,  as  equivalent  to  the 

where  the  interest  is  added  to  the  of  the  note  for  want  of  punctuality 

principal  when  the  promise  is  made,  in  paying  the  debt  when  due,  con- 

the   debtor   really   pays   no   interest  sisting    by    concession    of    principal 

for    that    time    because    he    obtains  and  interest,  is  the  only  interest  in 

as   equivalent   or   more   in   the   pos-  the  transaction. 

session   of   the   property   or   money,  n  Billingsly    v.    Cahoon,    7    Ind. 

and  that  therefore  the  restrospective  ]84;    Wernwag   v.    Mothershead,    3 

interest  made  payable   on   the   face  Blackf.  401. 


§    312]  INTEREST.  975 

higher  rate;  or  that  such  increased  rate  is  no  more  than  a  just 
indemnity  for  the  disappointment  and  injnrv  occasioned  by  the 
default;  that  they  have  made,  and  intended  to  make,  an  alterna- 
tive contract  as  to  interest  to  secure  punctuality  of  payment;  or 
in  case  of  default,  to  give  the  creditor  the  rate  he  was  authorized 
to  claim  and  demanded  for  forbearance.^'  Contracts  of  the 
nature  indicated  are  different  from  those  which  provide  that  in 
default  of  the  payment  of  the  semi-annual  interest  instalment 
the  whole  debt  shall  bear  interest  at  a  higher  rate  than  it  would 
by  its  terms  otherwise  bear.  Such  a  contract  is  in  the  nature  of 
a  penalty  for  non-payment  of  the  instalment  of  interest,  and 
does  not  provide  for  the  payment  of  a  contract  rate  for  the  use 
of  money  borrowed. ^^ 

Where,  looking  at  the  substance  of  the  contract  rather  than 
the  particular  collocation  of  words  by  which  it  is  expressed,  the 
damages  or  pecuniary  consequences  stipulated  to  result  from  de- 
fault do  not  contravene  any  statutory  provision,  nor  transcend 
what  the  parties  might  legitimately  and  reasonably  agree  shall 
be  paid  without  default,  or  during  a  prolonged  period  of  credit, 
there  would  seem  to  be  no  legal  impediment  to  adjudging  that 
the  very  contract  w^hich  they  have  made  shall  be  enforced.  Con- 
tracts for  a  higher  rate  of  interest  after  maturity  than  the  debt 
had  previously  borne,  and  higher  than  the  ordinary  rate  fixed  by 
law,  have  been  upheld  and  enforced  according  to  their  terms. 
Though  there  is  some  conflict  of  decision,  it  is  believed  that,  ac- 
cording to  the  decided  preponderance  of  authority,  such  con- 
tracts are  valid  unless  the  rate  exceeds  that  which  the  statute 
authorizes  to  be  stipulated  for;  and  also  subject,  in  extreme 
cases,  to  having  the  rate  cut  down  because  it  is  so  disprojior- 
tioned  to  the  actual  value  of  money  that  it  should  be  regarded 
as  in  the  nature  of  a  penalty.^"     Contracts  for  very  large  rates 

"Pass  V.   Shinp,   113   N.   C.   284.  head,  3  Blackf.  401-.  Latham  v.  Dar- 

See  Mead  v.  Wheeler,  13  N.  H.  351;  ling,  2  111.  203;  Young  v.  Fluke.  15 

Wilkinson   v.   Daniels,   1   G.  Greene  tip.   Can.   C.   P.    360;    Witherow    v. 

179.  Briggs,  67   111.  96;   Davis  v.   Rider, 

19  Connecticut  Mut.  L.  Ins.  Co.  v.  53  111.  416;  Young  v.  Thompson,  2 
Westerhoff,  58  Neb.  379,  76  Am.  St.  Kan.  83;  Gould  v.  Bishop  nill  Col- 
101.  ony,  35  111.  324;   Wilkinson  v.  Dan- 

20  Bell  V.  Ran  Francisco  S.  I'nion,  ids,  1  G.  Greene  179;  Taylor  v. 
153  Cal.  64;   Wernwag  v.  Mothers-  Meek,    4    Blackf.    388;    Phinney    v. 


97G 


SUTJIERLAND    ON    DAMAGES. 


Lg   'SV2 


of  interest  lias  been  sustained ;  as  three  dollars  per  month  for 
the  detention  of  thirty ;  ^^  five  dolhirs  per  week  for  detention 
of  four  hundred  and  thirty-two  dollars ;  ^^  and  other  instances 
of  rates  from  twenty  to  one  hundred  and  twenty  per  cent  per 


annum 


23 


Section  3, 

agreements  for  more  than  legae  rate  before  maturity. 

§  313.  Effect  of  usury  found.  It  is  not  proposed  to  discuss 
what  constitutes  usury ;  but  the  effect  of  usury  found  on  the 
amount  of  recovery  or  of  agreeing  to  pay  interest  before  ma- 
turity of  the  debt  exceeding  the  limit  fixed  by  statutes.  The 
early  statutes  in  this  country  have  been  generally  moulded  after 
the  statute  of  Anne ;  ^*  first,  forbidding  the  taking  of  interest 
above  a  certain  rate ;  and  second,  declaring  void  agreements  and 
securities  for  greater  rates.  The  taking  of  usury  has  sometimes 
also  been  made  a  criminal  offense.  Under  such  legislation  the 
important  question  is  the  existence  of  usury.  It  is  not  a  favored 
plea ;  though  a  legal  defense  to  which,  when  established,  the 
courts  have  given  effect,  it  has  been  judicially  denounced  as  un- 
conscionable.'^^ Courts  require  parties  who  would  avail  them- 
selves of  it  to  pursue  correct  practice  in  the  first  instance ;  if 
they  err  their  defense  will  not  be  treated  with  indulgence.^^ 


Baldwin,  16  111.  3  08;  Palmer 
V.  Lfffler,  18  Iowa  125;  Reeves  v. 
Stipp,  91  111.  009 ;  Downey  v.  Beach, 
78  111.  53;  Lawrence  v.  Cowles,  13 
111.  577;  Smith  v.  Whitaker,  23  111. 
367;  Blair  v.  Chamblin,  39  111.  521, 
89  Am.  Dec.  322;  Miller  v.  Kemp- 
ner,  32  Ark.  573;  Badgett  v.  Jor- 
dan, id.  154;  Portis  v.  Merrill,  33 
id.  416;  Bailey  v.  McClure,  73  Ind. 
275;  White  v.  litis,  24  Minn.  43; 
McKay  v.  Belknap  Sav.  Bank,  27 
Colo.  50,  54;  Lynde  v.  Thompson, 
2  Allen,  456;  Finger  v.  McCaughey, 
114  Cal.  64;  Rogers  v.  Sample,  33 
Miss.  310,  69  Am.  Dec.  349;  Rum- 


sey  V.  Mathews,  1  Bibb,  242;  Eccles 
V.  Herrick,  15  Colo.  App.  350;  Close 
V.  Riddle,  40  Ore.  592;  Draper  v. 
Horton,  22  R.  I.  592.  But  see  New^ 
ell  V.  Holton,  22  :\Iinn.  19. 

21  Latham  v.   Darling,  2  111.  203. 

22  Wernwag  v.  Mothershead,  su- 
pra. 

23  Taylor  v.  Meek,  4  Blackf.  388, 

24  12  Anne,  St.  2,  ch.  16. 

25  Merrills  v.  Law,  9  Cow.  65 ; 
Marsh  v.  Lasher,  13  N.  J.  Eq.  253. 

26  Beach  v.  Fulton  Bank,  3  Wend. 
573 ;  Lovett  v.  Cowman,  6  Hill,  223 ; 
Woolcott  V.  McFarlan,  id.  227;  Na- 
tional  F.    Ins.    Co.   V.    Sackett,    11 


313] 


INTEREST. 


977 


It  is  deemed  equilable  that  the  creditor  sliouM  receive  tlie 
priucipal  and  legal  interest;  but  it  is  au  imperfect  eiiuity;  the 
creditor  cannot  himself  assert  it  by  an  action  or  suit  based  iiixni 
it;  on  the  contrary,  usury  is  as  fatal  to  his  suits  in  e(|uity  to  en- 
force usurious  demands  as  at  law;  and  if  the  debtor  has  paid 
usury  otherwise  than  voluntarily  ^'^  he  may  recover  it.  It  is  a  pas- 


Paige,  6G0;  C!i)llar(l  v.  Siiiith.  l.S  N. 
J.  Eq.  43;  Renicr  v.  81ui\v,  S  id. 
355;  McCauley  v.  VN'ard,  2  Marvel, 
]83;  Turner  v.  Hamilton,  88  Fed. 
467;  McCready  v.  Phillips,  56  Neb. 
446. 

.  A  statute  requiring  tliat  a  de- 
fendant wlio  pleads  usury  must  ten- 
der the  principal  sura  is  not  appli- 
cable to  a  case  arising  under  and 
governed  by  the  usury  laws  of  a 
foreign  state.  Maynard  v.  Hall,  02 
Wis.  565. 

27  When  voluntarily  paid  usury 
cannot  be  recovered.  Smith  v. 
Coopers,  9  Iowa  376;  Nicholls  v. 
Skeel,  V2  id.  300;  Shelton  v.  Gill, 
11  Ohio  417;  Graham  v.  Cooper,  17 
id.  605;  Moseley  v.  Smith,  21  Tex. 
441;  Manny  v.  Stockton,  34  111. 
306;  Carter  v.  Moses,  39  111.  539; 
Tompkins  v.  Hill,  28  111.  519;  Dykes 
V.  Wyman,  67  Mich.  236;  Kendall 
v.  Davis,  55  Ark.  318;  Matthews  v. 
Ormerd,  140  Cal.  578;  Murphy  v. 
Citizens'  Bank,  82  Ark.  131,  11 
L.R.A.(N.S.)  616.  See  Pearce  v. 
Martin,  130  111.  App.  24;  Chase  v. 
Baker  Co.  v.  National  Trust  & 
Credit  Co.,  215  Fed.  633;  Helmick 
V.  Carter,  171  111.  App.  25. 

Nor  can  the  debtor  charge  the  ex- 
cess of  payments  above  the  legal 
rate  against  the  principal  debt.  Pet- 
tis v.  Ray,  12  R.  I.  344.  See  Bond 
V.  Jones,  8  Sm.  &  M.  368. 

In  New  Hampshire  payments  of 
usurious  interest  are  excepted  from 
the  general  rule  that  payment  of 
an  illegal  claim  witli  full  knowledge 
of  its  illegality  is  irrevocable,  being 
Suth.  Dam.  Vol.  1.— 62. 


regarded  as  niadc  under  dures.s. 
Peterborough  Sav.  Bank  v.  Ilodgdon, 
(VI  N.  II.  300;  Albany  v.  Ablxitt,  61 
id.  157:  Cross  v.  Bell,  34  id.  82; 
Willie  v.  Green,  2  id.  333. 

The  rule  that  usurious  interest 
voluntarily  paid  cannot  be  recovered 
has  no  application  if  tlie  transaction 
has  not  been  closed ;  if  the  note  sued 
on  is  a  renewal  of  a  prior  note  upon 
u'liicli  such  interest  has  been  paid 
the  debtor  may  have  all  such  pay- 
nu'nts  applied  upon  the  principal 
debt.  Harris  v.  Bressler,  119  111. 
467;  Nicrosi  v.  Walker,  139  Ala. 
369. 

Under  see.  5108,  R.  S.  of  l^  S., 
a  national  bank  which  stipulates  for 
usury  upon  a  note  to  become  due 
forfeits  the  entire  interest,  and  can 
recover  only  the  face  of  the  note, 
less  the  interest  cliarged  or  included 
therein.  If  tliat  is  collected  in  ad- 
vance the  person  paying  it  or  liia 
legal  representatives  may,  in  an  ac- 
tion in  the  nature  of  debt,  recover 
twice  the  amount  of  interest  paid. 
This  must  be  done  in  the  numner 
provided  in  the  statute.  National 
Bank  v.  Deering,  91  U.  8.  29,  23  L. 
ed.  196;  Barnet  v.  National  Bank, 
98  id.  555,  25  L.  ed.  212.  The  usuri- 
ous interest  cannot  be  set  off  and 
applied  in  satisfaction  of  the  note. 
Driesbach  v.  National  Bank,  104  I'. 
S.  52,  26  L.  ed.  658. 

In  an  action  upon  a  note  given  to 
such  a  bank  tlie  maker  cannot  set 
ofT  or  ol)tain  credit  for  usurious  in- 
terest  paid   upon  the  renewal  of   it. 


978 


SUTHEKT.AND    OiN    DAMAGES. 


[§  313 


sive  equity  which  the  debtor  must  recognize  and  })erform  only 
Avhen  he  asks  equity.  Accordingly,  when  he  asks  a  favor  in  prac- 
tice, by  invoking  the  equitable  power  of  the  court  by  motion,^* 
and  when  he  appeals  to  a  court  of  equity  for  relief  against  the 
usurious  contract  or  the  effect  of  any  legal  assertion  of  the  debt, 
or  to  procure  its  aid  to  establish  the  fact  of  usury,  as  by  discov- 
ery, he  will  be  obliged  to  submit  to  the  condition  of  paying  the 
principal  and  lawful  interest. ^^    But  where  the  maker  was  un- 


Haseltine  v.  Central  Bank,  183  U. 
S.  132,  46  L.  ed.  118. 

A  national  bank  wliicli  makes  a 
loan  upon  a  note  that  embraces 
usury,  which  note  is  renewed  from 
time  to  time,  forfeits  the  entire  in- 
terest. First  Nat.  Bank  v.  Grimes, 
49  Kan.  219. 

An  agreement  to  pay  usury  for 
any  part  of  the  time  that  a  note 
may  run,  whether  by  its  terms  or 
by  indulgence,  forfeits  all  interest, 
whether  it  accrues  before  or  after 
the  maturity  of  the  note.  Alves  v. 
National  Bank,  89  Ky.  126;  Shafer  v. 
First  Nat.  Bank,  53  Kan.  614;  First 
Nat.  Bank  v.  Stauflfer,  1  Fed.  187; 
Danforth  v.  National  State  Bank, 
48  id.  271,  1  C.  C.  A.  62,17  L.R.A. 
622;  Maynard  v.  Hall,  92  Wis.  56.5 
(construing  the  statute  of  Illinois). 

28  Beach  v.  Fulton  Bank,  3  Wend. 
573;  Remer  v.  Shaw,  8  N.  J.  Eq.  355. 

29BIaisdell  v.  Steinfeld,  15  Ariz. 
155;  Riley  v.  Hopkinson,  82  N.  J. 
Eq.  469;  Payton  v.  McPhaul,  128 
Ga.  510;  Garlick  v.  Mutual  L.  & 
B.  Ass'n,  129  111.  App.  402;  Tenny 
V.  Porter,  61  Ark.  329;  Hiner  v. 
Whitlow,  66  Ark.  121,  74  Am.  St. 
74;  Scott  V.  Williams,  100  Ga.  540, 
62  Am.  St.  340;  Bush  v.  Bank,  111 
Ga.  664;  Mason  v.  Pierce,  142  111. 
331  ;  Crawford  v.  Nimmons,  180  111. 
143;  Faison  v.  Grandy,  128  N.  C. 
438;  Hill  v.  Alliance  B.  Co.,  6  S.  D. 
160,  55  Am.  St.  819;  Parker  v. 
Bethel    H.    Co.,    96    Tenn.    252,    31 


L.R.A.  706;  Roberts  v.  Coffin,  22 
Tex.  Civ.  App.  127;  Dickenson  v. 
Bankers'  L.  &  I.  Co.,  93  Va.  498; 
Smith  V.  McMillan,  46  W.  Va.  577; 
Greer  v.  Hale,  95  Va.  533,  64  Am. 
St.  814;  Wenham  v.  Mallin,  103  111. 
App.  609;  Bang  v.  Windmill  Co., 
96  Tenn.  361 ;  Crim  v.  Post,  41  W. 
Va.  397 ;  Livingston  v.  Tompkins, 
4  Johns.  Ch.  415,  8  Am.  Dec.  598; 
Rogers  v.  Rathbun,  1  Johns.  Ch. 
367 ;  Tupper  v.  Powell,  id.  439 ;  Fan- 
ning V.  Dunham,  5  id.  122,  9  Am. 
Dec.  283;  Fitzroy  v.  Gwillim,  1  1. 
R.  153;  Mason  v.  Gardiner,  4  Bro. 
Ch.  436;  Schermerhorn  v.  Talman, 
14  N.  Y.  93;  Conner  v.  Myers,  7 
Blackf.  337;  Cooper  v.  Tappan,  4 
Wis.  362;  Piatt  v.  Robinson,  10  id. 
128;  Miller  v.  Ford,  1  N.  J.  Eq.  358; 
Legoux  V.  Wante,  3  Har.  &  J.  184; 
Jordan  v.  Trumbo,  6  Gill  &  J.  103; 
McRaven  v.  Forbes,  6  How.  (Miss.) 
569;  Noble  v.  Walker,  32  Ala.  456; 
Ruddell  V.  Ambler,  18  Ark.  369; 
Taylor  v.  Smith,  2  Hawks,  465; 
Pearson  v.  Bailey,  23  Ala.  537;  Mc- 
Geehe  v.  George,  38  Ala.  323;  Wil- 
son v.  Hardesty,  1  Md.  Ch.  66;  Bal- 
linger  v.  Edwards,  4  Ired.  Eq.  449; 
Thomas  v.  Doub,  8  Gill,  1  ;  Boyers 
V.  Boddie,  3  Humph.  666;  Hudnit  v. 
Nash,  16  N.  J.  Eq.  550;  Eslava  v. 
Crampton,  61  Ala.  507 ;  Cook  v.  Pat- 
terson, 103  N.  C.  127;  Eiseman  v. 
GJallagher,  24  Neb.  79;  Carver  v. 
Brady,   104  N.  C.  219. 

But  it   is  otherwise  imder   some 


§    314]  INTEREST,  979 

successful  iu  an  action  to  enjoin  the  collection  of  a  note  because 
it  was  void  for  tli(>  want  of  consideration,  and  the  transferee 
brought  the  note  into  court  and  bv  iiis  cr()ssd)il]  asked  to  have  it 
enforced,  it  was  adjudged  \oid,  it  appearing  that  it  was  usu- 
rious.^" By  entering  his  ap])earance  in  a  cause  and  consenting 
that  judgment  be  entered  against  hiin  a  debtor  waives  the  de- 
fense of  usury.  Such  a  judgment  is  not  within  a  statute  declar- 
ing that  a  usurions  contract  and  any  mortgage,  pledge  or  other 
lien  or  conveyance  executed  to  secure  the  performance  of  the 
same  may  be  annulled  and  canceled."  But  it  is  otiierwise  as 
to  a  judgnnent  confessed  upon  warrant  of  attorney  or  a  judii'- 
ment  note  which  formed  a  part  of  the  contract  upon  whicli  the 
judgment  was  confessed,  and  by  reason  thereof  was  tainted  with 
usury. 

§  314.  Who  may  take  advantage  of  usury.  As  usury  is  a 
defense  personal  to  the  debtor  and  those  standing  in  relations  of 
privity  to  him  it  is  not  an  illegal  element  when  the  usurious  debt 
becomes  a  principal  in  the  undertaking  of  a  third  party,  as  be- 
tween him  and  the  creditor,  upon  a  new  consideration.^^     This 

statutes.     Scott  v.  Austin,  36  Minn.  Industrial  S.  &  L.  Co.  v.  Hare,  21(> 

460;    Exley   v.   Bem'liill,   37   Minn.  Pa.     389;     Thomson    v.     Kocli.    CI 

]82;    Moore  v.   Beaman,   ]12   N.   C.  Wash.   438;    Grubb   v.    Stewart.   47 

558,  564.  Wash.  103;   Chenoweth  v.  National 

30  Bang   V.    Windmill   Co.,    s«pr«.  B.  Ass'n,  59  W.  Va.  653;  Harper  v. 

31  Bell  V.  Fergus,  55  Ark.  530.  Middle  States  L.,  B.  &  C.  Co.,  55  W. 

32  Brown  v.  Toell,  5  Rand.  543 ;  Va.  149  ;  Stuekey  v.  Same,  Gl  W,  Va. 
Fanning  v.  Dunham,  supra;  War-  74,  123  Am.  St.  977,  8  L.R.A.(N.S.) 
dell  V.  Eden,  2  Johns.  Cas.  258;  814;  Bank  v.  Sinclair,  60  N.  H.  100, 
Page  V.  Wallace,  87  111.  84;  Hindle  49  Am.  Rep.  307;  Essley  v.  Sloan, 
V.  O'Brien,  1  Taunt.  413;  Roberts  116  111.  391;  Gathercole  v.  Young. 
V.  Goff,  4  B.  &  Aid.  92.  01    N.   H.   563;    Sullivan   Sav.   Inst. 

33  Sager  v.  Steinbrenner,  99  Ark.  v.  Copeland,  71  Iowa  67;  Jeffries  v. 
626;  Matthews  v.  Ormerd,  140  Cal.  Allen,  29  S.  C.  501;  Cheney  v.  Dun- 
.578;  Miller  v.  Parker,  133  Ga.  187;  lap,  27  Neb.  401,  5  L.R.A.  465;  Log 
Anderson  v.  Oregon  M.  Co.,  8  Idaho  Cabin,  etc.  Ass'n  v.  Gross,  71  Md. 
418;  Bacon  v.  Iowa  S.  &  L.  Ass'n,  456;  Griel  v.  Lehman,  59  Ala.  419; 
121  Iowa  449;  Tidball  v.  Schmeltz,  Lee  v.  Feamster,  21  W.  Va.  108,  45 
77  Kan.  440,  127  Am.  St  424;  Mis-  Am.  Rep.  549;  Palmer  v.  Call,  2 
souri  R.  E.  Syndicate  v.  Sims,  179  McCrary,  522;  Burlington  Mutual 
Mo.  679;  Terminal  Bank  v.  Dubroff,  L.  Ass'n  v.  TIcider,  55  Iowa  424: 
66  N.  Y.  Misc.  100;  Biedler  v.  Mai-  Mason  v.  Searles,  56  Iowa  532; 
colm,   121   App.   Div.    (N.  Y.)    245;  First    Nat.     Bank     v.     Bentley,    27 


980  SUTliEKLAND    ON    DAMAGES.  [§    314 

principle  is  of  general  application;  it  will  prevent  deductions 
for  usury  to  which,  as  between  the  creditor  and  the  debtor,  the 
latter  is  entitled  to  under  various  statutes,  when  such  deductions 
are  asked  for  or  against  other  persons  who  have  novated  or  paid 
the  usurious  debt  at  the  debtor's  request.^^  The  rule  that  the 
right  to  plead  usury  is  a  privilege  personal  to  the  debtor  does 
not  embrace  his  sureties,  guarantors,  heirs,  devisees  and  per- 
sonal representatives ;  these  are  permitted  to  set  up  usury  on  the 
ground  of  privity  or  common  interest.^^  An  attaching  creditor 
of  the  mortgagor  is  a  privy  in  representation  and  may  interpose 
the  defense  of  usury  against  the  claim  by  the  mortgagee  to  the 
attached  property.^^  "It  would  seem  that  an  assignee  under  a 
deed  of  trust  for  the  benefit  of  creditors,  or  an  assignee  in  bank- 
ruptcy would  fall  within  the  exception  and  could  plead  usury 
to  a  debt  which  was  entitled  to  participate  in  the  assets  con- 
veyed to  them  on  the  ground  of  privity  in  estate."  ^"^  Under  a 
statute  declaring  that  usurious  contracts  shall  be  deemed  to  be 
for  an  illegal  consideration  as  to  the  excess  beyond  the  principal 
sum  the  plea  of  usury  to  an  action  on  negotiable  paper  brought 
by  a  bona  fide  holder  for  value,  who  acquired  it  before  maturity, 

Minn.   87;    Pence  v.   Christman,   15  Cooke,  2  Mete.    (Ky.)   275;   Stevens 

Ind.  287;   Stephens  v.  Muir,  8  Ind.  v.  Davis,  3  Mete.   (Mass.)   211. 

352.  35  Denton  v.  Butler,  99  Ga.  264; 

Where  the  debtor  is  insolvent  and  Parker   v.   Bethel   H.   Co.,   96   Tenn. 

there  is  a  fund  in  court  to  be  dis-  252,  31  L.R.A.  706;  Cole  v.  Hills,  44 

tributed  equity  will  allow  one  cred-  N.    H.    227;    Loomis    v.    Eaton,    32 

itor   to   suggest   usury   as   to   a   co-  Conn.     550;     Goodhue     v.     Palmer, 

creditor,  and  will  compel  the  usuri-  ]3  Ind.  568;   Cramer  v.  Lepper,  26 

ous  creditor  to  write  off  his  usury  Ohio  St.  59,  20  Am.  Rep.  756;  Mer- 

anxl    only    give    him    his    principal  chants'    Exch.    Nat.    Bank   v.    Com- 

and  legal  interest.     Brooks  v.  Todd,  mercial   Warehouse,  49   N.  Y.   635; 

79  Ga.  692.  Ford  v.   Washington   Nat.   B.   &   L. 

The  sole  heir   of  a  deceased  bor-  Ass'n,    10    Idaho    30,    109    Am.    St. 

rower  who  has  paid  a  usurious  debt  192;   Osborne  v.   Fridrich,   134   Mo. 

to   release   his   inheritance   may   re-  App.    449.      See    Lemars    B.    &    L. 

cover  the  usury  paid.     Pope  v.  Mar-  Ass'n    v.    McLain,    120    Iowa    527; 

shall,  78  Ga.  635.  Widell  v.   National  Citizens'   Bank, 

34  Tompkins   v.    Monticello    C.    O.  ]04  Minn.  510. 

Co.,  153  Fed.  817;  Lowe  v.  Walker,  36  Coleman  v.   Cole,   158  Mo.  253. 

77  Ark.   103;   Brinkerhoff  v.  Foote,  37  Parker  v.  Bethel  H.  Co.,  supra, 

1  Hoff.  Ch.  261 ;   Thurston  v.  Pren-  citing   Stein   v.   Swenson,   44   Minn, 

tiss,  1  Mich.  193;   Shirley  v.  Spen-  218,  222;  Nance  v.  Gregory,  6  Lea, 

cer,  9   111.  583.     But  see  Totten  v.  343. 


§    315]  INTEREST.  981 

cannot  be  sustained.^*  It  is  otherwise  if  one  l)uys  notes  with 
knowledge  of  the  ])ayment  of  unlawful  interest  thereon,^®  The 
person  who  is  the  substantial  debtor  may  plead  usury."  Tt 
may  be  pleaded  by  the  mortgagor  though  he  has  sold  the  mort- 
gaged premises  if  he  is  liable  for  a  deficiency  judgment;  *^  and 
by  a  purchaser  subject  to  the  mortgage  unless  the  usurious  in- 
terest was  deducted  from  the  purchase  price,*^  and  by  the  owner 
of  mortgaged  property  pledged  by  one  who  had  possessl<>n  of 
it.*^  If  a  corporation  is  denied  the  plea  of  usury  the  disability 
attaches  to  its  junior  mortgagee  as  against  a  senior  mortgage.*^ 
§  315.  When  contracts  not  void  for  usury.  In  the  statutes  of 
several  of  the  states  and  in  some  charters  for  commercial  cor- 
porations there  has  been  a  simple  prohibition  of  interest  above 
a  certain  rate,  but  no  provision  that  agreements  and  securities 
for  such  interest  should  be  void.  Under  such  legislation  it  has 
been  made  a  question  whether  such  agreements  and  securities 
are  to  be  treated  as  wholly  void, — whether  the  resen^ation  of 
interest  above  the  legal  rate  renders  the  whole  contract,  as  an 
entire  thing,  illegal, — so  that  the  principal  as  well  as  interest 
is  to  be  regarded  as  involved  in  an  unlawful  venture,  or  whether 
such  agreements  are  void  only  to  the  extent  of  the  illegal  in- 
terest. On  this  question  there  is  some  conflict  of  decision.  In 
a  case  in  the  national  supreme  court,  where  usury  in  the  trans- 
fer of  a  promissory  note  was  complained  of  by  the  maker,  the 
court  said  that  the  taking  of  interest  by  the  bank,  beyond  the 
sum  authorized  by  its  charter,  would  doubtless  be  a  violation  of 
the  latter,  for  which  a  remedy  might  be  ap])lied  by  the  govern- 
ment ;  but  as  the  act  did  not  declare  that  it  shall  avoid  the  con- 
tract it  was  not  perceived  how  the  defendant  could  avail  himself 
of  this  ground  to  defeat  a  recovery.     The  statute  containing  no 

38  Schlesinger    v.    Gilhooley,     189  41  Male    v.    Wink,    61    Neb.    748; 
N.   Y.   1 ;    Lynchburg  Nat.   Bank   v.  Scull  v.  Idler,  79  N.  J.  Eq.  4CC. 
Scott,  91  Va.  652,  50  Am.  St.  860,  42  Grove  v.  Great  Northern  L.  Co., 
29  L.R.A.  827.  17  N.  D.  352,  138  Am.  St.  707. 

39  Schlesinger  v.  Lehmaier,  191  43  Keim  v.  Vette.  167  Mo.  389; 
N.  Y.  69,  123  Am.  St.  591,  16  L.R.A.  Davis  v.  Tandy,  107  Mo.  App.  437. 
(N.S.)    626.  44  Lcmbeck  v.  .Tarvia  T.  C.  S.  Co., 

•     40  Faison  v.  Grandy,  128  X.  C.  4:i8.       70  N.  J.  K(|.  757. 


982 


SUTHERLAND    ON    DAMAGES. 


r§    315 


express  provision  that  usurious  contracts  should  be  utterly  void, 
the  contract  was  to  be  deemed  valid,  at  least  in  respect  to  per- 
sons who  were  strangers  to  the  usurj.*^  In  a  later  case  that 
court  held  that  a  contract  made  in  violation  of  the  same  charter 
fixing  a  limit  of  interest,  where  the  usury  was  set  up  by  the 
other  party  to  the  usurious  contract,  was  void  in  toto.  The  de- 
cision was  put  upon  the  naked  prohibition  in  the  charter,  ex- 
pressly laying  out  of  view  the  general  statute  on  the  subject  of 
interest.  It  was  so  held  void  by  a  majority  of  the  court  on  gen- 
eral principles.  The  reservation  of  interest  in  the  contract  at  a 
rate  the  taking  of  which  would  be  a  violation  of  the  charter 
vitiated  the  contract  for  both  principal  and  interest  and  ren- 
dered  it  utterly  void.*^     This   decision  was   followed   at  the 


45  Fleckner    v.  '  Bank,    8     Wheat. 
338,  5  L.  ed.  631. 

46  Bank  v.  Owens,  2  Pet.  527.   The 
"language  of  the  charter  was:   "The 

bank  shall  not  be  at  liberty  to  pur- 
chase any  public  debt  whatever;  nor 
shall  it  take  more  than  six  per  cent, 
per  annum  for  or  upon  its  loans  or 
discounts."  It  was  held  that  an 
agreement  "corruptly  and  usurious- 
ly"  to  loan  depreciated  bills,  tak- 
ing therefor  a  note  on  time,  bearing 
illegal  interest,  was  a  violation  of 
the  charter.  Johnson,  J.,  said:  "To 
understand  the  gist  of  the  question, 
it  is  necessary  to  observe  that,  al- 
though the  act  of  incorporation  for- 
bids the  taking  of  a  greater  interest 
than  six  per  cent.,  it  does  not  de- 
clare void  any  contract  reserving  a 
greater  sum  than  is  permitted. 
Most,  if  not  all,  the  acts  passed  in 
England  and  in  the  states  on  the 
same  subject  (1829),  declare  such 
contracts  usurious  and  void.  The 
question,  then,  is  whether  such  con- 
tracts are  void  in  law,  upon  gen- 
eral principles."  In  a  previous  part 
of  the  opinion  he  said :  "Some 
doubts  have  been  thrown  out  wheth- 
er, as  the  charter  speaks  only  of 
talcing,   it   can    apply   to   a   case   in 


which  the  interest  has  only  been  re- 
served, not  received.  But  on  that 
point  the  majority  are  clearly  of 
opinion  that  reserving  must  be  im- 
plied in  the  word  taking,  since  it 
cannot  be  permitted  by  law  to  stipu- 
late for  the  reservation  of  that 
which  it  is  not  permitted  to  receive. 
.  .  .  When  the  restrictive  policy 
of  a  law  alone  is  in  contemplation, 
we  hold  it  to  be  a  universal  rule 
that  it  is  unlawful  to  contract  to 
do  that  which  it  is  unlawful  to  do." 
The  contract  being  held  to  be  with- 
in the  prohibition,  the  opinion  is 
that  such  contracts  are  void  upon 
general  principles.  The  authorities 
cited  are  wholly  English,  and  iin- 
questionably  sound  on  both  sides  of 
the  Atlantic.  They  may  be  dis- 
tinguished, however,  from  the  ease 
decided  in  this  important  particu- 
lar: the  fundamental  purpose  for 
which  the  contracts  in  question,  in 
the  cases  cited,  were  made,  or  to 
which  they  were  ancillary,  was  il- 
legal; malum  in  se  or  malum,  pro- 
hihittim.  In  the  Owens  case  the 
principal  purpose  of  the  transaction 
— the  loan  and  promise  of  interest 
— was  lawful;  making  loans  for  in- 
terest was  one  of  the  main   objects 


§    315]  INTEREST.  y,S.'3 

circuit  by  a  case  decided  by  Taney,  C.  .1.,  upon  a  siinplo  cmisti- 
tutioiial  prohibition  of  interest  above  a  spcciiiod  rate,  wliicli  wiis 
exceeded  in  the  contract  that  was  the  subject  of  the  action." 
The  Maryland  interest  law,  as  modified  by  the  act  of  1845,  pro- 
hibited, in  the  language  of  the  statute  of  Anne,  the  takirii:  of 
more  than  six  per  cent  per  annum,  but  by  that  act  the  letuh-r 
was  entitled,  notwithstanding  the  contract  exceeded  that  limit, 
to  recover  the  principal  and  six  per  cent.  This  hiw  was  in  force 
when  the  constitution  of  1850  took  effect.  That  instrument  con- 
tained a  clause  in  these  words:  "The  rate  of  interest  in  tliis 
state  shall  not  exceed  six  per  cent  per  annum,  and  no  higher 
rate  shall  be  taken  or  demanded;  and  the  legislature  shall  pro- 
vide by  law  all  necessary  forfeitures  and  penalties  against 
usury."  Before  any  legislation  under  the  constitution  this  case 
arose  upon  a  bill  of  exchange  to  which  a  plea  of  usury  was  inter- 
posed. On  demurrer,  Taney,  C.  J.,  following  the  doctrine  of 
the  supreme  court,  held  that  the  prohibition  in  the  constitution 
was  inconsistent  with  and  abrogated  the  provision  of  the  act  of 
1845  giving  the  lender  the  principal  and  six  per  cent  interest. 
And  he  declared  that,  "as  the  constitution  has  forbidden  the  tak- 
ing or  demanding  of  more  than  six  per  cent,  no  contract  made 
in  this  state  can  be  enforced  where  a  higher  rate  of  interest  is 
taken  or  demanded  by  the  contract."  "A  court  of  justice  can- 
not lend  its  aid  to  him  to  recover  it  (the  money  loaned),  because 
the  contract  for  the  loan  is  one  entire  thing,  and  consequently 
is  altogether  invalid  or  void,  and  it  would  be  contrary  to  tlie 
duty  of  a  court  of  justice  to  assist  a  party  in  consummating  an 
act  which  the  law  forbids."  The  absence  of  any  penalty  was 
held  no  argument  in  support  of  the  action."     JJut  the  supreme 

of    the    corporation;    the    illegality  A  constitutional  provision  diH'lar- 

complained  of  was  an  incidental  vio-  inp   contracts   which   provide   for   a 

lation  of  the  charter.     There  is  the  rate  of  interest  in  excess  of  a  named 

difference  between  the  case  decided  sum   and   whidi    requires   the   lepis- 

and  those  cited  to  support  it  of  an  lature  to   provide   penalties  to   pre- 

incident   being   impressed    witli    tlie  vent   and   punish   usury   is   self-exe- 

character  of  the  principal,  and  tlic  cuting  so  far  as  to  render  a  contract 

principal  I)eing  infected  by  the  vice  tliereafter    made    for    a    prohibited 

of  the  incident.  rate  invalid.     Watson   v.   .Aiken,  />.') 

47  Dill  V.  Ellicott,  Taney,  233.  Tex.   53(5;    llcmi.liill   v.   Watson,   (50 

48  Dill  V.  Ellicott,  Taney,  233.  id.  670. 


984 


SirrilKKLAND    ON    DAMAGES. 


[§  ^15 


eom-t  of  Maryland  urrivrd  at  a  different  conclusion.*^  It,  in 
effect,  held  that  the  absolute  prohibition  in  the  constitution  was 
not  inconsistent  with  the  act  of  1845  in  respect  to  allowing  the 
creditor  to  recover  upon  a  usurious  contract  the  principal  and 
legal  interest.  No  penalty,  forfeiture  or  other  punishment  was 
prescribed.  The  question  has  also  been  decided  in  Indiana. 
Usury  there  was  made  an  olfense  punishable  on  indictment  by  a 
fine  of  double  the  amount  of  the  usury.  The  decision  was  based 
on  the  authority  of  the  case  cited  from  the  supreme  court  of  the 
United  States.^" 


49  In  Bandel  v.  Isaac,  13  Md.  202. 

50  Fowler  v.  Throckmorton,  6 
Blackf.  326. 

In  other  states,  wliere  usury  has 
not  been  made  a  criminal  offense, 
and  contracts  tainted  with  it  not 
declared  by  statute  to  be  utterly 
void,  they  have  been  held  invalid 
only  to  the  extent  of  the  usury,  or 
at  most  as  to  the  contract  for  in- 
terest. 

Alabama:  Saltmarsh  v.  Planters', 
etc.  Bank,  17  Ala.  761 ;  s.  c.  14  Ala. 
668.  A  later  statute  relieves  from 
the  payment  of  interest;  Barclift  v. 
Fields,  145  Ala.  264. 

Arkansas:  The  statute  declares 
securities  tainted  with  usury  to  be 
void.  Jones  v.  McLean,  18  Ark.  456. 
But  as  to  the  effect  of  usury  in 
cases  not  within  that  statute,  see 
Alston  V.  Brashears,  4  Ark.  422, 
where  the  principal  of  the  usurious 
contract  was  held  recoverable. 

"The  express  contract  being  void, 
no  implied  obligation  can  arise  from 
it.  It  cannot  be  devided  into  sepa- 
rate and  distinct  contracts,  so  that 
one  obligation  shall  be  given  for 
the  money  actually  loaned  and  an- 
other for  the  excessive  interest. 
Each  obligation  is  part  of  the  same 
contract  and  both  are  void.  Neither 
can  a  promise  to  pay  any  part  of 
a  usurious  debt,  for  the  same  rea- 


son, be  enforced  without  consent  so 
long  as  the  original  contract  which 
supports  it  remains  unrevoked.  The 
taint  of  usury  in  the  old  contract 
infects  the  new  promise.  This  is 
not  true  of  usurious  contracts  to 
pay  a  pre-existing  valid  debt.  That 
debt  is  not  destroyed  by  the  usury. 
It  may  be  recovered  on  the  strength 
of  the  contract  which  created  it. 
But  where  the  contract  on  which  it 
depends  in  the  beginning  for  exist- 
ence is  usurious,  there  never  was 
anything  to  give  it  life,  and  to  sup- 
port an  action  for  its  enforcement. 
But  if  the  debt  be  for  money  loaned 
and  actually  received  by  the  debtor, 
there  is  an  equitable  and  moral  duty 
to  pay  it,  which,  while  the  law  will 
give  it  no  effect,  may  be  made  the 
consideration  for  a  new  promise. 
Tlie  parties  can  cancel  and  destroy 
the  old  contract,  purge  the  consider- 
ation of  usury,  and  make  it  the 
basis  of  a  new  obligation,  and  there- 
by bind  the  borrower,  in  law  and 
equity,  to  pay  the  money  actually 
received,  and  a  legal  rate  of  inter- 
est." Garvin  v.  Linton,  62  _Ark. 
370,  citing  Hammond  v.  Hopping, 
13  Wend.  505,  511;  Early  v.  Ma- 
hon,  19  Johns.  147,  10  Am.  Dec. 
204;  Miller  v.  Hull,  4  Denio,  104; 
Phillips  V.  Columbus  City  B.  Aas'n, 
53  Iowa  719, 


§   315] 


INTEREST. 


985 


The  constitution  of  Texas  provides  that  all  contracts  for  a 
greater  rate  of  interest  than  ten  per  cent  per  aiinnni  shall  be 


Connecticut:  A  corporation  hav- 
ing power  to  loan  money  under  cer- 
tain restrictions,  having  afterwards 
taken  a  note  as  security  on  terms 
which  were,  in  respect  to  interest,  a 
violation  of  the  charter,  it  was  held 
in  a  suit  on  the  note,  ivUh  the 
money  counts,  tliat  although  there 
could  be  no  recovery  on  the  note  the 
money  loaned,  with  the  legal  inter- 
est, might  be  recovered.  Philadel- 
phia L.  Co.  V.  Towner,  13  Conn.  249. 
See  Sheldon  v.  Steere,  5  Conn.  181. 

Georgia:  Contract  void  only  to 
the  extent  of  the  usury.  Dillon  v. 
McEae,  40  Ga.  107. 

Illinois:  The  statute  which  fixes 
the  legal  rate  at  six  per  cent,  al- 
lows 'any  person  who  shall  pay  or 
deliver  any  greater  sum  or  value  for 
any  loan,  discount  or  forbearance" 
to  "recover  threefold  the  amount  of 
money  so  paid"  from  the  person  so 
receiving;  but  does  not  invalidate 
the  contract  reserving  an  illegal 
rate  of  interest.  Hansbrough  v. 
Peck,  5  Wall.  497,  18  L.  ed.  520; 
McGill  V.  Ware,  5  111.  21;  Lucas  v. 
Spencer,  27  id.  15;  Mapps  v.  Sharpe, 
32  id.  13;  Cushman  v.  Sutphen,  42 
id.  256;  Conkling  v.  Underbill,  4  id. 
388;  Ferguson  v.  Sutphen,  8  id. 
547;  Hunter  v.  Hatch,  45  id.  178. 

Iowa:  A  contract  tainted  with 
usury  is  void  only  to  the  extent  of 
the  usury,  and  may  be  enforced  for 
the  residue.  Richards  v.  Marshman, 
2  G.  Greene,  217 ;  Shuck  v.  Wight,  1 
id.  128;  Haggard  v.  Atlec,  id.  44; 
Gower  v.  Carter,  3  Iowa  244,  6C 
Am.  Dec.  71  ;  Ficklin  v.  Zwart,  10 
Iowa,  387;  Drake  v.  Lowry,  14  id. 
125;  Garth  v.  Cooper,  12  id.  304; 
Wight  V.  Shuck,  Morris,  425;  Wil- 
son V.  Dean,  10  Iowa  431. 

Kentucky:      An  agreement  fo  set 


the  hire  of  a  negro  woman  worth 
£22  per  year  against  the  interest  of 
£125  is  so  far  void  as  to  let  in  the 
borrower  to  redeem,  but  does  not 
vitiate  the  whole  contract.  Reed  v 
Lansdale,  Hardin,  C.  But  see  Rich- 
ardson V.  Brown,  3  Bib)),  207 ;  Wells 
V.  Porter,  5  B.  Mon.  410;  Denliam 
V.  Stone,  7  J.  J.  Marsh.  170. 

Michigan:  The  eflfect  of  usury  is 
not  to  avoid  the  contract,  but  to  re- 
duce the  amount;  the  usurer  is  en- 
titled to  recover  the  amount  actually 
loaned  and  legal  interest  (Thurston 
V.  Prentiss,  Walk.  Cli.  529;  Craig 
V.  Butler,  9  Mich.  21),  which  is  con- 
strued to  be  the  highest  rate  the 
law  permits  to  be  stipulated  for. 
Smith  V.  Stoddard,  10  Mich.  148,  31 
Am.  Dec.  778. 

Mississippi:  Taking  or  reserving 
illegal  interest  is  not  a  punishable 
offense  nor  does  it  render  the  con- 
tract into  whicli  it  enters  void ;  by 
statute  it  causes  a  forfeiture  of  all 
interest.  Wallace  v.  Fouche,  27 
Miss.  266 ;  Newman  v.  Williams,  29 
id.  212;  M'Alister  v.  Jerman,  32  id. 
142;   Brown  v.  Nevitt,  27  id.  801. 

Missouri:  In  Farmers'  &  T.  Bank 
V.  Harrison,  57  '^U^.  503,  Lewis,  J., 
said:  "Hitlierto  .  .  .  wlien  the 
defense  (of  usury)  was  successful 
courts  have  habitually  rendered 
judgment  for  the  principal  sum  and 
ten  per  cent,  interest,  setting  apart 
the  interest  to  the  county  school 
fund;"  and  it  was  here  held  that  the 
same  rule  would  apply  to  a  corpo- 
ration restrained  by  its  charter  from 
taking  interest  above  a  specified 
rate,  in  actions  by  it  upon  contracts 
providing  for  a  greater  rate.  The 
usury  paid  is  deducted.  Seaver  v. 
IJay,  137   Mo.   App.  78. 

Nei)raska  :   Tii  <'i|uify  (lie  princi|i:il 


986 


SUTHERLAND    ON    DAMAGES. 


[§  315 


deemed  usurious,  and  the  first  legislature  after  this  amendment 
is  adopted  shall  provide  appropriate  pains  and  penalties  to  pre- 
vent the  same 


Such  legislature  enacted  laws  of  the  designated 


and  legal  interest  may  be  recovered. 
Gund  V.   Ballard,  73  Neb.  547. 

Ohio:  In  Bank  v.  Swayne,  8  Ohio 
257,  is  a  history  of  the  legislation 
of  the  state  on  the  subject  of  in- 
terest. The  act  of  1799  fixed  the 
rate  at  six  per  cent.,  but  inflicted 
no  penalty  for  taking  or  reserving 
a  greater  rate.  It  did  not  declare 
any  such  contract  void,  nor  create 
any  forfeiture  of  the  principal  sum, 
but  forfeited  the  entire  interest.  It 
expressly  provided  that  the  lender 
might  recover  the  principal  after  de- 
ducting payments  on  account  of  in- 
terest. The  act  of  1804  fixed  the 
rate  at  six  per  cen^.  and  provided 
as  to  persons  taking  more  that  "such 
persons  shall  forfeit  the  whole 
amount  of  the  debt  on  which  the  il- 
legal interest  was  charged  or  re- 
ceived," one-half  to  the  informer 
prosecuting,  and  one-half  to  the 
county  treasurer ;  said  to  be  sub- 
stantially, if  not  literally,  the  same 
as  the  Pennsylvania  statute,  and 
probably  copied  from  it.  Act  of 
1824:  "All  creditors  shall  be  en- 
titled to  receive  interest  on  all 
money  after  the  same  sliall  have  be- 
come due,  either  on  bond,  bill,  prom- 
issory note  or  other  instrument  of 
writing;  on  contracts  for  money  or 
property;  on  all  balances  due  on 
settlement  between  parties  thereto; 
on  all  moneys  withheld  by  unreason- 
able and  vexatious  delay  of  pay- 
ment; and  on  all  judgments  ob- 
tained from  the  date  thereof;  and 
on  all  decrees  obtained  in  any  court 
of  chancery  for  the  payment  of 
money  from  the  day  specified  in  the 
said  decree  for  tlie  payment  thereof, 
or  if  no  day  be  specified,  then  from 


the  day  of  entering  thereof,  until 
such  debt,  money  or  property  is  paid 
at  the  rate  of  six  per  cent,  per  an- 
num and  no  more."  Althougli  this 
statute  provided  only  that  all  credi- 
tors should  be  entitled  to  interest 
at  six  per  cent,  per  annum  mid  no 
more  "on  all  money  after  the  same 
shall  become  due,"  it  was  held  and 
finally  settled,  up  to  1850,  that  the 
rate  could  not  be  raised  by  agree- 
ment before  or  after  due  by  reason 
of  the  prohibition  in  the  act,  Hitch- 
cock, J.,  said:  "From  1804  to  the 
present  period  (1838),  there  has 
been  no  time  in  which  an  individual 
might  not  recover  the  principal  sum 
of  money  loaned,  together  with  law- 
ful interest,  notwithstanding  by  the 
terms  of  the  loan  he  was  to  have 
received  a  greater  rate  of  interest." 
In  this  case,  however,  a  like  pro- 
liibition  in  the  charter  of  a  bank 
limiting  its  right  to  charge  interest 
to  a  specified  rate  was  held  to  ren- 
der a  contract  exceeding  this  limit 
wholly  void  on  the  ground  of  its 
want  of  power  to  make  it.  For 
criticism  on  this  distinction,  see 
McLean  v.  Lafayette  Bank,  3  Mc- 
Lean, 589;  and  Farmers'  &  T.  Bank 
V.  Harrison,  57  Mo.  503;  Lafayette 
Ben.  Soc.  v.  Lewis,  7  Ohio  81. 

Pennsylvania :  Usurious  agree- 
ments not  wholly  void.  The  cred- 
itor is  entitled  to  recover  the  sum 
loaned  and  legal  interest.  Wycofl 
V.  Longhead,  2  Dall.  92;  Turner  v. 
Calvert,  12  S.  &  R.  46;  Kupfert  v. 
Guttenberg  B.  Ass'n,  30  Pa.  465; 
Philadelphia,  etc.  R.  Co.  v.  Lewis, 
33  id.  33,  75  Am.  Dec.  574.  See 
Evans  v.  Negley,  13  S.  &  R.  218. 


§    315]  INTKREST.  987 

character  which  were  limited  to  written  coiitracls.  One  of  llic 
courts  of  civil  appeals  has  held  that  the  itenallv  prcscrilx'd  in 
the  statute  reaches  a  contract  the  written  part  of  which  stij»- 
ulated  only  for  lawful  interest,  while  a  contemporaneous  parol 
contract  provided  for  a  rate  in  excess  thereof.*^  Another  of 
these  courts  has  declined  to  assent  to  such  conclusion.  "If  it 
could  be  maintained  that  a  contemporaneous  oral  aii'rcemcnt  for 
usurious  interest  made  in  connection  with  a  written  instrument 
is  included  within  the''  statute,  "it  could  not  affect  this  case  for 
the  reason  that  the  written  contract  was  made  prior  to  the  verbal 
agreement  and  its  validity  could  not  be  affected  by  the  subse- 
quent oral  agreement."  The  failure  of  the  legislature  to  include 
oral  contracts  simply  necessitated  a  falling  back  on  the  constitu- 
tion to  obtain  the  rule  to  be  followed  in  passing  upon  usurious 
oral  contracts.  "When  we  do  this  we  merely  have  a  provision 
declaring  interest  above  a  certain  rate  illegal,  no  penalty 
being  attached  for  violation  of  the  provision."  Hence  the  con- 
tract as  evidenced  by  the  note  was  not  affected  by  the  oral 
agreement  for  usurious  interest.^^  An  oral  agreement  to  pay 
such  interest  on  a  note  is  merely  void  as  to  the  excess  over  the 
lawful  rate.^^ 

Though  one  who  loans  money  upon  a  usurious  agreement  will 
not  be  entitled  to  any  relief  ^*  it  is  otherwise  with  one  who  has 
purchased  valid  securities  and  subsequently,  upon  such  an  agree- 
ment, extended  the  time  of  payment,  lent  more  money  and  took 
new  securities.  The  taint  of  the  subsequent  illegal  contract 
does  not  relate  back  to  or  affect  the  original  contract." 

All  that  is  meant  according  to  any  legal  usage  by  a  statute 
which  declares  a  usurious  contract  to  "be  void  and  of  no  effect 
for  whole  premium  or  rate  of  interest  only"  is  that  a  court  of 
law  will  not  lend  its  aid  to  enforce  the  performance  of  a  contract 

51  Dnnman  v.  Harrison   ('J'ex.  Civ.  54  Tvililc.  v.  Nicliols,  5:?  Ark.  271, 

App.),41S.  W.  499.  22  Am.  St.  100. 

^„  ^    .   ,      ,    „^         „           „,  rr  65  Humphrey  V.  McCaulcy,  r)5  Ark. 

52Quinlan's  Est.  V.  Smyo,  21    lex.  xt-  ,    i          i-                t  d  +    mm 

^  143;  Nichols  V.  tcarson,  7  Pet.  104, 

Civ.  App.   156,  citing  this  section.  ^  ^     ^^    ^^g^.   rpjjjj^^,^,^  ^.    'pi,atcher, 

53  Roberts  v.  Coffin,  22  Tex.   Civ.       r,,;   .\,.k    ry.U;   Rountree  v.  Roi)insoii, 

App.  127.  08  N.  C.  107. 


988  SUTUKKl.ANI)    ON    DAMAGES.  [§    815 

which  appears  to  have  been  entered  into  Ly  both  the  contracting 
parties  for  the  express  purpose  of  carrying  into  effect  that  which 
is  prohibited.  Snch  a  contract  is  not  so  far  void  that  the  repeal 
of  the  statute  which  forbade  it,  no  saving  clause  being  embodied 
in  the  repealing  act,  will  not  operate  to  cut  off  the  defense  of 
usury  in  an  action  upon  it.^^ 

Subjecting  the  usurer  to  a  fine,  or  to  loss  of  all  interest  on  the 
debt  by  a  separate  prosecution,  does  not  of  itself  render  the  con- 
tract into  which  the  usury  enters  wholly  void.  Where  it  is  not 
declared  void  for  usury  by  the  statute,  and  there  are  no  specific 
provisions  for  a  different  adjustment  of  the  amount  which  may 
be  recovered,  the  contract  as  to  interest  is  held  void  when  it 
stipulates  for  a  rate  forbidden  l)y  law ;  then  the  principal  sum 
may  be  recovered  with  ordinary  interest.®'  If  a  note  is  declared 
voidable  only  to  the  extent  of  the  usury  included  in  it  an  in- 
nocent purchaser  for  value,  before  maturity  and  without  notice, 
is  unaffected  by  the  fact  that  an  unlawful  rate  of  interest  is 
secretly  included  as  principal.®^  Where  usury  is  punished  by 
the  forfeiture  of  interest  the  counsel  fee  stipulated  for  in  a  note 
may,  according  to  the  federal  circuit  court  for  South  Carolina, 
be  recovered,®^  though  the  supreme  court  of  the  state  had  pre- 
viously ruled  otherwise  on  the  ground  that  the  debtor  was  only 

56  Ewell  V.  Daggs,  108  U.  S.  143,  date  and  maturity;  for  if  the  intcr- 
27  L.  cd.  682.  est  agreement  were  wholly  void,  no 

57  Bunn  V.  Kinney,  15  Ohio  St.  interest  whatever  could  be  recovered 
40.     By  an  act  passed  in  1850  par-  for  that  time. 

ties  were  allowed  to  "stipulate  for  A  statute  expressing  that  the  tak- 

interest  at   any   rate  not  exceeding  ing    of    usurious    interest    shall    be 

ten  per  cent,  yearly."     In  an  action  deemed  a  forfeiture  of  the  entire  in- 

on  a  note  at  four  months,  which  in-  terest  makes  void  the  agreement  as 

eluded  interest  at  nearly  twenty  per  to  interest.     Ward  v.  Sugg,   113  N. 

cent.,  it  Avas  held  usurious  and  void  C.  489,  24  L.R.A.  280. 
to  the  extent  of  interest  above  six  58  Hamilton  v.  Fowler,  40  C.  C.  A. 

per  cent,  from  date.     There  was  no  47,  99  Fed.   18,  citing  Bradshaw  v. 

mention   of  interest  on  the  face  of  Van  Valkenburg,  97  Tenn.  316;  Mc- 

the   note,    except    "after    due;"   the  Broom  v.   Scottish  M.  &  L.   I.   Co., 

usury  Avas  included  with  the  princi-  153  U.  S.  318,  38  L.  ed.  729;  Norris 

pal.    The  interest  agreement  implied  v.  Langley,  19  N.  H.  423;   Converse 

by  putting  interest  and  principal  to-  v.  Foster,  32  Vt.  828. 
gether,  in  the  amount  for  which  the  59  Union   M.    B.   &    T.    Co.    v.   Ha- 

note  was  given,  was  enforced  to  the  good,  98  Fed.  779;   Louisiana  &  A. 

extent  of  six  per  cent,  between   its  R.  Co.  v.  Rider,  103  Ark.  558. 


§    316]  INTEREST.  OSO 

liable  for  the  sum  nchinlly  received.™  Tlic  |i('ii;il  Inws  of  a 
state  will  not  be  enforced  bv  the  courts  of  another  state.  Hence 
where  the  nsury  statute  of  a  state  declares  that  the  usurer  shall 
forfeit  his  ri<>ht  to  interest  a  forfeiture  of  the  principal  will  not 
be  adjudged  by  the  courts  of  anotlun*  state  in  an  action  on  the 
usurious  contract  because  another  statute  of  the  tirst-nientione<l 
state  makes  the  taking  of  usury  a  misdemeanor  and  ))rovides  for 
the  punishment  of  the  guilty  party  by  fine  and  imprisonment.^^ 

In  many  cases  the  construction  of  such  statutes  has  been  in- 
fluenced by  antecedent  legislation  indicating  some  legislative 
policy.  x\nd  the  history  of  legislation  uj^on  this  subject  shows 
the  progress  and  tendency  of  po])uhir  tliought;  the  gradual  sub- 
sidence and  final  disappearance  of  the  old  prejudice  against  not 
only  interest,  but  usury.  The  connnon  law  is  flexible  enough  to 
accommodate  itself  by  degrees  to  deliberate  popular  convictions  ; 
and  it  has  done  so  in  respect  to  interest  and  usury.  Very  high 
rates  of  stipulated  interest  which  transcend  statutory  limits  are 
abated  and  brought  to  the  standard  which  the  law  fixes;  and 
when  no  limit  is  fixed  by  statute  such  stipulated  rates  are  some- 
times mitigated  as  the  law  mitigates  penalties ;  but  in  both  cases 
the  excessive  interest  is  treated  as  free  from  the  taint  of  crime. 
Usury,  as  a  crime,  is  rapidly  disappearing  from  the  statutes 
everywhere. 

§  316.  Recoveries  under  usury  statutes.  Fnder  statutes 
where  the  rates  allowed  by  law  have  been  exceeded  in  the  con- 
tract, and  the  principal  sum  or  a  part  of  it  remains  collectible, 
various  questions  have  arisen  affecting  the  amount  tlu^  ci'cditor 
is  entitled  to  recover.  The  forfeiture  of  interest  or  priiicij)al 
declared  by  statute  for  usury  inures  to  the  debtor,  and  may 
operate  in  reduction  of  the  debt  where  such  forfeiture  is  not 
exclusively  to  be  adjudged  in  a  separate  proceeding,  or  to  be 
adjudged  in  the  creditor's  suit  to  a  public  fund.     Tlu^  interest 


60  Land  M.  Co.  v.  Gillam,  4!)  S.  eliargfi  of  otlicr  notes  and  a  niort- 
C.  345.  gage  securing  it  was  executed,  only 

61  Waite  V.  Bartlett,  53  Mo.  App.  one  of  the  notes  being  tainted  with 
378;  Kendriclv  v.  Kyle,  78  Miss.  278,  usury,  the  renewal  and  secured  note 
288.  was  void  only  pro  tnuto.     Sniitli  v. 

62  Where  a  note  wair-  given  in  dis-  Xeeley,  2  Indian  T.  051. 


990  SUTHERLAND    ON    DAMAGES.  [§    316 

in  many  instances  the  statute  goes  further,  and  by  way  of 
penalty  declares  a  forfeiture  of  all  interest,  or  a  forfeiture  of 
double  or  treble  the  amount  of  the  interest  or  usury  and  some- 
times also  a  portion  of  the  principal.  If  the  forfeiture  is  to  be 
worked  out  by  a  criminal  proceeding  or  a  qui  tain  action  it  is  not 
to  be  deducted  from  the  valid  portion  of  the  debt.^^  In  Ohio, 
under  the  act  of  1804,  which  provided  for  forfeiture  of  the  whole 
debt,  the  creditor  was  entitled,  nevertheless,  to  recover  it  from 
the  debtor  with  legal  interest;  for  the  statute  excludel  him 
from  the  benefit  of  the  forfeiture  by  awarding  one-half  to  the 
informer  and  devoting  the  other  half  to  the  county  treasury.  So 
the  Iowa  act  of  1839  abated  the  interest  to  the  legal  standard  be- 
tween the  debtor  and  creditor  and  made  the  latter  subject  to  a 
forfeiture  to  the  county  of  the  usurious  part  of  the  interest  and 
twenty-five  per  cent  interest  thereon.^* 

Under  a  statute  in  Indiana  ^^  which  limited  the  rate  of  in- 
terest and  provided  that  in  actions  upon  contracts  by  which, 
directly  or  indirectly,  a  higher  rate  was  contracted  for,  taken 
or  reserved,  the  plaintiff,  besides  losing  costs,  should  only  re- 
cover the  principal,  deducting  interest  paid,  notes  containing  a 
promise  of  such  interest  were,  to  the  extent  of  it.  without  con- 
sideration. Whether  it  was  openly  expressed,  stealthily  added 
to  the  principal  or  taken  in  advance  without  reducing  the  sum 
stated  in  the  note,  there  was,  to  the  extent  of  the  interest,  a  want 
of  consideration.^^  Where,  however,  a  note  bearing  usurious 
interest  was  given  for  a  precedent  debt  the  "principal"  allowed 
to  be  recovered  included  not  only  the  original  principal,  but 
such  interest  as  had  legally  accrued  thereon  up  to  the  time  of 
giving  the  usurious  note.^' 

The  Massachusetts  act  of  1825,  as  modified  by  the  act  of  1826, 
and  the  Illinois  act  of  1845  are  similar  in  respect  to  the  conse- 
cpiences  to  the  creditor  of  usury  in  an  action  upon  the  usurious 
contract.     The  creditor  must  pay  ct^sts  and  forfeit  threefold  the 

63  Richards    v.    Marshman,    2    G.  66  :Miisselinan   v.   McElhenney,   23 

Greene  217.  Ind.  4,   85  Am.  Dec.  445;    Cross  v. 

64Ficklin  v.  Zwart,  10  Iowa  3S7;  Wood,  30  Ind.  378;  Hays  v.  Miller, 

Drake  v.  Lowry,  14  id.  125;  Sheldon  12  Ind.  187. 

V.  Mickel,  40  id.  19.  67  Pratt    v.    Wallbridgc,    36    Ind. 

65  Gavin  &  Hord,  408,  §  4.  147. 


1 


§    316]  INTEREST.  991 

amount  of  the  whole  interest  reserved,  discounted  or  taken ;  lie 
is  entitled  to  jndgnicnt  and  execution  for  the  balance  only 
which  may  remain  due  upon  the  contract  or  assurance  after  de- 
ducting the  forfeiture.  In  the  former  state  this  statute  has  been 
regarded  in  her  own  courts  in  respect  to  these  and  other  accom- 
panying provisions  as  such  a  mitigation  of  the  law  previously  in 
force  that  it  is  remedial  rather  than  penal.*'  So  that  the  debtor 
as  plaintiff,  seeking  equitable  relief  by  bill  in  equity  to  redeem 
by  payment  of  amount  equitably  due  upon  the  usurious  debt, 
may  claim  the  same  benefit  of  the  forfeiture  and  have  the  debt 
reduced  by  it  as  when  he  is  defendant  at  law  if  the  creditoi-  as- 
serts his  rights  under  the  contract  by  his  answer.*' 

In  Illinois,  however,  there  is  no  provision  for  recovering 
usury  voluntarily  paid;  the  right  to  deduct  it  from  the  debt  on 
which  it  was  paid  in  actions  therefor  is  the  only  remedy,'" 
unless  the  note  containing  the  contract  is  assigned  before  ma- 
turity to  an  innocent  purchaser  and  the  amount  stipulated  for 
has  been  collected  by  him,  in  which  event  equity  will  r(^(|iiir(' 
the  original  payee  to  restore  the  excessive  interest.'^  The  stat- 
utes, through  successive  changes,  are  and  have  been  ])enal  by 
reason  of  the  forfeiture  of  interest;  and  the  debtor  who  seeks 
equity  is  required  to  do  equity  by  paying  principal  and  legal 
interest.'^  But  while  the  transaction  remains  unsettled  and 
suit  is  brought  for  the  recovery  of  the  usurious  debt,  or  any  ]iart 
of  it,  the  debtor  had  a  right,  prior  to  1867,  to  reduce  it  by  apply- 
ing all  the  usury  paid.  Where  usury  had  been  contracted  for 
the  statute  was  express  that  the  creditor  was  entitled  to  recover 
only  the  principal  due,  or  only  the  balance  after  deducting  the 

68  Hart  V.  Goldsmith,  1  Allen  McGuire  v.  Cainpholl,  58  Til.  App. 
145;  Gray  v.  Bonnett,  3  Mete.  188;  Albeitz  v.  d'Arcaiiiliol,  100  id. 
(Mass.)    522.  505. 

69  Id.;  Gerrish  v.  Black,  104  Mass.  71  Culver  v.  Osborne,  2:?1  HI.  104. 
400;   Minot  v.  Sawyer,  8  Allen  78;  121   Am.   St.  302. 

Smith  V.  Robinson,  10  Allen  1.30.  72  Cobe    v.    Guyer,    237    111.    5G8; 

70Eeinback    v.    Crabtree,    77    111.  Garliok    v.    Mutual    L.    iV    B.   Ass'n, 

182;   Saylor  v.  Daniels,  37  111.  331,  2:W   111.  232;    Mapps   v.   Sharpe.   32 

87  Am.  Dec.  250;  Farvvell  v.  Meyer,  111.   13;   Snyder  v.  Griswold.  37   III. 

35  111.  40;  Lucas  v.  Spencer,  27  ill.  21G;    Cusimian    v.    Sutjilien,    42    111. 

15;    Parnielee   v.    Lawrence,    44    111.  256.     But  see  Juliiison  v.  Tlioinp.sun, 

405;  Booker  v.  Anderson,  35  111.  OD ;  JS  III.  3.52. 


992 


SUTHERLAND    ON    DAMAGES. 


[§  316 


forfeiture.'^  The  usury  received  was  considered  as  having  been 
extorted  by  the  creditor  and  shonld  be  applied  in  part  payment 
of  the  principal  of  the  debt.''*  If  a  nsnrions  note  is  delivered  to 
the  maker  and  a  new  note  is  execnted  for  a  new  principal,  the 
time  of  payment  being  extended,  and,  intermediate  the  execu- 
tion of  the  original  note  and  the  later  one,  the  law  in  force  when 
the  former  was  executed  is  repealed  and  a  new  statute  enacted 
declaring  a  different  penalty  for  usury,  the  new  note  will  be  re- 
garded as  a  new  contract  and  be  governed  by  the  law  in  effect 
when  it  was  made,  it  also  being  usurious.'''^ 

§  317.  Same  subject.  Under  those  statutes,  as  under  all 
others,  the  parties  may  free  the  debt  of  the  usurious  taint  and 
rescue  it  from  the  frowns  of  the  law.  The  courts  do  not  shut 
the  door  in  the  face  of  the  penitent.''^  The  debt  will  usually  be 
so  divested  of  the  vice  with  which  usury  infects  a  contract  if 
the  usury  is  dedcuted  from  the  debt  and  a  new  contract  made 
for  the  payment  of  so  much  of  the  original  principal  alone  as 
remains  unpaid,  with  only  lawful  interest.''  But  in  Illinois  the 
debt,  so  long  as  it  remains  against  the  the  same  debtor  who  has 
paid  usury,  would  seem  to  be  subject  to  a  deduction  for  all  the 
usury  paid ;  merely  striking  out  the  usury  from  the  debt  unpaid 
and  substituting  a  new  agTeement  or  new  securities  bearing  law- 
ful interest  for  the  same  debt  will  not  suffice.'*    In  the  District 


73  Driscoll  V.  Tannock,  76  111.  154; 
Reinback  v.  Crabtree,  77  111.  182; 
Farwell  v.  Meyer,  .3.5  111.  40. 

74  Id. 

75  Purvis  V.  Woodward,  78  Miss. 
022;  Story  v.  Kimbrongh,  33  Ga. 
21;  Webb  v.  Bishop,  101  N.  C.  99; 
Watson  V.  Mims,  56  Tex.  451.  Com- 
pare Hunter  v.  Hatch,  45  111.  178. 
See  §  370. 

76  De  Wolf  V.  Johnson,  10  Wheat. 
367,  6  L.  ed.  343;  Moseley  v.  Ram- 
bo,  106  Ga.  597. 

77  Sanford  v.  Kunz,  9  Idaho  29 ; 
Chadbourn  v.  Watts,  10  Mass.  121, 
0  Am.  Dec.  100;  Clark  v.  Phelps,  6 
Mete.  (Mass.)  296;  Smith  v.  Stod- 
dard, 10  Mich.  148,  81  Am.  Dec.  778; 
Collins  I.  Co.  V.   Burkain,   10  Mich. 


283;  Craig  v.  Butler,  9  id.  21; 
Barnes  v.  Hedley,  2  Taunt.  184; 
Kilbourn  v.  Bradley,  3  Day  356,  3 
Am.  Dec.  273;  Postlethwait  v.  Gar- 
rett, 3  T.  B.  Mon.  345;  Fowler  v. 
Garret,  3  J.  J.  Marsh.  682. 

78Cobe  V.   Guyer,   237   111.  568. 

In  Mitchell  v.  Lyman,  77  111.  525, 
a  usury  debt  was,  by  a  new  agree- 
ment, so  freed  of  usury  as  to  subse- 
quently bear  legal  interest;  but  it 
was  the  same  debt,  and  so  divested 
of  its  original  character  as  to  cut 
ofl'  the  riglit  to  deduct  the  usury 
paid  while  in  a  usurious  state.  A 
person  borrowed  .$3,000,  gave  his 
note  for  that  amount,  payable  in 
one  year  with  interest  at  ten  per 
cent.;    but   the   lender   retained    out 


§  317] 


INTEREST. 


903 


of  Columbia  usurious  interest  cannot  be  made  the  subject  of 
set-off  or  counter-claim  unless  within  twelve  months  after  suit 
brought  for  the  principal  claim. ''^  In  Michii^nn,  where  only 
the  excess  above  the  highest  rate  which  may  be  stipuUited  for  is 
usury  and  where  only  that  excess  can  be  abated,  or,  after  having 
been  paid,  can  be  deducted  in  actions  for  the  principal,  this 
remedy  of  recoupment  does  not  exist,  if  the  parties  ha\('  made 
new  securities  which  include  nothing  but  the  actual  loan  and 
are  not  meant  to  be  mere  evasions  j  ®°  nor  if  they  have  adjusted 
the  debt  by  applying  credits  and  payments  so  that  usury  con- 
tained in  the  items  adjusted  is  not  coiitaiiKMl  as  ;iii  integral  |)art 
of  the  debt  in  its  final  furm.®^ 

In  Louisiana  the  borrower  may  recover  so  much  of  the  usury 


of  the  $3,000  five  per  cent.,  so  that 
the  borrower  actually  received  no 
more  than  .$2,850.  At  the  end  of 
the  year  all  interest  was  paid,  and 
a  new  note  given  for  $3,000  with  in- 
terest at  ten  per  cent.,  with  person- 
al security,  and  the  mortgage  which 
had  been  made  to  secure  the  first 
note  discharged.  In  an  action  upon 
the  second  note,  it  was  held  that  al- 
though tlie  same  debt  was  secured 
by  the  second  as  by  tlie  first  note, 
and,  therefore,  was  subject  to  be  re- 
duced by  the  interest  paid  on  tlie 
first  note,  yet  the  last  note  was  not 
usurious,  and  the  plaintiff  was  en- 
titled to  interest  upon  it.  This  case 
was  governed  l)y  the  law  of  1857, 
wliich  provides  tliat  if  any  person 
or  corporation  shall  contract  to  re- 
ceive a  greater  rate  of  interest  than 
ten  per  cent,  upon  any  contract, 
irritten  or  verbal,  such  person  shall 
forfeit  the  whole  of  the  interest,  and 
shall  be  entitled  only  to  recover  the 
principal  sum.  The  language  of 
this  statute  is  peculiar. 

In   Reinback   v.   Crabtree,   77    III. 

182,  a  loan  of  $450  was  made,  and 

a    note    given    calling    for    ten    per 

cent,   interest;     there    was    also    a 

Suth.   Dam.  Vol.   I.— 03. 


verbal  agreement  made  at  the  same 
time  to  pay  six  pi-r  cent,  more,  and 
payment  made  pursuant  to  that 
agreement.  This  verbal  agreement 
was  held  to  make  the  transaction 
usurious,  and  that,  although  usuri- 
ous interest  once  paid  cannot  be 
recovered  l)ack,  it  is  settled  in  that 
state  that  this  rule  does  not  apply 
where  the  transaction  has  not  been 
settled,  and  the  lender  brings  his 
action  for  the  balance.  In  such  ac- 
tion the  borrower  may  defend  by 
claiming  a  credit  for  wliatevcr  usuri- 
ous interest  he  bus  paid  in  tli'- 
same  transaction.  Savior  v.  Dan- 
iels,   37    111.    331,    87    -Am.    Dec.    250. 

The  fact  tiiat  new  notes  have, 
from  time  to  time,  been  given  does 
not  chang»>  the  case.  Farwell  v. 
Meyer,  35  111.  40;  Parmelee  v.  Law- 
rence, 44  Til.  405;  Hooker  v.  An.ler- 
son,  35  111.  G(i. 

79  Lawrence  v.  Mi. idle  Staf.-s  1... 
V,.  etc.   ('...,   7    D.   ('.    A|p|i.   Cas.    111!. 

SOSniifb  V.  Sloddar.i,  Kt  Mich 
118,  SI   .Am.  Dec.  778. 

81  Collins  Iron  Co.  v.  Hurkam,  10 
Mich.  283.  See  Be.ker  v.  ilradst.n. 
137   Mich.  478. 


994  SUTHEKLAND    ON    DAMAGES.  [§    817 

as  was  paid  within  twelve  months  of  judicial  demand  or  may 
avail  himself  of  it  by  way  of  defense  to  an  action.®^  In  Mis- 
souri the  holder  of  a  usurious  note  cannot  recover  interest  dur- 
ing the  pendency  of  an  action  on  it;  neither  can  he,  after  the 
court  has  purged  it  of  usury,  recover  as  on  an  account  in  the 
action  on  the  note.^^  In  Alaska  double  the  usurious  interest 
paid  cannot  be  set  off  against  the  debt ;  it  must  be  recovered  in 
a  separate  action.** 

Statutes  providing  for  a  forfeiture  of  threefold  the  amount  of 
the  whole  interest  reserved  or  taken  were  in  force  in  several 
states  for  many  years.  Under  them  the  interest  was  computed, 
for  the  purpose  of  determining  the  amount  of  the  forfeiture,  on 
the  basis  of  the  contract,  up  to  the  time  the  amount  due  was 
ascertained  by  the  verdict.*^  And  in  INIassachusetts  threefold 
the  amount  of  the  whole  interest,  usurious  as  well  as  lawful,*^ 
and  in  New  Hampshire  threefold  the  sum  above  the  lawful  in- 
terest, *'  was  deducted.  On  usurious  contracts  in  Iowa  the 
creditor  is  entitled  only  to  the  principal ;  ten  per  cent  is  ad- 
judged against  the  debtor  for  certain  public  funds ;  this  is  com- 
puted upon  the  amount  of  the  contract  up  to  the  rendition  of  the 
judgment,*'  and  in  the  same  way  against  a  surety.*^  Where 
there  have  been  partial  payments  the  computation  should  be 
made  as  between  debtor  and  creditor ;  ^°  and  if  the  principal  of 
a  usurious  debt  has  been  paid  and  the  action  is  brought  for  the 
usurious  interest,  on  the  defense  of  usury,  the  judgment  for 
the  penalty  to  the  school  fund  cannot  be  rendered.^^ 

In  Virginia  if  the  debtor  has  applied  payments  made  upon  a 
usurious  contract  to  the  interest  or  that  has  been  done  with  his 
assent,  the  application  will  not  be  disturbed  unless  within  one 

82  Huntington  v.  Westerfielcl,  119  See  Revised  St.  N.  H.,  ch.  290, 
La.  615.  §  3 ;  Divoll  v.  Atwood,  41  N.  H.  449. 

83  Citizens'  Nat.  Bank  v.  Donnell,  ^^  Ficklin  v.  Zwart,  10  Iowa  387, 
195  Mo.   564.  ^^7   ^™-  ^^^-  ^^^''   Drake  v.  Lowry, 

14  Iowa  125. 

89  Mcintosh    V.    Likens,    25    Iowa 

.555. 
85  Parker  v.  Biglow,  14  Pick.  436.  ^^  Sheldon  v.  Mickel,  40  Iowa  19; 

86Brigham  v.  Marean,  7  Pick.  40.       Smith  v.  Coopers,  9  Iowa  376. 
87  Gibson  v.  Stearns,  3  N.  H.  185.  91  Easlev  v.  Brand,  18  Iowa  132. 


84  Lorentzen  v.  Warner,  3  Alaska, 

218. 


4 


§    317]  INTEREST.  095 

year  thereafter  a  suit  he  hroiii^lit  h_v  the  ih'hlor  for  its  i'ecn\orv, 
in  which  he  may  set  it  ofi"  against  the  (leiiiniid  Inr  whicli  he  is 
sned.^^ 

In  West  Virginia  tlic  resi(hie  of  the  del)t  may  he  recovered 
after  crediting  all  the  iisnrv  ])aid  as  ])artial  payments  upon  the 
principal  as  of  the  time  the  iisnrv  was  paid.^^  There  may  he  a 
recovery  of  nsui-ious  interest  after  the  deht  has  lieen  fully  dis- 
charged.^* 

Where  usury  does  not  wholly  invalidate  the  dehtor's  contract 
to  pay  the  principal,  hut  it  is  subject  to  he  reduced  by  de- 
duction of  the  nsury,  or  interest  paid  or  reserved,  whether  single 
or  multiplied,  the  benefit  of  that  defense  is  of  course  confined 
to  actions  upon  the  usurious  contract  or  in  some  form  for  the 
collection  of  the  usurious  debt.  The  defense  is  available  in 
suits  for  the  foreclosure  of  mortgages,  as  well  as  in  persomil 
actions  upon  the  contract.^^  The  usurious  debt,  originally  a 
gross  sum,  or  made  so  l)y  the  consolidation  of  a  series  of  trans- 
actions, is  often  divided  to  be  paid  by  instalments  secured  in 
one  instrument  or  in  several.  When  so  divided,  and  a  part  only 
is  sued  for,  the  residue  being  either  paid,  or  for  other  reasons 
not  in  issue — perhaps  belonging  to  another  party — may  the 
entire  deduction  to  which  the  debtor  is  entitled  for  usury  be 
made  from  the  portion  sued  for?  In  Maine  the  debtor  is  en- 
titled to  an  abatement  of  the  usurious  interest  and  to  have  such 
usury  as  he  has  paid  on  a  debt  deducted  from  the  collectible  por- 
tion when  it  is  sued  for.^^  In  that  state  where  a  usurious  deht 
is  divided  and  separate  notes  given  for  it  each  note  is  held  to 
contain  the  same  proportion  of  the  usury  as  the  entire  debt ;  and 
subject  to  abatement  by  application  of  a  like  ])rop()rti(>n  only  of 
any  usurious  interest  that  had  been  paid  on  the  whole  debt." 

32  Crabtree  V.  Old  Dominion  B.  &  85    Misc.    (N.    Y.)    .Tli;    Madson    v. 

L.    Ass'n,    n5    Va.    670,   64    Am.    St.  Whitman,  ,8    Idaho    762;    Kohn    v. 

818:    Munford   v.   McVeigh,   92   Va.  K(dly,    76    N.    J.    Eq.    l.'?2;    Mctro- 

446.  ])olitan   T.   Co.   v.   Truax,  67   N.   Y. 

93Loientz  v.   Pinnell,   ;j5   W.   Va.  Misc.  .588;  Minot  v.  Sawyer,  8  Allen 

114  78:  Cowlcs  v.  WoodnifT,  8  Conn.  3.j. 

94IIari)(>r  v.  Middle  States  L.,  15.  96  J.oud  v.  :\[t'rrill,  4.')  Me.  316. 

&  C.  Co.,  r^  W.  Va.  140.  97  Picice    v.    Conaiit,    25    Me.    Xi; 

95  Empire   Trust   Co.   v.   Coleman,  Darling    v.     Mareli,    22     Mo.     184; 


996  SUTHERLAND  ON  DAMAGES.  [§  317 

Til  New  llampsliire  usury  was  for  a  long  time  punished  by 
obliging  the  creditor  to  lose  three  times  the  sum  above  the  law- 
ful interest  taken,  to  be  deducted  from  the  sum  found  lawfully 
due.  Where  a  usurious  debt  was  secured  by  two  notes  and  one 
had  been  paid,  it  was  held  in  an  action  upon  the  other  that  the 
payment  of  one  could  not  affect  the  defendant's  right  to  the  de- 
duction allowed  by  the  statute  any  more  than  if  the  whole  sum 
had  been  put  into  one  note  and  the  amount  paid  had  been  in- 
dorsed upon  it ;  the  balance  still  due  upon  the  last  note  is  the 
balance  of  the  money  upon  which  the  usurious  interest  was 
secured  and  paid,  and  to  subject  it  only  to  a  proportionate  abate- 
ment would  be  an  evasion  of  the  spirit  and  letter  of  the  statute.^' 

In  Texas  if  a  note  sued  u})on  is  usurious  and  was  given  as  a 
renewal  of  another  usurious  obligation  and  embraced  usury  in 
the  principal  sum,  there  may  be  a  recovery  only  of  that  part  of 
the  latter  sum  which  would  remain  after  deducting  all  interest 
embraced  in  the  note,  and,  in  addition,  ten  per  cent  on  the  prin- 
cipal thus  ascertained,  less  the  payments  made  upon  the  note. 
Any  such  payments  should  not  be  applied  to  existing  usurious 
interest,  but  to  the  lessening  of  the  legal  demand.  Payments 
made  and  directed  to  be  applied  to  other  notes  should  not  be 
treated  as  payments  on  the  note  in  suit  unless  they  constituted 
a  part  of  the  same  usurious  contract  and  were  executed  for  usu- 
rious interest.  If  they  were  executed  alone  for  that  purpose  such 
l)ayment8  sliould  be  applied  to  the  extinguishment  of  the  legal 
demand.^^  The  right  to  recover  double  the  amount  of  the 
usurious  interest  paid  may  be  enforced  under  a  pleading  in  re- 
convention in  an  action  u])on  the  contract  without  discharging 
the  principal.^  Under  the  act  of  1907  there  may  l)e  a  recovery  of 
double  the  amount  of  all  the  interest  paid.^  In  Washington 
the  principal  of  another  note  and  interest  thereon,  given  as  a 
cover  for  usury,  as  well  as  interest  on  the  note  which  represented 
the  loan,  in  addition  to  double  the  amount  of  all  the  interest 
paid,  is  to  be  deducted.     The  statute  does  not  permit  the  re- 

Ticonic  Bank  v.  Johnson,  31  Me.  414.  i  Rosetti  v.  Lozano,  96  Tex.  57. 

98  Fan-  V.  Chandler,  51  N.  H.  645. 

QQ  c<4^,.„„-     TS.T  A    T>     1         CI     -ii     n  ^  Baum   V.   Daniels,   55   Tex.    Civ. 

9»  teuirgis  iNat.  Bank  v.  Smith,  9 

Tex.  Civ.  App.  540.  App.  273. 


§    318]  INTEREST.  997 

coveiy  of  atloriic\y's  fccs,^  In  Oklalioiiia  tlic  dcl)l(»r  iiiiiv  re- 
cover all  the  interest  paid.*  Under  a  statute  of  North  (  aiolina 
double  the  total  amount  of  a  usurious  pasiiKMil  of  interest  nuiy 
be  recovered  and  not  merely  ilouble  llie  usurious  part  tlicreof; 
but  this  is  not  true  where  the  ]iavments  of  lej>al  interest  and 
usurious  rates  are  made  separately,  in  that  case  oidy  douhh: 
the  amount  of  the  usurious  payment  is  recoverable.*  In  Wash- 
ington the  statutory  remedies  of  the  borrower  do  not  ju-event  the 
maintenance  of  an  action  in  the  nature  of  an  assumpsit  for 
money  had  and  received  to  i'eco\'er  tlie  interest  i)aiil  in  excess  of 
that  fixed  by  the  law.^  A  party  who  asks  tliat  a  dead  he  declared 
a  mortgage  may  be  required,  as  a  condition  to  receiving  such 
relief,  to  forego  the  advantage  of  the  penalties  for  usury  and  t*} 
submit  to  the  ])ayment  of  the  principal  with  legal  interest.' 

Section  4. 

agreements  for  .m«)rk  than  t.kgal  kate  after  matckity. 

§  318.  Not  usury,  but  penalty.  This  subject  has  been,  to  a 
considerable  extent,  considei-ed  in  the  i)receding  ])agcs,  but  at- 
tention has  not  been  called  to  the  distinct  (piestion  of  the  elTect 
of  stipulating  for  rates  of  interest  exceeding  those  allowed  by 
law  to  be  paid  after  maturity.  The  (pu^sti(tn  may  ])ractically 
arise  under  statutes  regulating  inlei'cst  in  two  ways:  tirsi,  by 
providing  that  the  interest  on  money  shall  l)e  a  uiven  rate,  and 
no  more;  second,  by  prescribing  a  general  rate  and  thai  parties 
may  agree  on  any  other  not  exceeding  a  specified  higher  rate. 
Reserving  a  greater  sum  for  intei-est  before  maturity  than  the 
rate  fixed  by  statute  or  than  is  authorized  to  be  slipnlated  for 
renders  the  contract  usurious,  lint  agreeing  for  the  prohihited 
rates  to  be  computed  aftei-  nuitui'ily  is  not  usury.® 

The  reason  given  is  that  the  debtor  can  relieve  himself  by  at 

3  Libert  v.  Unfried,  47  Waali.  lSf>.        lOloB    402;    Walter  v.  Callioun.  88 

4  Melton   V.    Snow,   24   Okla.   780.       Kan.  801. 

STayloe  v.  Parker,  1.37  N.  C.  418.  8  Carney  v.   Mnttliewson,   8(5    Ark. 

6  Lee  V.   Hillman,    74   Wash.   408.  2.'i;   Holmes  v.  Dewey,  00  Kan.  441; 

7Holden  L.  &  L.  S.  Co.  v.   Inter-  Taylor   v.    Hiizard.     114     Mo.     Ajii.. 

state   T.    Co.,   87    Kan.   221,   L.R.A.  G22;  Gay  v.  Berkey,  i:i7  .Mirli.  (i.nS; 


998 


SUTHERLAND    ON    DAINIAGES, 


[§  318 


once  paying  the  debt;  he  i^  no  longer  bound  to  keep  the  money 
that  it  may  earn  interest  for  the  creditor.     By  paying  the  debt 


Keys  V.  Lardncr,  55  Kan.  331;  Paw- 
tucket  Mut.  V.  Ins.  Co.  V.  Landers, 

5  Kan.  App.  623;  Brown  v.  Cory,  !) 
Kan.  App.  702  (the  rule  has  been 
changed  by  statute  in  Kansas)  ; 
Home  F.  Ins.  Co.  v.  Fitch,  52  Neb. 
88;  Havemeyer  v.  Paul,  45  Neb. 
373,  overruling  Richardson  v.  Camp- 
bell, 34  Neb.  181;  Sanford  v.  Lich- 
tenberger,  62  Neb.  501;  Sumner 
V.  People,  29  N.  Y.  337;  Green  v. 
Brown,  22  N.  Y.  Misc.  279;  Glidden 
V.  Chamberlin,  167  Mass.  486;  Law 
Trust  Soc.  V.  Hoguc,  37  Ore.  544; 
Ramsey  v.  Morrison,  39  N.  J.  L. 
591 ;  Crider  v.  San  Antonio  R.  E.  B. 

6  L.  Ass'n,  89  Tex.  597;  Lloyd  v. 
Scott,  4  Pet.  225,  7  L.  ed.  840; 
Taylor  v.  Hiestand,  46  Ohio  St.  343; 
Ward  V.  Cornett,  91  Va.  676,  49 
L.R.A.  550;  Scottish-Am.  M.  Co.  v. 
Wilson,  24  Fed.  310;  Stansbury  v. 
Stansbury,  24  W.  Va.  634;  Chaffe 
V  Landers,  46  Ark..364;  Weyrich  v. 
Hobleman,  14  Neb.  432;  Barbour 
V.  Tompkins,  31  W.  Va.  410  (if  the 
agreement  is  made  after  interest  has 
become  due)  ;  Lawrence  v.  Cowles, 
13  111.  577;  Gould  v.  Bishop  Hill 
Colony,  35  111.  .324;  Davis  v.  Rider, 
53  111.  416,  85  Am.  Dec.  368;  With- 
erow  V.  Briggs,  67  111.  96;  Wilday 
V.  Morrison,  66  111.  532;  Cutler  v. 
How,  8  Mass.  257;  Call  v.  Scott,  4 
Call,  402;  Wilson  v.  Dean,  10  Iowa 
432;  Gower  v.  Carter,  3  Iowa  244, 
66  Am.  Dec.  71 ;  Moore  v.  Hylton,  1 
Dev.  Eq.  433;  Campbell  v.  Shields, 
6  Leigh  517;  Gambril  v.  Doe,  8 
Blackf.  140,  44  Am.  Dec.  760 ;  Fisher 
V.  Otis,  3  Pin.  78;  Wight  v.  Shuck, 
Morris,  425;  Shuck  v.  Wight,  1  G. 
Greene  128;  Fisher  v.  Anderson,  25 
Iowa  28,  95  Am.  Dec.  761;  Jones  v. 
Berryhill,  25  Iowa  289;  Rogers  v. 
Sample,  33  Miss.  310,  69  Am.  Dec. 


349 ;  Roberts  v.  Trenayne,  Cro.  Jac. 
507 ;  Floyer  v.  Edwards,  1  Cowp. 
112;  Weils  v.  Girling,  1  Brod.  & 
Bing.  447;  Caton  v.  Shaw,  2  Har. 
&  G.  13. 

Under  the  Tennessee  statute 
which  provides  that  "interest  is  the 
compensation  which  may  be  demand- 
ed by  the  lender  from  the  borrower, 
or  creditor  from  the  debtor  for  tlie 
use  of  money,"  a  rate  in  excess  of 
that  fixed  by  law  is  usurious,  though 
it  is  not  payable  until  after  the  ma- 
turity of  the  obligation.  Richard- 
son v.  Brown,  9  Baxter,  242. 

Where  there  is  no  restriction  as 
to  the  rate  of  interest  which  may  be 
contracted  for,  an  increased  rate 
may  be  collected  after  the  obligation 
promising  it  has  matured ;  it  is  not 
a  penalty.  If  the  increased  rate  is 
payable  monthly  the  payee  waives 
his  right  to  it  by  accepting  interest 
at  the  rate  stipulated  for  before  ma- 
turity for  such  time  as  the  latter  is 
accepted,  but  not  for  any  subsequent 
time.  Thompson  v.  Corner,  104 
Cal.  168,  43  Am.  St.  81. 

It  is  said  by  Simonton,  Circuit 
Judge,  in  a  recent  case,  that  the 
principle  seems  to  be  this:  If,  from 
tlie  contract,  it  appears  that  the 
parties,  when  making  it,  understood 
that  the  words  of  the  note  were  not 
peremptory,  but  that  the  maker 
would  l)e  indulged  provided  ho  paid 
the  increased  rate  of  interest,  this 
would  be  usury;  but  if  the  threat 
of  increased  interest  was  held  out 
to  enforce  prompt  payment,  and  if 
the  increased  rate  was  penalty  for 
the  default,  it  would  not  be  usury. 
Tlie  note  before  tlie  court  contained 
these  words:  "with  interest  thereon, 
after  maturity,  until  paid,  at  the 
rate    of    ten    per    cent,   per    annum, 


§  318] 


INTEREST. 


999 


the  debtor  can  prevent  its  increase  by  llic  ncciiimilation  nf  in- 
terest. This  reasoning  overlooks  the  possihilitv  that  for  want  of 
money  the  debtor  will  be  nnable  to  avail  himself  of  this  relief; 
this  is  the  very  inability,  with  its  distressing  consoqnences,  from 
which  it  is  deemed  humane  and  politic  by  statutes  against  usury 
to  shield  him.  'I'he  right  to  stop  interest  by  paying  the  princi- 
pal, without  the  ability  to  make  such  payment,  is  just  eiinivaknit 
to  the  right  a  person  has  to  borrow  money  when  no  ])erson  hav- 
ing it  will  lend  to  him.  If  the  creditor's  jiower  o\-er  the  neces- 
sitous to  extort  oppressive  terms  at  the  lending  is  deserviiii:  of 
legal  check,  why  limit  that  restriction  to  the  period  of  credits 
High  rates  of  interest  to  connnence  at  the  end  of  that  j^eriod  are 
as  likely  to  be  oi)i)ressive  as  when  applied  before,  and  more 
likely  to  be  assented  to.  But  the  further  reason  is  given  that 
higher  than  legal  rates  agreed  to  for  interest  after  maturity  are 
in  the  nature  of  a  penalty,  and  therefore  only  the  actual  dam- 
ages are  recoverable;  and  as  these  damages  are  for  the  non- 
payment  of   money   they   are   measured    by    the    legal    I'ate   of 


payaljle  annually,  value  received." 
Tlie  court  observed  tliat  tlie  promise 
to  paj'  interest  after  maturity  at  an 
unlawful  rate  was  incorporated  in, 
and  formed  part  of,  the  original  eon- 
tract;  that  it  was  one  of  tlie  terms 
of  that  agreement,  and  that  the  con- 
sideration was  sufficient  to  all  its 
terms;  that  the  words  "payable  an- 
nually" express  a  contract  on  tlio 
part  of  the  promisor,  and  its  ac- 
ceptance on  the  part  of  the  promisee. 
The  note  was  usurious.  Union  M., 
B.  &  T.  Co.  V.  Hagood,  97  Fed.  .SOO. 
The  opinion  in  tlie  foregoing  case 
is  quoted  from  in  Law  Trust  Soc. 
V.  Hogue,  37  Ore.  544,  557. 

In  South  Carolina  one  who  sues 
on  a  contract  not  originally  usuri- 
ous forfeits  all  interest  by  subse- 
quently charging  and  receiving 
thereon  interest  at  a  rate  in  excess 
of  that  fixed  Ijy  statute.  Khrliardt 
V.  Varn,  51  S.  C.  550. 

A  statute  to  the  contrary  was  en- 


acted in  1887  in  Minnesota.  Ciiase 
V.  Whitten,  51  Minn.  485.  It  mere- 
ly works  a  forfeiture  of  the  interest 
reserved  and  does  not  render  the 
contract  void  in  toto.  Chase  v. 
Whitten,  G2  ^Minn.  408. 

In  Missouri  "a  note  bearing  a  law- 
ful rate  before  maturity  and  an  un- 
lawful rate  after  that  time,  becomes 
usurious  if  forbearance  is  exercised 
and  tlie  unlawful  rate  is  cliarged  or 
exacted."  J.  I.  Case  Thresliing 
Mach.  Co.  v.  'roinliii,  174  M<i.  A)))). 
512. 

A  statute  which  delines  interest 
as  "the  compensation  allowed  by 
law  or  fixed  by  the  parties  to  a  con- 
tract for  the  use  or  forbearanee  or 
detention  of  money"  changes  the 
rule.  '"The  detention  of  money 
arises  in  a  ease  when  a  debt  has  be- 
come due  and  tlie  del)t()r  witiibolds 
its  payment  witliout  a  new  contract 
gi\iiig  liim  a  right  to  do  so."  Parks 
V.  Liil.bo.k,  !I2  Tex.  (1^5. 


1000 


SLTTHERT.AND    ON    DAMAGKS. 


[§   318 


interest.  The  doctrine  thus  limited  is  correctly  stated  thus: 
An  agreement  to  pay  more  than  the  legal  rate  of  interest  by 
way  of  penalty  for  not  paying  the  debt  is  not  nsnrions  because 
the  debtor  may  at  any  time  relieve  himself  by  paying  it  with 
lawful  interest  if  he  is  able  to  do  so ;  and  even  if  he  incurs  the 
penalty,  this  may  be  reduced  to  the  actual  debt  reckoned  in  the 
same  manner,^  No  agreement  is  valid  for  a  greater  rate  of 
interest  to  be  paid  after  maturity  than  may  be  legally  stipulated 
to  be  paid  before.  This  rule  is  founded  upon  principle  and 
authority.  Parties  may  contract  absolutely  or  conditionally,  as 
we  have  seen,  for  any  rate  within  a  statute  fixing  interest  limits. 
When  a  rate  above  those  limits  is  agreed  to  be  paid  before 
maturity  it  is  usurious ;  not  collectible ;  if  it  is  agreed  to  be  paid 
after  maturity  it  is  in  the  nature  of  a  penalty  and  has  no  effect ; 
then  the  legal  rate  will  govern  as  though  no  agreement  had  been 
made.^°    An  increased  rate  of  interest  after  the  maturity  of  the 


9  3  Parsons  on  Cont.  116. 

10  Shuck  V.  Wight,  1  G.  Greene 
128;  Wight  v.  Shuck,  Morris  425; 
Gower  v.  Carter,  3  Iowa  244,  66 
Am.  Dec.  71;  Wilson  v.  Dean,  10 
Iowa  432;  Cutler  v.  How,  8  Mass. 
257;  Conrad  v.  Gibhon,  29  Iowa 
120;  Clark  v.  Kay,  26  Ga.  403; 
Claypool  V.  Sturgess,  10  Ohio  St. 
440;  Taul  v.  Everet,  4  J.  J.  Marsh. 
10;  Jackson  v.  Shawl,  29  Cal.  267; 
Burnhisel  v.  Firman,  22  Wall.  170, 
22  L.  ed.  766;  Bunn  v.  Kinney,  15 
Ohio  St.  40;  Caton  v.  Shaw,  2  Har. 
&  G.  13;  Sexton  v.  Murdock,  36 
Iowa  516;  Pyke  v.  Clark,  3  B.  Mon. 
262;  Brockway  v.  Clark,  6  Ohio 
45;  National  L.  Ins.  Co.  v.  Hall,  34 
Okla.  395. 

In  Gower  v.  Carter,  stipra,  the  ac- 
tion was  brought  on  an  agreement 
to  pay  a  sum  of  money  by  a  certain 
day,  and  more  than  legal  interest 
afterwards,  by  way  of  penalty,  if 
the  debt  be  not  punctually  paid. 
Stockton,  J.,  said :  "The  defendants' 
agreement  to  pay  two  and  one-half 


per  centum  per  month,  in  default 
of  payment  of  the  promissory  notes 
at  maturity,  is  not  essentially  dif- 
ferent from  an  agreement  to  pay  a 
gross  sum  as  such  penalty.  Nor  do 
we  perceive  that  either  of  the  notes 
sued  on  is  essentially  different  from 
a  penal  bond  by  which  the  obligor 
binds  himself  to  pay  the  obligee  a 
certain  sum,  with  the  condition  ap- 
pended, by  which  the  first  obligation 
is  to  be  void  on  the  payment  of  the 
lesser  sum  to  the  obligee  by  a  day 
certain.  The  real  nature  and  es- 
sence of  the  agreement  is  always  dis- 
closed by  the  condition  of  the  bond 
or  undertaking. 

"In  the  present  case  the  condition 
of  the  contract  was  to  pay  the  note, 
with  interest,  by  a  certain  day.  If 
not  paid  punctually  when  due,  the 
defendants  promise  to  pay  as  a  pen- 
alty for  the  default  two  and  a  half 
per  centum  per  month  from  matur- 
ity until  paid.  Are  the  plaintiffs 
entitled  to  enforce  this  penalty 
against  the  defendants  on  their  fail- 


§  ai8] 


INTEREST. 


1001 


indebtedness  cannot  be  collected  from  the  i)urchaser  of  mort- 
g-aged  property,  wlio  assumed  tlie  principal  of  the  mortgage  with 


lire  to  pay  tlio  notes  at  tlieir  ma- 
turity? Wc  must  first  remark, 
however,  that  on  examination  of 
tlie  petition  we  find  tliat  it  does  not 
set  fortli  anj'  breaches  on  the  part 
of  the  defendants,  as  on  a  penal 
bond.  It  does  not  aver  wliat  amount 
is  chiimed  by  plaintiffs  as  due  from 
defendants,  nor  does  it  pray  judg- 
ment for  the  amount  of  the  penalty. 
We  refer  to  this  in  connection  with 
the  question  made  by  the  defend- 
ants in  their  assignment  of  errors, 
viz.:  whether  the  court  should  have 
rendered  judgment  for  the  penalty 
of  two  and  a  half  per  centum  per 
month,  and  if  not,  for  what  amount 
should  judgment  have  been  ren- 
dered ? 

"The  consideration  of  this  ques- 
tion renders  it  advisable  to  inquire 
to  some  extent  into  the  nature  and 
history  of  actions  for  penalties  sued 
on  penal  obligations.  In  an  action 
of  debt  on  a  penal  bond  for  condi- 
tion broken,  the  amount  which  the 
plaintiff  was  entitled  to  recover  was 
originally  the  penalty.  The  ac- 
tion could  not  be  relieved  against 
by  payment  or  tender.  This  severe 
rule  of  the  common  law  was  only 
mitigated  by  the  practice  of  the 
courts  of  chancery,  which  interposed 
and  would  not  allow  the  creditor  to 
take  more  than  in  conscience  lie 
ought.  Sedgw.  on  Dam.  393.  From 
the  time  that  it  became  settled  in 
equity  that  the  condition  of  the 
bond  was  the  agreement  of  the  par- 
ties, the  obligor  was  relieved  from 
the  penalty.  Very  soon  arose  the 
practice,  enforced  by  legislation, 
requiring  the  plaintiff  to  assign 
breaches  in  his  declaration,  and  the 
jury  on  the  trial  assessed  such  dam- 
ages for  the  breaches  assigned  as 
the    plaintiff     on     the     trial     miglit 


prove.  And  it  is  enacted  by  tiic 
coile  of  Iowa,  section  1818,  tiiat  in 
actions  on  penal  bonds  the  petition 
must  set  forth  the  breaehes.  and  tin- 
judgment  rendered  thereon  must  lie 
for  the  actual  damages  only.  It 
may  therefore  be  laid  down  as  a 
settled  rule,  that  no  other  sum  can 
now  l)e  recovered  under  a  penalty 
tlian  that  wliicli  shall  compensate 
the  plaintiff  for  liis  actual  less. 
The  penalty  is  in  no  sense  the 
measure  of  compensation;  and  the 
plaintiff  must  show  the  particular 
injury  of  which  he  complains,  and 
liave  his  damages  assessed  by  a 
jury.  Such  damages,  it  is  further 
held,  are  not  necessarily  nominal, 
and  tln!  jury  may  give  substantial 
damages  if  they  see  fit.  Sedgw.  on 
Dam.  .396,  397. 

"In  the  case  of  a  loan  of  money, 
although  in  point  of  fact  the  cred- 
itor may  suffer  the  most  serious 
inconvenience  for  the  want  of  punc- 
tual payment  of  his  debt,  as  haj)- 
pens  every  day,  and  a  subsequent 
payment  of  prineipal  and  interest 
may  be  a  very  inadequate  compensa- 
tion for  the  original  disappointment, 
it  may  be  stated  as  a  general  rule 
that  a  promise  of  paying  a  penalty 
beyond  the  amount  of  legal  inter- 
est cannot  be  enforced.  Pofliier  on 
Obligations.  .\p|irndi\,  87.  Where 
the  penalty  has  been  incurrerl,  the 
ends  of  justice  may  hv  arrived  at 
by  reducing  the  penalty  to  the 
actual  debt.  2  Parsons  on  Con- 
tracts, 393.  The  case  of  Groves  v. 
Groves,  1  Wash.  (Va.)  1,  was  an 
agreement  for  the  payment  of  a 
debt  at  a  certain  day,  and,  if  not 
paid  punctually,  then  for  the  jjay- 
nicnt  of  a  larger  sum;  the  court 
held  that  a  contract  to  pay  a  larger 
sum  at  a  future  day  was  not  usuri- 


1002 


SUTHERLAND    ON    DAMAGES. 


[§  318 


interest   thereon    at    a    specified    rate,    even    thougli    the    note 
secured  by  the  mortgage  bore  an  increased  rate  after  maturity 


oils,  and  that  the  increased  sum 
should  be  considered  as  a  penalty 
against  which  equity  ought  to  re- 
lieve, on  comi^ensation  being  made. 
So  in  Brockway  v.  Clark,  6  Ohio 
45,  the  supreme  court  of  Ohio  held 
that  where  a  money-lender  takes 
from  a  borrower  an  obligation  for 
a  greater  amount  than  the  money 
lent  and  stipulated  interest,  with  an 
undertaking  on  Iiis  part  to  receive 
a  less  sum  in  discharge  of  the  ob- 
ligation, if  punctually  paid,  equity 
may  relieve  against  the  excess  as  a 
penalty,  on  the  same  principle  upon 
which  parties  are  ordinarily  re- 
lieved from  penalties.  The  same 
was  granted  at  law  in  Massachu- 
setts in  the  case  of  Cutler  v.  How,  8 
Mass.  257.  After  a  verdict  by  the 
jury,  for  the  plaintiff,  assessing  the 
damages,  the  court  directed  a  cer- 
tain amount  of  the  penalty,  which 
it  deemed  oppressive,  to  be  deduct- 
ed from  the  amount  of  the  verdict, 
and  judgment  was  entered  on  tlie 
verdict  as  amended. 

"In  Shuck  v.  Wight,  1  G.  Greene 
128,  the  note  was  for  the  sum  of 
$300,  payable  two  years  after  date, 
and  to  bear  interest  after  maturity, 
if  not  paid,  at  the  rate  of  fifty  per 
centum  per  annum.  Suit  being 
brought  by  the  liolder  of  the  note 
to  foreclose  a  mortgage  given  to 
secure  -  its  payment,  the  petition 
prayed  judgment  for  the  amount  of 
the  note  with  such  interest  as  the 
court  should  deem  just  and  proper. 
Judgment  was  given  for  the  plaintiff 
for  the  amount  of  the  note  and  in- 
terest at  six  per  centum  per  annum. 
This  judgment  was  affirmed  by  the 
supreme  court  (1  G.  Greene  128), 
and  we  may  consider  that  the  prin- 
ciple was  thereby  settled  so  far  as 
the   authority   of   this   court   could 


settle  it,  that  the  plaintiff  was  not 
entitled  to  judgment  for  the  penalty 
of  fifty  per  centum  per  annum,  but 
for  six  jjer  cent.  only. 

"In  anotlier  class  of  cases  where 
the  parties  have  agreed  upon  a  sum 
certain  as  the  measure  of  danuigcs, 
in  order  as  far  as  possible  to  avoid 
all  future  questions  as  to  the 
amount  of  damages  which  may  re- 
sult from  the  violation  of  the  con- 
tract, and  where  a  definite  sum  was 
named  as  settled  and  liquidated,  if 
the  construction  of  the  phraseology 
would  work  oppression  the  use  of 
the  term  'liquidated  damages'  did 
not  prevent  the  courts  from  inquir- 
ing into  the  actual  injury  sustained, 
and  doing  justice  between  the  par- 
ties. No  damages  for  the  non-pay- 
ment of  money  can  ever  be  so  liqui- 
dated between  the  parties  as  to 
evade  the  provisions  of  the  law 
which  fix  the  rate  of  interest. 
Sedgw.  on  Dam.  400.  In  Orr  v. 
Churchill,  1  H.  Black  232,  Lord 
Loughborough  said :  'There  can  only 
be  an  agreement  for  liquidated  dam- 
ages where  there  is  an  agreement 
for  tlie  performance  of  certain  acts, 
the  not  doing  of  which  would  be  in- 
jurious to  one  of  the  parties;  or  to 
guard  against  the  performance  of 
acts  which  if  done  would  also  be 
injurious.  But  in  cases  like  the 
present,  the  law  having  fixed  by 
positive  rules  the  rate  of  interest, 
has  bounded  the  measure  of  dam- 
ages.' In  the  case  of  Gray  v.  Cros- 
by, 18  Johns.  219,  where  a  party 
covenanted  on  a  certain  contingency 
to  pay  to  another  a  sum  of  money, 
with  a  proviso  that  if  he  failed  or 
refused  then  he  would  pay  a  larger 
sum  as  liquidated  damages,  the  su- 
preme court  of  New  York  say:  Such 
facts  constitute  no  right  to  recover 


§    319]  INTEREST.  ItKi:; 

unless  the  stipulation  to  pay  it  bv  the  party  who  assiinicd  llic 
indebtedness  is  elear.^^ 

§  319.  Same  subject;  when  debtor  relieved  in  Illinois,  in 
Illinois,  however,  this  nilc  does  not  appear  to  be  recognized. 
A  remedy  in  eqnity  has  sometimes  been  abstractly  ackno\vIed<^ed 
as  one  that  might  be  available  in  ease  of  an  interest  contract  of 
an  oppressive  character. ^^  While  the  statnte  limited  the  rate 
which  might  be  stipulated  for  to  ten  per  cent  per  annnm  a  nolo 
was  given  to  which  was  added  this  clause:  "and  if  the  same  is 
not  paid  when  due,  to  pay  her  twenty-fonr  ]hm'  cent  interest 
thereon  from  the  time  the  same  is  due  until  j);tid/'  Tbe  sn- 
preme  court  held,  as  it  had  done  before  and  as  it  did  rejjeatedly 
afterwards,  that  such  agreements  for  interest  are  not  usurious 
unless  given  on  such  short  time  as  to  induce  the  belief  that  they 
were  designed  to  evade  the  statute  against  nsnry.^^  Snch  con- 
tracts do  not  come  within  the  rule  that  a  greater  snm  is  a  pen- 
alty when  it  is  made  payable  on  failnre  to  pay  a  smaller  sum. 
Where  that  rule  applies  the  greater  sum  becomes  due  at  once,  in 
case  of  non-payment  at  the  day,  and  is  strictly  a  ])enalty  from 
which  a  court  of  chancery  will  relieve  on  slight  grounds.  The 
courts  of  that  state,  in  common  with  other  courts,  pronounce 
such  excessive  interest  a  penalty  to  ensure  ])unctnality,  Imt  it 
is  not  there  strictly  a  penalty  against  which  courts  of  chancery 
will  relieve  except  for  cogent- reasons.  On  the  contrary,  these 
penalties  are  enforced  for  the  full  amount  agreed  to  be  paid.^* 

beyond     the     money     actually     due.  per  annum  was  stipulated  to  he  paid 

Liquidated  damages  are  not  applica-  after  maturity  the  court,  referring 

ble   to   such   a   case.     Tf   they   were  to    its    previous    decisions,    said    it 

tliey   might   afford   a   secure   protec-  could  hardly  have  decided  all  these 

tion  for  usury,  and  countenance  op-  cases  witliout  i)assiiig  upon  hotii  of 

pression    imder   the   forma   of    law."  ^]^^^^^,     (piestions,     namely,     whetlier 

11  Hicks   V.    Elwell,   129    111.  App.  ^^^.j^   intj.,.pst  was  of  tlu-  nature  of 

•'"l-  a  penaltv  or  usurious,  ami  evideiitlv 

12GouW    V.    Bishop    Hill    Colony,  ^,._,    „.,t '  ,„.,,,,    .,    ,„..,,ly    increased 

'  "   ■  ^        ,  ^  ,  rate    of    interest    in    conse<pience    of 

13Id. :     Lawrence    v.    i  owles,     I!  .      .  ■      -^ 

„„     r.     -x,         xxM -i.  1         o.)  Til  iionpavment  at   maturity   as  a   j)en- 
111.  .')77;   Smitii  v.  \\hitaker,  23  111.  '    •  .         ,  ■  , 

„,_      ^.  ,         TTii   n  1  vA^^r.  altv   in  the  sense   in    which   a   gross 

3(i7;    Bishop  TTill  Colony  v.  Edger-  -^  ..    .     T     i 

ton,  26  111.   54;   Davis  v.  Rider,  53  '''-"   '«  =»   I'""»l*>-   ^^'"■"   '*    "^  »"  '"^ 

111.  416;  Wilday  v.  Morrison,  66  111.  r"i''   '^^   '»   partuular  .lay.      I'.a,,..  v. 

5.32;    Witherow    v.    Briggs,    67    111.  f^ii'U'V.  'm    HI-  -"i'^^- 

96;  Banev.  Gridley,  id.  388.  14  Downey    v.    H.sich.    7S    111.    53; 

In  a  case  in  which  thirty  per  cent.  Reeves  v.  Stipp,  91    111.  Unit. 


1004  sutherland  on  damages.  [§  320 

Section  5. 


INTEREST    AS    COMPENSATION. 

§  320.  Scope  of  section.  Under  previous  heads  we  have  dis- 
(5iissed  interest  resulting  from  or  connected  with  agreements 
therefor.  It  is  now  proposed  to  consider  the  subject  in  a  broader 
sense : — the  liability  for  interest  where  there  is  no  actual  agree- 
ment to  pay  it,  not  only  in  connection  with  obligations  ex 
contractu  to  pay  the  principal,  but  also  where  the  -liability  is 
founded  in  tort.  A  liability  for  interest  may  result  from  a  tacit 
agreement  to  pay  it;  and  the  law  in  many  instances  implies  a 
duty  to  pay  it  on  the  principle  of  quantum  meruit.  It  is  also  al- 
most ^^  invariably  chargeable  as  damages  in  cases  of  default  in 
the  payment  of  a  liquidated  debt,  and  upon  damages  for  viola- 
tion of  contracts  where  such  damages  are  determinable  by  some 
certain  standard.  In  cases  of  tort  interest  is  allowed  not  only 
upon  money,  but  the  value  of  property  wrongfully  taken,  con- 
verted, withheld,^^  or  lost  by  culpable  neglect.  It  is  recoverable, 
also,  upon  pecuniary  elements  of  damage  although  the  principal 
injury  may  involve  a  claim  for  unliquidated  damages.  Damages 
allowed  as  an  equivalent  of  legal  interest  are  actual  and  not 
punitive.^' 

§  321.  Right  not  absolute.  It  will  appear  more  fully  here- 
after that  the  right  to  interest  as  comj^ensation  is  not  absolute, 
as  it  is  where  there  are  agreements  made  to  pay  it.  In  some 
jurisdictions  the  allowance  of  it  is  discretionary  with  the  jury,^* 

15  Hardwood  Interior  Co.  v.  Bull,  of  an  agroement,   is  due  only  from 

24  Cal.  App.   129.  the     time     payment     is     demanded. 

A  subscription  for  stock  in  a  cor-  Stevens  v.  Corbitt,  33  Mich.  458. 

poration,     the     amount     subscribed  16  Nunn  v.  Lynch,  89  Ark.  41,  cit- 

being  payable  in   fixed   instalments,  ing   this   section    (on   the   value   of 

is  not   such   a   contract   as   interest  premises  in  ejectment), 

is  recoverable  on  as  matter  of  right.  l7flriswold  v.  Wentworth,  85  Vt. 

Frank    v.    Morrison,     55     Md.     399.  205. 

The  jury   may  allow   it.     Musgrove  18  Shoop  v.  Fidelity  &  Deposit  Co. 

V.  Morrison,  54  id.  161.  of    Maryland,    124    Md.    130;    Occi- 

Interest    on    a    note    given    as    a  dental  C.  M.  Co.  v.  Comstock  T.  Co., 

subscription  to  a  railroad  company  125  Fed.  244 ;  District  of  Columbia 

and  payable  one  year  after  the  com-  v.  Camden  I.  Works,  15  D.  C.  App. 

pletion  of  the  road,  in  the  absence  Cas.  198,  222. 


§  321] 


INTEREST. 


1005 


in  others  with  the  conrt/^  and  in  others  it  cannot  he  allowed  in  a 
nnmerons  class  of  cases  as  interest,  though  the  lapse  of  time  be- 
tween the  origin  of  the  cause  of  action  and  the  time  of  trial 
may  be  considered  bv  the  jury  in  estimating  the  damages.'^"  In 
cases  where  the  right  to  recover  interest  is  not  absolute  the 
plaintiff  may  properly  be  deprived  of  it  if  he  has  been  guilty 
of  laches  in  making  his  demand  or  in  prosecuting  his  action, 
either  for  the  time  anterior  to  judgment  or  for  such  other  ))eriod 
as  the  jury  may  find  that  his  laches  continued. ^^     A  debtor  is 


WEastfield  S.  S.  Co.  v.  McKeon, 
208  Fed.  580;  Bethell  v.  Mellor  & 
Rittenhouse  Co.,  135  Fed.  445;  The 
Scotland,  118  U  S.  507,  30  L.  ed. 
153. 

20  See  §§  336,  1256. 

A  contractor  in  default  is  not 
entitled  to  interest  on  the  sum  re- 
covered prior  to  his  decree.  Fils- 
ton  F.  Co.  V.  Henderson,  106  Md. 
335. 

In  the  absence  of  a  contract  in- 
terest is  recoverable  only  upon  the 
subjects  specified  in  the  statute. 
Hurlburt  v.  Dusenbury,  26  Colo. 
240;  Vietti  v.  Nesbitt,  22  Nev.  390; 
Thompson  v.  Tonopah  Lumber  Co., 
—  Nev.  — ,  41  Pac.  09. 

Interest  can  only  be  allowed  by 
virtue  of  .some  contract  e.xpress  or 
implied,  or  by  virtue  of  some  stat- 
ute, or  on  account  of  the  default  of 
the  party  liable  to  pay,  and  then  it 
is  allowed  as  damages  for  the  de- 
fault. Matter  of  Trustees  of  New 
York  &  B.  Bridge,   137  N.  Y.  95. 

In  Manitoba  interest  cannot  he 
recovered  before  action  brought  un- 
less there  was  a  contract  to  pay  it 
or  the  nature  of  the  case  is  such 
that  a  contract  may  be  implied, 
unless  the  money  was  payable  by 
virtue  of  a  writing  and  a  demand 
was  made  with  notice  that  interest 
would  be  claimed.  Nichol  v.  C.oeher, 
12  Manitoba  177,  182. 

21  Hilbiirn     v.      Mercantile     Nat. 


Bani^',  39  Colo.  189 ;  Arapahoe  Coun- 
ty V.  Denver,  30  Colo.  13;  Betlile- 
iiem  V.  Hemingway,  14  Pa.  Diat. 
656;  Redfield  v.  Ystalyfera  I.  Co., 
110  U.  S.  174,  28  L.  ed.  109;  Bann 
V.  Dalzell,  3  C.  &  P.  376;  Newell  v. 
Keith,  n  Vt.  214;  Adams  Exp.  Co. 
V.  Milton,  11  Bush,  49;  Bartels  v. 
Redfield,  27  Fed.  286,  23  Blatchf. 
486;  Stewart  v.  Sohell,  31  Fed.  65; 
United  States  v.  Sanborn,  135  U.  S. 
271,  34  L.  ed.  112;  Brinkly  v. 
Willis,  22  Ark.  9;  Clark  v.  Hershy, 
52  id.  473;  Culmer  v.  Caine,  22 
Utah,  216,  230;  Jourolmon  v.  Ew- 
ing,  26  C.  C.  A.  23,  80  Fed.  004; 
Redfield  V.  Bartels,  139  U.  S.  694, 
701,  35  L.  ed.  310,  313;  Burroughs 
V.  Abel,  105  Fed.  366;  Chemical 
Nat.  Bank  v.  Armstrong,  8  C.  C. 
A.  155,  59  Fed.  372,  28  L.R.A.  231. 

A  party  wlio  claims  damages  for 
a  tort,  liability  for  which  has  been 
denied,  may  defer  l)ringing  an  ac- 
tion until  a  pending  case  involving 
the  same  question  is  settled.  Frazer 
V.    Bigelow    C.    Co.,    141    Mass.    126. 

A  litigant  wlio  refused  tlie  re- 
lief tendered  him  in  the  court  of 
original  jurisdiction  and  contested 
the  question  at  issue  in  the  court 
of  last  resort  may  not,  on  finally 
ol>taining  what  was  refused,  recover 
interest  pending  the  delay,  .\ndrus 
V.  Berksliire  P.  Co.,   197   Fed.   1016. 

In  the  absence  of  an  agreement 
therefor    the    riglit    to    interest    will 


1006  SUTJIEKLANI)    ON    DAMAGES.  [§    321 

not  liable  for  interest  on  money  deposited  with  a  third  party 
because  he  contests  the  creditor's  right  thereto. ^^  In  the  absence 
of  an  agreement  therefor  there  is  no  liability  in  an  action  at  law 
for  interest  on  the  rescission  of  a  contract  for  the  sale  of  realty. ^^ 
A  valuable  contribution  to  the  discussion  of  some  of  the 
features  of  interest  as  compensation  has  recently  been  made  by 
eTustice  Dodge  of  the  supreme  court  of  Wisconsin.  After  refer- 
ring to  the  former  disinclination  to  allow  interest,  except  where 
it  was  specifically  contracted  for,  he  noticed  the  changes  made 
in  the  terms  of  statutes,  which  formerly  guardedly  permitted 
express  contracts  for  limited  rates  of  interest ;  while  now  they 
allow  its  recovery  upon  the  forbearance  of  any  money,  goods  or 
things  in  action,  as  well  as  upon  money  due  upon  note  or  other 
contract.  '^Such  a  change  in  the  statute  is  certainly  significant, 
and  may  well  justify  a  difference  in  states  where  it  is  in  force 
as  to  the  class  of  demands  which  draw  interest  without  express 
agreement  therefor."  After  noticing  the  conflict  in  several  Wis- 
consin cases  respecting  the  allowance  of  interest  as  compensation 
and  the  rule  prevailing  in  New  York,  it  was  observed :  The  true 
principle,  w^hich  is  based  on  the  sense  of  justice  in  the  business 
community  and  on  our  statute,  is  that  he  who  retains  money 
which  he  ought  to  pay  to  another  should  be  charged  interest  upon 
it.  The  difficulty  is  that  it  cannot  well  be  said  one  ought  to  pay 
money  unless  he  can  ascertain  how  much  he  ought  to  pay  with 
reasonable  exactness.  Mere  difference  of  opinion  as  to  amount 
is,  however,  no  more  a  reason  to  excuse  him  from  interest  than 
difference  of  opinion  whether  he  ought  legally  to  pay  at  all, 
which  has  never  been  held  an  excuse.     When  one  is  held  liable, 

depend  upon  the  nature  of  the  ob-  public  moneys  received  by  its  treas- 

ligation,  the   relations   and   circum-  urer   because   of  general   knowledge 

stances  of  the  parties.     Stonebraker  of  the   custom   of   its   treasurers   to 

V.  Littleton,  ]19  Md.  173.  retain    such    interest   to   their    own 

Laches   on   the   part   of   state   of-  use,  nor  by  the  acquiescence  of  the 

ficers     in     demanding    payment    of  state    authorities    for    many    years 

license    fees    from    foreign    corpora-  in    such    custom.      State   v.    McFet- 

tions  will  not  bar  the  right  of  the  ridge,   84   Wis.   473,   523,  20  L.R.A. 

state   to   collect    such    fees    and    in-  223. 

terest    on    them.      State    v.  •  Fricke,  22  Qgden  v.  Stevens,  241  111.  556, 

102  Wis.   107.  132    Am.    St.   237. 

The    state    is   not    estopped    from  23  Sill    v.    Burgess,    134   111.    App. 

recovering    interest    on    deposits    of  373. 


§    322]  INTEREST.  1007 

say  on  a  ])roiiiiss()i'_v  note,  to  wliicli  his  dot'ciise  has  I'aiscd  a 
doubtful  question  of  hiw,  he  must  pay  the  interest  with  it,  l)c- 
cause,  theoretically  at  least,  there  whs  a  tixeJ  standard  of  legal 
obligation,  which,  if  correctly  applied,  would  have  made  his 
duty  clear.  So  if  there  be  a  reasonable  standard  of  measure- 
ment by  the  correct  applicati(ui  of  which  one  can  ascertain  the 
amount  he  owes,  he  should  equally  be  hehl  responsible  for  mak- 
ing such  application  correctly  and  liable  for  interest  if  he  does 
not.  The  New  York  courts  have  adopted  as  desigiuition  of 
such  a  standard  "market  value,''  and  in  a  broad  use  of  the  term 
this  is  perhaps  the  safest  test  to  apply.  It  must  not,  however 
be  restrained  to  detinite  quotations  on  a  board  of  trade,  or  to 
such  degree  of  certaint}^  that  no  difference  of  opinion  could 
exist.  If  one  having  a  commodity  to  purchase,  or  certain  serv- 
ices to  hire  can  by  inquiring  among  those  familiar  with  the 
subject  learn  approximately  the  current  prices  which  he  would 
have  to  pay  therefor,  a  market  value  can  well  be  said  to  exist, 
so  that  no  serious  inequity  will  result  from  the  application  of 
the  foregoing  rule  to  those  who  desire  to  act  justly;  espetiially 
in  view  of  the  other  rule  of  law  that  a  debtor  can  always  stop 
interest  by  making  and  keeping  good  an  unconditional  tender, 
thus  giving  him  a  substantial  advantage  over  a  creditor,  who 
has  no  such  option.^* 

The  rate  of  interest  allowed  as  compensation  is  that  i)rovided 
by  law  when  the  liability  is  established.^^ 

§  322.  Tacit  agreements  to  pay  interest  on  accounts.  As  will 
be  presently  seen  more  at  largo  interest  is  not  allowed  upon 
open  running  accounts.  Where  there  is  no  definite  credit  the 
parties  deal  upon  the  assumption, — by  the  debtor,  that  although 
he  has  no  claim  to  forbearance,  yet  payment  will  be  requested ; 
and, -on  the  part  of  the  creditor,  that  the  account  has  no  time  to 
run  and  will  be  paid  on  demand.  Hence  interest  is  not  payable 
before  demand  for  the  same  reason  that  it  is  neN'cr  payable, 

24Laycock   v.   Parker,     103     Wis.  Lake    Shore    &    M.    R.    Co.,    94    id. 

]6].     See  Dady   v.   Condit,  209   111.  041;    State    v.    Ouonthor,    87    Wis. 

48g  "  (57:5;  Willctt  v.  Ilerrin,  —  Tex.  Civ. 

25  First  Nat.  Bank  v.  Fourth  Nat.  App.   — ,    lt)l   S.   W.   26. 
Bank,    89    N.    Y.    412;    Sanders    v. 


1008 


SUl'llKKI.AND    ON     DAMACiKS. 


[§  322 


except  bj  agreement  while  the  debtor  has  a  right  to  retain  the 
money ;  in  such  cases  it  is  not  payable  on  the  ground  of  default 
until  the  creditor  has  put  the  debtor  under  a  present  duty  to 
pay  by  rendering  the  account  or  requesting  payment.  Where 
by  the  custom  of  a  place  of  a  trade  or  of  a  particular  dealer 
moneys  owing  on  account  are  to  carry  interest  after  a  certain 
period,  whether  demanded  or  not,  persons  who  contract  debts  at 
that  place,  in  that  trade  or  to  that  dealer  w'ith  notice  of  that 
custom  at  the  time  of  contracting  tacitly  acquiesce  in  it  and  by 
a  natural  implication  tacitly  agree  to  the  liability  which  it  im- 
poses. 


26  Davis  Regulator  Co.  v.  Phoenix 
I.  Works  Co.,  17  Ta.  Dist.  889; 
Smith  V.  Butler,  176  Mass.  38; 
Wilniot  V.  Gardner,  [1901]  2  Ch. 
548;  Aiizerais  v.  Naglee,  74  Cal. 
60;  Hummel  v.  Brown,  24  Pa.  310; 
Watt  V.  Hoch,  2.5  id.  411;  Newell  v. 
Griswold,  6  Johns.  45 ;  Barclay  v. 
Kennedy,  3  Wash.  C.  C.  350;  Loring 
V.  Gurney,  5  Pick.  15;  Kaymond  v. 
Isham,  8  Vt.  258;  Consequa  v.  Fan- 
ning, 3  .Johns.  Ch.  587 ;  Wood  v. 
Smith,  23  Vt.  706;  Esterly  v.  Cole, 
1  Barb.  235,  3  N.  Y.  502;  Knight 
V.  Mitchell,  3  Brev.  506;  Wills  v. 
Brown,  3  N.  J.  L.  *548;  Dickson 
V.  Surginer,  3  Brev.  417;  Black  v. 
Reybold,  3  Harr.  528;  Higgins  v. 
Sargent,  2  B.  &  C.  349;  McAllister 
V.  Reab,  4  Wend.  483;  Reab  v.  Mc- 
Alister,  8  id.  109;  Veiths  v.  Hagge, 
8  Iowa,  163;  Knox  v.  .Jones,  2  Dall. 
193,  1  L.  ed.  345;  Farmers,'  etc.  Co. 
V.  Mann,  4  Robert.  356;  McKnight 
V.  Dunlop,  4  Barb.  36. 

In  Meech  v.  Smith,  7  Wend.  315, 
an  action  upon  the  account  of  a 
forwarding  merchant,  on  the  trial 
the  plaintiff  proved  an  account  of 
about  .$34  for  the  transportation 
of  a  quantity  of  flour  by  him  for 
the  defendant  from  R.  to  X.  Y.  in 
1827.  The  plaintiff  claimed  inter- 
est   on    his    account    and    offered    to 


prove  the  universal  custom  of  for- 
warding merchants  to  charge  in- 
terest upon  such  accounts;  that 
such  custom  was  well  known  to 
the  defendant  when  he  contracted 
with  the  plaintiff,  and  that  he  had 
settled  several  accounts  of  a  simi- 
lar description  witli  the  plaintiff  in 
whicli  interest  was  charged  with- 
out objection.  Exception  was  taken 
upon  the  rejection  of  this  testimony. 
Savage,  C.  J.,  said:  "On  the  ques- 
tion of  interest,  I  think  the  court 
erred.  Interest  is  always  properly 
chargeable  where  there  is  either  an 
express  or  implied  agreement  to 
pay  it.  Tlie  facts  offered  to  be 
proved  are  sufficient,  in  my  judg- 
ment, to  authorize  a  jury  to  infer 
that  there  was  an  agreement  to  pay 
interest;  it  was  the  uniform  custom 
of  all  tliose  engaged  in  the  same 
business  to  charge  interest;  it  was 
the  custom  of  the  plaintiff  to 
cliarge  it;  he  had  charged  it  in 
former  accounts  against  the  defend- 
ant, and  it  had  been  paid  without 
objection,  before  the  contract  was 
made  on  which  this  suit  is  brouglit. 
In  Trotter  v.  Grant,  2  Wend.  415, 
there  was  no  evidence  that  the  de- 
fendant Jcneic  the  plaintiff's  custom 
to  charge  interest,  nor  had  he  ever 
settled  an  account  in  which  interest 


§  322] 


INTEREST. 


lOO'J 


custom    is    essential,    direct    evidence    of    such    notice    is    not 
required.     It  may  as  in  other  cases  be  implied  from  the  cir- 


was  charged;  there  were  in  that 
case  no  suflicient  facts  from  wliich 
an  agreement  to  pay  interest  could 
be  implied,  and,  the  account  being 
unliquidated,  int-crcst  could  not  be 
recovered."  See  Liotard  v.  Graves, 
3  Cai.  226;  Williams  v.  Craig,  1 
Dall.  313,  1  L.  ed.  153;  Dodge  v. 
Perkins,  9  Pick.  368;  Rayburn  v. 
Dajs  27  111.  46;  Plarrison  v.  lland- 
ley,  1  Bibb,  443;  Von  llemcrt  v. 
Porter,  11  Mete.  (Mass.)  210;  War- 
ren V.  Tyler,  81  111.  15. 

In  Koons  v.  Miller,  3  W.  &  S. 
271,  the  court  say :  "The  practice  of 
the  merchants  of  Philadelpliia  to 
charge  interest  on  their  accounts 
after  six  months  has  endured  more 
than  half  a  century ;  and  it  is  so 
universal  that  their  customers  deal 
with  them  avowedly  on  the  basis 
of  it.  It  is  so  notorious  as  to  hv. 
recognized  abroad ;  as  may  be  seen 
in  Bispham  v.  Pollock,  1  McLean, 
411,  in  which  the  circuit  court  of 
the  United  States  for  the  district 
of  Indiana  left  its  existence,  as  the 
existence  of  any  foreign  law  must 
be  left,  to  the  jury.  Its  existence 
is  so  notorious  at  home,  however, 
that  we  are  bound  to  take  notice  of 
it  as  part  of  the  law.  That  it  lias 
not  been  sooner  recognized  I)y  ju- 
dicial decision  has  arisen  frmn  the 
fact  that  it  has  not  before  Ix'cn 
thought  a  subject  of  dispute;  but 
the  principle  is  as  well  known  and 
observed  in  the  collection  of  mer- 
chants' debts  as  any  other  custom 
peculiar  to  the  state."  To  the  same 
effect  are  Watt  v.  Hoch,  25  Pa. 
411 ;   Adams  v.  Palmer,  30  id.  346. 

In    Zi'isher    v.    Sargent,    10    Cusli. 
250,     assumpsit    was     brought    for 
goods  sold  and  delivered.     The  plain- 
tiffs were  traders  in  Boston,  and  at 
Suth.  Dam.  Vol.  I.— 64. 


the   trial   offered   testimony    tending 
to  prove  a  custom  among  merdiants 
and  traders  there  to  cliarge  inti-rest 
on   tiieir  accounts  after  a  credit  of 
fiiur  or  six  montlis;    but  offered  no 
evidence   as    to   the   credit  given    in 
tills  particular  transaction,  or  that 
I)ayment  had   been   demanded.     Tlie 
jury     were     instructeil     tluit     tliry 
miglit,  upon  tliis  evidence,  allow  in- 
terest   after    six    months — to    which 
exc-eptions  were  taken.     These  were 
overruled.      Bigelow,  J.,   said:    "Or- 
dinarily, in  the  absence  of  any  evi- 
dence of  usage,  or  of  a  special  agree- 
ment  between   the   parties,    interest 
cannot   be   recovered    upon    an    oi)en 
running  account  for  goods  sold  and 
delivered,  when  there  was  no  specific 
term  of  credit  agreed  upon  between 
the    [)arties.      This    is    the    general 
rule;  but  it  may  be  varied  by  proof 
of  the  usage  of  a  particular  trade 
or  business  to  charge  interest  after 
the  expiration   of   a   certain   period. 
In  such  cases,  jiarties  having  knowl- 
edge of  the  usage  are  presumed   to 
contract    with    reference   to   it,   and 
will   be  as  nuich   bound   by   it  as  if 
it  entered  specially   into  the  agree- 
ment  of   bargain     and    sale.       Sucli 
usage    nmy    be    shown    by    proof    of 
the   practice   among   merchants   and 
traders  generally  in  n  lown  or  city, 
i>r  by  evidence  of  the  nu)dc  of  deal- 
\u'^  in  a  jiarlicular  branch   or  class 
of  trade.     It  is  undoubtedly  true  that 
in    order   to   render   the   usage   of  a 
particular    trade    or    place    binding 
upon    a    party,    so    as    to    make    it 
part  of  a  contract,  it  must  be  made 
to    appear    that    it    was    known    to 
the   party   who   is  to   be  affected   by 
it.       But    this    knowledge    may     be 
tstaidished   by   presumptive   as   well 
as   direct  evidence. 


1010 


SUTHERLAND    ON    DAMAGES. 


[§  322 


cuiiistaiices  uf  the  case,  sucli  as  tlie  general  notoriety  of  the 
custom,  impelling  a  conviction  of  notice.     In  the  absence  of 


"It  may  be  inferred  from  the  uni- 
formity and  long  continuance  of  tlie 
usage;  from  tlie  fact  that  a  party 
has  for  some  time  been  in  the  par- 
ticular trade  to  vvhicli  it  relates; 
from  tlie  previous  dealings  between 
the  parties,  or  from  any  other  facts 
tending  to  show  its  general  noto- 
riety. Whether  such  facts  exist  in 
any  particular  case  is  a  proper 
question  for  a  jury.  In  the  case  at 
bar  there  was  evidence  tending  to 
prove  the  usage,  and  its  knowledge 
by  the  defendant,  from  which  it 
was  competent  for  the  jury  to  in- 
fer a  contract  to  pay  interest  on 
the  articles  as  charged  by  the  plain- 
tiff." 

In  Adriance  v.  Brooks,  12  Tex. 
279,  Hemphill,  C.  J.,  said:  "the  act 
of  1840  undertook  to  regulate  the 
subject  of  interest;  and  unlike  the 
English  statute  of  37  Henry  8,  it 
gave  an  affirmative  and  not  an  in- 
direct and  negative  sanction  to  its 
allowance.  It  differed  also  from 
the  English  statute  by  dividing  in- 
terest into  two  classes,  viz.:  that 
which  is  allowed  by  law,  and  that 
which  may  be  agreed  upon  by  the 
parties ;  and  there  was  the  further 
distinction,  not  known  to  the  earlier 
English  statutes,  that  the  contracts 
on  which  the  law  provided  that 
interest  should  be  recovered,  or  in 
which  the  parties  might  stipulate 
for  interest,  should  be  written  con- 
tracts. But  though  provision  is 
made  for  recovery  of  interest  on 
written  contracts,  yet  there  is  no 
prohibition  of  a  stipulation  for  the 
payment  of  interest  on  a  verbal 
agreement,  or  on  a  contract  not  in 
writing.  And  if  such  an  agree- 
ment be  not  criminal,  or  contrary 
to  good  morals  or  public  policy,  it 


would  seem  that  it  should  be  bind- 
ing. And  accordingly,  in  Pridgen 
V.  Hill,  12  Tex.  374,  a  suit  on  an 
account  upon  which  the  party  had 
agreed  to  pay  interest,  it  was  held 
that  such  agreement  was  valid  and 
might  be  enforced  in  law.  In  the 
previous  cases  of  Cloud  v.  Smith, 
1  Tex.  102;  Close  v.  Fields,  2  id. 
232;  Crook  v.  McGreal,  3  id.  487; 
Davis  v.  Thorn,  6  id.  486;  Wetmore 
v.  Woodhouse,  10  id.  33,  the  ques- 
tion of  a  verbal,  distinct,  positive 
agreement  to  pay  interest  on  a  debt 
acknowledged  to  be  due  was  not  pre- 
sented; and  although  there  are  ex- 
pressions in  the  opinions  in  those 
cases  which  would  seem  to  restrict 
the  recovery  of  interest  to  debts  on 
written  contracts,  and  such  is  the 
general  rule  under  the  statute,  yet 
we  deem  it  no  departure  froiu  the 
principle  of  those  decisions,  with 
reference  to  the  facts  then  before 
the  court,  to  hold,  when  a  new  fact 
is  presented,  viz.:  an  agreement  to 
pay  interest,  that  it  shall  be  en- 
forced, though  it  be  not  in  writ- 
ing; nor  the  debt  on  which  it  was 
stipulated,  in  writing;  such  agree- 
ment not  being  prohibited  by  law, 
nor  subversive  of  sound  policy  or 
good  morals.  .  .  .  But  the  sub- 
ject is  one  which  may  be,  and  as 
we  have  seen,  has  been,  regulated 
by  statute.  This  has  provided  for 
the  stipulation  and  recovery  of  in- 
terest on  written  contracts.  And, 
on  the  grounds  stated,  we  have  also 
supported  verbal  agreements  to  pay 
interest.  But  this  ease  is  neither 
upon  a  written  contract,  nor  was 
there  any  agreement  to  pay  interest. 
The  ground  upon  which  it  is  claimed 
is  the  fact  that  the  defendant  had 
previously  paid  interest  on  similar 


§    o22]  INTEREST.  1011 

any  agreenioiit  the  price  of  gcwds  is  payable  on  their  deliverv,^"^ 
and  if  the  purchaser  is  notilied  on  the  face  of  each  bill  sent  him 
that  the  terms  are  thirty  days  his  assent  thereto  will  be  implied 
if  he  has  kept  silent.  ''The  fact  that  in  subsequent  statements 
interest  was  not  charged  was  evidence  that  the  plaintiff  was 
then  willing  to  waive  its  legal  right  to  interest;  but  in  the 
absence  of  a  settlement  n])()n  the  statement  it  would  not  deprive 
it  of  its  right  in  this  suit  to  recover  interest  according  to  the 
terms  of  the  original  contract."  ^* 

This  interest  is  a  part  of  the  debt,  a  compensation  for  for- 
bearance, not  damages  for  withholding  uiou(\v  due.  A  tacit 
agreement  is  of  the  same  nature  and  foi-ce  as  an  actual  one,  but 
not  being  expressed,  it  is,  of  course,  to  be  established  by  circum- 
stances. Contracting  a  debt  with  a  custom  in  view  which  con- 
templates the  payment  of  interest  before  steps  have  been  taken 
to  liqnidate  an  account  or  to  obtain  payment  affords  one  ex- 
ample of  such  intent.  Dealing  with  knowledge  of  such  a 
custom,  making  no  objection  to  it,  or  proceeding  after  objection 
without  any  waiver  of  the  custom  by  the  creditor,  is  a  consent 
to  pay  interest  as  the  custom  requires.^^  And  a  continuance  of 
the  dealing  after  paying  one  account  containing  such  interest 
is  to  furnish  by  this  circumstance  additional  evidence  of  such 
consent  in  the  subsequent  transaction.^"  Whether  there  is  in  a 
given  case  such  an  agTcement  is  for  the  jury.^^     Though  an  ac- 

accounts.  This  we  deem  insufficient.  than  prohibit  a  recovery  of  interest 
Had  the  contract  been  in  writing,  beyond  the  legal  rate  on  a  contract 
the  statute  would  have  allowed  in-  not  in  writing,  interest  in  excess  of 
terest;  or  had  he  verbally  agreed  to  tliat  rate  may  be  included  in  an  ac- 
pay,  we  would  not  have  permitted  count  stated  and  recovered.  Tlie 
him  to  violate  his  engagement.  rate,  being  known  and  assented  to 
Thus  far  we  will  go  beyond  the  by  the  debtor  and  not  being  in  viola- 
cases  expressly  provided  for  by  the  tion  of  positive  law,  affords  a  suf- 
statute.  But  we  will  not  go  fur-  ficient  consideration  for  the  promise 
ther,  and  scrutinize  the  acts  of  the  involved  m  such  an  account.  Au- 
parties  to  judge  whether  an  implied  zerais  v.  Xaglce,  74  Cal.  60;  Marye 
obligation  to  pay  interest,  as  an  in-  v.  Strouse,  (I  Sawyer,  205. 
cident  of  the  debt,  has  been  ere-  Failing  to  object  to  accounts  ren- 
ated."  dered,    which    included    interest,    is 

27  Ciiester  v.  Jumel,  125  N.  Y.  ground  for  its  recovery.  Johnson  v. 
237,   254.  Milmine,   150  111.  App.  208. 

28  Lam))eth  R.  Co.  v.  Brigham,  30  Thomas  v.  Turner,  157  III.  App. 
170   Mass.   518.  10;   Warren  v.  Tyler,  81  111.  15. 

29  Where  a  statute  does  no  more  81  See    Ayers    v.    Metcalf,    .39    111. 


J  012  SUTHERLAND    ON    DAMAGES.  [§    322 

count  consisting  of  items  of  debit  and  credit  is  an  unliquidated, 
running  account,  which  will  not  carry  interest  in  the  absence  of 
an  agreement,  yet  from  the  time  of  the  last  item  on  the  debit 
side  of  such  an  account,  it  must  be  regarded  as  closed,  and  an 
implied  agreement  exists  to  pay  interest  on  the  balance  due 
thereafter.^^  But  if  statements  of  account  for  goods  sold  do  not 
include  interest,  and  if  the  debtor  has  made  payments  from  time 
to  time,  interest  cannot  be  recovered  on  the  balance  due  prior  to 
the  commencement  of  suit.^^  A  statiite  requiring  a  settlement 
of  accounts  before  liability  for  interest  shall  exist  does  not  apply 
to  accounts  stated  monthly  and  assented  to  by  the  debtor.^* 

The  custom  to  which  reference  has  been  made  is  an  evident 
tiary  fact  to  show  the  intention  of  the  parties.  It  has  no  other 
effect.  It  does  not  alter  the  law.  It  derives  all  its  force  from 
being  sanctioned  and  adopted  by  the  parties.  It  can  have  no 
validity  to  bind  the  debtor  to  pay  interest  or  fix  a  rate  or  mode 
of  comjuitation ;  nor  will  his  acquiescence  or  tacit  consent  bind 
him  to  a  liability  which  he  could  not  by  express  agreement 
legally  assume.'^  It  is  a  legal  usage  of  merchants  to  cast  inter- 
est on  the  items  of  their  mutual  accounts  and  strike  a  balance 
at  the  end  of  the  year  and  make  that  balance  the  first  item  of 
principal  for  the  ensuing  year;  but  the  law  does  not  make  it 
binding  on  the  debtor  except  under  a  specific  agreement  after 
the  mutual  dealings  are  passed. ^^  A  learned  English  text 
writer^''  says:  "Where  parties  have  acquiesced  in  a  course  of 
dealing  in  which  interest  was  exacted,  they  will  be  assumed  to 

307;    Fisher   v.   Sargent,    10    Cush.  cannot  collect  more  than  seven  per 

250;    Cole  v.  Trull,  9  Pick.  325.  cent,  on  such  overdrafts,  as  no  cus- 

32  Bell  V.  Mendenhall,  78  Minn.  toni  of  the  bank  can  contravene  the 
57,  67.  law     forbidding     the     collection     of 

33  Ryan  D.  Co.  v.  Hvambsahl,  02  more  than  seven  per  cent,  unless 
Wis.  G2.  there  is  an  agreement  in  writing  to 

34McCuish  v.  Snuiil,  13  S.  D.  307.  pay  eiglit.     Loan  &  E.Kch.   Bank  v. 

35  Where   parties   accept   the   ens-  Miller,  39  S.  C.  175. 

tom   of   banks   to   charge  eight   per  36  Von  Hemert  v.  Porter,  11  Mete, 

cent,  on  overdrafts,  and  close  their  (Mass.)    210;    Marrs  v.   Southwick, 

account,  including  such  charges,  by  2  Port.  351;  Jones  v.  Ennis,  18  Hun 

giving    their    note   they    are    bound  452. 

to  pay  the  rate  of  interest  charged.  37  Mayne  on  Dam.    (8th  ed.),  pp. 

But  where  a  note  is  given  the  bank  187,   188. 


§    323]  INTEREST.  1013 

have  contracted  to  pay  it.^*  And  in  this  way  even  conipomid 
interest  may  be  charged  as  long  as  tlie  accounts  remain  open.'® 
But  although  compound  interest  may  he  charged  by  means  of 
half-yearly  rests,  where  such  a  practice  is  assented  to,  it  is  not 
sufficient  to  show  that  such  has  been  the  usage  of  the  plaintiff 
without  proving  that  the  defendant  was  acquainted  with  it.*° 
^4.  fortiori  not  where  compound  interest  had  been  allowed  under 
a  mistaken  belief  that  it  was  stipulated  for  by  the  document 
under  which  the  debt  was  due.*^  And  even  in  the  case  of  mer- 
chants' accounts  where  this  system  prevails,  the  plaintill"  can 
recover  no  more  than  the  principal  upon  the  last  balance,  in 
which  there  is  no  new  account,  and  no  new  transaction,  however 
long  it  may  be  before  the  action  is  brought  to  recover  the  bal- 
ance, and  the  jury  cannot  give  interest,  still  less  com[)Ound 
interest,  upon  the  balance;  *^  and  the  same  rule  applies  between 
banker  and  customer.  Accounts  which  are  made  up  with  yearly 
or  half-yearly  rests,  while  the  relationship  continues,  only  bear 
simple  interest  from  the  time  it  is  terminated  by  death  or  other- 
wise." "' 

Where  accounts  are  settled  without  charging  interest  the  set- 
tlement will  not  be  opened  for  the  ])urpose  of  allowing  it,  in  the 
absence  of  a  mistake.**  Transactions  anterior  to  it  and  included 
therein  are  not  interest-bearing.'*^ 

§  323.  Interest  where  payment  unreasonably  and  vexatiously 
delayed.    Under  some  statutes  interest  is  due  on  any  instrument 

38  Ex  parte  Williams,  1  Rose  399;  tlie  same  charge  as  of  right  in  the 

Willmot   V.   Gardner,    [1901]    2   Ch.  8iihae(iiient  half   years;    also   Cross- 

548.  kill  V.  l?o\ver,  32  Beav.  86. 

39Bruee  v.  Hunter,  3  Camp.  407;  41  Danitil  v.  Sinelair.  ti  Apj).  (as. 

Newell  V.  Jones,  4    C.    &    P.    124;  I  si. 

Eaton  V.  Bell,  5  B.  &  Aid.  34;  Fer-  42  Attwood  v.  Taylor,   1    M.  &   fi. 

guson    V.    Fyffe,    8    CI.    &    F.    121;  301;   Waring  v.  Cunliffe,   I   Ves.  99; 

Mosse  V.  Salt,  32  Beav.  209.  Ex    parte    Bevan,   9    \>s.   223;    Fer- 

40  Dawes     v.     Pinner,     2     Camp.  guson  v.   Fyffe,  8  CI.  &   F.   121. 

48Gn;    Moore  v.  Vougliton,  1    Stark.  43  J'er  Lord  Sdiiorne,  C,  Barlifld 

487,      And    sec   Williamson   v.   Wil-  v.  Loughiutrougli,  L.  R.  8  Cli.  7. 

iiamson,    L.    R.    7    Eq.    542,    where  44  Martin     v.     Heckwitli,     4     Wis. 

acquieseenee  in  a  banker's  charge  of  219;    Uodges    v.    Tlosford,     17     \t. 

500L    for   a   half-year's    commission  014;      Chandler     v.     IVopic's     Sav. 

on  an  over-drawn  account  was  held  Bank.   01    Cal.   410. 

not   to    entitle   tlie    hanker    (o    inak.-  4.5  ("liaiidl.  r    v.    Kank,   nupra. 


1014 


SUTHEELAND    OX    DAMAGES. 


[§   323 


in  writing,  on  the  settlement  of  accounts  from  the  day  of  liqui- 
dating them  Letween  the  parties  and  ascertaining  the  balance, 
and  on  money  withheld  by  an  unreasonable  and  vexatious  delay 
of  payment.  Interest  is  not  allowable  under  the  last  clause  by 
reason  of  the  debtor's  mere  delay  or  his  defense  of  a  suit  to  col- 
lect the  debt.  To  make  the  delay  unreasonable  and  vexatious 
he  must  throw  obstacles  in  the  way  of  the  creditor  or  by  some 
means  induce  him  to  postpone  the  commencement  of  proceedings 
for  the  collection  of  his  demand.**  An  exception  seems  to  be 
made  against  an  officer  who  refuses  to  pay  over  funds  in  his 
hands  and  compels  the  bringing  of  a  suit  therefor.*'  One  is  not 
liable  for  interest  under  that  clause  because  he  refuses  to  per- 
form a  condition  in  a  contract  which  is  open  to  question  as  to 
its  meaning,**  nor  because  he  refuses  to  pay  in  good  faith  with 
an  honest  belief  in  his  non-liability.*^    A  contractor  for  a  public 


*6  Howell  V.  Empire  State  Sure- 
ty Co.,  183  111.  App.  220;  F.  .J. 
Lewis  Mfg.  Co.  v.  Cobe,  180  111.  App. 
466;  Whitteniore  v.  People,  227 
111.  453;  O'Meara  v.  Cardiff  C.  Co., 
154  111.  App.  321;  Kempton  v.  Peo- 
ple, 139  id.  563;  Espert  v.  Ahl- 
schlager,  117  id.  484;  Imperial  H. 
Co.  V.  Claflin  Co.,  175  111.  119; 
Kelley  v.  Caffrey,  79  111.  App.  278; 
Pieser  v.  Minkota  M.  Co.,  94  id. 
595;  Hatterman  v.  Thomp-son,  83 
id.  217;  Nixon  v.  Cutting  F.  P.  Co., 
17  Mont.  90;  Carson  v.  Neatheny, 
9  Colo.  212;  Keys  v.  Morrison,  3 
Colo.  App.  441 ;  Mueller  v.  Xorth- 
western  University,  195  111.  236, 
257 ;  West  Chicago  A.  Works  v. 
Slieer,  104  111.  586.  See  further, 
Bedell  v.  Janney,  9  id.  193;  Hitt 
V.  Allen,  13  id.  596;  Kennedy  v. 
Oibbs,  15  id.  406;  Newlan  v.  Shafer, 
.38  id.  379;  McCormick  v.  Elston,  16 
id.  204;  Aldrich  v.  Dunham,  id.  403; 
Daniels  v.  Osborn,  75  id.  615;  .Tas- 
soy  V.  Horn,  64  id.  379;  Chapman 
V.  Burt,  77  id.  615;  Devine  v.  Ed- 
wards,  10  id.   138. 

A  general  allegation  of  vexatious 


and  unreasonable  delay  is  insuffi 
cient  as  against  a  demurrer  or  mo- 
tion, but  is  not  so  defective  that 
evidence  cannot  be  received;  it  will 
support  a  judgment  for  interest. 
Kej's  V.  Morrison,  sit/pra,  259. 

Withholding  payment  merely  to 
force  a  compromise  is  cause  for 
awarding  interest.  Borden  v. 
Eraser,   118   111.   App.   655. 

A  defense  upon  purely  technical 
grounds  constitutes  unreasonable 
and  vexatious  delay.  Chicago  B. 
Co.  V.  McLester,  165  111.  App.  114. 
Compare    Osgood    v.    Poole,    id.    63. 

47  .Jefferson  County  v.  Lineberger, 
3  Mont.  231.  Contra.  Whittemore 
V.  People,  supra. 

48  Uhrich  v.  Livergood,  25  111. 
App.  640;  O'Heron  v.  American  B. 
Co.,    177    111.    App.    405. 

49  GroUman  v.  Montgomery  Ward 
&  Co.,  181  111.  App.  598;  Roberts-M. 
Pub.  Co.  V.  Wise,  140  111.  App.  443; 
Billingbeimer  v.  Scott,  145  id.  395; 
Gillespie  V.  Fulton,  161  111.  App. 
248;  Franklin  County  v.  Layman, 
145  111.  138;  Felt  v.  Smith,  62  111. 
App.    637. 


§    324]  IXTERKST.  101  r. 

iiiiprovenient  is  not  entitled  to  Interest  where  the  delay  in  |(ii\- 
ment  arises  from  the  fact  that  the  special  assessments  out  i>f 
which  it  is  to  be  made  arc  not  collected  as  soon  as  they  should 
be.^°  Where  one  party  constantly  claimed  a  snm  larirely  in  ex- 
cess of  what  was  equitably  due  and  was  refused  paymeul  of"  auy 
amount  aiijiroachiuii-  that  to  which  he  was  entitled,  there  was 
such  deh^y  as  justiried  the  allowance  of  interest  mi  the  ac'irrcijate 
snm  due  from  the  time  the  master's  rcpctrt  was  tiled. *^  IJy  re- 
qniring  the  creditor  to  comjdy  with  a  condition  not  recpiircd  by 
law  the  debtor  becomes  liable  for  interest.*^  If  there  has  been 
unreasonable  and  vexatious  delay  in  payinii'  a  just  claim  the 
debtor  cannot  be  relieved  by  paying  anything  less  than  interest 
on  it  from  the  time  it  became  due.*^  If  the  facts  creating  a 
liability  to  pay  at  a  specified  time  are  not  denied  and  no  testi- 
mony is  offered  to  show  the  ground  for  refusal  the  court  will 
determine  Avhether  the  case  is  within  the  statute.^*  Stock- 
holders of  an  insolvent  corporation  who  have  jniid  a  judgment 
against  them  are  not  liable  for  interest  on  .their  share  of  the 
amount  remaining  unpaid  by  other  stockholders  from  the  time 
of  such  judgment;  their  liability  dates  from  the  time  demand 
was  made  for  the  balance  by  motion  for  a  further  judgment.*^ 

§  324.  Quantum  meruit  claim  to  interest.  Where  one  person 
requests  another  to  perform  service,  supply  goods  or  pay  money, 
and  the  request  is  complied  with,  nothing  further  being  said  (u- 
done  to  indicate  his  intentions,  it  is  a  verv  simple  transaction  ; 
the  law  interprets  it  according  to  the  ethics  of  fair  dealing;  the 
request,  acceded  to,  imports  an  agreement  so  definite  an<l  so 
certain  to  be  understood  by  both  parties  in  the  same  sense  that 
they  deem  it  quite  suiierflnous  to  state  it.  And  when  a  remedy 
is  sought  on  such  transactions  the  common   law   retpiires   in 

SOVider  v.  Chicago,  164  111.  354.  53  Chicago  v.  Telibctts,    1(14   V.  S. 

51  Thomas  v.  Peoria,  etc.  R.,  36  ^^0.  26  L.  od.  65.1:  Rarker  v.  Turn- 
Fed.  808,  per  Harlan,  J. 

The  Colorado  statute  allowing  in-  I'""-  •">'    l"-  -M'P-  —6. 

tereat  in   such   a   case   has  been    re-  54  Sanderson  v.  Road,  75  111.  .\|)[.. 

pealed.     Young  v.  Kimber,  44  Colo.  ]<){). 

448,  28  L.R.A.(N.S.)    626. 

,'  .  T^     o    Tvi    r.  T-     I  55].  list    Nat.    r.aiik    v.   Cooiier.   01 

62  American  F.  &  M.  Co.  v.  Lind-  ' 

say  C.  Co.,  129  111.  App.  548.  NH'.   624. 


1016 


SUTIIEBLAJND    ON    DAMAGES. 


[§   ^24 


pleading  no  greater  certainty  or  particularity.     Tlie  party  mak- 
ing the  request,  by  necessary  intendment,  promises  the  party 
complying  with  it  to  pay  him  so  much  as  he  reasonably  deserves. 
For  benefits  conferred  upon  request,  or  enjoyed  under  various 
circumstances  which  are  tantamount  to  a  request,  there  is  a  legal 
duty  to  make  compensation;  this  is  measured  by  the  standard 
of  recii>rocal  justice.     The  party  in  whose  favor  such  duty  is 
implied  is  legally  entitled  to  recover  so  much  as  he  reasonably 
deserves.     Interest  is  in  many  cases  allowed  upon  this  prin- 
ciple.    It  is  almost  an  axiom  in  American  jurisprudence  that 
he  who  has  the  use  of  another's  money,  or  money  he  ought  to 
pay,  should  pay  interest  on  it.^^    A  bank  which  pays  the  money 
of  a  depositor  upon  his  check  bearing  a  forged  indorsement 
is  liable  for  interest  from  the  time  of  payment  though  the 
depositor  received  no  interest  on  his  deposits,"  if  he  is  bound 
to  make  sufficient  additional  deposits  to  keep  his  account  in- 
tact.^^     The  claim  of  cor})orate  directors  for  interest  on  a  sum 
due  them  as  remuneration  for  services,  payable  out  of  the  net 
proiits  of  the  concern,  Avill  be  disallowed  if  they  have  acted 
in  bad  faith  in  transferring  money  from  the  suspense  account 
to  the  profit  account. ^^     Where  an  emploj^ee  may  elect  to  sue 
his  employer's  estate  on  a  quantum  meruit  or  in  damages  for 
the  breach  of  the  agreement  to  compensate  for  his  services  in  a 
specified  manner  the  right  to  interest  does  not  accrue  until  the 
choice  is  made,  and  if  the  action  is  brought  on  the  quantum 
meruit  interest   runs   only   from   the  time  the   claim    is   filed 
against  the  estate.^" 


56  Looiiiis  V.  Gillett,  75  Conn.  298; 
Fitzpatrick   v.   McGregor,     l,S;i    Ga 
332,  25  L.R.A.(N.8.)    50;    Burke  v 
Clangliton,  12  D.  C.  App.  C'as.  182 
Momscn   v.    Atkins,    105    Wis.   557, 
Laycock   v.   Parker,   103   Wis.    161; 
Healy  v.  Fallon,  69  Conn.  228;  Port 
Royal  V.  Graham,  84  Pa.  426;  Jones 
V.    Williams,   2    Call,    102;    Fasholt 
V.  Reed,   16  S.  &  R.  266;    Miller  v. 
Bank,   5   Whart.   503,   34   Am.   Dec. 
571;  Rapelic  v.  Emory,  1  Dall.  349, 
1  L.  ed.  170;   Lewis  v.  Bradford,  8 


Ala.  632;  Perrin  v.  Parker,  126  111 
201,  9  Am.  St.  571,  2  L.R.A.  336 
fjoodnow  V.  Litchfield,  63  Iowa  275 
Goodnow  V.  Plumbe,  64  Iowa  672. 

57  Corn  Exch.  Bank  v.  Nassau 
Bank,  91  N.  Y.  74,  43  Am.  Rep. 
655. 

58  German  Sav.  Bank  v.  Citizens' 
Nat.  Bank,  101  Iowa  530,  2  Am. 
Neg.  Rep.  349,  63  Am.  St.  399. 

59  In  re  Peruvian  G.  Co.,  [1894] 
3  Ch.  690. 

eopclton  V.  Smith,  50  Wash.  459. 


§  325] 


INTEREST. 


loir 


§  325.  Allowed  on  money  loaned.  Interest  on  money  loaned 
is  recovered  not  on  the  ground  that  it  is  due  the  lender  and  the 
borrower  is  in  default  for  not  repaying  from  the  iiioment  of 
receiving  it,  but  on  the  principle  that  the  use  of  money  is  worth 
the  legal  rate  of  interest  and  therefore  money  borrowed  should 
bear  interest  from  the  date  of  the  loan."  This  rule  applies 
where  cash  is  loaned  by  a  corporation  to  one  of  its  stockholders 
although  there  may  be  in  the  treasury  undeclared  dividends 
due  the  borrower  in  excess  of  the  sum  loaned.^'^  A  bailee  of 
money  for  safe-keeping  is  chargeable  with  interest  if  the  own- 
er permits  him  to  use  it  in  his  business.^'  In  Massachusetts 
if  there  is  no  contract  to  pay  interest  on  money  borrowed, 
and  in  the  absence  of  usage,  fraud,  or  an  earlier  demand, 
interest  will  be  allowed  from  the  date  of  the  writ  oidy.*^*    Money 


61  Morrow  v.  Frankish,  4  Boyce 
(Del.)  534;  Clark  v.  Smallwood, 
156  Fed.  409;  Magruder  v.  Ericson, 
146  Ky.  89;  In  re  Barr,  234  Pa. 
294;  ]  Am.  Lead.  ('as.  518;  Butler 
V.  Butler,  10  R.  I.  501;  Hodgea  v. 
Hodges,  9  id.  32 ;  Reid  v.  Rensselaer 
G.  Factory,  3  Cow.  393;  Rensselaer 
G.  Factory  v.  Reid,  5  id.  58,0. 

In  England  the  rule  is  not  to 
give  interest  on  money  lent.  Lord 
Ellenborough  said  no  case  had  oc- 
curred in  fifty-two  years  in  whicli, 
upon  a  simple  contract  of  lending, 
without  any  agreement  for  the  pay- 
ment of  the  principal  at  a  certain 
time,  or  for  interest  to  run  immedi- 
ately, or  special  circumstances  from 
which  a  contract  for  interest  was 
to  be  inferred,  liad  interest  ever  been 
given. 

In  Harris  v.  Benson,  2  Str.  910, 
it  is  said  that  interest  had  never 
been  allowed  for  money  lent  witliout 
a  note.  In  Robinson  v.  Bland,  2 
Burr.  1077,  it  \vas  held  tliat  inter- 
est was  recoverable  on  money  lent 
from  the  time  when  it  was  agreed 
to  be  paid.  Some  American  cases 
recognize   the   same  doctrine.      Mur- 


ray v.  Ware,  1  Bibb  32.'),  4  Am. 
Dec.  637;  Bell  v.  Logan,  7  J.  J. 
Marah.  593.  But  see  Chancy  v. 
Cooke,   5   T.   B.   Mon.   248. 

62  Seattle  T.  Co.  v.  Pitner.  LS 
Wash.  401. 

63  Gravenstine's  Est.,  IS  Phila.  9. 

64  Gay  V.  Rooke,  151  Mass.  115, 
21   Am.  St.  438,  7   L.R.A.  392. 

In  Hubbard  v.  Charlestown  Branch 
R.  Co.,  11  Mete.  (Mass.)  124,  Shaw, 
C.  J.,  said:  "The  only  question  now 
raised  on  tliis  bill  of  exceptions  is 
whether  the  defendants  were  diarge- 
al)le  with  interest  upon  the  amount 
overdrawn  by  tliem  from  the  time 
of  .sucli  overdraft.  The  court  are 
of  the  opinion  tliat  the  direction  of 
the  judge  was  not  correct  in  point 
of  law,  when  he  instructed  the  jury 
that  if  the  amount  was  actually 
paid  to  the  defendants  then  the 
jury  sliould  add  interest  from  the 
time  of  the  oviTilraft,  without  in- 
structing them  to  take  into  con- 
si<leration  the  other  circumstances 
of  the  case.  If  money  were  fraudu- 
lently or  wrongfully  obtained  from 
a  bank,  it  miglit  be  recovered  lia<"k 
witli    intrresl.     Wood  v.  Robliin-^,   11 


1018  SUTHERLAND    ON    DAMAGES.  [§    325 

voluntarily  placed  in  the  hands  of  a  person  for  an  illegal  pur- 
pose is  not  loaned,  and  the  person  who  placed  it  cannot  recover 
interest  until  its  return  is  demanded.^^  There  has  been  some 
divergence  of  opinion  as  to  the  right  of  the  holder  of  bonds  issued 
by  counties  to  recover  interest  thereon  after  the  exercise  of  the 
reserved  right  to  declare  them  due,  no  means  being  provided 
for  ffivino-  constructive  notice  of  the  exercise  of  such  right. 
One  of  the  federal  courts  has  held  that  after  the  publication  of 
notice  that  the  bonds  v^ill  be  paid  has  been  given,  the  holder 
without  knowledge  of  such  notice  may  not  recover  interest.®^ 
But  the  Mississippi  court,  declining  to  follow^  this  case,  has 
ruled  in  favor  of  the  holders  of  the  bonds.®' 

§  326.  Allowed  on  money  paid.  From  the  date  of  the  pay- 
ment of  money  by  one  person  for  the  benefit  of  another,  at  the 
latter's  express  or  implied  reque'st,  the  debt  is  of  the  same 
nature  as  a  loan  and  the  right  to  interest  is  based  upon  the 
same  reason.  The  cases  on  this  point  are  numerous.  Where 
three  persons  w'ere  interested  in  a  cargo  sent  abroad,  money 
paid  for  general  average  was  held  to  bear  interest  from  the 
time  it  was  advanced.  Interest  w^as  deemed  demandable  in 
every  case  where  one  man  had  used  or  been  benefited  by  the 
application  of  the  money  of  another,  paid  under  such  circum- 
stances  as   to  imply   a   re<juest.      It   would   be   inequitable   to 

Mass.    504,    G    Am.    Dec.    182.      Per-  or  some  other  default.     *     *     *     In 

haps  the  evidence  might  have  been  general,  when  there  is  a  loan  with- 

properly    left    to    the    jury    to    find  out  any  stipulation  to  pay  interest, 

whether  the  money  was  wrongfully  and  when  one  has  the  money  of  an- 

drawn    or    not.      But    we    think    an  other,     having    been    guilty    of    no 

overdraft   on    a   bank    is   not  neces-  wrong   in    obtaining   it,    and   no   de- 

sarily  wrongful;  it  may  be  made  in  fault  in  returning  it,  interest  is  not 

conformity  with  some  mutual  agree-  chargeable."        See       Etheridge      v. 

ment    or    understanding.      A    draft  Binney,  9  Pick.  272;   Dodge  v.  Per- 

on   a   bank,    by    one    who    has    no  kins,    id.   368 ;    Hunt   v.   Nevers,    15 

funds,   or   beyond  his   funds,   and   a  id.  500,  20  Am.  Dec.  616. 

payment   made   in    pursuance   of   it,  65  Baldwin  v.  Zadig,  104  C'al.  594; 

constitute   a   loan     of    money;    and  Parker  v.  Otis,  130  Cal.  322. 

supposing    it    to    be    made    without  66  Stewart    v.    Henry    County,    66 

any   stipulation   for  interest  at  the  Fed.  127. 

outset,  it  does  not  necessarily  draw  67  Hinds    County    v.    National    L. 

interest     until     neglect     or     refusal  Ins.   Co.,    104    Miss.    104,   43   L.R.A. 

of    payment,    after    demand     made,  (N.S.)    1146. 


§   326] 


INTEREST. 


KM!) 


allow  interest  oiilv  iVfMii  llic  lime  wIkmi  iIic  |ii'iiici|);il  was  de- 
manded, in  sncli  a  traiisadion  li:i|)|)(Miiiiii'  in  a  forciiiii  coiuitrv, 
where  it  is  long-  before  the  jtlaiiitiiV  ciiii  he  advised  of  liis 
having  a  claim  (this  language  is  not  to  be  regarded  as  a  limi- 
tation npon  the  right  to  interest  in  such  cases  because  a  dcuuiud 
is  not  necessary),  and  longer  still  before  he  can  kuow  exactly 
what  he  is  entitled  to  dcMtiaiid.^^  It  is,  tlicreforc,  a  geuci'al 
rule  that  interest  is  recoverable  on  money  paid  by  one  person 
for  the  benefit  of  another  at  his  request,  express  or  implied. ^^ 
It  may  be  recovered  by  a  surety  who  pays  his  principal's  debt.'" 
Though  a  surety  dischai'gc!  a  debt  l)earing  a  high  i-atc  of  (-(m- 
ventional  interest  he  is  not  entitled  to  charge  his  principal 
thereafter  the  same,  but  only  the  legal,  rate,'^  and  that  rate 


68  Sims  V.  Willing,  8  S.  &  R.  103; 
Gibbs  V.  Bryant,  1  Pick.  llS;  Jlsloy 
V.  Jewett,  2  Mete-.  (Mass.)  108; 
Weeks  v.  Hasty,  13  Mass.  218. 

69  Pollard  V.  American  F.  M.  Co., 
139  Ala.  183  (on  taxes  paid  by 
mortgagee  on  mortgaged  property)  ; 
Hall  V.  O'Connell,  52  Ore.  164; 
Wright  V.  Conservative  I.  Co.,  49 
Ore.  177  (on  taxes  paid  l)y  mort- 
gagee before  foreclosure )  ;  Graham  v. 
Merchant,  43  Ore.  294;  Savings  Bank 
V.  Sprunt,  86  S.  C.  8;  Wolfinger 
V.  Thomas,  22  S.  D.  57,  133  Am.  8t. 
900;  Fuhrman  v.  Power,  43  Wash. 
533  (interest  on  taxes  paid  at  the 
legal  rate,  not  at  the  rate  fixed  by 
statute  as  a  penalty  upon  delin- 
quent taxes)  ;  Harris  v.  Mercur,  202 
Pa.  318;  Allen  v.  Fairbanks,  45 
Fed.  445;  Gibbs  v.  Bryant,  Weeks 
V.  Hasty,  supra;  Liotard  v.  Graves, 
3  Cai.  226;  Milne  v.  Rempublicam, 
3  Yeates  102;  Hastie  v.  De  Peys- 
ter,  3  Cai.  190;  Thompson  v. 
Stevens,  2  N.  &  McC.  494;  Huck- 
master  v.  Grundy,  8  III.  626;  Aikin 
V.  Peay,  5  Strobh.  15,  53  Am.  Dec. 
684;  Blaney  v.  Hendricks,  2  W. 
Black.  761 ;  Trelavvney  v.  Thomas,  1 
H.    Black.    304;    Craven   v.    Tickcll, 


1  Ves.  60;  Chaml)er]ain  v.  Smitli,  1 
Mo.  718;  Gillet  v.  Van  Rensselaer, 
15  N.  Y.  397;  :\rorris  v.  Allen,  14 
N.  J.  Eq.  44;  Cobbey  v.  Knapp,  28 
Neb.  158;  Semi-Tropic  Spiritualists' 
Ass'n  V.  Johnson,  163  Cai.  639;  Kas- 
tor  Adv.  Co.  V.  Elders,  170  Mo.  App. 
490. 

It  may  be  recovered  on  an  exces- 
sive payment  made  by  a  receiver 
after  an  adjudication  finding  it  to 
be  so.  Harrigan  v.  Gilciirist,  121 
Wis.  127. 

70  Newman  v.  Newman,  29  Mo. 
App.  649 ;  Sims  v.  Goudclock,  7 
Rich.  23;  Sollee  v.  Meugy,  1  Bailey 
620;  Miles  v.  Bacon,  4  .T.  J.  IMarsb. 
458;  Breckinridge  v.  Taylor,  5 
Dana  114;  Knight  v.  Mantz,  Ga. 
Dec.  22  Winder  v.  DifTenderfrer,  2 
Bland  106. 

A  statute  provi<ling  that  when  a 
bond,  bill  or  note  shall  not  be  jiaid 
by  the  principal  according  to  its 
terms  and  shall  l>e  paid  by  ttie 
"surety,"  that  tiie  principal  shall 
refund  the  amoiuit  or  value  witli  in- 
terest thereon,  does  not  include 
joint  deI)tors.  McGec  v.  Russell,  49 
Ark.  104. 

71Mc(Jee  V.  Russell,  supra:  Mi'IM- 
phis,  etc.  R.  Co.  v.  Dow,    120   l'.  S. 


1020  SUTHERLAND  ON  DAMAGES.  [§  326 

governs  where  a  tenant  in  common  redeems  from  a  foreclosure 
against  liis  cotenants.'''^  So  a  surety  obtaining  contribution 
from  a  co-surety  is  entitled  to  interest.'^  But  if  the  plaintiff 
has  securities  from  the  principal  in  his  hands  for  the  payment 
of  the  debt,  which  were  expected  to  yield  the  means  therefor, 
the  co-surety  is  entitled  to  notice  of  any  deficiency.  His  lia- 
bility extends  only  to  a  moiety  of  the  deficiency ;  as  that  is  con- 
tingent, both  as  to  time  and  amount,  he  should  not  be  charged 
with  interest  until  he  is  at  least  informed  that  he  is  a  debtor.'* 
Such  information  would  be  manifestly  essential  to  make  out  an 
equitable  title  to  charge  interest;  such  a  notice  would  place 
the  co-surety  at  once  in  default  if  he  did  not  then  pay  his  con- 
tribution ;  such  notice  is  necessary  to  establish  his  consent  to 
accept  forbearance.  A  party  paying  luoney  for  another  cannot 
recover  for  interest  paid  which  accrued  in  consequence  of  his 
own  negligent  delay  in  making  the  payment.'^  An  agent  or 
factor  is  also  entitled  to  interest  on  advances  for  his  principal.''^ 
An  insurer  who  pays  a  loss  to  insured  and  takes  an  assignment 
of  the  claim  for  damages  against  one  who  negligently  destroyed 
the  property  insured  may  recover  interest  on  the  sum  paid,'' 
as  may  an  insurer  who  has  paid  a  loss  on  a  policy  which  would 
have  been  canceled  but  for  the  negligence  of  a  third  party.'^  A 
taxpayer  who  has  paid  more  than  his  share  of  the  public  ex- 
pense is  entitled  to  interest  on  the  excess.'^ 

287,  30  L.  ed.  595;  Bushong  v.  Tay-  21  cS;    Walters    v.    McGirt,     8     Rich, 

lor,   84  Mo.   660;   Newman  v.   New-  287;   Howard  v.  Belin,  27  Ga.   374. 

man,   supra;  Smith   v.  Johnson,  23  A     factor     who     guaranties     his 

Cal.   63.     See  Fisk  v.   Brunette,   30  principal  the  cost  of  goods  consigned 

Wis    102  *"^    ^^'^'^    furnishes    the    principal 

72  Wettlauffer  v.  Ames,  133  Mich.  ^oney    to    secure   part    payment   of 

oni     mo    A        ci    /(^n  tlieir  value  is  not  entitled  to  inter- 

201,  103  Am.  St.  449. 

_„  T,  1  T       2.1.  c      ^/r  4.  (-'st   thereon ;    but  if   there   is   guar- 

73  Ilslev      V.      .Jewett,  2      Mete.  .,         ,  -    •  j 


(Mass.)     168;     Aikin    v.     Peay,    5 


anty,  and  the  advancement  is  made 
as  a  loan,  the  factor  will  be  en- 
Strobh.  15,  53  Am.  Dec.  684.  ^.^^^^    ^^    .^^^^^^^       Wittkowski    v. 

74Goodloe  V.  Clay,  6  B.  Mon.  236.       ^^^^^..^^  g^   ^^^    ^jg. 

75Somers    v.    Wright,    115    Mass.  77  Te'xarkana,  etc.  R.  Co.  v.  Hart- 


292. 


ford  Ins.  Co..  17  Tex.  Civ.  App.  498. 
78  Providence  W.  Ins.  Co.  v.  West- 
ern U.  Tel.   Co.,   153   111.  App.   118. 
C.)    400;    Smetz  v.  Kennedy,   Riley  79  Boston    &   M.    R.    v.    State,    63 


76  Taylor   v.   Knox,    1   Dana   391:  78  Providence  W.  Ins.  Co.  v.  West- 

Cheeseborough  v.  Hunter,  1  Hill  (S.       em  U.  Tel.   Co.,   153   111.  App.   118. 


§    327]  INTEREST.  1021 

§  327.  Same  subject.  Wlioii;  one  of  two  pailics,  liavin-r 
contiguous  tenements,  refused  to  iiiiilc  with  tlic  other  in  erect- 
ing a  new  party-vall  or  to  eontrihute  anything  to  the  expense, 
he  denying  the  rigid  of  the  jdaintiti"  to  prostrate  the  old  wall 
or  to  charge  him  with  any  portion  of  the  cost  of  the  new,  the 
court  held  him  liable;  the  expense  was  an  e(|nitalile  charge  (>\\ 
the  wall  and  on  the  owner  for  the  time  being.  The  (piestion 
being  raised  whether  the  plaintiff  was  entitled  to  interest  and 
from  what  time,  the  chancellor  said  it  was  a  ease  of  money 
expended  for  the  use  of  the  defendant  and  upon  every  sound 
principle  the  plaintiff  ought  to  receive  interest  after  a  m<iiety 
of  the  joint  expense  had  been  demanded  and  refused;  adding 
that  it  is  the  settled  law  of  the  state  that  nioiiey  received  or 
advanced  for  the  use  of  anothei-  carries  interest  after  a  default 
in  payment,  and  it  is  a  very  reasonable  and  just  rule.  Interest 
was  claimed  from  the  time  of  the  advance  of  the  money  to  build 
the  wall;  it  was  allowed  from  the  date  of  the  demand  and  re- 
fusal on  the  genera]  principle  that  a  party  is  liable  for  interest 
after  a  default;  and  by  implication  it  was  considered  that  the 
plaintiff  was  not  entitled,  on  any  other  principle,  to  interest 
from  the  date  when  it  had  been  advanced.^"  The  defendant 
could  not  be  considered  as  in  default  until  demand;  he  was 
under  no  duty  to  repay  moneys  expended  by  the  plaintiff 
against  his  will  for  the  common  benefit  until  informed  of  the 
amount  and  an  opportunity  thus  given  to  discharge  the  indebt- 
edness. The  principal  claim  was  not  one  which  the  debtor 
acknowledged;  it  was,  however,  maintained  against  him;  '^  but 

N.   H.   57]  ;    Aiiioslveag  Mfg.   Co.   v.  pay  one-half  the  value  of  the  wall 

Manchester,  70  X.  H.  336,  348;  Chi-  at  tiie  time  he  used   it.     Huston   v. 

cago  V.   Nortli western   Mut.   L.   Ins.  de  Zeng,  7H  Mo.  App.  522. 

Co.,    120    111.    App.    497     (payment  A  mortgagor  is  not  lialde  for  in- 

under     protest     of     unjust     water  terest    on    advanee   payments    made 

rates).  hy  the  mortgagee  to  his  counsel  on 

80  Campbell    v.    Mesier,    6    Jolms.  account   of  services   to   be   rendered 

Ch.    21.  in  the  foreclosure  proceedings.     Pol- 

In    such    a    case    interest    is    due  lard    v.    American    F.    M.    Co.,    13!) 

from  the  date  of  default  in  paying  Ala.    183. 

the    sum    due    under    the    contract,  81  Campbell    v.    Mesier,    4    Johns, 

the     party     against     whom     it     is  Ch.    334,   S    Am.    Dee.   570. 
claimed    having    bound    himself    to 


1022 


SUTHERLAND    ON    DAMAGES. 


r§  327 


siibsequGiitJy  the  doctrine  on  which  it  was  founded  was  doubted 
and  overruled.*^  Senator  Golden/^  referring  to  this  ease,  said : 
"The  circumstances  of  that  case  were  very  peculiar.  The  de- 
fendant was  liable  to  contribute  to  the  rebuilding  of  a  party- 
wall,  lie  not  only  refused  to  contribute,  but  forbade  the  prostra- 
tion of  the  old  wall.  The  complainant  erected  a  new  one  at  a 
much  greater  expense  than  the  re-establishment  of  the  old  one 
required.  It  could  not  be  ascertained  till  the  new  wall  was  ap- 
praised and  it  was  estimated  what  it  would  have  cost  to  restore 
the  old  wall  how  much  the  defendant  ought  to  have  paid.  When 
the  appraisement  and  estimate  were  made  and  the  extent  of  the 
defendant's  liability  was  thereby  settled  the  complainant  de- 
manded the  amount.  The  chancellor  decided  that  the  defendant 
should  pay  interest  from  that  time.  Here  was  a  case  very  dif- 
ferent from  an  advance  of  specific  sums  of  money.  It  is  true 
the  demand  is  considered  in  the  court  of  chancery  as  a  demand 
for  money  advanced ;  but  it  was  more  like  a  demand  for  un- 
liquidated damages,  which  never  carries  interest.  The  defend- 
ant could  not  have  discharged  the  ])rincipal  till  after  the 
appraisement  and  estimate  had  settled  how  much  he  was  liable 
to  contribute  to  the  party-wall."  ** 


82  Partridge  v.  Gilbert,  15  N.  Y. 
601,  69  Am.  Dec.  632;  Shcrrcd  v. 
Cisco,  4  Sandf.  480. 

83  In  Rensselaer  G.  Factory  v. 
Ecid,  5  Cow.  598. 

84  The  case  of  Eensselaer  G.  Fac- 
tory V.  Reid  raised  the  question 
whether  cash  advances  made  by  an 
agent,  charged  in  an  account  not 
reported  to  his  principal,  but  where 
the  circumstances  indicated  that 
the  latter  must  have  known  that 
the  advances  were  made,  should  bear 
interest.  The  case  was  very  thor- 
oughly considered.  Senator  Golden, 
in  the  prevailing  final  opinion,  said 
generally  of  the  subject  of  interest: 
"As  often  as  the  question  of  interest 
has  been  before  a  court,  the  judges 
seem  to  Iiave  considered  it  as  de- 
pending on  general  equitable  princi- 


ples; and,  in  most  instances,  to 
have  decided  each  case  in  reference 
to  its  particular  circumstances, 
without  attempting  to  give  any  rule 
which  might  be  generally  appli- 
cable." And  again :  "However  it 
may  be  with  respect  to  money  lent, 
or  as  to  money  had  and  received, 
or  in  regard  to  merchandise  sold 
and  delivered ;  or,  however  it  may 
be  where  advances  are  made  in  pur- 
suance of  an  express  agreement  in 
which  nothing  is  said  about  inter- 
est, I  think  the  above  authorities 
will  admit  of  no  other  conclusion 
than  that  it  is  now  a  well  estab- 
lished general  rule  of  law,  that  where 
a  person  advances  money  for  the 
use  of  another,  iinder  an  implied 
authority,  he  who  makes  the  ad- 
vance  is    entitled    to    interest   from 


§    327]  INTEREST.  1023 

Interest  may  likewise  be  allowed  on  money  advanced  by 
trustees  for  the  benefit  of  the  trust.  The  law  recjuires  of  trustees 
diligence  and  good  faith ;  and  they  will  not  be  entitled  to  interest 
on  advances  made  necessary  by  their  defaults.  As  a  general 
rule  an  administrator  is  not  entitled  to  interest  on  money  ad- 
vanced by  him  beyond  the  funds  of  the  estate  in  his  hands 
because  it  is  in  his  power  to  put  himself  in  cash  from  the  estate 
and  it  is  not  his  duty  to  advance  his  own  funds  for  its  benefit.^* 
If,  however,  such  special  circumstances  exist  as  to  justify  ad- 
vances by  him  and  he  makes  them  judiciously  ho  will  bo  on- 
titled  to  interest.'®  Where  the  advance  by  an  administrator  oi- 
other  like  trustee  is  meritorious,  or  where  an  executor  for  the 
benefit  of  the  estate  has  paid  his  own  money  for  taxes,  necessary 
expenses,  repairs,  and  debts  which  carried  interest  he  is  entitled 
to  interest.®'  A  trustee  is  not  obliged,  when  the  exigencies  of 
his  trust  require  advances,  to  raise  money  at  a  loss  to  himself. 
When  property  is  in  his  hands  as  security  and  he  is  restricted 
by  its  nature  and  situation  from  selling  it,  and,  to  keep  it  in 
good  order,  must  borrow  money  he  may  resort  to  banks  or  other 
usual  modes  of  raising  it  upon  his  credit.  And  in  such  cases  he 
is  entitled  to  full  indemnity. ^^     Hut  the  right  of  a  trustee  lo 

the  time  it  is  made."  In  the  ex-  icfcrreil  to  a  JHi-y  to  dttiTiniiu' 
haustive  dissenting  opinion  of  Sena-  w  iictlur  damages  shall  be  given  by 
tor  Spencer  he  says:  "Probably  the  the  allowance  of  interest." 
rule  of  easiest  application  would  85  Stt)rtr  v.  Storer,  9  Mass.  .37 ; 
be  this:  where  money  has  been  lent,  Evarts  v.  Nason's  Est.,  11  Vt.  122. 
advanced  or  expended  by  request,  86  Rix  v.  Smith,  8  Vt.  .305. 
and  under  an  agreement  to  pay  at  87  Mann  v.  Lawrence,  3  IJradf. 
a  specific  time,  or  where  it  has  been  Sur.  424;  Liddell  v.  McVickar,  11 
had  and  received  under  a  like  agree-  N.  .T.  L.  44,  1!1  Am.  Dec.  3(ii»;  .Jen- 
ment,  then  the  allowance  of  interest  nison  v.  Hapgood,  10  Pick.  79:  Hay- 
may  be  safely  referred  to  the  prin-  ward  v.  Ellis,  13  Pick.  272.  See 
ciple  of  an  implied  contract  to  pay  Aldridge  v.  ^McClelland.  3ii  N.  .T. 
interest   on    default;    and    so,   also,  Eq.   288. 

where   the   money    is    not   to   be    re-  88  In     Rarrell    v.    .Joy,     16     Mass. 

funded  at  a  particular  time,  but  a  221,  comiiound  interest  was  alloweil 

default  arises  from  a  demand  or  no-  a    trustee    under    the    circumstances 

tice,  the  same  principle  will  apply.  stated    in    the    text,    as    a    mode    of 

But   where   no   time   of   payment   is  coin])ensation  for  the  interest  he  was 

fixed,    and    where   the   duty    to    pay  obliged    to    pay    to    provide   himself 

arises    from    the    relative    situation  with    the   necessary    means   to   keep 

of  the  parties,  it  seems  it  should  l)e  the    trust    iiropcrty    in    good    order. 


1024  SUTHERLAND    ON    DAMAGES.  [§    327 

interest  will  cease  whenever  the  funds  of  the  estate  are  sufficient 
to  pay  the  debt.*^ 

The  general  rule  that  interest  can  be  allowed  only  by  virtue 
of  contract,  express  or  implied,  or  by  virtue  of  some  statute,  or 
on  account  of  the  default  of  a  party  liable  to  pay  when  it  is 
allowed  as  damages  for  the  default  has  some  exceptions,  at  least 
in  courts  of  equity.  Where  an  instrument  of  compromise  was 
made  under  the  authority  of  a  court  by  the  receiver  of  an  in- ' 
solvent  bank  with  its  tnistees,  who  had  been  sued  for  waste  and 
mismanagement  of  its  assets,  which  instrument  transferred  to 
the  trustees  certain  real  estate  of  the  bank  in  consideration  of 
their  paying  a  certain  percentage  of  its  debts,  gave  them  a 
power  of  sale  and  provided  that  they  should  be  reimbursed  for 
their  outlay  before  accounting  to  the  receiver  for  any  surplus, 
they  were  entitled  on  such  accounting  to  interest  on  advances 
miide  for  the  del)ts  of  the  bank  and  upon  their  expenses  incurred 
in  the  management  of  the  property  before  a  sale  of  it  was 
made  by  them,  although  the  instrument  was  silent  as  to  interest. 
Such  allowance  was  justihed  by  the  nature  of  the  transaction 
or  by  usage  and  custom,  and  was  a  proper  exercise  of  equitable 
discretion.^" 

§  328.  Quantum  meruit  claim  to  interest  between  vendor  and 
purchaser.  Where  a  i)urcliaser  obtains  possession  of  the  land 
pui'chased  while  the  contract  is  pending  such  possession  may 
oblige  him  to  pay  interest  when  otherwise  he  would  be  entitled 
to  retain  the  purchase-money  without  being  so  liable.  Before 
the  time  fixed  for  payment  he  is  not  liable  to  pay  interest  unless 
it  is  required  by  the  contract.  It  frequently  happens,  however, 
that  when  the  time  arrives  for  payment  the  seller  is  not  pre- 
pared to  fulfill  the  concurrent  condition  of  making  title;  on 
that  account  the  purchaser  would  be  under  no  obligation  to  part 
with  his  money;  and  being  in  no  default,  interest  could  not  bo 

In   a   note  the   reporter   says:    "The       Johns.  Cli.  517.     See  Lessee  of  Dil- 
trustee     in     this     case     could     only        „.(„.th  v.  Sinderling,  1  Bin.  494. 
claim  an  Indemnity,  and  ought  not  89  Sehring    v.    Keith,    2    Hill     (S. 

to  be  allowed  compound  interest  un-  " 

C  ]   .340 
less  he  could  show  that  he  was  in 

the    discharge    of    his    duty    obliged  90  Woerz   v.    Schumacher,    161    N. 

to  pay  it."     Evertson   v.  Tappeii,   f)       Y.   .530,   37   App.   Dlv.    (N.  Y.)    .374. 


328] 


INTEREST. 


1025 


exacted;  but  if  he  has  taken  and  eujoys  the  possession  whik' 
the  vendor  is  precluded  from  demanding  the  money  on  account 
of  the  state  of  the  title  and  he  finally  makes  title  so  as  to  have  a 
right  to  performance  of  the  contract  of  })urchase,  he  will  be 
entitled  to  interest  on  the  purchase-money  if  the  purchaser  had 
possession  of  the  estate.^^  This  rule,  however,  is  not  absolute ; 
it  rests  upon  equitable  grounds,  and  is  subject  to  the  modifying 
effect  of  other  equitable  circumstances  for  the  consideration  of 
a  chancellor  in  equity  or  of  a  jury  at  law.^*^     Where  the  con- 


aiMinard  v.  Beans,  G4  Pa.  411; 
Lang  V.  Moole,  31  N.  J,  Eq.  413; 
Breckenridge  v.  Hoke,  4  Bibb  272 ; 
Cleveland  v.  Burrill,  25  Barb.  532; 
CiiUum  V.  Branch  Bank,  4  Ala.  21, 
37  Am.  Dec.  425;  Selden  v.  James, 
6  Rand.  465;  Rutledge  v.  Smith,  1 
McCord  Ch.  399;  Boyce  v.  Pritcliett, 
G  Dana  231;  Hepburn  v.  Dunlop, 
1  Wheat.  179;  Brockenbrough  v. 
Blythe,  3  Leigh  619;  Steenrod  v. 
Railroad  Co.,  27  W.  Va,  1.  See 
vol.  1,  Warvelle  on  Vendors  (2d 
ed.),  §  180. 

McKennan  v.  Sterrett,  6  Watts 
162,  was  an  action  for  purchase- 
money  on  tender  of  title;  purchaser 
in  possession.  Rogers,  J.:  "At 
the  time  of  the  contract  both  parties 
were  aware  that  Sterrett  had  no 
title;  notwithstanding  which  Mc- 
Kennan was  to  take  immediate  pos- 
session, as  appears  from  that  clause 
which  stipulates  that  if  McKennan 
is  deprived  of  the  property  Ster- 
rett will  pay  him  for  all  tin-  im- 
provements, either  in  buildings  or 
otherwise.  With  a  full  knowh'dgo 
of  all  the  facts  Sterrett  agrees  to 
sell  McKennan  ten  acres  of  land, 
with  the  allowance,  for  $45  per  acre, 
and  Sterrett  agrees  to  give  him  a 
clear  title.  The  payments  are  to 
be  one-half  in  hand,  as  soon  as  he 
makes  him  a  right  for  the  tm  acrm 
of  land,  and  the  remaining  IimU  in 
three  yearly  payments.  Now,  noth- 
Suth.  Dam.  Vol.  I.— 65. 


ing  can  be  clearer  than  tliat  until 
tender  of  title  the  v<  inlur  is  not  en- 
titled to  payment  of  the  purciiase- 
money;  and  it  is  a  general  principle 
that  interest  is  not  denumdaide  of 
right  until  tlu'  debt  is  due,  except 
in  pursnanee  of  the  terms  of  an  ex- 
press contract;  and  no  contract  is 
here  alleged.  But  the  argument  ia 
that  the  vendor  took  possession,  and 
as  he  enjoys  tiie  profits  he  ought  to 
pay  interest.  And  this  is  true  in 
ordinary  cases,  where  a  time  is  fixed 
for  tlie  payment  of  the  purchase- 
money;  but  tin'  right  to  take  im- 
mediate possession  was  part  of  the 
contract;  and  the  vendees  having 
taken  possession  cannot  afTeet  the 
construction  of  that  clause  in  the 
agreement  on  which  the  debt  is 
only  recoverable  after  a  clear  title 
is  made.  A  ditTercnt  construction 
would  render  the  vendor  careless  of 
obtaining  and  tendering  a  tith',  as 
lie  would  be  sure  nf  b'Lial  interest 
fioin  llie  time  tiie  vendee  took  pos- 
session. Why  tbis  extraordinary 
delay  took  ]ilace  we  liave  not  lieen 
informed:  l>ut  tbei-e  is  nntbing 
which  leads  us  to  believe  that  it 
arose  from  the  fault  of  the  vendee. 
The  court  are  therefore  of  opinion 
that  interest  is  only  demantiable 
from  the  time  of  the  temler  of  the 
title."  See  Beeson  v.  Elliott,  1 
Del.   Ch.   368. 

92  Letcher    v.    Woodson,    1    Brock. 


1026 


SUTHERLAND    ON    DAMAGES. 


[§  328 


tract  gave  the  vendee  possession  and  placed  on  the  vendor  cer- 
tain duties  which  were  conditions  precedent  to  the  right  to  re- 
ceive the  purchase-money,  there  being  no  stipulation  respecting 
interest,  and  mutual  advantage  resulted  from  the  immediate 
possession  given  the  vendee,  and  the  delay  in  completing  the 
sale  was  due  solely  to  the  wilful  and  excuseless  conduct  of  the 
vendor,  his  right  to  interest  was  denied  in  a  suit  for  the  specific 
performance  of  the  contract.'^     A  vendee  may  avoid  liability 


212;  Brockenbroiigh  v.  Elythe,  3 
Leigh  619.  See  Davis  v.  Parker, 
14  Allen  104. 

In  Dias  v.  Glover,  Hoff.  Ch.  71,  it 
was  held  that  though  the  general 
rule  is  to  allow  interest  from  the 
time  when  the  contract  should  have 
have  been  fulfilled  and  to  give  the 
purchaser  the  rents  and  profits,  yet 
if  the  vendor  caused  the  delay  and 
interest  exceeded  the  rent  the  pur- 
chaser should  be  permitted  to  elect 
to  pay  the  interest  or  relinquish  his 
right  to  the  rents. 

In  Selleck  v.  Tallman,  11  Daly 
141,  judgment  was  given  the  plain- 
tiff for  the  specific  performance  of  a 
contract  to  sell  land  he  had  bar- 
gained for  for  the  purpose  of  mak- 
ing improvements  upon  it.  No  rent 
or  other  profits  were  derivable  from 
it  in  the  condition  it  was  in.  He 
was  kept  out  of  possession  and  sus- 
tained large  damages  which  could 
not  be  compensated.  The  vendor 
was  charged  with  interest  and  taxes 
accruing  prior  to  the  delivery  of  his 
deed. 

93  Atchison,  etc.  R.  Co.  v.  Chicago, 
etc.  R.  Co.,  162  111.  632,  654,  35 
L.R.A.  167.  In  this  case  the  right 
to  interest  in  suits  for  specific  per- 
formance was  thus  expounded : 
First,  where  the  contract  contains 
no  provision  as  to  possession  or  in- 
terest, if  the  vendee  takes  possession 
he  must  pay  interest  from  that  date. 
Calcraft   v.    Roebuck,    1    Ves.    221; 


Fludyer  v.  Cocker,  12  id.  25;  Powell 
V.  Martyr,  8  id.  146;  Ballard  v. 
Shutt,  15  Ch.  Div.  122;  Attorney- 
General  v.  Christ  Church,  13  Sim. 
Ch.  214;  Rutledge  v.  Smith,  1  Mc- 
Cord  231;  Wilson  v.  Herbert,  76 
Md.  489;  Boyle  v.  Roward,  3  De- 
sauss.  555;  Bostwick  v.  Beach,  103 
N.  Y.  414;  Phillips  v.  South  Park 
Com'rs,  119  111.  626;  Steenrod  v. 
Railroad  Co.,  27  W.  Va.  1 ;  Steven- 
son V.  Maxwell,  2  N.  Y.  408;  Binks 
v.  Lord  Rokeby,  2  Swanst.  223 ;  Gib- 
son V.  Ciark,  1  V.  &  B.  500;  Rhys 
V.  Dare  Valley  R.  Co.,  L.  R.  19  Eq. 
93;  Lang  v.  Moole,  31  N.  J.  Eq.  413; 
Cleveland  v.  Burrill,  25  Barb.  532; 
Huntley  v.  Lyons,  5  Munf.  342,  7 
Am.  Dec.  685;  Monroe  v.  Taylor,  8 
Hare  51 ;  Phillips  v.  Silvester,  L.  R. 
8  Ch.  173;  Railroad  v.  Gesner,  20 
Pa.  240;  Pomeroy  on  Contracts,  sec. 
430.  Second — where  the  contract 
contains  no  provision  as  to  posses- 
sion, but  provides  a  date  for  per- 
formance and  for  the  payment  of 
interest  tliereafter,  if  either  party  is 
in  wilful  default  equity  will  refuse 
to  enforce  the  terms  of  the  agree- 
ment for  the  benefit  of  the  default- 
ing party.  De  Visme  v.  De  Visme, 
1  Macn.  &  G.  336;  Lombard  v.  Chi- 
cago Sinai  Congregation,  64  111.  477, 
75  id.  271;  Jones  v.  Mudd,  4  Russ. 
Ch.  122;  Monk  v.  Huskinson,  id. 
122,  note  a;  Leggett  v.  Metropolitan 
R.  Co.,  L.  R.  5  Ch.  716;  Lofland  v. 
Maull,    1     Del.    Ch.    359;    Riley    v. 


i 


§  328] 


INTEKKST. 


ioj: 


for  interest  il"  lie  is  mialilo  lo  });iv  on  accdiiiil  dI'  the  (Ict'niill  of 
the  vendor  by  setting  aside  the  inirchase-iiioiiev  and  notifving 
the  latter  tliat  it  is  awaiting  liis  acceptance."*  A  vendor  wlio 
conveys  wild  land  to  which  he  has  no  title  cannot  chiiin  interest 
on  the  purchase  price  on  the  snhsccpient  accrual  of  title  hy  the 
act  of  a  thii'd  j)arty  for  any  time  anterior  to  that  e\(Mit,  thougli 
the  vendee  was  in  possession,  the  beneiits  resulting  to  him 
therefrom  being  produced  by  his  own  improvements.'* 

Where  there  has  been  wilful  and  vexations  delay  by  the  fault. 
or  gross  laches  of  the  vendoi-,  in  conseipience  of  which  the  pni-- 
chase-money  has  lain  idle  and  nnju-oductive,  it  may  be  left  to 
the  jury  to  say  whether  \w,  shall  receive  interest.'^  On  the 
rescission  of  a  contract  of  sale  where  the  vendee  has  been  in 
possession,  in  the  absence  of  ju-oof  to  the  contrary,  his  nse  of 
the  land  will  in  e([nity  be  deemed  e(]uivalent  to  that  of  the  price 
paid  and  interest  ought  not  to  be  given.''  So  where  the  vendor 
in  a  verbal  contract  refuses  to  perform  it  the  vendee  is  entitled, 
iu  addition  to  the  purchase-money  paid,  to  receive  interest 
thereon   only   from    the   time   the   former   asserts   his    riuhts.'' 


Streetfield,  M  Gh.  Div.  388;  Towart 
V.  Lawson,  3  Sm.  &  G.  307;  King  v. 
Ruckman,  24  N.  J.  Ecj.  550.  Third— 
where  the  contract  provides  a  time 
for  performance,  with  a  provision 
for  prior  possession  and  ail  express 
agreement  for  interest  from  a  day 
named,  and  the  vendor  merely  neg- 
lects or  is  unable  to  perform,  in 
such  case  tlie  vendee  shall  have  the 
rents  and  profits  and  pay  interest 
from  the  time  fixed  by  the  contract. 
Birch  V.  Joy,  3  H.  of  L.  Gas.  r)(}5 ; 
Brockenbrough  v.  Blytlie,  3  Leigh 
619 ;  McKayer  v.  Melvin,  1  Ired.  Eq.  • 
73;  Baxter  v.  Brand,  6  Dana  296; 
Cowper  V.  Bakewell,  13  Beav.  421. 

94  Steenrod  v.  Railroad  Co.,  27 
W.  Va.  1;  Bostwick  v.  Beach,  103 
N.  Y.  414;  Galcraft  v.  Roebuck,  1 
Ves.  221;  Roberts  v.  Massay,  13  id. 
561 ;  Kershaw  v.  Kershaw,  L.  R.  9 
Eq.  56. 


If  a  note  for  ilic  jiiircliase  price 
of  land  is  payable  at  a  designated 
bank,  and  the  maker  is  ready  at  the 
agreed  time  and  place  to  pay  it.  but 
is  unalde  to  do  so  because  tlie  note 
is  not  in  the  bank's  possession,  he  is 
not  liable  for  interest  subsequently 
accruing  unless  he  realized  it  from 
the  use  of  the  money.  Gheney  v. 
Libby,  134  U.  S.  68,  33  L.  ed.  818. 

96  Toms  v.  Boyes,  59  Jlich.  386. 
96Mc('ormick    v.    Crall,    (i    Watts 

207:  Kester  v.  Rockell,  2  W.  &  S. 
365;  Stevenson  v.  Maxwell.  2  Sandf. 
Ch.  274,  2  N.  Y.  408. 

97  Talbot  V.  Sebree,  1  Dana  56; 
WicklifTe  v.  Glay,  id.  585. 

Tlie  vendee  will  be  allowed  inter- 
est only  from  the  time  lie  gave  up 
the  possession.  Ankeny  v.  Clark.  1 
Wash.  549. 

98  Fox  v.  Longly.  1  A.  K.  Marsh. 
388. 


1028 


SUTHERLAND    ON    DAMAGES. 


[§   328 


Whether  the  vendee  be  entitled  to  have  the  consideration  re- 
funded upon  rescission  of  the  sale  or  to  damages  on  the  basis  of 
the  sum  paid  for  a  total  or  jnirtial  breach  of  the  covenants  for 
title,  interest  will  be  withheld  for  so  much  of  the  time  as  he 
enjoyed  the  possession  without  liability  for  mesne  profits.^^ 
The  doctrine  is  that  possession  is  equivalent  to  interest  on  the 
consideration;  and  where  the  bargain  is  given  up  or  the  title 
fails  and  the  ])urchase-money  must  be  refunded  interest  will 
not  be  added  in  either  case  to  a  purchaser  who  has  had  jiosses- 
sion  unless  there  is  a  liability  to  the  superior  owner  for  rents 
and  profits,  and  then  only  to  the  extent  of  that  liability.^  The 
reason  assigned  is  if  the  occupant  shall  recover  interest  on  the 
value  of  the  land  when  he  has  obtained  the  equivalent  of  that 
interest  in  the  use  thereof  he  will  have  received  and  his  vendor 
will  have  lost  more  than  the  value  of  what  w^as  given  for  it ;  and 


99Staats  V.  Ten  Eyck,  3  Cai.  Ill, 
2  Am.  Dec.  254 ;  Pitcher  v.  Livings- 
ton, 4  Johns.  1,  4  Am.  Dec.  229; 
Bennet  v.  Jenkins,  13  Johns.  50; 
Baldwin  v.  Munn,  2  Wend.  309,  20 
Am.  Dec.  627;  Dimmick  v.  Lock- 
wood,  10  Wend.  142;  Caulkins  v. 
Harris,  9  Johns.  324;  Kane  v.  San- 
ger, 14  id.  89;  Baxter  v.  Ryerss,  13 
Barb.  267;  Flint  v.  Steadman,  36 
Vt.  216;  Rich  v.  Johnson,  2  Pin.  88, 
52  Am.  Dec.  144;  Noonan  v.  Ilsley, 
21  Wis.  138;  Patterson  v.  Stewart,  6 
W.  &  S.  527,  40  Am.  Dec.  586;  Fer- 
nander  v.  Dnnn,  19  Ga.  497,  65  Am. 
Dec.  607;  Harding  v.  Larkin,  41  111. 
413;  Thompson  v.  Jones,  11  B.  Men. 
365;  Hale  v.  New  Orleans,  13  La. 
Ann.  499;  Bach  v.  Miller,  16  id.  44; 
Clark  V.  Parr,  14  Ohio,  118,  45  Am. 
Dec.  529;  Whitlock  v.  Crew,  28  Ga. 
289;  Collier  v.  Cowger,.52  Ark.  322. 

1  Point  Street  I.  Works  v.  Turner, 
14  R.  I.  122;  Crockett  v.  Gray,  39 
Kan.  659;  Ware  v.  Lippincott,  45 
N.  J.  Eq.  320;  Whitlock  v.  Crew,  28 
Ga.  289. 

If  a  bona  fide  purchaser  in  pos- 
session is  allowed  the  value  of  his 


improvements  as  against  the  owners 
of  the  land  he  will  not  he  entitled  to 
interest  thereon.  Boykin  v.  An- 
crum,  28  S.  C.  486,  13  Am.  St.  698. 

Where  the  purchaser  of  chattels 
gave  his  note  to  the  seller  for  part 
of  the  price  and  a  chattel  mortgage 
to  a  third  party  who  loaned  him 
money  to  make  a  cash  paj'ment,  the 
under.standing  being  that  the  sale 
miglit  be  rescinded  within  sixty 
days,  the  seller  was  not  liable  to 
sucli  third  party  for  interest  dur- 
ing the  time  the  other  retained  pos- 
session. Kildea  v.  Washington  L. 
Co.,  22  Wash.  385. 

Where  the  son  and  one  of  the 
executors  of  decedent  had  bought 
from  the  latter  a  farm  on  credit, 
and  an  agreement  was  made  be- 
tween the  former  and  the  other  ex- 
ecutor and  others  interested  in  the 
estate  for  a  return  of  the  farm  on 
condition  that  the  value  of  the  im- 
provements should  be  paid  the  pur- 
chaser before  making  distribution 
of  the  estate,  the  latter  was  denied 
interest  on  their  value  because  for 
years  he  had,  as  executor,  neglected 


§    328]  INTEREST.  10l>t» 

as  the  occupant  is  linhle  to  the  cvictor  for  vicsiir  protils  I'm'  tlic 
period  of  limitation  pi'ccodinu'  llic  cviclinn.  Im-  that  period  li(> 
slionld  not  be  entitled  to  interest  (<n  tiie  consideration  wiiidi  lie 
paid  for  the  land.^  This  doctrine  is  further  illustrated  l\v  the 
case  of  a  tenant  bv  the  curtesy  conveying  in  fee  with  warranty. 
The  grantee  has  been  licltl  entitled  to  I'ecovci-  from  his  estate 
on  the  covenant  only  the  i)nrchase-nioney,  with  interest  from 
the  time  of  his  death. ^  So  where  an  eviction  is  oidy  by  the 
claim  of  a  tenant  in  dower  the  measure  of  damages  is  the 
present  value  of  an  annuity  ecjual  to  interest  at  the  legal  rate 
on  one-third  of  the  consideration  money  for  the  time  the  tenant 
in  dovper  has  a  probable  exjiectation  of  life  according  to  ap- 
proved tables  of  life  annuities.*  TIk^  purchaser  must  sometimes 
submit  to  equitable  terms  when  in  default  in  order  to  obtain 
relief  by  specific  performance.  In  such  cases,  in  order  fully 
to  indemnify  the  seller,  the  court,  according  to  the  circumstan- 
ces, may  decree  a  larger  amount  of  interest  than  such  vendor 
could  recover  as  plaintiff,  as  by  compounding  the  interest  with 
rests  at  short  intervals.^  When  a  vendee  has  a  right  to  recover 
a  deposit  of  a  part  or  the  whole  of  the  purchase-money  because 
of  the  vendor's  inability  to  nudcc  title  he  can  also  reco\-er  in- 
terest from  the  time  it  was  paid  though  there  was  no  e.\))rcss 
agreement  to  pay  it,^  or  after  a  demand  for  the  return  of  the 

to  pay  the  interest  or  debt,  it  not  ri^lit,  in  consciiMH-c  to  cdiniM'!  (In- 
appearing  that  he  could  not  have  vendor  to  pay  it  ajxain.  .And  snri'Iy, 
done  so.  Sutton's  Est.,  l.S  Pa.  Sii-  if  he  nnist  liavc  the  int'-rcst,  tin- 
per.  Ct.  492.  vendor  sluiuld  h;)\c  rrnt-.  liiit  in 
2  Cogswell  V.  Lyon,  3  J.  J.  Marsh.  ('(luity  thi'  intncst  im  tlic  |iiiic  arid 
40.  In  this  case  the  deed  was  avoid-  tlic  use  of  tin'  laml  are  e!)n.si(l<-n>d 
ed,  although  the  entire  consideration  e(iuivalcnt.  ami.  th'Tcfore.  tlicre 
had  been  paid,  on  the  ground  of  need  Ik'  no  accdinit  nf  tin-  profits, 
fraud  on  creditors,  and  tlie  court  as  tiicy  should  be  sit  niT  against  tlie 
say:  "As  a  general  proposition,  it  interest."'  See  Haithtt  v.  Mlanti'ii. 
is  plainly  just  and  reasonable  that  4  .(.  J.  ^larsh.  421). 
the  vendee,  after  losing  the  benefit  3  House  v.  House,  10  Paige  l.is. 
of  his  purchase,  should  be  restored  i  Wager  v.  Schuyler,  1  Wend.  'tXi. 
to  the  price  which  he  gave,  and  its  5  Cleveland  v.  Purrill,  25  Barb, 
annual  interest.  But  if  he  shall  532:  Morris  v.  Iloyt,  11  Mich.  10. 
have  already  received  the  interest  or  6  FHnn  v.  Barber,  04  .Ma.  200; 
its  equivalent  in  the  enjoyment  of  Bennett  v.  Latiuim,  IS  Tex.  (  iv. 
the  profits  of  the   land,   he  has   no  Ajij).  403. 


1030  SUTIIKKLAND    ON    DAMAGES.  [§    328 

deposit.''  One  who  buys  land  under  a  decree  stipulating  that 
deferred  payments  are  to  bear  interest  is  liable  for  interest 
though  he  gave  no  notes  and  understood  that  the  price  was  to 
be  taken  out  of  his  share  of  the  estate.^  If  the  plaintiff  in  an 
action  to  recover  money  paid  demands  that  it  be  deposited  in 
court  subject  to  his  order  and  it  is  so  deposited,  and,  pursuant 
to  his  motion,  it  is  directed  to  remain  on  deposit  the  money  is, 
in  legal  effect,  paid  into  court  and  the  plaintiff  can  recover  no 
greater  rate  of  interest  than  it  earned.^  On  the  breach  of  an 
oral  agreement  to  convey  or  devise  real  estate  to  one  who  has 
made  advances  on  the  faith  thereof  there  may  be  a  recovery  of 
simple  interest  from  the  dates  of  the  several  advances.^" 

§  329.  Interest  allowed  from  time  when  money  ought  to  be 
paid.  Interest  is  imposed  by  law  as  damages  for  not  discharg- 
ing a  debt  when  it  ought  to  be  j)aid.  In  this  country  the  prin- 
ciple has  long  been  settled  that  if  a  debt  ought  to  be  paid  at  a 
particular  time  and  is  not  then  paid  through  the  default  of  the 
debtor,  compensation  in  damages  equal  to  the  value  of  money, 
which  is  the  legal  interest  upon  it,  shall  be  paid  during  such 
time  as  the  party  is  in  default."     The  important  practical  in- 

7IIellraan  v.  Merz,  112  Cal.  661.  Green,  102  Va.  373;   Mann  v.  Rob- 

8  McNairy  v.  McNairy,  1  Tenn.  erts,  126  Wis.  142;  Larson  v.  An- 
Cas.  329.  derson,  122  Minn.  39;  Empire  State 

9  Warren  v.  Banning,  140  N.  Y.  S.  Co.  v.  Moran,  71  Wash.  171;  Ben- 
227.  nett  v.  Federal  C.  &  C.  Co.,  70  W. 

lOMorrissey  v.  Morrissey,  180  Va.  456,  40  L.R.A.(N.S.)  588;  Pad- 
Mass.  480.  ley  v.   Catterlin,   64  Mo.   App.   629, 

H  Blair  v.  Clayton  E.  Co.  (Del.)  citing  the  text;  McCuish  v.  Sniail, 
77  Atl.  740;  Harnish  v.  Miles,  13  S.  D.  397,  citing  the  text;  1  Am. 
Ill  111.  App.  105  (interest  bear-  Lead.  Cases,  498;  Day  v.  Brett,  6 
ing  note  indorsed  "no  interest  to  Johns.  24;  Hunt  v.  Jucks,  1  Hayw. 
be  charged"  draws  interest  after  173,  1  Am.  Dec.  555;  Coughlin 
maturity);  Chicago  &  S.  R.  Co.  v.  McElroy,  74  Conn.  397;  LefTel  v. 
V.  McEwen,  35  Ind.  App.  251;  Piatt,  126  Mich.  443;  Sullivan  v. 
Morrow  v.  Pike  County,  189  Mo.  Nicolin,  113  Iowa  76,  83;  Mullally 
610;  Leggat  v.  Gerrick,  35  Mont.  91,  v.  Dingraan,  62  Neb.  702;  Happy  v. 
8  L.R.A.(N.S.)  1238;  Campbell  v.  Prickett,  24  Wash.  290;  Broughton 
Kimball,  87  Neb.  309;  Dame  v.  v.  Mitchell,  64  Ala.  210;  Flinn  v. 
Wood,  75  N.  H.  38;  (see  s.  c.  73  Barber,  id.  200;  Milton  v.  Black- 
N.  H.  222,  70  L.R.A.  133)  ;  Sieger  v.  shear,  8  Fla.  161;  Bishop  Hill  Col- 
Sieger,  209  Pa.  65  (as  between  ten-  ony  v.  Edgerton,  26  111.  54;  Cheek 
ants     in     common)  ;     Johnston     v.  v.  Waldrum,  25  Ala.  155;  Purdy  v. 


§  329] 


INTEREST. 


u>;u 


qiiirj,  therefore,  in  caeli  ease  in  which  interest  is  in  question 
is,  what  is  the  date  at  which  this  legal  duty  to  pay,  as  an  ahso- 
lute  present  duty,  arose.  This  date  does  not  always  coincide 
with  that  at  which  the  demand  is  legally  due  and  suahlc.  Where 
a  sum  certain  is  payahle  at  a  particular  time,  either  immedi- 
ately after  the  debt  is  contracted  or  in  the  future,  the  d(!l)t(>r 
should  pay  at  that  time;  otherwise,  he  is  at  once  in  default  and 
liable  for  interest. ^"^    In  such  cases  it  is  his  duty  to  pay  at  the 


Philips,  11  N.  Y.  40G;  People  v. 
New  York,  5  Cow.  331  ;  Dodgo 
V.  Perkins,  9  Pick.  368;  Williams  v. 
Sherman,  7  Wend.  109;  Ten  Eyck 
V.  Tloughtaling,  12  How.  Pr.  523; 
Van  Rensselaer  v.  Jewett,  2  N.  Y. 
135;  Maltman  v.  Williamson,  fifl  111. 
423;  Swett  v.  Hooper,  62  Me.  54; 
Wenman  v.  Mohawk  Ins.  Co.,  13 
Wend.  267;  French  v.  French,  126 
Mass.  360;  MclMahon  v.  New  York, 
etc.  R.  Co.,  20  N.  Y.  463. 

In  the  last  case  the  court  held 
that  interest  may  be  charged  on  the 
ground  of  the  debtor's  default  al- 
though the  amount  of  the  demand 
neither  has  been  nor  can  readily  be 
ascertained. 

A  deI)tor  is  not  excused  from  pay- 
ing when  the  money  is  due  where 
the  contract  imder  which  it  is 
claimed  fixes  the  price  of  the  work, 
thougli  the  amount  of  material  fur- 
nished under  it  was  uncertain  and 
the  claim  was  disputed  in  good 
faith.  City  of  Louisville  v.  Hender- 
son, 11  Ky.  L.  Rep.  796. 

It  is  not  cause  for  excusing  the 
debtor  that  the  parties  disagreed  as 
to  the  principal  sum  due  and  that 
their  respective  contentions  were  ju- 
dicially disallowed.  It  was  the 
debtor's  duty  to  ascertain  the 
amount  of  his  obligation.  Toronto 
V.  Toronto  R.  Co.,  7  Ont.  L.  R.  78, 
ruled  under  sec.  113  of  tiie  Judica- 
ture Act. 


Wliere  tlie  evidence  shows  a  de- 
mand for  payment  witliin  tiie  re- 
quired period  but  fails  to  siiuw  on 
what  particular  day  tiic  demand 
was  made  interest  will  nm  from  the 
last  day  of  such  jieriod.  Arizona 
Life  Ins.  Co.  v.  Liiidcii,  15  Ariz. 
471. 

12  Cummins'  Kst.,  143  Cal.  525; 
Mullenary  v.  Rurton,  3  Cal.  App. 
263;  Denver  P.  B.  Co.  v.  Young,  49 
Colo.  498;  Donley  v.  Bailey,  48  Colo. 
373;  Doyle  v.  Nesting,  .37  Colo.  522; 
Parsons  v.  Utica  C.  Mfg.  Co.,  80 
Conn.  58;  Parker  v.  Cortatowsky, 
129  Ca.  623;  Cicero  v.  Hall,  240  111. 
160;  Concord  A.  H.  Co.  v.  O'Brien, 
228  III.  360;  Bauer  v.  Ilindley,  22 
111.  319;  Goodall  v.  Eldoradoj  etc. 
R.  Co.,  143  111.  App.  328;  Bauer  v. 
Jerolman,  124  111.  App.  151;  Sie- 
berts  v.  Spangler,  140  Iowa  2.36; 
Flynn  v.  American  B.  &  T.  Co.,  104 
Me.  14],  19  L.R.A.(N.S.)  428,  129 
Am.  St.  378;  Bell  v.  Jordan,  102  Me. 
67;  Sampson  v.  Commonwealth,  202 
Mass.  .326;  Childs  v.  Krey,  199 
Mass.  352 ;  Rowland  v.  Maddock,  183 
Mass.  360;  Union  T.  Co.  v.  Preston 
Nat.  Bank,  144  Mich.  106;  Bank 
Com'rs  V.  New  Hampshire  B.  Co.,  74 
N.  H.  292;  People  v.  Freeman,  110 
App.  Div.  (N.  Y.)  605;  Shaul  v. 
lioard  of  Education,  108  App.  Div. 
(N.  Y.)  19;  Helen.'  v.  Corn  Exeh. 
Bank,  9(i  App.  Div.  ( N.  Y.)  392: 
Morrison     Mfg.     Co.     v.     Farjio     S. 


1032 


SUTHERLAND    ON    DAMAGES. 


[§  y2u 


very    time    when    the    debt    is    legally    and    technically    due. 
Numerous  cases  applying  this  rule  will  be  found  in  the  notes.  It 


&  T.  Co.,  16  N.  D.  256;  Wallace's 
Est.,  13  Pa.  Dist.  155;  Stude  v. 
Koehler  (Tex.  Civ.  App.),  138  S. 
W.  103;  Guflfey  P.  Co.  v.  Hamill, 
42  Tex.  Civ.  App.  196;  Dunnett  v. 
^  Gibson,  78  Vt.  439 ;  Sun  v.  Makain- 
ai,  14  Hawaii  495 ;  Enslow  v.  Ennis, 
155  Iowa  266;  Grayson  v.  Mar- 
shall (Tex.  Civ.  App.),  145  S.  W. 
1034;  Butler-H.  Co.  v.  Virginia  R. 
Co.,  113  Va.  28;  Allen  v.  Central 
Counties  L.  Co.,  21  Cal.  App.  163; 
Diamond  M.  Co.  v.  Silberstein,  165 
Cal.  282;  Meyer  v.  Buckley,  22  Cal. 
App.  96;  Council  v.  Hixon,  11  Ga. 
App.  818;  Taylor  v.  Scott,  178 
111.  App.  487  ;  Smolikowski  v.  Laibe, 
170  111.  App.  181 ;  Myers  v.  Bender,  46 
Mont.  497  ;  Siebert  v.  Dunn,  157  App. 
Div.  (N.  Y.)  387;  Martin  v.  Ede, 
103  Cal.  157;  Macomber  v.  Bigelow, 
126  Cal.  9;  Hines  v.  Miller,  126  Cal. 
683;  Ryland  v.  Heney,  130  Cal.  426; 
Healy  v.  Fallon,  69  Conn.  228; 
Hartshorn  v.  Byrne,  147  111.  418; 
Luetgert  v.  Voiker,  153  111.  385; 
Crunirine  v.  Estate  of  Crumrine,  14 
Ind.  App.  641 ;  Willey  v.  St.  Charles 
H.  Co.,  52  La.  Ann.  1581,  1602; 
Donahue  v.  Partridge,  160  Mass. 
336;  Hazelet  v.  Holt  County,  51 
Neb.  716;  Myers  v.  Bolton,  157  N. 
Y.  393;  Haight  v.  Price,  10  App. 
Div.  (N.  Y.)  470;  Kelley  v.  Phe- 
iiix  Nat.  Bank,  17  App.  Div.  N.  Y. 
496;  Irlbacker  v.  Roth,  25  App.  Div. 
(N.  Y.)  290;  Wasatch  M.  Co. 
v.  Crescent  M.  Co.,  7  Utah  8; 
Land,  L.  &  L.  Co.  v.  Oneida  Coun- 
ty, 83  Wis.  649;  Laycock  v.  Parker, 
103  Wis.  161;  Richmond  &  I.  C. 
Co.  V.  Richmond,  etc.  R.  Co.,  15  C. 
C.  A.  289,  68  Fed.  105,  34  L.R.A. 
625;  District  of  Columbia  v.  Me- 
tropolitan R.  Co.,  8  D.  C.  App.  Caa. 
322;   Hawkins  v.  Citizens'  Inv.  Co., 


38  Ore.  544;  McCullough  v.  Newlove, 
27  Ont.  627;  Elkin  v.  Moore,  6  B. 
Mon.  462;  Rensselaer  G.  Factory  v. 
Reid,  5  Cow.  587,  611;  Robinson 
V.  Bland,  2  Burr.  1086 ;  Farquliar  v. 
Morris,  7  T.  R.  124;  Purdy  v.  Phil- 
ips, 11  N.  Y.  406;  Knickerbocker 
Ins.  Co.  V.  Gould,  80  111.  388;  Pe- 
oria M.  &  F.  Ins.  Co.  V.  Lewis,  18 
111.  553;  Hunt  v.  Jucks,  1  Hayw. 
173,  1  Am.  Dec.  555;  Milton  v. 
Blackshear,  8  Fla.  161;  Wenman  v. 
Mohawk  Ins.  Co.,  13  Wend.  267; 
Cheek  v.  Waldrum,  25  Ala.  152; 
Bishop  Hill  Colony  v.  Edgerton,  26 
111.  54 ;  Royal  v.  Miller,  3  Dana  55- 
58;  Newlan  v.  Shafer,  38  111.  379; 
Putnam  v.  Lewis,  8  Johns.  389. 

Where  money  becomes  payable  on 
the  happening  of  a  contingency  in- 
terest will  be  allowed  only  from 
such  time.  Bellevue  Mills  Co.  v. 
Baltimore  Trust  Co.,  214  Fed.  817. 

Liability  for  interest  on  the  price 
bid  for  land  at  an  oflBcial  sale  con- 
tinues until  the  arrival  of  the  time 
fixed  by  the  court  for  the  payment 
thereof,  notwithstanding  an  inter- 
mediate confirmation  of  the  sale  by 
the  orphans'  court.  Ross's  Est.,  18 
Pa.  Dist.  429. 

The  time  for  making  payments 
being  fixed  in  thirty-three  days  after 
completion  of  a  contract  is  not  ex- 
tended by  a  clause  therein  making 
the  contractor  liable  for  damages 
occasioned  by  his  work  and  the  fact 
that  actions  were  pending  against 
him  to  recover  damages  so  caused. 
Donahue  v.  Partridge,  supra. 

A  contract  by  a  city  to  pay  for 
street  paving  when  assessments  shall 
be  collected,  and  if  that  is  not  done 
at  the  end  of  two  years  the  amount 
then  unpaid  to  become  due,  does  not 
carry    interest   prior    to   the   end    of 


§  329] 


INTEREST. 


1033 


is  upon  the  ground  stated  that  statutes  whicli  give  a  preference 
to  one  class  of  creditors  over  another  in  the  distribution  of  an 


two    years.      Booth    v.    Pittsburgh, 
]54  Pa.  482. 

Interest  is  not  allowed  witli  the 
same  liberality  in  England  as  in 
this  country.  In  Mayne  on  Dam- 
ages (8th  ed.),  p.  100  et  soq.,  it  is 
said:  "Formerly  it  was  thought, 
where  a  sum  of  money  was  agreed 
to  be  paid  07i  a  particular  day,  that 
on  default  interest  from  that  day 
might  be  recovered  without  any  ex- 
press or  implied  contract  to  that 
effect.  Blaney  v.  Hendricks,  2  W. 
Bl.  761,  3  Wils.  205;  Shipley  v. 
Hammond,  5  Esp.  114;  Chalie  v. 
Duke  of  York,  6  Esp.  45 ;  De  Havil- 
land  V.  Bower  Bank,  1  Camp.  50; 
Mountford  v.  Willes,  2  B.  &  P.  337. 
But  this  doctrine  has  now  been  over- 
ruled. Gordon  v.  Swan,  12  East 
419;  Higgins  v.  Sargent,  8  B.  &  C. 
348;  Page  v.  Newman,  9  B.  &  C. 
378 ;  Foster  v.  Weston,  6  Bing.  709 ; 
Cook  V.  Fowler,  L.  R.  7  H.  of  L.  27, 
43  L.  J.  (Ch.)  855.  See  the  cases 
reviewed  in  London,  etc.  R.  Co. 
V.  South  Eastern  R.  Co.,  [1893] 
App.  Cas.  429.  It  lias,  Jiowever, 
been  always  held  that  where,  by 
an  award,  money  is  made  payable 
on  a  certain  day,  interest  ought  to 
be  allowed  from  that  day,  if  pay- 
ment was  demanded  at  the  place  ap- 
pointed. Pinhorn  v.  Tuckington,  3 
Camp.  468 ;  Churcher  v.  Stringer,  2 

B.  &  Ad.  777;  -Tohnson  v.  Durant,  4 

C.  &  P.  327.  I  cannot,  on  principle, 
explain  this  exception.  Many  ap- 
parent exceptions  to  the  rule  that 
interest  is  only  recoverable  in  the 
cases  just  mentioned  may  be  ex- 
plained by  distinguishing  between 
interest  recovered  as  part  of  the 
debt  and  interest  recovered  as  dam- 
ages for  its  detention.  For  instance, 
interest    on    a    deposit    may    be   re- 


covered, if  laid  as  special  danutgc  in 
an    action    for    broach    of    an    agree- 
ment to  sell  an  estate.     De  Bernales 
V.  Wood,  3  Camp.  258;   Farquhar  v. 
Farley,  7  Taunt.  592.     So  it  may  be 
allowed  as  damages  in  an  action  on 
a  mortgage  deed  after  the  day  of  de- 
fault    (Dickenson    v.     Harrison,    4 
Price  282;   Atkinson  v.  Jones,  2  A. 
&   E.  439;    Price  v.   Great  Western 
R.  Co.,  16  M.  &  W.  244)  ;    or  upon 
a  contract  to  pay  money  upon  a  par- 
ticular day    (Watkins  v.  Morgan,  6 
C.  &  P.  661 )  ;   or  upon  a  covenant 
to    indemnify    a    surety.      Petrc    v. 
Duncombe,  20  L.  J.    (Q.  B.)   242,  2 
Lown.,  M.  &  P.  107.     Where  a  writ- 
ten  security   is   given   for   the   pay- 
ment of  money  on  a  particular  day, 
with   interest'  up   to  that  day   at  a 
fixed   rate,   a   claim   for   subsequent 
interest  would  be  a  claim  for  dam- 
ages at  the  discretion  of  the  tribunal 
before  which   the   demand   is  made, 
and  not  for  interest  due  as  a  matter 
of  law.     The  former  rate  might,  but 
need  not  be,  adopted  in  assessing  the 
da;mages.     Cook  v.   Fowler,  L.   R.  7 
H.  of  L.  27-32.     Where  a  mortgage 
deed  provided  for  interest  at  ten  per 
cent,  up  to  the  time  fixed  for  pay- 
ment, but  contained  no  covenant  for 
interest   after   that   date   the   court 
held  that  subsequent  interest  could 
only  l)e  awarded  as  damages,  and  re- 
fused to  grant  more  than    live   per 
cent.      In    re   Roberts,    14    Ch.    Div. 
49;   Mellersh  v.  Brown,  45   id.  225. 
And   it   is   laid    down   as   a  general 
rule,   that   although    it   be   not   due 
ex  contractu,   a  party  may   be  en- 
titled  to   damages    in   the   form   of 
interest  where  there  has  been   long 
delay   under   vexatious   and   oppres- 
sive  circumstances    in   the   payment 
of  what  is  due  under  the  contract. 


1034 


SUTILEKLAJMD    ON    DAMAGES. 


[§  329 


estate  are  coustrued  to  include  interest  on  the  claims  of  the 
preferred  class  although  the  assets  are  not  sufficient  to  pay  all 


Hillhousc  V.  Davis,  1  M.  &  S.  169; 
Arnott  V.  Rodfern,  3  Bing.  353. 
Where  a  person  under  a  contract 
of  purchase  enters  into  possession 
of  property  which  produces  a  prof- 
it, sucli  as  machinery,  and  then  de- 
clines to  carry  out  his  purchase,  the 
vendor  is  entitled  to  interest  on  the 
value  of  the  property  by  way  of 
damages.  Marsh  v.  Jones,  40  Ch. 
Div.  563. 

"Interest  cannot  be  recovered  as 
such  in  an  action  against  the  ven- 
dor of  an  estate,  the  sale  of  which 
has  gone  off,  for  the  recovery  of  a 
deposit  which  has  been  lying  idle 
(Bradshaw  v.  Bennett,  5  C.  &  P. 
48;  Maberley  v.  Robins,  5  Taunt. 
625 )  ;  though  it  may  be  recovered . 
as  special  damages  for  breach  of  the^ 
contract  if  so  laid.  De  Bernales  v. 
Wood,  3  Camp.  258;  Farquhar  v. 
Farley,  7  Taunt.  592.  But  the 
principal  and  auctioneer  stand  on 
a  different  footing;  and  in  an  action 
against  the  latter  to  recover  the  de- 
posit paid  to  him  interest  cannot  be 
recovered  even  as  damages,  unless, 
perhaps,  after  a  demand  and  refusal 
on  the  contract  being  rescinded.  Lee 
v.  Munn,  8  Taunt.  45.  Not  even 
when  the  auctioneer  has  made  inter- 
est upon  the  money  while  in  his 
hands  and  although  he  was  request- 
ed by  one  of  the  parties,  before  the 
completion  of  the  contract,  to  in- 
vest it.  Harrington  v.  Iloggart,  1 
B.  &  Ad.  577.  Interest  is  not  due 
as  such  in  an  action  for  money 
secured  on  mortgage,  after  day  of 
default,  without  covenants  to  pay  in- 
terest, but  may  be  recovered  as  dam- 
ages. Nor  in  an  action  for  money 
lent  unless  there  has  been  a  usage 
to  that  effect  (Calton  v.  Bragg,  15 
East  223;    Shaw  v,  Picton,  4  B.  & 


C.  723)  ;  or  for  money  had  and  re- 
ceived (Walker  v.  Constable,  1  B.  & 
B.  306)  ;  even  though  by  the  course 
of  dealing  between  the  defendant 
and  the  person  from  whom  the 
money  was  received  to  the  plaintiff's 
use  the  sum  would  have  borne  in- 
terest; for  no  right  passed  to  the 
plaintiff  but  a  right  to  demand  the 
sum  actually  in  the  defendant's 
hands.  Friihling  v.  Schroeder,  2 
Bing.  N.  C.  79.  And  it  makes  no 
difference  that  the  money  has  been 
obtained  by  fraud  (Crockford  v. 
Winter,  1  Camp.  124).  Nor  in  ac- 
tions for  money  paid  (Carr  v.  Ed- 
wards, 3  Stark.  132;  Hicks  v. 
Marcco,  5  C.  &  P.  498)  ;  or  on  an 
account  stated  (Nichol  v.  Thompson, 
1  Camp.  52n;  Chalie  v.  Duke  of 
York,  6  Esp.  45;  Blaney  v.  Hen- 
dricks, 2  W.  Bl.  761.  Contra,  Ab- 
bot, C.  J.,  2  B.  &  C.  349)  ;  or  for 
goods  sold,  even  though  to  be  paid 
for  on  a  particular  day.  Gordon  v. 
Swan,  12  East  419.  Mountford  v. 
Willes,  2  B.  &  P.  337,  merely  de- 
cides that  if  the  jury  allow  interest 
— which  they  clearly  may  do  as 
damages — the  court  will  not  disturb 
their  verdict,  though  it  is  otherwise 
where  the  payment  was  to  be  made 
by  bill.  Nor  in  an  action  for  work 
and  labor  (Trclawney  v.  Thomas,  1 
H,  Bl.  303;  Milsom  v.  Ilayward,  9 
Price  134)  ;  nor  on  money  lying 
with  a  banker  (Edwards  v,  Vere,  5 
B.  &  Ad.  232)  ;  nor  upon  a  policy 
of  insurance  ( Kingston  v.  Mcintosh, 
1  Camp.  518;  Bain  v.  Case,  3  C.  & 
P.  496)  ;  nor  are  annuitants  entitled 
to  interest  on  the  arrears  of  their 
annuities.  Earl  of  Mansfield  v. 
Ogle,  4  De  G.  &  J.  41;  Booth  v. 
Coulton,  30  L.  J.  (Ch.)  378;  Blogg 
v.  Johnson,   L.   R.   2  Ch.   225.     See 


I 


§  329] 


INTEREST.  1035 


creditors."  Interest  should  be  allowed  on  claims  against  a 
national  bank  during  the  period  between  the  time  it  is  placed 
in  the  hands  of  a  receiver  and  the  closing  up  of  its  affairs  before 
appropriating  the  surplus  to  the  stockholders."  An  insolvent 
debtor  who  has  paid  money  on  an  unlawful  preference  is  liable 
for  interest  from  the  time  an  action  was  begun  to  recover  it.^* 
A  residuary  legatee  is  liable  for  interest  on  his  indebtedness  to 
the  testator  until  sucli  time  as  his  legacy  is  payable. ^^ 

A  building  and  loan  society  which  refuses  to  pay  the  sum 
to  which  a  member  has  given  notice  of  his  witlidi-awal  is  on- 
titled,  is  liable  for  interest  at  the  legal  rate  notwithstanding  tiio 
by-laws  deny  that  the  stock  draws  interest  after  notice  of  with- 
drawal is  given.^'  Under  a  statute  providing  for  the  allowance 
of  interest  on  all  moneys  after  they  become  due  on  any  bond, 
bill,  note  or  other  written  instrument  interest  may  be  recovered 
upon  the  amount  found  due  on  an  accounting  under  a  Avritten 
contract  for  the  payment  of  a  specified  per  cent,  of  the  amount 
of  certain  articles  though  the  contract  is  silent  as  to  interest." 
Interest  may  be  recovered  from  one  who  has  secretly  received 
money  belonging  to  another,  the  statute  allowing  interest  "on 
money  received  to  the  use  of  another  and  retained  without  the 
owner's  knowledge."  "  A  written  subscription  to  the  capital 
stock  of  a  corporation  is  an  instrument  ip  writing,  and  draws 

Marsh  v.  Jones,  40  Ch.  Div.  563.    In-  Dickinson's  Est.,  14  id.  4;  Shultz  v. 

terest  is  not  recoverable  as  such  in  Weaver,   11    S.   &    R.    182;    Cliainp- 

an  action  upon  a  foreign  judgment,  neys  v.  Lyle,  1  Bih.  327. 

where   the   subject   of   the   claim   is  14  Chemical  Nat.  Bank  v.  Bailey. 

not  one  whicli   would   bear   interest  j2  Blatch    480 

in  tliis  country.     Doran  v.  O'Reilly,  ,- ^     .  '  ,    J  ,     -r>     ,           ,,..,, 

o -o  •       OCA     aVi-                t      J  t.  15  Capital    ]\at.    Bank    v.    U  ilker- 

3  Price,  250;  Atkinson  v.  Lord  Bray-  „^'      ,     . 

1        1        A    r^            ooA      T,   i^   -i  son,  3G  Tnd.  App.  407. 

brooke,  4   Camp.   380.     But  it  may  *^' 

1      1  *j-  A     it      •         J-  1,  XI,  "  16  Leask    v.    Hoagland,    ]3(!    Add. 

be  left  to  the  jury  to  say  whether  .  ^       _        '^         •        "       i  i  • 

the  plaintiff  has  used  proper  means  '^'   ^             ' 

to    find   out   the    defendant   and   en-  ^'  Enterprise  J^.  &  L.  Soc.  v.  Balin. 

force    the    judgment;     and    if    they  ^^  ^""^"-  -^PP-   304;    Kellenberger  v. 

find    for   him,   they   may   give   such  (^sl^alogsa  Nat.  B.  L.  &  T.  Ass'n,  129 

interest   as  they   wish — as   damages  Iowa  582. 

it  would  appear.     Bann  v.  Dalzell,  l^  Dick  Co,  v.  Slierwood  L.  F.  Co., 

3  C.  &  P.  37G;  M'Clure  v.  Dunkin,  157  111.  325. 

1  East  436."  19  Currier  v.   Kret/.inger,    162   III. 


13 


Carey's  Est.,  15  Pa.  Dist.  527;       511,  aff'g  5S  111.  .Ajjp.  2SS. 


1036  SUTHERLAND    ON    DAMAGES.  [§    329 

interest  after  a  call  has  been  made.^°  The  acceptance  of  a 
written  order  for  the  payment  of  money  is  such  an  instrument 
in  writing  and  when  the  uncertainty  as  to  the  amount  due  under 
it  is  removed,  interest  is  to  be  computed  from  the  time  of  accept- 
ance.^^ One  who  claims  property  as  his  own,  and,  by  consent 
of  the  court  in  which  the  title  is  being  litigated,  sells  it  and 
retains  the  proceeds,  subject  to  the  court's  order,  is  not  an  in- 
diiferent  custodian  of  the  money  and  is  presumed  to  have  used 
it ;  hence  he  is  liable  for  interest. ^^  A  creditor  of  an  insolvent 
corporation  is  equitably  entitled  to  interest  upon  a  dividend 
payable  to  him  from  the  date  of  the  order  directing  its  payment, 
where  that  has  been  delayed  by  an  unsuccessful  contest  by  the 
receiver.^^  A  mortgagee  who  forecloses  under  a  power  of  sale 
is  liable  for  interest  on  the  surplus  retained  by  him  if  there  is 
nothing  to  prevent  its  payment. ^^  The  liability  for  interest  of 
one  who  has  collected  and  retained  money  in  which  others  have 
an  equal  interest  with  him  does  not  depend  upon  whether  he  has 
received  interest.^^  Under  a  statute  providing  that  interest 
may  be  allowed  "on  money  lent  or  money  due  on  the  settlement 
of  accounts  from  the  day  of  such  settlement  of  accounts  between 
the  parties,  and  ascertaining  the  balance  due,"  interest  is  re- 
coverable on  a  claim  for  wages  from  the  time  of  the  acknowledg- 
ment of  the  correctness  of  the  account  by  the  debtor's  assignee.^® 
A  party  who  has  undertaken  to  do  work  is  not  entitled  to  inter- 
est until  it  is  completed  in  accordance  with  his  contract.^''^  A 
party  who  has  money  in  his  possession,  the  title  to  which  is  in 
litigation,  is  liable  for  interest  if  he  files  an  interpleader  with- 
out paying  the  money  into  court.^*    A  recognizance  is  a  promise 

20  McCoy  V.  World's  Col.  Expos.,       v.  Exch.  Nat.  Bank,  133  U.  S.  433, 
18G   111.  356,  78   Am.   St.   288,   aff'g       33  L.  ed.  747. 

87  III.  App.  605.  24  Perkins    v.    Stewart,    75    Minn. 

21  Elgin,  etc.  R.  Co.  v.  Northwest-       21. 

ern  Nat.  Bank,  165  111.  App.  35.  35  g^^^^  ^    Hamilton,   144  Mo.   1, 

22  Kenton   Ins.   Co.  v.   First  Nat. 


citing  this  section. 

26  Knatz  V.  Wise,  16  Mont.  555. 


Bank,  93  Ky.  129 ;  Albers  v.  Norton, 
147  Ky.  751. 

23  Citizens'  Sav.  Bank  v.  Vaughan,  ^7  Associated   Artists   v.   Clement, 

115  Mich.  156;  Chemical  Nat.  Bank  142  Wis.  490. 

V.    Armstrong,   8   C.  C.   A.    155,   28  28  C.  K.  of  Hall  Co.  v.  Lloyd,  14 

L.R.A.  231,  59  Fed.  372;  Armstrong  Ohio  C.  C.  30. 


§    330]  INTEiiEST.  1037 

to  pay  a  certain  sum  of  money,  and  interest  is  due  thereon  after 
the  condition  is  broken.^^  A  person  who  illegally  receives  or 
obtains  possession  of  money  belonging  to  another  is  presumed 
to  have  made  use  of  it  and  will  be  liable  for  interest  unless  he 
shows  that  he  did  not  use  it.^°  If  a  contract  provides  for  the 
exchange  of  property  or  the  payment  of  its  value  the  party  who 
disables  himself  so  that  he  cannot  deliver  the  property  is  charge- 
able with  interest  from  the  time  of  so  doing.^^  A  foreign  insur- 
ance company  which  does  business  in  a  state  without  paying  the 
required  license  fee  is  liable  for  interest  thereon.^^  Interest  on 
money  due  on  a  compromise  agreement  should  be  allowed  only 
from  the  time  it  was  made.^^  A  stockholder  of  a  corixn-ation 
who  has  been  denied  the  right  to  purchase  stock  from  the  estate 
of  a  deceased  stockholder  in  accordance  with  a  mutual  agree- 
ment of  stockholders  is  entitled  to  the  dividends  declared 
subsequent  to  the  accrual  of  the  right  to  purchase  and  the  estate 
is  entitled  to  legal  interest  on  the  agreed  purchase  price.^*  A 
demand  note  is  due  forthwith  upon  delivery  and  interest  may 
be  recovered  as  damages  for  its  nonpayment.^^  A  claim  against 
an  estate  draws  interest  from  the  time  it  was  disallowed.^® 

§  330.  No  interest  on  penalties  nor  statutory  liability  for  riots. 
Interest  is  not  allowed  on  statutory  penalties;  ^"^  but  it  may  be 
recovered  on  so  much  of  the  judgment  as  is  for  the  damages.^* 
where  a  constable  who  failed  to  return  an  execution  within  the 
time  prescribed  by  statute  was  declared  liable  for  the  amount 
then  due  and  ten  per  cent,  damages,  it  was  held  interest  could 

29  Kinney  v.  State,  14  Ohio  C.  C.  35  Van  Vliet  v.  Kanter,  05  N.  Y. 
91.  Misc.  48. 

30  Southern  R.  Co.  v.  Greenville,  ^'^  <-'la'k  v.  Macdermott,  82  Conn. 
49    S.    C.    449;    North    Troy    School  ^"-• 

Dist.  V.  Troy,  80  Vt.  16.       "  ^'^  Lo.iisville  &  N.  R.  Co.  v.  Mel- 

31  First  Nat.  Bank  v.  Lynch,  (i  ^""'  ^^^  K.y.  242;  Blodgett  v.  Park, 
Tex    Civ   Auv)    r.90  "  '^  ^-  ^^-  '*^^'  Davenport  v.  McKee, 

norr      '   1       ."    T     '     o  T.  •  1  -^^  ^-  C-   ^^^'   P*^"?'^'  "••  Go''l  &   ^• 

32  Travelers     Ins.    Co.    v.    Fricko,       r^y  ,    r^       no    xt    \t    /.-      mi 

lei.    Co.,   98    N.   Y.   G/  ;    Thomas   v. 

99   Wis.   367,  41   L.R.A.   M?;    State        „•      ,    -,  ,   ^  i         orr     ti  ix- 

'  '  \\  ecu,  14  .lolins.  255;  Hopper  v.  (In- 

v.  Fricke,  102  Wis.  107.  ^.^go,  etc.  R.  Co.,  91  Iowa  6.39,  G^O; 

33  Nelson  v.  Stewart,  174  Mich.  j^j.^;,.  ^  sioux  City,  etc.  R.  Co.,  109 
127.  Iowa  .S69. 

34  Lindsay's  Est.,  210  Pa.  224.  38  Boyd  v.  Randolph,  91   Ky.  472. 


1038 


SUTHERLAND    ON    DAMAGES. 


[§   330 


not  be  added. '^  Before  judgment  the  penalty  allowed  for  tak- 
ing or  receiving  usurious  interest  does  not  bear  interest.*"  A 
judgment  imposing  a  fine  is  not  interest-bearing.*^  Interest 
is  not  recoverable  under  a  statute  which  makes  a  county  or 
municipality  liable  to  the  owner  of  property  for  damages  re- 
sulting thereto  from  a  riot ;  *^  but  it  may  generally  be  recovered 
on  stipulated  damages.*^ 

§  331.  When  allowed  on  penalty  of  bonds.  There  has  been 
some  question  in  actions  upon  penal  bonds,  where  the  damages 
for  breach  of  the  condition  equal  or  exceed  the  penalty,  whether 
recovery  beyond  the  penalty  can  be  had  by  adding  interest  from 
the  date  of  the  breach,  where  such  damages  are  of  such  a  nature 
as  to  bear  interest.**  But  the  American  courts  are  now  nearly 
agreed  that  interest  on  the  penalty  in  such  cases  may  be  re- 
covered.*^    It  is  not,  however,  recoverable  upon  a  bail  bond 


39  Trouer  v.  Sharp,  4  J.  J.  Marsh. 
79. 

40  Baum  V.  Daniels,  55  Tex.  Civ. 
App.  273;  Columbia  Nat.  Bank  v. 
Bletz,  2  Penny.  (Pa.)  169;  Higley 
V.  First  Nat.  Bank,  26  Ohio  St.  75, 
20  Am.  Rep.  759;  First  Nat.  Bank 
V.  Turner,  3  Kan.  App.  352. 

41  State  V.  Steen,  14  Tex.  396. 

42  Weir  V.  Allegheny  County,  95 
Pa.  413. 

43  I^ittle  V.  Banks,  85  N.  Y.  267 ; 
Winch  V.  Mutual  Ben.  Ice  Co.,  86 
id.  618;  French  v.  French,  126  Mass. 

360.  Contra.  Devereux  v.  Burgwin, 
1]  Ired.  490  (not  even  from  date  of 
the  writ) . 

44  See  Hellen  v.  Ardley,  3  C.  &  P. 
12;  Lonsdale  v.  Church,  2  T.  R. 
388;  Brangwin  v.  Perrott,  2  W.  Bl. 
1190;  Clark  v.  Bush,  3  Cow.  151; 
McClure  v.  Dunkin,  1  East  436; 
Francis  v.  Wilson,  Ry.  &  M.  105; 
Harris  v.  Clap,  1  Mass.  308 ;  United 
States  V.  Arnold,  1  Gall.  348;  Fair- 
lie  V.  Lawson,  5  Cow.  424;  Fraser 
V.  Little,  13  Mich.  195. 

45  Johnson    v.    Norton,    159    Fed. 

361,  86  C.  C.   A.  361;    American   S. 


Co.  V.  Pacific  S.  Co.,  81  Conn.  252, 
19  L.R.A.(N.S.)  83;  Goff  v.  United 
States,  22  App.  D.  C.  512  ;Bent  v. 
Stone,  184  Mass.  92;  Bassett  v.  Fi- 
delity &  D.  Co.,  184  Mass.  210; 
Maddox  v.  Rader,  9  Mont.  126 ;  Jef- 
ferson County  V.  Lineberger,  3  Mont. 
246,  35 'Am.  Rep.  462;  Frink  v. 
Southern  Exp.  Co.,  82  Ga.  33,  3 
L.R.A.  482 ;  Burt  v.  Delano,  4  Cliff. 
618;  Stern  v.  People,  102  111.  540; 
Leighton  v.  Brown,  98  Mass.  516; 
United  States  v.  Curtis,  100  U.  S. 
119,  25  L.  ed.  571;  School  Dist.  v. 
Dreutzer,  51  Wis.  153;  State  v. 
Sooy,  39  N.  J.  L.  539,  555;  Clark 
V.  Wilkinson,  59  Wis.  543;  Bruns- 
wick V.  Snow,  73  Me.  177;  Burch- 
field  V.  Ilaffey,  34  Kan.  42;  Harris 
V.  Clap,  supra;  Brainard  v.  Jones, 
18  N.  Y.  35;  Hughes  v.  Wickliffe, 
11  B.  Mon.  202;  Carter  v.  Thorn, 
18  id.  613 ;  Bank  v.  Smith,  12  Allen 
243,  90  Am.  Dec.  144;  McGill  v. 
Bank  of  United  States,  12  Wheat. 
511,  6  L.  ed.  711;  Ives  v.  Merchants' 
Bank.  12  How.  159,  13  L.  ed.  936; 
Warner    v.    Thurlo,    15    Mass.    154. 


4 

I 
i 


§   332] 


INTEREST. 


1039 


conditioned  for  the  appearance  of  a  person  to  answer  a  criminal 
offense,*®  and  so  under  the  ISTew  York  code  as  to  other  bonds  to 
secure  the  performance  of  acts  other  than  to  pay  money.*' 

§  332.  Interest  against  government.  It  has  been  established 
as  a  general  rule  in  the  practice  of  the  federal  government  that 
interest  is  not  allowed  on  claims  against  it,  whether  they  origi- 
nate in  contract  or  in  tort,  or  whether  they  arise  in  the  ordinary 
business  of  administration  or  under  private  acts  of  relief  passed 
by  congress  on  special  application.  The  only  recognized  excep- 
tions are  where  the  government  stipulates  to  pay  interest  and 
where  it  is  given  expressly  by  an  act  of  congress  either  by  the 
name  of  interest  or  by  that  of  damages,**  and  when  the  cause 


Compare  Blcwett  v.  Front  St.  C.  R. 
Co.,  49  Fed.  12G.     See  §§  477,  478. 

The  principal's  liability  for  inter- 
est is  not  affected  by  the  penal  sum 
named  in  the  bond.  United  States 
V.  Walker,   128   Fed.   1012. 

Interest  may  not  be  recovered  on 
the  penalty  stipulated  for  in  a  bond. 
White  V.  Manning,  46  Tex.  Civ. 
App.  298,  following,  but  doubting, 
Hawthorne  v.  State  (Tex.  Civ. 
App.),  87  S.  W.  841. 

46  United  States  v.  Broadhead,  127 
U.  S.  212,  .32  L.  ed.  147. 

« Beers  v.  Shannon,  73  N.  Y. 
292;  Polhemus  P.  Co.  v.  TIallenback, 
46  App.  Div.   (N.  Y.)   563. 

48  Treat  v.  Farmers'  L.  &  T.  Co., 
185  Fed.  760,  108  C.  C.  A.  98;  Pen- 
nell  V.  United  States,  162  Fed.  75; 
Trigg  V.  Bucyrus,  104  Va.  79;  Scul- 
ly V.  United  States,  197  Fed.  327; 
United  States  v.  Bayard,  127  U.  S. 
251,  32  L.  ed.  159;  Tillson  v. 
United  States,  100  U.  S.  43,  47,  25 
L.  ed.  543,  544;  Wrightman  v.  Same, 
23  Ct.  of  Cls.  144;  Baxter  v.  Same, 
2  C.  C.  A.  411,  51  Fed.  671;  United 
States  V.  Barber,  20  C.  C.  A.  616, 
74  Fed.  483;  Walton  v.  United 
States,  61  Fed.  486;  District  of  Co- 
lumbia v.  Johnson,  165  U.  S.  330, 
41  L.  ed.  734;  United  States  v.  Ver- 


dier,  164  U.  S.  213,  41  L.  ed.  407. 
See  Pacific  Coast  S.  Co.  v.  United 
States,  33  Ct.  of  Cls.  36. 

For  cases  in  wliich  interest  has 
been  allowed  on  liquidated  claims, 
see  United  States  v.  McKee,  91  U. 
S.  442,  23  L.  ed.  326;  Erskine  v. 
Van  Arsdale,  15  Wall.  75,  21  L.  ed. 
63 ;  The  Nuestra  Senora  de  Regla, 
108  U.  S.  92,  27  L.  ed.  662. 

Where,  under  a  statute,  the  court 
grants  a  certificate  that  there  was 
probable  cause  for  the  acts  done  by 
an  officer  of  the  United  States,  for 
which  judgment  was  rendered 
against  liim,  tlie  government  is  not 
liable  for  interest  on  the  judgment 
prior  to  the  granting  of  such  certifi- 
cate. United  States  v.  Sherman,  98 
U.  S.  565,  25  L.  ed.  235. 

A  case  appealed  from  the  board 
of  general  appraisers  under  the  act 
of  June  10,  1890,  is  practically  a 
suit  against  the  United  States  and 
the  importer  cannot  recover  interest. 
Marine  v.  Lyon,  10  C.  C.  A.  ,315,  62 
Fed.  153. 

In  actions  against  the  government 
in  the  court  of  claims,  interest  prior 
to  judgment  cannot  be  allowed 
claimants;  but  sec.  -066,  R.  S.  of 
U.  S.,  reijuires  it  to  be  allowed  to 
the    government    against    claimants 


1040 


SUTHERLAND    ON    DAMAGES. 


[§  332 


is  submitted  to  the  courts  iu  the  manner  pursued  bj  private 
litigants.*^  The  same  rule  is  applied  in  England,^"  Canada,^^ 
and  in  some  of  the  states.^^  A  state  is  not  bound  to  pay  interest 
on  its  bonds  after  their  maturity  unless  its  consent  to  do  so  is 
shown  by  an  act  of  its  legislature  or  by  a  contract  which  its 
ofhcers  were  authorized  to  enter  into.^^  The  right  to  interest 
does  not  attach  to  a  judgment  against  the  federal  government 
unless  by  virtue  of  an  act  of  congress.^^  If  the  statute  provid- 
ing for  interest  on  judgiuents  does  not  except  counties  they  are 
liable  therefor  when  judgment  is  rendered  against  them  on 
contract  obligations.^^  And  under  a  statute  providing  that  cred- 
itors shall  be  allowed  to  receive  interest,  when  there  is  no  agree- 
ment as  to  the  rate  thereof,  at  the  rate  of  eight  per  cent,  for  all 
moneys  after  they  become  due  on  any  bond,  l)ill,  promissory 
note  or  other  instrument  in  writing  a  county  is  liable  for  inter- 
est on  coupons  from  its  bonds.  The  court,  very  properly,  took 
a  distinction  between  the  governmental  and  contractual  powers 
of  a  county.  "It  had  incurred  an  indebtedness,  and,  needing 
money  to  pay  the  same,  had  proceeded  to  borrow  it.  In  the 
exercise   of  powers   of   this   character,   as   distinguished    from 


under  all  circunistancos  to  which 
that  section  applies  and  without  re- 
gard to  equities  which  might  be  con- 
sidered between  private  parties. 
United  States  v.  Verdier,  supra. 

Sec.  1091,  R.  S.  of  U.  S.,  which 
regulates  tlie  recovery  of  interest 
against  the  government,  does  not  ex- 
tend to  a  case  brouglit  in  the  court 
of  claims  under  a  special  statute 
and  resting  on  a  treaty  which  pro- 
vides for  the  payment  of  interest. 
Western  Cherokee  Indians  v.  United 
States,  27  Ct.  of  Cls.  1;  Black- 
feather  v.  United  States,  28  id.  447. 

49  Ex  parte  Republic  of  Columbia, 
195  U.  S.  604,  49  L.  ed.  338. 

50  In  re  Gosman,  17  Ch.  Div.  771. 

51  Ross  V.  King,  32  Can.  Sup.  Ct. 
532   (on  duties  illegally  demanded.) 

52  Montezuma  County  v.  Wheeler, 
39  Colo.  207 ;  Marshall  v.  State,  10.5 


Me.  103  (unless  the  consent  to  be 
sued  provides  that  interest  may  be 
recovered)  :  Ohio  v.  Board  of  Public 
Works,  36  Ohio  St.  409;  Attorney- 
General  V.  Cape  Fear  N.  Co.,  2  Ired. 
Eq.  444;  Young  v.  State,  36  Ore. 
417,  47  L.R.A.  548. 

Consent  to  pay  interest  means 
simple  interest.  Ute  Indians  v. 
United  States,  45  Ct.  of  Cls.  440. 

53  United  States  v.  North  Caro- 
lina, 136  U.  S.  21],  34  L.  ed.  336; 
Sawyer  v.  Colgan,  102  Cal.  283; 
Carr  v.  State,  127  Ind.  204,  11 
L.R.A.  370,  22  Am.  St.  624;  Davis  v. 
State,  121  Cal.  210;  Hawkins  v.  Mit- 
chell,  34   Fla.   405. 

54  United  States  v.  Sherman,  98 
U.  S.  565,  25  L.  ed.  235. 

55  Nevada  County  v.  Hicks,  50 
Ark.  416. 


§    332]  INTEREST.  1041 

governmental  powers,  the  niimicipalily  is  not  entitled  to  invoke 
for  its  protection  any  imnninity  ])ei-tainin<;'  to  it  as  a  sovereign 
or  governing  body.®^  Some  anthorities  take  the  view  that 
counties  are  not  liable  for  interest  by  virtue  of  general  statutes 
fixing  liability  therefor  unless  they  arc  specified  therein." 
Thus,  it  has  been  ruled  that  a  statute  expressing  that  "every 
person  who  is  entitled  to  recover  damages  certain,  or  capable  of 
being  made  certain  by  calculation,  and  the  right  to  recover 
which  is  vested  in  him  upon  a  particular  day,  is  entitled  also 
to  recover  interest  from  that  day,"  does  not  apply  to  counties.^* 
In  Illinois  the  same  rule  prevails  as  to  counties  and  is  extended 
to  townships  and  other  municipalities.*^  A  claim  arising 
against  a  county  upon  a  statute  and  not  ex  contractu  does  not 
carry  interest  unless  the  act  so  provides.^''  If  a  funding  statute 
does  not  provide  for  interest  on  bonds  issued  by  a  county  after 
their  maturity  they  will  not  bear  it.^^  County  warrants  or 
papers  which  are  essentially  such  do  not  everywhere  bear  in- 
terest; neither  are  they  judgments  or  contracts  so  as  to  come 
within  a  statute  allowing  interest ;^^  and  so  of  scliool  district 
warrants.^^    Under  a  statute  providing  that  no  interest  shall  he 

66  Board  of  Com'rs  of  Ouray  Conn-  County,  6S  Ark.  83;  Clay  County  v. 

ty  V.  Geer,  47  C.  C.  A.  450,  108  Fed.  Chickasaw    County,    64    Miss.    534; 

478.  Beals  v.  Supervisors,  28  Cal.  449. 

57Seton  V.  Hoyt,  34  Ore.  266,  43  61  Sober    v.    Supervisors,    30    Cal. 

L.R.A.  634,  75  Am.  St.  64].  i-^^ 

58  Hopkins  V.  Contra  Costa  Coun-  62  Isenhnur  v.  Barton  County,  100 
ty,  106  Cal.  556,  overruling  Davis  ^^^  ^^.3  ^j^^  j^^,^,.  ,,^  ^^^  ,^^,^:^„  ^^ 
V.  Yuba  County,  75  Cal.  452,  which  _^^^.^^^^^      ,^^.      ,^,^^^^      assignment). 

held  that  coupons  on  county  bonds,  '                         r<       t.       nr 

^      .    ,         ,     .           ,,  Anderson    v.    Issaquena   County,   75 

after    due,    bore    interest    from    the  '                       ■„ 

,              ,           ,    -  Miss.    873,    896.      Contra,    Williams 

time  payment  was  demanded.  ^,       ,       ,^  „,     ,     „  ^     r^,    , 

-a  AT   i-         ri       4.           T.     +1  +4-    <?  V.  Shoudy,  12  Wash.  362;   State  v. 

59  Madison   County   v.  Bartlett,   2  ■''                             ' 

111.  67;  Pike  County  v.  Horsford,  11  ^^out,  43  Wash.  501. 
111.  170;  Pekin  v.  Reynolds,  31  111.  "  ^as  ruled  in  Williams  v. 
^29  Shoudy,  supra,  that  if  county  war- 
Interest  is  not  recoverable  tliere  rants  issued  for  an  indebtedness  il- 
on  coupons  from  county  bonds  after  legally  incurred  are  ratified  by  the 
their  maturity,  they  being  silent  as  voters  at  a  special  election,  the  war- 
to  interest.  Graves  v.  Saline  Coun-  rants  carry  interest  from  the  date 
ty,  43  C.  C.  A.  414,  104  Fed.  61.  their  payment  was  refused. 

60  State  V.  Spinney,  166  Ind.  282;  63  Andrews  Co.  v.  Dcliglit  S.  C. 
Garland     County     v.     Hot     Spring  Dist.,  95  Ark.  26. 

Suth.  Dam.  Vol.  I.— 66. 


10-i2  SUTllElil.AJMD    ON    DAMAGES.  [§    332 

recovered  on  such  warrants  thej  do  not  carry  interest  after  pay- 
ment refused. ^^  Interest  cannot  be  collected  on  void  county 
warrants.^* 

In  Kentucky  the  rule  is  that  the  ordinary  appropriations  for 
working  roads,  supporting  the  poor,  etc.,  and  such  as  do  not 
arise  from  contract,  hut  by  reason  of  the  control  of  the  county 
over  its  funds  and  the  subject  to  which  they  are  to  be  applied, 
bear  no  interest  against  a  county;  but  this  doctrine  does  not 
apply  where  a  county  voluntarily  assumes  a  debt ;  in  such  a  case 
if  responsible  parties  liable  to  the  creditor  are  released  from 
liability,  the  consideration  is  sufficient  to  bind  the  county  for 
both  principal  and  interest.^^  The  liability  of  counties  for  in- 
terest on  default  in  making  contractual  payments  is  the  same 
as  that  of  individuals.^'  The  disallowance  of  a  legal  claim  is 
cause  for  allowing  interest  from  the  time  thereof.^®  In  Penn- 
sylvania counties  are  liable  for  interest  on  fees  withheld  from 
public  officers.^^  In  New  York  the  exemption  from  liability 
for  interest  in  favor  of  the  state  and  counties  does  not  appear  to 
be  rocogui/ed.  In  a  case  decided  in  1809,  in  which  the  state  had 
withheld  water  used  for  operating  a  mill,  it  was  held  liable  for 
the  loss  of  profits  resulting,  if  they  could  I)C  shown  with  the  req- 
uisite certainty;  otherwise,  for  the  value  of  the  use  of  the  water 
to  the  plaintiif,  and  also  for  interest  on  the  award  of  the 
court  of  claims  during  the  time  payment  thereof  was  delayed 
by  litigation  instituted  by  the  state.'^"  The  older  eases  were 
less  strict  in  exempting  government  from  liability  for  inter- 
est; "  but  they  generally  held  that,  in  the  absence  of  an  express 

64  AlexaiuIiT  V.  Oneida  County,  76  70  Lakeside  P.  Co.  v.  State,  45 
Wis.  56.  App.  Div.  (N.  Y.)   112,  55  App.  Div. 

65  Coles  County  v.  Goehring,  209  (N.  Y.)  208.  See  Sayre  v.  State, 
111.  142.  12.3  N.  Y.  291,  as  explained  in  Wil- 

66  Washington  County  Court  v.  son  v.  Troy,  135  N.  Y.  96,  105,  31 
McKee,  12  Ky.  L.  Rep.  102.  Am.   St.   817,   18  L.R.A.  449. 

67  Morris  v.  Bell  County,  20  Ky.  71  Respublica  v.  Mitchell,  2  Dall. 
L.  Rep.  1912.  ]01,  1   L.  ed.  307;   People  v.  Canal 

68  State  V.  Will,  54  Wash.  453.  Com'rs,  5  Denio  401;  Canal  Com'rs. 

69  Koch  V.  Schuylkill  County,  12  v.  Kcmpshall,  26  Wend.  404;  Thorn- 
Pa.  Super.  Ct.  567.  dike  v.   United   States,   2   Mason   1. 


§    332]  INTEREST.  1043 

agreement  to  pay  it,  a  demand  was  necessary  to  entitle  the 
creditor  to  it.'^ 

The  liability  of  municipal  and  gi«is^-numiei{)al  corporations 
for  interest,  except  on  express  contracts,  depends  very  largely 
upon  their  charters  and  the  general  statutes  of  the  state  of  which 
they  are  parts.  No  rule  can  be  deduced  from  the  adjudications 
which  can  be  relied  upon  outside  of  the  jurisdiction  in  which 
the  particular  case  was  decided.  The  reason  usually  given  for 
exempting  counties  from  such  liability  does  not  apply  to  cities 
and  villages,  though  it  has  some  application  to  towns.  ( Jities  and 
villages  are  not  arms  of  the  government  in  the  way  or  to  the 
extent  counties  and  towns  are.  Their  corporate  capacity  and 
powers  are  not  imposed  upon  them  in  the  first  instance,  but 
are  usually  sought  after.  They  are  agencies  of  their  citizens, 
rather  than  of  the  state.  Unless  they  are  exempted  from  lia- 
bility for  interest  there  appears  to  be  no  good  reason  why  the 
statutes  governing  that  subject  should  not  be  applicable  to  them, 
especially  as  to  contracts  for  public  works.  There  is  a  tendency 
to  this  view,  as  the  appended  note  will  show.'^    It  has  been  said 

72  Attorney-General  v.  Cape  Fear  terest.  Ashe  v.  Harris,  55  Tex.  49. 
N.  Co.,  2  Ired.  Eq.  444;  Milne  v.  If  a  warrant  is  not  paid  on  pre- 
Rempnblicam,  3  Yeates  102;  Adams  sentment  a  riglit  of  action  tlien 
V.  Beach,  6  Hill  27 ;  Auditor  v.  Dug-  accrues  and  interest  may  be  recov- 
ges,  3  Leigh  241;  Pawlet  v.  Sand-  ered  on  the  original  indebtedness 
gate,  19  Vt.  62;  United  States  v.  from  tlie  time  suit  was  brought. 
Hoar,  2  Mason  314;  State  v.  Mayes,  Malianoy  v.  Comry,  103  Pa.  362; 
28  Miss.  709.  Snyder   v.    Boviard,    122   id.   442,   9 

73  A  claim  which  has  been  audited  Am.  St.  118. 

against  a  county  does  not  bear  in-  For  a  violation   of  its  duty  as  a 

terest   until    judgment    is    rendered  lessee  a  city  is  liable  for  interest  on 

upon     it.       Wheeler     v.     Newberry  the  resulting  damages.     Allegheny  v. 

County,  18  S.  C.  132.  Campbell,  107  Pa.  r)30,  r)2  Am.  Kep. 

Interest  is  not  allowable  upon  a  478. 
claim  against  a  county  until  a  Avar-  A  munici])al  ofTicer  lias  no  author- 
rant  has  been  presented  and  in-  ity  to  bind  the  municipality  to  pay 
dorsed  "not  paid  for  want  of  funds."  compound  interest  on  an  account 
Grant  County  v.  Lake  County,  17  unless  it  is  expressly  given  him.  St. 
Ore.  453.  See  Territory  v.  Board  of  Louis  G.  L.  Co.  v.  St.  Louis,  11  Mo. 
Com'rs,  8  Mont.  390,  7  L.R.A.  105.  App.  55,  77. 

County  warrants  which   are  pay-  As  to  the  liability  of  a  town  which 

able  in  the  order  of  their  registra-  has    acquired    property    of    another 

tion   and   are   silent   as   to   interest  town,  by  virtue  of  a  statute,  to  pay 

and  time  of  payment  do  not  bear  in-  interest  on  the  value  thereof  or  for 


1044 


SUTHERLAND    ON    DAMAGES. 


[§  332 


that  the  general  interest  laws  are  applicable  to  a  city  in  default 
in  paying  a  contractor.     This  law  is  general  in  its  terms,  and 


delay,  see  Needham  v.  Wellesley, 
139  Mass.  372. 

Tlie  successful  bidders  for  city 
bonds  are  not  entitled  to  interest  on 
a  deposit  made  as  a  bonus  even  after 
a  demand  therefor,  the  bonds  prov- 
ing to  be  invalid.  Denver  v.  Hayes, 
28  Colo.  110. 

A  county  is  not  liable  for  inter- 
est on  the  purchase-money  of  lands 
sold  by  its  officer,  through  whose 
mistake  the  deed  issued  was  void, 
until  demand  made  for  the  return 
thereof.  Rice  v.  Ashland  County, 
114  Wis.   130,  137. 

Where  money  is  lawfully  collect- 
ed by  special  assessment  for  a  street 
improvement  and  paid  to  the  treas- 
urer the  city  is  not  liable  for  inter- 
est upon  it  because  it  is  withheld 
from  the  contractor.  Hoblit  v. 
Bloomington,  87  111.  App.  479;  Vi- 
der  v.  Chicago,  164  111.  354. 

In  the  absence  of  an  agreement  a 
mimicipality  is  not  chargeable  with 
interest  on  claims  against  it  except 
wliere  money  has  been  wrongfully 
obtained  by  it  and  illegally  witli- 
held.  Peoria  v.  Fruin-B.  C.  Co., 
169  111.  36;  Danville  v.  Danville  W. 
Co.,  180  111.  235;  Schoenberger  v. 
Elgin,  164  111.  80. 

In  Kentucky  a  city  is  liable  for 
interest  on  a  contract  for  labor,  the 
price  of  which  was  fixed  and  the 
time  for  its  completion,  no  stipula- 
tion as  to  interest  being  made. 
Louisville  v.  Henderson,  11  Ky.  L. 
Rep.  796.  This  is  the  rule  in  Min- 
nesota. Moran  Mfg.  &  C.  Co.  v.  St. 
Paul,  65  Minn.  300.  And  in  Mis- 
souri :  Neosho  City  W.  Co.  v.  Neosho, 
136  Mo.  498.  And  in  New  York: 
Sweeny  v.  New  York,  173  N.  Y.  414. 

If  a  contractor  is  to  be  paid  out 
of  assessments  the  city   has  a  rea- 


sonable time  after  the  completion  of 
the  work  in  whicli  to  make  and  col- 
lect them,  and  is  not  liable  for  in- 
terest before  that.  Keigher  v.  St. 
Paul,  69  Minn.  78. 

Unreasonable  and  negligent  delay 
in  issuing  interest-bearing  assess- 
ment certificates  to  a  contractor  is 
attended  with  liability  for  interest. 
Turner  Imp.  Co.  v.  Des  Moines,  155 
Iowa  592;  Commercial  Nat.  Bank 
V.  Portland,  24  Ore.  188,  41  Am.  St. 
854. 

In  New  York  the  liability  of 
cities  for  interest  in  actions  for 
torts  is  governed  by  the  same  rule 
as  that  of  individuals.  Wilson  v. 
Troy,  135  N.  Y.  96,  31  Am.  St.  817, 
18  L.R.A.  449. 

In  Oregon  a  distinction  is  made 
between  the  liability  of  counties 
and  cities  on  the  ground  that  the 
former  are  involuntary  arras  of  the 
government;  cities  are  liable  for  in- 
terest on  their  debts  to  the  same 
extent  as  individuals.  Shipley  v. 
Hacheney,  34  Ore.  303.  City  war- 
rants draw  interest  from  the  time 
they  are  presented  and  stamped 
"not  paid,"  notwithstanding  they 
are  retained  by  the  treasurer  and 
others  are  issued  in  lieu  of  them, 
these  being  dated  and  indorsed  as 
were  the  original.  Monteith  v. 
Parker,  36  Ore.  170,  78  Am.  St.  767. 

In  Pennsylvania  interest  is  pay- 
able on  municipal  claims  due  in 
instalments  as  each  instalment  be- 
comes due.  South  Chester  Bor- 
ough V.  Garland,  162  Pa.  91. 

In  Tennessee  a  city  is  not  liaHe 
for  interest  upon  an  implied  con- 
tract if  its  power  to  contract  must 
be  exercised  in  writing.  Gas  L.  Co. 
V.  Memphis,  93  Tenn.  612. 

In  Louisiana  a  city  which  coUe'^ts 


332] 


INTEKEST. 


104: 


applies  to  cities  as  well  as  natural  persons.  Justice  is  best  pro- 
moted by  the  adoption  of  a  uniform  rule  applicable  to  all.  It 
is  the  duty  of  a  city  to  provide  the  necessary  means  to  defray 
the  expenses  of  constructing  improvements.  Unless  it  is  stijj- 
ulated  to  the  contrary  the  work  is  ordinarily  to  be  paid  for  as 
accepted.  If  the  work  is  not  to  be  paid  for  at  that  time  it  is 
the  result  of  a  contract  to  extend  the  time.  In  the  absence  of 
any  contract  that  payment  shall  be  delayed  the  city  will  be 


school  taxes  and  fails  to  pay  tliem 
over,  but  uses  the  money  for  its 
own  purposes,  is  liable  for  interest 
to  judgment  creditors  of  the  school 
board.  New  Orleans  v.  P'isher,  34 
C.  C.  A.  15,  91  Fed.  574. 

In  Washington  the  practice  of 
paying  interest  on  municipal  war- 
rants has  the  force  of  law  and  they 
bear  interest  at  the  legal  rate  from 
the  time  payment  is  refused  for  lack 
of  funds.  Seymour  v.  Spokane,  6 
Wash.  362.  But  there  is  no  general 
liability  on  the  part  of  cities  for 
either  principal  or  interest  on  war- 
rants issued  on  account  of  street 
improvements  in  the  absence  of  a 
contract  on  the  part  of  the  city  or 
the  collection  and  misappropriation 
of  the  funds  from  the  local  assess- 
ment. Potter  V.  Whatcom,  25 
Wash.  207,  overruling  Philadelphia 
M.  &  T.  Co.  v.  New  Whatcom,  19 
Wasli.  225.  To  the  same  effect  is 
Tacoma  B.  P.  Co.  v.  Sternberg,  2G 
Wash.  84. 

A  township  is  liable  for  interest 
on  money  advanced  for  its  benefit 
by  one  of  its  officers.  White  River 
School  Tp.  V.  Dorrell,  26  Iiid.  App. 
538.  But  town  orders  do  not  bear 
interest  in  the  absence  of  a  statute 
to  that  effect.  Mueller  v.  Cavour, 
107  Wis.  599. 

If  a  proposition  to  issue  bonds 
has  been  submitted  to  the  electors 
of  a  city  the  officers  cannot  vary  the 
terms  of  the   proposition   as  to   in- 


terest, as  by  making  it  payable 
semi-annually,  tlie  notice  of  the  elec- 
tion stating  that  interest  was  to  be 
paid  annually.  Skinner  v.  Santa 
Rosa,  107  Cal.  464,  29  L.H.A.  512. 

A  claim  against  a  city  does  not 
bear  interest  prior  to  its  presenta- 
tion. South  Yuba  W.  Co.  v.  Au- 
burn, 16  Cal.  App.  775. 

A  county  is  liable  for  interest  on 
the  funds  of  a  town  in  its  possession 
from  the  time  they  are  demanded. 
Spooner  v.  Washburn  County,  124 
Wis.  24. 

Interest  upon  vouchers  issued  to 
contractors  against  a  special  im- 
provement ceases  on  the  collection 
of  money  applicable  to  their  pay- 
ment. Chicago  V.  Hurford,  238  111. 
552.  If  sucli  money  is  diverted  to 
other  purposes  it  bears  interest  at 
the  legal  rate  from  the  time  when 
it  might  have  first  been  demanded, 
rather  than  from  the  time  it  was 
diverted.  Conway  v.  Chicago,  237 
111.  128. 

A  city  must  pay  interest  on 
vouchers  representing  its  liability 
on  a  special  assessment  thougii  the 
statute  does  not  so  provide.  Chi- 
cago V.  People,  215  111.  235. 

Liability  for  interest  on  the  con- 
struction of  a  local  improvement  fol- 
lows liability  for  the  principal;  if 
the  funds  are  diverted,  tlie  delin- 
quent property  purchased  by  the 
city  or  tlie  sum  of  tlielr  cost  is  as- 
sessed   as    public    benefits    the    city 


1046  SUTHERLAND    ON    DAMAGES.  [§    332 

liable  for  interest  like  any  other  debtor.  Any  other  rule  is 
fraught  with  injustice  and  if  once  established  would  exclude 
men  of  scanty  means  from  taking  such  contracts,  as  the  delay 
in  payment  and  loss  of  the  use  of  the  money  might,  and  in  many 
cases  would,  cause  a  serious  loss  which,  to  one  not  possessed  of 
ample  means,  could  result  in  bankruptcy.  In  its  business 
transactions  a  city  should  be  required  to  conform  to  the  ordi- 
nary rules  and  all  exemptions  claimed  which  would  work  in- 
justice should  be  denied.'* 

§  333.  Judgments  bear  interest.  In  nearly  all  the  states 
and  territories  are  statutes  which  provide  that  judgments  shall 
carry  interest  in  a  greater  or  smaller  class  of  actions  and  suits, 
the  tendency  of  legislation  being  to  diminish  the  number  of 
exceptions."^^  These  statutes  do  not  give  a  judgment  the  nature 
of  a  contract  except  when  they  provide  that  the  rate  of  interest 
on  a  judgment  shall  be  that  which  the  parties  have  stipnlated 
for.  In  such  a  case  a  change  in  the  statute  after  a  contract 
has  been  made  for  the  payment  of  an  agreed  rate  of  interest 
does  not,  according  to  some  courts,  affect  the  liability  or  rights 
of  the  parties  thereto."^^     This  view  is  not  in  conformity  with 

must     pay     interest.       Chicago     v.  Wis.   395;    Chicago  v.   Conway,   138 

Union  T.  Co.,  138  111.  App.  245.  111.  App.  300,  320;  Barber  A.  P.  Co. 

An  action  does  not  lie  on  a  mu-  v.  Chicago,  139  id.  121;   Shawnee  v. 

nicipal  warrant  without   a   demand  Froauff,  3G  Okla.  280. 

or  facts  excusing  it.    Farmers'  Bank  In   New   York   a   municipality   is 

V.  Wickliffe,  129  Ky.  G79.  not    liable   for   interest   though   the 

Interest  must  be  paid  on  money  -amount  due  is  liquidated  until  pay- 
illegally  exacted.  Cliicago  v.  North-  ment  is  demanded.  O'Keefe  v.  New 
western  Mut.  L.  Ins.  Co.,  218  111.  York,  176  N.  Y.  297.  The  same 
40,  1  L.Tl.A.(N.S.)  770,  aff'g  120  rule  applies  where  the  claim  is 
111.  App.  497;  Chicago  v.  McGovern,  against  a  department  of  the  munici- 
226  111.  403.  pal  governinent.     Smith  v.  Board  of 

Interest     on     special     assessment  Education,  208  N.  Y.  84. 

vouchers  ceases  when   the  property  75  A  city  may  be  exempted   from 

owner  has  paid  the  city.     Wilmette  liability  for  interest  on  a  judgment 

V.  People,  214  111.  107.  pending  an  appeal  in  condemnation 

Interest    follows    vouchers    issued  proceedings.    Brunn  v.  Kansas  City, 

in  payment  of  a  local  improvement.  216  Mo.  108. 

Chicago  V.  People.  n6  111.  App.  .564.  76  Bond    v.    Dolby,    17    Neb.    491; 

74  Murphy  v.  Omaha,  33  Neb.  402;  C'orley  v.  McKeag,  57  Mo.  App.  415. 

Dale  V.  Scranton,  231  Pa.  604;  Ap-  A  default  judgment  awarding  in- 

pleton  W.  W.  Co.  v.   Appleton,   136  terest  at  ten  per  cent,  is  erroneous 


§    33o]  IWTEKEST,  10-17 

the  weight  of  authority.  It  is  said  that  when  u  contrat-t  creditor 
elects  to  merge  the  riglits  accruing  to  him  because  of  the  breacli 
of  the  contract  in  a  judgment  interest  as  agreed  npon  ceases  and 
the  judgment  will  hear  such  interest  as  is  prescribed  by  statute. 
The  right  to  change  the  rate  exists  where  the  statute  in 
force  when  the  contract  was  made  fixed  the  rate  for  judgments 
at  the  contract  rate.'''  There  is  also  a  disagreement  in 
the  courts  concerning  the  effect  of  statutes  changing  tlie  rate 
of  interest  on  judgments.  In  ISTew  York  a  judgment  is  re- 
garded as  an  obligation  of  record,  interest  on  which  is 
given  as  damages  for  delay  in  performing  the  contract 
or  duty  which  it  enforces.  Hence,  when  the  rate  of  interest 
thereon  is  reduced  by  law  a  judgment  previously  rendered 
cannot  carry  a  higher  rate  than  is  fixed  by  the  amendatory  act 
after  it  takes  effect,'''^  although  the  judgment  so  rendered  was 
based  upon  a  contract  which  provided  for  the  payment  of  the 
stipulated  rate  until  it  was  discharged.'''^  On  the  other  hand,  it 
is  said  that  judgments  are  sometimes  expressly  declared  to  be 
contracts;  ^°  and  that  it  is  unquestionably  true  that  a  judgment 
partakes  of  the  nature  of  a  contract  sufficiently  to  supersede  the 
original  contract  or  cause  of  action  both  as  to  principal  and 
interest.  The  original  contract  or  cause  of  action  becomes 
merged  both  as  to  principal  and  interest.  A  dcl)t  and  the  lia- 
bility for  interest  thereon,  as  provided  by  statute  at  the  date 
of  the  judgment,  are  obligations  binding  upon  the  (U^btor  till 
the  judgment  is  reversed  or  satisfied;  and  the  legislature  can- 
not alter  the  rate  of  interest  to  which  a  creditor  is  entitled 

if  it  was  not  shown   what  the  con-  wlicrc     tlie     judfinient     is     for     the 

tract     was.       Titus     v.     Larsen,     18  ciiforccincnt  of  tlie  statutory   liahil- 

Wasli.   145.  ily   of   a   stockholder.      Cnvtni.   Cox 

77  Wyoming  Nat.  Bank  v.  Brown,  v.  Marlatt,  30  N.  ,1.  L.  :iS!),  l.i  Am. 
7  Wyo.  494,  75  Am.  St.  935;   Mor-  Rep.  454. 

ley  V.  Lake  Shore,  etc.  E.  Co.,   146  79  Taylor  v.   Wing,  84  N.  Y.  471. 

U.  S.  168,  36  L.  ed.  928;   Palmer  v.  Under  a  decree  providing  for  the 

Laberee,  23  Wash.  409.  payment  by  the  estate  of  a  decedent 

78  O'Brien  v.  Young,  95  N.  Y.  428  of  the  contract  rate  of  interest  only 
(two  judges  dissenting)  ;  Wells,  such  rate  can  be  collected.  Friend 
Fargo  &  Co.  v.  Davis,  105  N.  Y.  670.  v.  Kngel,  43  111.  Ai)p.  386. 

See  Whitman  v.  Citizens'  Bank,  110  80  Co.v    v.   Marlatt,   supra;   John- 

Fed.  503,  49  C.  C.  A.  122  for  the  rule       son  v.  Butler,  2  Iowa  535. 


1048 


SUTIIEKXAND    OJST    DAMAGES. 


[§     '^33 


upon  his  pre-existing  judgment.*^  Retrospective  effect  will  not 
be  given  a  statute  changing  the  rate  of  interest  on  judgments 
unless  its  terms  are  very  clear.*^  A  statute  allowing  interest  on 
a  judgment  for  injury  to  the  person  has  been  applied  to  a  judg- 
ment where  the  cause  of  action  arose  before  the  statute  was  en- 
acted.^^  Where  judgments  bear  the  contract  rate  of  interest 
and  that  rate  is  void  because  contrary  to  the  usury  statute  the 
judgment  will  bear  the  same  rate  it  would  have  borne  if  there 
had  been  no  contract.^*  In  Nebraska  a  plaintiff  who  sues  on 
an  usurious  contract  is  not  entitled  to  costs  or  interest  on  any 
judgment  he  may  recover.^^  In  Texas  the  rule  is  to  the  con- 
trary at  least  where  the  suit  is  to  recover  the  penalty  for  the 
usury. *^  The  rate  of  interest  designated  in  a  statute  for  judg- 
ments to  bear  cannot  be  varied  by  the  parties  to  the  contract 
sued  upon."  The  rate  of  interest  fixed  for  tax  bills  by  a  city 
charter  governs  the  rate  a  judgment  rendered  thereon  shall 
bear.**  Except  as  they  are  subject  to  legislative  control  to  the 
extent  indicated,  judgments  are  debts  of  record,  having  like 


81  Butler  V.  Rockwell,  17  Colo. 
290,  17  L.R.A.  61L  See  Seton  v. 
Hoyt,  34  Ore.  266,  43  L.R.A.  634,  75 
Am.  St.  641;  Shipley  v.  Hacheney, 
34  Ore.  303;  Meyer  v.  Brooks,  29 
Ore.  203,  54  Am.  St.  790;  Morley 
V.  Lake  Shore,  etc.  R.  Co.,  supra. 

82Brauer  v.  Portland,  35  Ore. 
471,  480;  Missouri  Pac.  R.  Co.  v. 
Patton  (Tex.  Civ.  App.),  35  S.  W. 
477;  Louisville  &  N.  R.  Co.  v. 
Sharp,  11  Ky.  L.  Rep.  811  (Ky. 
Super.  Ct. ) 

83  Wagers  v.  Irvine,  103  Ky.  544. 

84  Finney  v.  Moore,  9  Idaho  284; 
Shafer  v.  First  Nat.  Bank,  53  Kan. 
614.  See  Brown  v.  Marion  Nat. 
Bank,  92  Ky.  607. 

85  Interstate  S.  &  L.  Ass'n  v. 
Strine,  58  Neb.  133. 

86  Baum  V.  Daniels,  55  Tex.  Civ. 
App.  273. 

87  Le  Breton  v.  Stanley  C.  Co.,  15 
Cal.  App.  429 ;  Thrasher  v.  Moran, 
146  Cal.  683;  Haas  v.  Chicago  Soc, 


20  111.  248;  Moore  v.  Holland,  16 
S.  C.  15;  Neil  v.  Bank,  50  Ohio  St. 
193;  Hanford  v.  Howard,  1  New 
Bruns.  Eq.  241.  See  Deshler  v. 
Holmes,  44  N.  J.  Eq.  581,  as  to  the 
right  to  liave  interest  paid  in  ex- 
cess of  the  judgment  credited  on  the 
principal. 

In  Nebraska  the  prescribed  rate 
governs  unless  tiie  contract  stipu- 
lates for  a  rate  in  excess  of  it. 
Portsmouth  Sav.  Bank  v.  Yeiser,  81 
Neb.  343. 

It  is  presumed  that  the  rate  gov- 
erning in  the  state  in  which  the  con- 
tract is  to  be  discharged  is  the  same 
as  in  that  in  which  the  action  is 
pending.  Schofield  v.  Palmer,  134 
Fed.  753. 

88  Barber  A.  P.  Co.  v.  Hayward, 
248  Mo.  280 ;  disapproving  Same  v. 
Field,  134  Mo.  App.  668.  But  see 
Granite  B.  P.  Co.  v.  Park  View  R. 
&  I.  Co.,  168  Mo.  App.  468. 


§  333] 


INTEREST. 


1049 


incidents  as  other  debts,  including  that  of  bearing  interest,'^ 
though  they  are  silent  on  the  question. ^°     This  quality  is  given 


89  Watson  V.  McManus,  223  Pa. 
583;  Shannon  v.  Cohlliepp,  37  Pa. 
Super.  241  (agreement  to  pay  judg- 
ment in  goods;  interest  due  on  bal- 
ance unpaid)  ;  Benkard  v.  Babcoek, 
27  How.  Pr.  391. 

Interest,  unless  payable  by  the  ex- 
press terms  of  a  contract  to  pay  it, 
is  recoverable,  not  by  virtue  of  the 
contract  to  pay  it,  but  in  the  nature 
of  damages  for  tlie  nonpayment  of 
the  debt,  and  a  judgment  stands  in 
the  same  position  in  this  respect 
as  a  debt  where  there  is  no  contract 
to  pay  interest.  It  is  doubtful  if  a 
judgment  can  properly  be  said  to 
be  a  contract,  but  if  it  can  be  so 
said,  sucli  contract  is  merely  to  pay 
the  amount  of  the  judgment  and 
cannot  be  extended  so  far  as  to  in- 
clude an  agreement  to  pay  interest 
as  a  part  of  the  contract.  If  the 
amount  of  the  judgment  is  accepted, 
the  interest  thereon  being  waived 
and  the  judgment  satisfied,  the  right 
thereafter  to  recover  interest  is 
gone.  Brady  v.  Mayor,  14  App.  Div. 
(N.  Y.)  152;  Cutter  v.  Mayor,  92 
N.  Y.  160. 

A  decree  awarding  preliminary 
alimony  is  a  money  decree  and  bears 
interest.  Harding  v.  Harding,  180 
111.  592,  aff'g  79  111.  App.  621. 

In  California  (§  1504,  Civil  Code) 
a  claim  against  the  estate  of  a  de- 
ceased person  which  has  been  passed 
upon  on  the  final  settlement  of  the 
administrator's  accovnit  and  ordered 
paid  has  the  effect  of  a  judgment 
against  the  estate  and  bears  interest 
from  the  date  of  the  settlement  re- 
gardless of  wliether  the  original  was 
interest-bearing.  Olivera's  Est.  70 
Cal.  184;  Glenn's  Est.,  74  Cal.  567. 
And  so  in  Texas.  Finley  v.  Carotli- 
ers,  9  Tex.  517,  60  Am.  Dec.  186. 


But  until  an  allowed  claim 
against  a  decedent's  estate  is  or- 
dered paid  it  does  not  become  a 
judgment  within  the  contemplatiou 
of  §  1920  of  the  Civil  Code  prescrib- 
ing interest  on  judgments.  In  re 
Bell's  Estate,  168  Cal.  253. 

And  an  allowance  for  the  services 
of  an  attorney  for  a  deceased  ad- 
ministrator made  in  an  equity  suit 
for  an  accounting  between  the  ad- 
ministrator de  bonis  non  and  the  de- 
ceased administrator,  for  the  use 
and  benefit  of  the  attorney,  does  not 
bear  interest.  In  re  Blythe,  103 
Cal.  350. 

The  return  of  commissioners  on 
claims  against  an  c'state  is  not  a 
judgment,  and  a  rate  of  interest 
fixed  tliereon  does  not  affect  the  con- 
tract between  the  parties.  Bowers 
v.  Hammond,  139  Mass.  360.  Nei- 
tlier  is  an  award  of  dower.  Stunz 
V.  Stunz,  131  111.  210;  Field  v.  Field, 
117  111.  App.  307,  aff'd  215  111.  496. 
Til  is  view  has  been  (pialified  by  liold- 
ing  it  does  not  draw  interest  until 
an  election  has  been  made  to  take  tlie 
award  or  the  balance  due  thereon  in 
cash.  Turner  v.  Fell,  142  111.  App. 
458.  In  Pennsylvania  interest  or 
damages  equivalent  thereto  follows 
a  decree  making  a  widow's  exemp- 
tion a  charge  upon  the  realty. 
Balmforth's  Est.,  14  Pa.  Dist.  55. 

An  order  of  court  affirming  the 
assessment  of  damages  resulting 
from  taking  property  for  public  use 
is  a  judgment.  Beveridge  v.  Park 
Com'rs,  100  111.  75;  Cook  v.  South 
Park  Com'rs,  61  id.  115;  Epling  v. 
Dick.son,  170  111.  329;  King  v. 
Brown,  31  Pa.  Super.  50. 

90  McNeill  v.  Railroad,  138  N.  C. 
1 .     See  cases  cited  in  note  92  infra. 


1050 


SUTIIEKI.AND    ON"    DAMAG"ES. 


[§   333 


them  on  common-law  principles  in  actions  based  upon  the  fact 
of  the  wrongful  detention  of  money.  The  interest,  however,  is 
not  collectible  on  execution,  either  as  such  or  as  damages,  unless 
authorized  by  statute,"  or  it  is  so  specified  in  the  judgment.^^ 
In  the  absence  of  a  statute  authorizing  the  collection  of  interest 
upon  execution  that  which  accrues  between  the  rendition  and 
collection  of  a  judgment  is  lost;  or  in  other  words,  since  such 
interest  is  allowed  as  damages  it  can  only  be  obtained  by  suit. 
The  very  sum  in  the  judgment  is  the  amount  to  be  collected  by 
execution  unless  a  statute  exists  authorizing  the  officer  to  com- 
pute and  collect  interest.^^  Indebitatus  assumpsit  will  not  lie 
for  that  purpose.^*  And  the  claim  for  it  will  be  extinguished 
by  collection  or  payment  of  the  principal  to  which  it  is  inci- 


91  Perkins  v.  Fourniquet,  14  How. 
328;  Micliaux  v.  Brown,  10  Gratt. 
612. 

92  Interest  cannot  be  collected  on 
a  money  judgment  unless  it  so  di- 
rects. Anderson's  Succession,  33  La. 
Ann.  581.  But  a  recovery  of  it  is 
not  prevented  because  the  record 
entry  of  the  judgment  does  not  show 
that  it  was  allowed.  Nevada  Coun- 
ty V.  Hicks,  50  Ark.  41fi;  Amis  v. 
Smith,  16  Pet.  303,  311. 

Where  every  judgment  in  a  civil 
action  bears  the  rate  of  interest 
which  the  cause  of  action  bore,  al- 
though the  judgment  is  silent  con- 
cerning it,  a  judgment-creditor  may 
have  the  record  corrected  to  show 
the  rate.  Evans  v.  Fisher,  26  Mo. 
App.  541. 

A  judgment  against  a  corporation 
is  an  unliquidated  demand  when  the 
defendant's  property  has  been  placed 
in  the  hands  of  a  receiver;  it  is 
not  enforceable  as  a  judgment 
against  the  receiver's  funds  and  does 
not  bear  interest  against  them.  The 
fact  that  it  was  rendered  by  consent 
is  immaterial,  and  so  is  the  fact 
that  an  order  has  been  made  direct- 
ing the  receiver  to  pay  it,  but  with- 


out specifying    the    sum    due.      Ex 
parte  Brown,  18  S.  C.  87. 

Though  a  decree  makes  no  pro- 
vision for  the  payment  of  interest 
tlicreon  it  may  be  recovered  as  dam- 
ages for  the  detention  of  the  money 
due  under  it.  Stuart  v.  Hurt,  88 
Va.  343. 

93  Perkins  v.  Fourniquet,  supra; 
Michaux  v.  Brown,  supra;  Solon  v. 
Virginia,  etc.  R.  Co.,  14  Nev.  405. 

Under  a  statute  providing  for  in- 
terest on  any  judgment  recovered  be- 
fore any  court  the  clerk  maj'  issue 
execution  for  the  amount  of  the 
principal  sum  with  legal  interest  re- 
gardless of  whether  the  judgment 
expressed  the  rate  of  interest  or  not. 
Nevada  County  v.  Hicks,  50  Ark. 
416;  Amis  v.  Smith,  supra;  Crook 
V.  Tull,  111  Mo.  283;  Burke  v.  Car- 
ruthers,  31  Cal.  407.  Contra,  Has- 
tings V.  Johnson,  1  Nev.  613;  Solen 
V.  Virginia  &  T.  R.  Co.,  14  Nev. 
405. 

The  federal  courts  will  follow  the 
decisions  of  tlie  state  court  on  this 
question.  Moran  v.  Hagerman,  69 
Fed.  427. 

94Beedle  v.   Grant,   1   Tyler,   423. 


§  o33] 


INTEREST. 


1051 


deiit.^*  h)ome  cases  arc  tu  be  fouiKl  which  deny  that  jiuliiiiients 
bear  interest  unless  by  virtue  of  a  statute.'^  Cousideriuii-  the 
hostility  uf  the  early  coniiiion  law  to  interest  it  is  easy  to  main- 
tain on  its  principles  any  proposition  adverse  to  its  recovery. 
But  on  the  principle,  now  universally  admitted,  that  on  all 
liquidated  sums  interest  may  be  recovered  after  the  date  when 
it  was  the  duty  of  the  debtor  to  pay,  judgments  will  carry  inter- 
est. And  it  is  generally  held  that  interest  is  recoverable  botli 
on  judgments  and  decrees,^''  at  least  on  the  latter  so  far  as  thev 


95  See  §  372. 

After  a  judgment  providing  for 
the  payment  of  the  legal  rate  of  in- 
terest has  been  satisfied  the  credi- 
tor cannot  collect  the  contract  rate 
though  it  wks  his  right  to  have  the 
judgment  provide  for  it.  Rice  v. 
Hulbert,  G7  Iowa  724. 

96  Marietta  I.  W.  v.  Lottimer,  25 
Ohio  627;  Neil  v.  Banl<,  50  id.  193; 
Perl^ins  v.  Fourniquet,  14  How.  328, 
14  L.  ed.  441;  Homer  v.  Kirkwood, 
25  Miss.  96;  Easton  v.  Vandorn, 
Walk.  (Miss.)  214;  Sewell's  Case, 
37  Mo.  448;  Williamson  v.  Brough- 
ton,  4  McCord  123.  See  Harrington 
v.  Glenn,  1  Hill  (S.  C),  53; 
Thomas  v.  Wilson,  3  McCord  105; 
Lambkin  v.  Nance,  2  Brev.  99; 
Todd  V.  Botchford,  86  N.  Y.  517. 

A  judgment  cannot  draw  interest 
in  the  absence  of  a  statute  authoriz- 
ing it  although  it  be  rendered  upon 
a  contract.  Rcece  v.  Knott,  3  Utah 
451. 

Interest  was  refused  on  a  judg- 
ment the  amount  of  wl\ich  was 
doubled  by  interest,  a  portion  of  it 
being  compounded.  Downs  v.  Allen, 
22  Fed.  805. 

In  the  District  of  Columbia  judg- 
ments for  personal  torts  do  not  bear 
interest.  Washington  &  G.  R.  Co. 
V.  Harmon,  147  U.  S.  571,  7  Am. 
Neg.  Cas.  359,  37  L.  ed.  284. 

97  Schwarz  v.  Harris,  209  Fed. 
1000;   Wadleigh  v,  Phelps,  149  Cal. 


627;  McMillan  v.  Warren,  59  Fla. 
578 ;  O'Neill  Mfg.  Co.  v.  Woodley,  118 
Ga.  114;  Ruddy  v.  McDonahi,  244 
111.  494;  licaly  v.  Protection  Mut. 
V.  Ins.  Co.,  213  111.  99,  afT'g  107 
111.  App.  632;  Smyth  v.  Stoddard, 
203  111.  424,  96  Am.  St.  314;  Bom- 
mariiis  v.  New  Orleans  R.  &  L.  Co., 
123  La.  615  (from  its  date  only); 
Smullin  v.  Wharton,  86  Neb.  553; 
Lincoln  v.  Lincoln  St.  R.  Co.,  67 
Neb.  469;  Cutter  v.  Gudebrod,  190 
N.  Y.  252;  Brown  v.  Rogers,  80  S. 
C.  289;  Eau  Claire  Nat.  Bank  v. 
Chippewa  Valley  Bank,  124  Wis. 
520,  109  Am.  St.  966  (judgment 
against  garnishee)  ;  Boall  v.  Silver, 
2  Rand.  401 ;  Roan  v.  Drummond,  6 
Rand.  182;  Clarke  v.  Day,  2  Ixiigii 
172;  Marshall  v.  Dudley,  4  J.  J. 
iVlarsh.  244;  Mercer  v.  Beall,  4  Leigh 
189;  Laidley  v.  Merrifield,  7  id.  346; 
Klock  v.  Robinson,  22  Wend.  157; 
Nunnellce  v.  IMorton,  Cooke  21  ; 
Gwinn  v.  Whittaker,  1  Harr.  &  .1. 
754;  Sayre  v.  Austin,  3  Wend.  496; 
Smith  v.  Todd,  3  J.  J.  Marsh.  306; 
Ilodgdon  v.  Hodgdon,  2  N.  H.  169; 
Hudson  V.  Daily,  13  Ala.  742;  Hop- 
kins v.  Shcpard,  129  Mass.  600; 
Florsheim  v.  Illinois  T.  &  S.  Bank, 
192  HI.  382,  aflf'g  93  111.  App.  297; 
Higgins  v.  Same,  193  111.  394,  aff'g 
96  111.  App.  29;  Stenger  v.  Carrig, 
61  Neb.  753. 

In   Administrator  of   Pinckiiey   v. 
Singleton,  2  Hill   (S.  C),  52,  it  was 


1052 


SUTHERLAND    ON    DAMAGES. 


[§  333 


are  in  personam  and  binding  upon  the  debtor's  property,  and 
rendered  without  reference  to  the  sale  of  particular  portions  of 


said:  "At  common  law  no  interest 
could  t)P  collected  upon  an  execution 
under  a  judgment;  but  interest  was 
recoverable  in  an  action  of  debt  on 
judgment,  and  by  commencing  such 
an  action  tlie  plaintiff  obtains  an 
inchoate  right  to  the  interest  which 
cannot  be  defeated  by  a  subsequent 
payment.  And,  therefore,  where  an 
action  of  debt  on  judgment  was  com- 
menced against  an  administrator 
suggesting  a  devastavit,  although 
the  administrator  after  suit  brought 
paid  the  amount  of  the  judgment 
and  costs  with  interest  on  the  origi- 
nal cause  of  action,  it  was  held 
that  the  plaintiff  might  still  go  on 
to  recover  the  interest  on  the  entire 
amount  of  the  judgment  (including 
the  principal  and  interest),  and  the 
court  will  not  preclude  him  from 
this  right  by  ordering  satisfaction 
to  be  entered  on  the  judgment." 

In  Crawford  v.  Simonton,  7  Port. 
110,  Collier,  J.,  reviewed  the  au- 
thorities and  stated  the  law:  "Dam- 
ages in  lieu  of  interest  are  allowed 
at  common  law  for  a  default  to  pay 
money  or  deliver  property,  upon  the 
principle  that  the  creditor  should 
be  compensated  for  the  want  of 
punctuality  in  his  debtor  in  keeping 
him  out  of  tlie  use  of  the  money  or 
property.  McWhorter  v.  Standifer, 
2  Port.  519.  Accordingly,  it  has 
been  held  that  interest  is  allowed 
on  judgments  at  common  law  to  the 
time  of  affirmance  or  of  a  new  judg- 
ment rendered.  Zink  v.  Langton, 
2  Doug.  749.  By  the  rules  of  the 
common  law  Lord  Ellenborough  con- 
sidered it  to  be  within  the  general 
province  of  a  jury  to  give  damages 
for  the  detention  of  a  debt,  and  he, 
therefore,  sustained  a  verdict  which 
allowed  interest  on  a  statutable  as- 


certainment of  damages  for  an  in- 
jury to  individual  property  occa- 
sioned by  a  public  improvement 
made  by  a  corporation  ( 1  M.  &  Sel. 
171);  and  in  7  Har.  &  J.  755,  it 
is  said  that  both  by  the  decisions  of 
tlie  court  of  Maryland  and  the  Eng- 
lish courts  every  judgment  for 
money  carries  interest  unless  other- 
wise agreed  by  the  parties  or  its 
terms  forbid  it.  So  in  North  Caro- 
lina it  lias  been  holden  that  a  plain- 
tiff is  entitled  to  interest  on  his 
judgment  if  a  new  action  is  brought 
up  to  the  time  of  the  rendition  of 
the  new  judgment.  2  Hayw.  26, 
378;  Thomas  v.  Edwards,  3  Ans. 
804;  Butler  v.  Stoullit,  8  Moore 
472;  Prescott  v.  Parker,  4  Mass. 
170.  In  Atkinson  v.  Braybrooke,  4 
Camp.  380,  Lord  Ellenborough  con- 
sidered that  interest  was  not  in 
general  recoverable  on  a  foreign 
judgment  because  it  was  a  simple 
contract.  S.  P.,  3  Price  350.  But 
in  McClure  v.  Dunkin,  1  East  436, 
the  court  of  king's  bench  determined 
that  in  assumpsit  on  a  judgment 
rendered  in  Ireland  it  was  compe- 
tent to  the  jury  to  allow  interest  to 
the  plaintiff,  and  that  in  that  respect 
there  was  no  difference  between  a 
foreign  judgment  and  a  judgment  in 
a  court  of  record  in  England.  The 
only  adjudication  to  the  contrary 
is  a  case  in  4  McCord  212,  which  is 
deemed  outweighed  by  the  authori- 
ties. In  Moore  v.  Patten,  2  Port. 
451,  it  was  determined  that  a  jury 
might,  in  their  discretion,  allow  in- 
terest upon  unsettled  accounts  for 
goods,  wares,  etc.,  from  the  time 
they  became  due.  And  in  Tate  v. 
Innerarity,  1  Stew.  «fe  Port.  33,  it 
was  adjudged  competent  upon  com- 
mon-law   principles    for    parties    to 


§  333] 


INTEREST. 


1053 


it  and  the  distribution  of  tlieir  proceeds.^*  A  creditor  wlio  first 
attaches  the  reversion  in  a  fund  not  bearing-  interest  is  entitled 
to  interest  from  the  date  of  his  judgment,  although  at  the  ex- 


stipulate  for  the  payment  of  a  rea- 
sonable rate  of  interest,  and  where 
it  was  not  ascertained  by  contract 
the  rate  might  be  fixed  by  tlie  cus- 
tom of  the  place  where  the  contract 
was  made. 

"From  the  decisions  we  have  no- 
ticed we  educe  as  applicable  to  the 
case  at  bar  the  rule  that  the  allow- 
ance of  interest,  except  upon  the 
particular  liabilities  embraced  by 
statute,  must  depend  upon  tiie  cir- 
cumstances of  the  case.  To  avoid 
its  payment  it  is  competent  for  the 
defendant  to  show  that  he  is  not 
in  fault  for  the  non-payment  of  the 
principal  sum,  or  that  the  plaintiff 
had  been  absent  from  the  country, 
without  having  left  a  known  agent, 
etc.;  but  if  the  defendant  offers  no 
excuse  for  the  delay  the  plaintiff 
is  entitled  to  recover  interest  as 
damages." 

In  Himely  v.  Rose,  .5  Crancli  .313, 
3  L.  ed.  in,  it  was  held  that  if 
property  ordered  to  be  restored  be 
sold,  interest  is  not  to  be  paid  un- 
less specially  ordered  by  the  decree. 
Marshall,  C.  J.:  "Restitution  of  the 
cargo  was  awarded.  The  property 
having  been  sold,  the  money  proceed- 
ing from  the  sale  is  substituted  for 
the  specific  articles.  If  this  money 
remains  in  the  possession  of  the 
court,  it  carries  no  interest;  if  it 
be  in  the  hands  of  an  individual, 
it  may  bear  interest  or  otherwise,  as 
the  court  may  direct." 

In  Cox  V.  Marlatt,  36  N.  J.  L.  389, 
13  Am.  Rep.  454,  the  court  say: 
"Our  practice  has  been  for  many 
years,  independent  of  any  express 
statute,     to     allow     interest    to     be 


levied  under  cxeciiiidn  as  an  inci- 
dent to  tiic  judgment,  and  as  an 
increase  of  damages  for  the  deten- 
tion of  the  debt  without  bringing  a 
distinct  action  for  the  interest  as 
damages  for  such  detention."  Sec 
Todd  V.  Rotchford,  86  N.  Y.  517. 

-Tudgments  for  costs  carry  inter- 
est (Emmitt  v.  Hrophy,  42  Ohio  82; 
In  re  Kennedy,  04  Cal.  22;  Klock 
V.  Robinson,  22  Wend.  157),  wlieii 
tlie  costs  are  included  in  a  judg- 
ment which  is  the  cause  of  action. 
Tiernan  v.  Minghini,  28  VV.  Va.  314. 
See  p.  1060. 

In  an  admiralty  proceeding  a  fed- 
eral circuit  court  is  not  bound  to 
allow  interest  on  costs  awarded  by 
the  district  court  although  tliey  arc 
included  in  tlie  former's  decree.  The 
Scotland,  118  U.  S.  507,  30  L.  ed. 
J  53. 

A  judgment  entered  nunc  pro 
tunc  bears  interest  from  the  day  on 
wliich  it  is  considered  to  have  been 
rendered.  Rarber  v.  Rriscoe,  !) 
Mont.  341. 

98  If  a  decree  provides  for  the  di- 
vision of  the  proceeds  of  designated 
property  according  to  fixed  priori- 
ties and  specifies  the  amounts  to  be 
paid  claimants,  and  there  is  not 
enough  to  pay  tlie  principal  and  in- 
terest due  tlieni  all  it  will  not 
be  construed  as  allowing  interest  to 
one  claimant  to  the  exclusion  of 
others.  National  Rank  v.  Heard,  65 
Ga.  189. 

A  decree  distril)uting  a  fund  paid 
into  court  to  await  the  determina- 
tion of  the  rights  of  the  parties  does 
not  bear  interest.  Franklin  Rank 
v.  Rruiis,  84  Ohio  12. 


1054     •  SUTKEELAND    ON    DAMAaES.  [§    333 

pense  of  subsequent  attacliiiig  creditors  of  the  same  fund.^^  It 
is  not  a  sufficient  reason  for  not  allowing  interest  at  the  legal 
rate  on  a  recovery  for  the  conversion  of  bonds  that  they  bore  a 
less  rate.^  A  judgment  on  city  warrants  bears  interest  though 
the  warrants  do  not  by  reason  of  a  provision  in  the  charter.^ 
An  officer  liable  for  a  judgment  because  of  neglect  to  pay  over 
money  nnist  pay  interest  though  his  deputy  was  responsible 
to  him  for  the  default,  he  having  in  his  hands  enough  funds  of 
the  deputy  to  discharge  the  judgment.^  In  cases  of  fraud  in- 
terest should  not  antedate  the  verdict ;  *  and  it  has  been  said  that 
in  tort  actions  interest  should  be  computed  only  from  the  time 
judgment  was  rendered.^  A  judgment  on  a  penal  bond  securing 
the  payment  of  money  in  instalments,  some  of  which  are  to 
become  due,  carries  interest  on  them  as  they  may  become  due 
and  remain  uni)aid.^ 

Rule  twenty-three  of  the  supreme  court  of  the  United  States 
provides  that  in  cases  where  a  writ  of  error  is  prosecuted  to 
that  court  and  the  judgment  is  affirmed,  the  interest  shall  be 
calculated  and  levied  from  the  date  of  the  judgment  below  until 
the  same  is  paid.  This  has  reference  only  to  the  action  of  the 
supreme  court  respecting  interest,  and  is  not  to  be  enforced  by 
inferior  courts  to  which  mandates  of  the  former  are  sent.  If 
the  judgment  or  decree  of  an  inferior  court  is  silent  as  to  inter- 
est and  is  merely  affirmed,  nothing  being  said  as  to  interest,  it 
is  to  be  taken  as  a  declaration  by  the  supreme  court  that  no 
interest  is  to  be  allowed.''' 

Under  a  statute  providing  that  "interest  shall  be  allowed  on 
all  money  due  upon  any  judgment,"  it  may  be  recovered  upon 
a  foreign  judgment  which  is  sued  upon.^     In  suits  upon  judg- 

99Edenton  v.   Dickinson,   2  Tenn.  Co.,  85  Neb.  413;  The  Argo,  127  C. 

Cas.  324.  C.  A.  456,  210  Fed.  872:  Burrows  v. 

1  Scollans  v.  Rollins,  179  Mass.  Lownsdalc,  66  C.  C.  A.  050,  133  Fed. 
346.  250. 

2  San  Antonio  v.  Alamo  Nat.  Bank  6  Dike  v.  Andrews,  80  Neb.  455. 
(Tex.  Civ.  App.),  155  S.  W.  620.  7  In  re  Washington  &  G.  E.  Co., 

3  Combs  V.  Bates,  150  Ky.  188.  140  U.  S.  96,  35  L.  ed.  341;   Kim- 

4  McDonough  v.  Williams,  86  Ark.  berly  v.  Arms,  40  Fed.  551 ;  Green 
600.  V.   Chicago,  etc.  R.  Co.,   1  C.   C.  A. 

5  Arkansas  &  L.  R.  Co.  v.  Stroude,  478,  49  Fed.  907. 

82  Ark.  1]7;  Tobler  v.  Union  S.  Y.  8  Santa  Clara  Valley  M.  &  L.  Co. 


1 


§  333] 


INTEREST. 


105 


ments  rendered  in  other  states  interest  is  generally  recoverable 
under  the  lawg  of  the  forum,  and  not  at  the  rate  authorized  by 
the  laws  of  the  state  in  which  they  were  rendered,^  and  this  is 
the  rule  whether  the  law  of  the  original  jurisdiction  allows 
interest  on  judginents  or  not.^°  There  is  reason  in  the  view 
which  denies  the  recovery  of  interest  on  a  judgment  rendered 
in  another  state  unless  proof  be  made  of  its  laws  allowing  it." 
If  interest  is  recovered  as  damages  this  rule  is  undoubtedly 
correct.  In  Illinois  interest  on  foreign  judgments  is  fixed  at 
the  rate  allowed  in  the  state  in  which  they  were  rendered,  it 
being  prf^ved.^^ 


V.  Prescott,  238  111.  625;  Shickle  v. 
Watts,  94  Mo.  410. 

9  Wells,  Fargo  &  Co.  v.  Davis,  105 
N.  Y.  670;  Barringer  v.  King,  5 
Gray  1);  Hopkins  v  Sliepard,  129 
Mass.  600;  Clark  v.  Child,  136  id. 
344;  Crone  v.  Dawson,  19  Mo.  App. 
214  (in  the  absence  of  proof  of  the 
rate  of  interest  in  the  state  in 
which  judgment  was  rendered). 
But  see  Owsley  v.  Central  T.  Co., 
196  Fed.  412. 

In  Schell  v.  Stetson,  12  Phila. 
387,  a  judgment  of  a  New  York 
court  sued  on  in  Pennsylvania  Avas 
held  to  carry  interest  by  virtue  of 
the  fact  that  it  would  do  so  in  t\m 
former  state,  of  the  law  of  which 
the  court  took  notice.  The  judg- 
ment was  for  costs,  and  interest 
thereon  was  not  allowable  under  tlio 
laws  of  Pennsylvania. 

In  Stewart  v.  Spaulding,  72  Cal. 
264,  the  judgment  of  another  state 
directed  that  a  part  of  the  sum  re- 
covered bear  interest  at  a  specified 
rate,  but  was  silent  as  to  the  rate 
of  interest  on  the  balance.  Interest 
should  have  been  allowed  on  the  bal- 
ance at  the  rate  fixed  by  the  law  of 
the  foreign  state. 

A  federal  court  will  award  inter- 
est on  a  judgment  rendered  in  a 
state  court  against  a  federal  receiver 
at  the  rate  provided  for  by  the  state 


law.      Willcox    V.    Jones,    177    Fed. 
870,  ]01  C.  €.  A.  84. 

If  nothing  appears  to  the  contrary 
it  will  be  presumed  that  a  judgment 
of  an  Engli-sh  court  bears  the  same 
rate  of  interest  as  a  judgment  of 
the  forum.  Murphy  v.  IMurphy,  145 
Cal.  482,  78  Cal.  1053. 

10  Nelson  v.  Feldeu,  7  Pvieh.  Eq. 
394;  Warren  v.  McCarty,  25  HI. 
95;  Prince  v.  Lamb,  Breese,  378; 
Fonville  v.  Monroe,  74  111.  129 ;  Tal- 
bot V.  National  Bank,  129  Mass.  67, 
37  Am.  Rep.  302;  Williams  v. 
American  Bank,  4  Mete.  (Mass.) 
317;  Barringer  v.  King,  5  Gray  9; 
Olson  V.  Veazie,  9  Wash.  481,  43 
Am.  St.  855.  The  contrary  is  as- 
sumed in  Santa  Clara  Valley  M.  & 
L.  Co.  V.  Prescott,  ftwpra. 

11  Schroeder  v.  Boyce,  127  Mich. 
33;  Thompson  v.  Monrow,  2  Cal.  99, 
56  Am.  Dec.  318;  Cavender  v.  Guild, 
4  Cal.  253.  The  Michigan  court 
said:  As  the  common  law  is  pre- 
sumed to  be  in  force  in  otlicr  states 
unless  the  contrary  is  shown,  and 
as  at  common  law  judgments  do 
not  carry  interest,  interest  is  not  re- 
coveral)le  on  a  judgment  rendered  by 
the  courts  of  another  state  without 
jiroof  that  tlie  law  of  such  state  al- 
lows interest  on  judgments. 

12  i^ritton  V.  Ciiaml)erlain,  234  111. 
246,  afV'g  136  111.   Ai)p.  290. 


1056  SUTHERLAND    ON    DAMAGES.  [§    333 

A  judgment  for  costs  is  within  the  words  ''interest  shall  be 
allowed  on  all  money  due  upon  any  judgment,"  ^^  also  one  for 
costs  and  attorney's  fees ;  ^^  but  not  one  for  the  fees  of  witnesses 
and  officers.^^  Where  the  defendant  paid  the  judgment  and 
costs  at  the  close  of  the  litigation  and  the  plaintiff  had  paid  but 
a  mere  item  of  the  costs  he  was  not  entitled  to  interest  on  the 
costs. ^"^  If  the  party  against  whom  a  judgment  for  costs  is  ren- 
dered enjoins  its  collection  on  grounds  not  going-  to  its  validity, 
although  it  may  be  proper  to  stay  the  payment,  he  is  liable  for 
interest  from  the  time  the  injimction  was  granted."  Interest 
on  costs  cannot  be  recovered  under  a  statute  fixing  the  rate  of 
interest  on  all  money  decrees  and  judgments.'^*  A  direction  in 
a  judgment  that  the  costs  of  the  attorneys  for  the  parties  be 
paid  out  of  the  estate  is  not  a  judgment,  no  statement  being 
made  in  it  as  to  the  amount  uf  the  costs,  and  such  amount  never 
having  been  inserted  therein,  notwithstanding  it  was  fixed  by 
an  order  in  the  action. ^^  An  order  for  the  payment  of  lying-in 
expenses  and  maintenance  in  a  bastardy  proceeding  does  not 
bear  interest.^"  It  is  otherwise  with  a  judgment  for  taxes,^^ 
and  allowed  claims  in  bankruptcy;  these  bear  interest  before 
and  after  their  allowance.^^ 

A  judgment  is  rendered  or  made  when  the  trial  court  makes 
its  original  findings,^^  and  not  when  it  enters  corrected  findings 

13  Santa  Clara  Valley  M.  &  L.  Co.  16  O'Donnell  v.  Omaha,  etc.  R.  Co., 

V.  Prescott,   238  III.   62.5;    Bates  v.  31  Neb.  846. 

Wilson,    18    Colo.    287 ;     Keifer    v.  17  Shipman    v.    Fletcher,    9.5    Va. 

Summers,    137    Ind.    106;     Hayden  .585. 

V.  Hefferan,  99  Mich.  262;   Johnson  18  People's  Bank  v.  ^tna  Ins.  Co., 

V,  Masters,  49  S.  C.  525;  Dowdy  v.  76  Fed.  548,  ruled  under  statutes  of 

Calvi,  14  Ariz.  148.     Contra,  Cock-  South  Carolina. 

rill  V.  Mizer,   11  Ky.  L.  Rep.  637 ;  19  State  Trust  Co.  v.  Cowdrey,  68 

Ashworth  v.  Tramwell,  102  Va.  852.  Hun  97. 

See  note,  p.  904.  20  Commonwealth  v.  Smith,  19  Pa. 

HHealy  v.  Protection  Mut.  F.  Ins.  Dist.  973. 

Co.,  213  ill.  99;  Hoyt  v.  Beach,  104  21  State  v.   Parker,  2   Ohio  C.   C. 

Iowa  257,  65  Am.  St.  461;    Carver  (N.  S.)   38,  25  Ohio  C.  C.  237. 

V.  Mayfield  L.  Co.,  and  Texas  cases  22  In  re  Osborn's  Sons  &  Co.,  177 

cited.  Fed.    184,    100    C.    C.    A.    392,    29 

15  Keifer     v.      Summers,     supra;  L.R.A.(N.S.)    887. 

Baum   V.   Reed,  74   Pa.   322;    Ghent  23  Cutting  F.  P.  Co.  v.  Canty,  141 

V.  Boyd,  18  Tex.  Civ.  App.  88.  Cal.  092. 


§    333]  INTEREST.  1057 

under  the  mandate  of  the  supreme  court ;  lienee,  under  a  statute 
which  jDrovides  for  the  computation  of  interest  upon  the  decision 
of  the  court  from  the  time  it  was  rendered  or  made,  interest  is 
to  be  computed  from  the  time  the  former  event  occurred.^* 
Interest  from  the  time  of  verdict  is  not  allowable  where  the 
judgment  is  reversed  and  the  plaintiff  given  an  election  to  take 
judgment  for  a  less  sum  and  no  more.^^  An  estate  is  liable  for 
interest  pending  an  appeal  taken  by  the  administrator  from  a 
decree  directing  him  to  pay  money  held  by  his  intestate  in 
trust,  where  he  retains  possession  of  the  fund  as  administrator 
and  takes  the  appeal  in  good  faith,  from  the  time  the  decree 
was  entered  until  it  was  affirmed.^®  Where  a  judicial  sale  of 
real  estate  is  not  absolute  so  as  to  entitle  the  purchaser  to  a  con- 
veyance or  the  judgment  creditor  to  any  part  of  the  proceeds 
until  it  has  been  confirmed  the  debtor  is  not  liable  for  interest 
until  that  time.^'''  In  such  a  case  the  creditor  is  entitled  to 
interest  until  the  sale  is  confirmed.^*  A  party  who  interpleads 
and  retains  money  ordered  to  be  paid  into  court  is  liable  for 
interest. ^^  Under  a  statute  providing  that  judgTuents  for  money 
upon  confracts  bearing  more  than  six  per  cent  interest  shall 
bear  the  contract  rate,  if  suit  is  brought  on  a  judgment  which 
bears  interest  at  the  rate  of  ten  per  cent  the  new  judgment 

24Barnhart  v.  Edwards,  128  Cal.  A   referee's  report   does  not  bear 

572.  interest  until  confirmed.    In  re  East 

In  Ohio  the  computation  is  made  p.^,^^.  -j^    ^^     goo  N.  Y.  545. 

from  the   first   day   of  the  term   at  ,,        , 

,  .  ,    .    ,           ,  .          J       1      Q4.      1  Interest   will   be   allowed   on   anv 
which  judgment  is  rendered,    btana- 

ard    B.    &    P.    Co.   v.    Cleveland,   25  judgment    changed    by    the    higlier 

Ohio  C.  C.  380.  court   only    from    the    date    of    the 

Under    a    statute    providing   that  judgment  thereof.    Sheldon  v.  Egan, 

every  judgment  debt  shall  carry  in-  18  Manitoba,  221. 

terest   from   tlie   time   it   is  entered  25  Leliman   v.   Amsterdam   (.'.   Co.. 

up  and  that  all  equity  orders  where-  ]gj  yVis.  207. 

by  any  sum  of  money  shall  be  pay-  26  Haines  v.  Hay,   Ifil)   111.  9.3. 

able   to   any   person   shall   have  the  „-  t       i      j    t     ^.  t>     ^         r 

„  „     .    ,  .  1  r  27  Lombard    I.    Co.    v.    Burton,    5 


Kan.  App.  107. 


effect  of  judgments,  an  order  of 
reference  to  have  the  damages  ascer- 
tained does  not  bear  interest;  that  28  Trompen  v.  Hammond,  01  Neb. 
runs  only  from  the  time  the  dam-  446,  citing  Lombard  I.  Co.  v.  Bur- 
ages  are  ascertained  by  the  ref-  ton,  supra,  and  Central  T.  Co.  v. 
eree.  Ashover  v.  Fluor  Spar  Mines,  Condon,  07  Fed.  84. 
(1911)  2  Ch.  355.  29  Millott  v.  Swift,  138  Ky.  408. 
Siith.  Dam.  Vol.  I.— 07. 


1058 


SUTHERLAND    ON    DAMAGES. 


[§    333 


should  bear  interest  at  the  same  rate.^°  And  where  a  note  stip- 
ulates for  the  payment  of  one  rate  of  interest  on  the  money 
borrowed  and  a  lower  rate  on  principal  and  interest  as  attorney's 
fee,  if  it  should  be  placed  in  the  hands  of  an  attorney  for  col- 
lection, the  judgment  properly  provides  that  it  shall  carry  the 
higher  rate  on  the  whole  sum.^^  The  contract  rate  should  con- 
trol the  rate  the  judgment  bears.^^  A  conditional  judgment 
does  not  bear  interest  prior  to  compliance  with  it.^^ 

§  334.  Same  subject.  Although  the  judgment  separately 
states  the  amount  of  principal  and  interest  the  total  bears 
interest,^*  and  interest  is  to  be  computed  on  statutory  damages 
or  a  penalty  included  in  the  judgment.^^  After  judgment 
against  a  corporation  interest  on  it  is  computed  in  an  action 
against  a  stockholder.^®     It  seems  to  have  been  the  practice  in 


30  Corley  v.  McKeag,  57  Mo.  App. 
41.5. 

31  Llano  I.  Co.  v.  Watkins,  4  Tex. 
Civ.  App.  428 ;  Washington  v.  First 
Nat.  Bank,  64  Tex.  4. 

32  Livingston  v.  Salter,  6  Ga.  App. 
377. 

33  Moore  v.  Durnan,  70  N.  J.  Eq. 
1. 

34  Steamship  Wellesley  Co.  v. 
Hooper,  3  8.5  Fed.  733,  108  C.  C.  A. 
71;  Morris  v.  Carr,  77  Ark.  228; 
Coles  V.  Kelsey,  13  Tex.  75. 

A  verdict  will  not  be  vitiated  by 
including  improper  interest,  sepa- 
rately stated  from  any  other  sum 
found,  nor  for  assuming  to  direct 
that  prospective  interest  be  allowed; 
the  excessive  interest  or  the  imper- 
tinent direction  that  the  sum  found 
bear  interest  in  the  future  may  be 
stricken  out  or  disregarded  as  sur- 
plusage. Brugh  V.  Shanks,  5  Leigh 
508. 

Where  a  petition  sets  forth  the 
recovery  of  judgment  for  a  certain 
sum,  without  stating  the  rate  of 
interest  it  is  entitled  to  draw,  but 
the  plaintiff  in  his  petition  demands 
judgment  for  the  amount  of  the  re- 


covery, with  interest  thereon  at  ten 
per  cent,  from  a  day  therein  stated, 
the  record  showing  a  submission  of 
the  cause  to  the  court  by  the  par- 
ties, and  the  rendition  of  a  judg- 
ment for  the  original  judgment, 
with  ten  per  cent,  interest,  without 
exception,  it  was  considered  that  the 
demand  for  ten  per  cent,  would  au- 
thorize the  introduction  of  proof  of 
that  rate,  and  that  the  production 
of  such  proof  should  be  presumed. 
Haskins  v.  Alcott,  13  Ohio  St.  210. 
LTnder  a  statute  providing  that 
judgments  for  money  upon  contracts 
shall  bear  tlie  contract  rate  it  is 
not  necessary  that  the  judgment  so 
provide;  the  rate  of  interest  may 
be  determined  from  the  record. 
Catron  v.  Lafayette  County,  125 
Mo.  67. 

35  Mutual  Reserve  L.  Ins.  Co.  v. 
Jay,  50  Tex.  Civ.  App.  165 

36  See  §  343. 

The  parties  liable  for  the  pay- 
ment of  a  money  judgment  are  also 
liable  for  interest  on  it — as  the 
assignee  of  sliares  of  stock.  Logan 
V.  Illinois  T.  &  S.  Bank,  93  111.  App. 
39:  Florsheim  v.  Same,  id.  297. 


§    334]  INTEREST.  1059 

Kentucky,  prior  to  the  statute  of  1837,  givini^-  interest  on  judj;- 
nients  and  decrees,  and  in  other  states,  to  adjudge  ''accruing'' 
interest  on  debts  which  by  the  terms  of  the  agreement  were  to 
bear  interest  "until  i)ai(K"  The  practice  was  to  adjudge  interest 
from  the  date  when  it  was  jjrovided  by  agreement  to  commence 
without  any  computation  to  the  rendition  of  the  judgment, 
and  it  was  not  inchukKl  with  the  })rincipal  sum  recovered; 
when  the  judgment  was  collected  or  paid  the  interest  was 
computed  according  to  the  agreement  and  judgment  with- 
out rest  at  the  time  of  the  latter.  But  where  interest  was  re- 
coverable as  damages  it  was  embraced  in  the  judgment.  Interest 
on  judgments  in  that  state,  prior  to  1837,  as  dauiages  for  deten- 
tion of  the  money  was  not  matter  of  right,  but  discretionary.^'^ 
Judgments  upon  contracts  stipulating  a  certain  rate  of  interest 
until  the  del»t  should  be  paid  were  entered  for  accruing  interest. 
The  court  entered  judgment  for  the  debt  in  the  declaration 
mentioned  and  also  the  legal  or  conventional  interest  from  the 
time  the  debt  was  due  and  payable,  or  the  interest  stipulated  to 
be  given  computed  until  payment  should  be  made.^^  But  since 
the  statute  of  1837,  giving  interest  on  all  judgments,  it  is  error 
to  render  judgment  in  a  suit  on  a  bill  of  exchange  for  principal 
and  interest  by  way  of  damages,  by  which  interest  would  run 
after  judgment  by  force  of  the  statute.^^  In  debt  on  a  judg- 
ment bearing  interest,  if  the  plaintiff  demanded  only  principal 
and  interest  accrued  at  the  connnencement  of  the  action,  he 
could  not  have  judgment  for  accruing  interest. *°     But  general- 

37Lair  V.  Jclf,  3  Uana  ISl;  West  Shepherd,    Hardin    44;     Harper    v. 

V.    Patrick,     1     J.     J.     Marsh.    95;  Bell,   2   Bibb   221;    Troxwell   v.   Fu- 

Sliockey    v.    CJlasford,    fl    Dana    It!;  gate,   Hardin   2.     See   Henderson   v^. 

Marshall  v.  Dudley,  4  J.  J.  Marsh.  Desha,   Hemp.   C.   C.   231.      But   see 

245;    Caldwell   v.    Richards,    2    Bibb  also  Byrd  v.  Oasquet.  id.  2(!1. 
33.1;  Guthrie  v.  Wickliffe,  4  id.  542,  39  Chamberlain   v.   ]\Iaithind,   5    B. 

7  Am.  Dec.  746;   Smith  v.     Todd,  3  Mon.  448. 

J.  J.  Marsh.  306,  20  Am.  Dec.  142;  40  Caldwell    v.    Richards,    2    Bibb 

Bartlett  v.  Blanton,  4  J.  J.  ]\Iarsh.  332. 

440;   McMillan    v.    Scott,    1    T.    B.  Where  a  creditor  obtained  a  judg- 

Mon.  150.  ment  at  law,  and  went  into  a  court 

38  Harden  v.  Major,  4   Bibb   104;  of   equity   to    foreclose   a   mortgage 

Taul   V.   Moore,   Hardin   90;    Cotton  for  the  same  debt  it  was  held  that 

V.    Reavill,    2    Bibb    99;    Russell    v.  interest  should   not  be  decreed,  the 


I 


1060  .  SUTHERLAND    ON    DAMAG-ES.  [§    334 

ly,  under  statutes  allowing  jndgments  to  be  taken  upon  contracts 
to  bear  interest  thereafter  at  the  contract  rate  the  correct  rulo 
is  to  add  the  interest  due  on  the  principal  up  to  the  time  of 
the  judgment  to  the  principal,  and  enter  the  judgment  for  the 
gross  amount;  and  this  judgment,  including  both  principal  and 
interest,  is  then  to  bear  the  interest  stipulated  in  the  contract 
until  the  debt  is  paid."  A  final  decree  for  alimony  carries 
interest  upon  unpaid  alimony  allowed  in  a  former  decree  from 
the  date  of  the  maturity  of  each  instalment,  and  upon  unpaid 
counsel  fees  from  the  date  of  the  original  decree;  but  costs  of 
the  original  trial  do  not  bear  interest.^^  On  the  affirmance  of  a 
judgment  the  trial  court  should  enter  judgment  for  the  amount 
of  the  original  judgment,  with  interest  thereon,  but  it  should  not 
include  as  part  of  the  principal  interest  on  the  interest  due  when 
the  original  judgment  was  first  rendered.*^  Under  a  statute  pro- 
viding that  on  the  affirmance  of  a  money  judgment,  the  execution 
of  which  has  been  stayed,  the  judgment  shall  bear  an  additional 
rate  of  interest  to  be  fixed  by  the  court  the  rate  so  fixed  does  not 
continue  after  the  mandate  of  the  court  has  reached  the  trial 


jiulgment    not   bearing    it;    but   the  Westerhoff,  58  Neb.  379,  76  Am.  St. 

amount    of    the   judgment    must    be  ]01;    Schofield  v.  Palmer,   134  P'ed. 

taken    as    the    amount    to    be    paid.  753;    Soudan    P.    Co.    v.    Stevenson, 

Heydle  v.  Hazelhurst,    4    Bibb    19.  100  Arl-:.  384. 

See  Brigham  v.  Van  Busl<irk,  6  B.  Under   a   statute    which    provides 

Mon.  ]97,  holding  that  l)y  tlie  stat-  that  "wlien  a  decree  or  judgment  is 

ute   of    1837    the    intention    was   to  rendered  or  made   for  the  payment 

establish   tlie   principle    tliat    debts  ^f  money  it  shall  be  for  the  aggre- 

established   by    judgment   or    decree  „.^^^   ^j   principal   and   interest  due 

should  bear  interest  from  that  time  ^^  ^^^^  ^.j^,^  ^^  judgment  or  decree,  ' 

unless   by    the    terms   of    the    judg-  ^^,.^,^     .^^^^^^^^    ^^^^.^^^     ^^.^^     ^j^^^ 

mcnt  thev  bore  interest  from  a  prior  ,    .    „      ,              ,             ,                   , 

date,     when  a  decree  has  once  been 

','                 „       ,  !•       r-    ,,  1     A-in  made  for  the  principal  and  interest 

41  Guy    v.    Franklin,    5    Cal.    416;  *^          ^ 

Tj,        .         rr           a  -J    ^rr■     Tit  n to   that   datc   a   second   aggregation 

Emeric  v.  Tams,  6  id.  15o;  McOann  **    " 

v.  Lewis,  9  id.  246;  Mount  v.  Chap-  of  the  same  debt  in  the  same  cause 
man,  id.  297;  Corcoran  v.  Doll.  32  '»  subsequent  decrees  for  the  pay- 
id.  82;  Bibend  v.  Liverpool,  etc.  Ins.  I'lent  of  the  original  decree  is  un- 
Co.,  30  id.  78;  Coles  v.  Kelsey,  L3  authorized.  Tiernan  v.  Minghini, 
Tex.  75;  Palmer  v.  Murray,  8  Mont.  28  W.  Va.  314,  323. 
312,  overruling  earlier  cases;  Have-  42  Huellmantel  v.  lluellmantel, 
meyer  v.  Paul,  45  Neb.  373,  389;  ]24  Cal.  583. 
Connecticut    Mut.    L.    Ins.    Co.    v.  43  Braue  v.  Portland,  35  Ore.  471. 


§    335]  INTEREST.  1061 

court,  because  execution  of  it  is  no  longer  stayed.  The  interest 
so  imposed  should  not  be  compounded  by  computing  the  amount 
due  up  to  the  time  of  the  order  in  the  higher  court  and  then 
computing  interest  thereon  upon  the  whole  sum.**  Equity  fol- 
lows the  law  and  allows  interest  in  like  cases.*^  On  debts  on 
which  interest  would  be  given  as  damages  at  law  it  is  decreed 
in  chancery  down  to  the  time  of  the  decree.*^  Interest  on  the 
proceeds  of  property,  the  title  to  which  has  been  contested, 
deposited  pursuant  to  agreement  of  the  parties  is  recoverable 
only  from  the  date  of  the  judgment.*'''  The  rate  of  interest  on  a 
judgment  for  conversion  of  notes,  the  action  not  being  c.r  con- 
tractu, is  not  determined  by  the  rate  borne  by  such  notes. *^ 

§  335.  Not  allowed  on  revival  of  judgment  by  scire  facias. 
Accrued  interest  on  a  judgment  is  lost  by  reviving  it  1)y  scire 
facias.  Nearly  all  the  authorities  agree  that  the  judgment  in 
such  proceedings  does  not  include  interest  on  the  judgment  re- 
vived;  the  party  reviving  only  obtains  execution  of  the  judg- 
ment without  interest.*^  And  it  has  been  held  in  \^ermont  that 
the  revival  of  the  judgment  by  such  process  is  a  tinal  waiver 
and  renunciation  of  the  interest  which  had  accrued  u])  to  the 
time  of  the  new  judgment  on  the  scire  facias}^     But  it  is  held 

«  Syndicate  I.   Co.  v.   Bradley,   7  &  W.  Co.,  SO  Ark.  f.Ol,  117  Am.  St. 

Wyo.  228;  Lonsdale    Co.    v.    Woon-  102. 

socket,  25  R.  I.  428.  48  Wilkirsoii     v.     Kia.lford     ('I'cx. 

45  Linton  v.  National  L.   Ins.  Co.,  Civ.  Aj)p.),  \7A  S.  W.  (i!)!. 

44  C.  C.  A.  r)4,  104  Fed.  584;  Baker  49  Anonymous,     Mart.     &     liayw. 

V.    Cumraings,    8    D.    C.    App.    Cas.  182;    Mann    v.    Taylor,    1    McCord 

515;    Connecticut   Mut.   L.    Ins.    Co.  113.     See    Barron    v.    Morrison,    44 

V.  Stinson,  86  111.  App.  668;   Morse  N.  H.  226. 

V.   Pacific   R.   Co.,   93   111.    App.   33;  50  Hall  v.  Hall,  S  Vt.  156.    In  tliis 

Samuel  v.  Minter,   3   A.   K.   Marsli.  case  Redfield,  chancellor,  said:     "It 

480;    McAle.xander    v.   Lcc,    id.   4S:!;  is   well   settled   that  on   scire  fncins 

Moore  v.  Pendergrast,  6  J.  J.  Marsh.  to   revive   a    judgment    no   damages 

534;    Taylor  v.   Knox,  5  Dana  466:  can   be   awarded.     The    writ   claims 

Hammond    v.    Hammond,    2    Bland's  none.      Tlie    ohjcct    of    the    suit    is 

Ch.    306;     Lonsdale    Co.    v.    Woon-  merely   to   revive  tlie  judgment  and 

socket,  supra.  no  interest  can  he  added  to  it;  e.\e- 

46  Deany  v.  Scriha,  2  Call  415:  cution  upon  the  judgment  in  scire 
Dawson  v.  Clay,  1  J.  J.  Marsh.  165;  facias  must  issue  for  the  same  sum 
Lair  v.  Jelf,  3  Dana  181  ;  Hughes  v.  of  the  original  judgment.  At  com- 
Standeford,  id.  285.  mon  law  not  only  could  no  damages 

47  Citizens'   Bank   v.   Arkansas   C.  be  recovered,  but  no  costs,  until  the 


1062 


SUTIIEKLAND    ON    DAMAG-ES. 


[§ 


in  Pennsylvania  that  bringing  scire  facias  does  not  extinguish 
the  right  to  interest.  Where  a  jndgment  had  been  several  times 
so  revived,  the  plaintiff,  in  an  action  on  it,  had  a  right  to  charge 
interest  on  the  aggregate  amonnt  of  principal  and  interest  due 
at  the  time  of  rendering  judgment  on  each  scire  facias.^^ 

§  336.  Interest  in  condemnation  proceedings.  Interest  is 
allowed  on  the  damages  assessed  in  proceedings  to  condemn 
l)roperty  in  the  exercise  of  the  power  of  eminent  domain  if  the 
property  has  been  taken,^^  and  from  the  time  of  the  taking 


statute  of  8  &  9  Wm.  3,  cli.  11,  wliicli 
provides  for  costs.  14  Petersdorf 
386.  As  the  debtor  had  been  dis- 
charged on  habeas  corpus,  no  good 
reason  is  now  perceived  why  the 
oratrix  might  not  have  brought 
debt  upon  the  judgment.  Scire  fa- 
cias is  the  most  common,  although 
not  the  exclusive,  remedy.  But  the 
judgment  liaving  been  revived  by 
scire  facias,  the  plaintiff  failed,  of 
course,  of  obtaining  execution  of  the 
interest  which  liad  accrued;  and  we 
think  thus  lost  the  claim  of  interest. 
It  will  not  be  allowed  to  separate 
the  interest  from  the  debt  of  which 
it  is  a  mere  incident.  The  judgment 
upon  the  scire  facias  so  far  merged 
the  judgment  for  the  alimony  that 
the  portion  not  recovered  by  the 
levy  was  gone.  It  became  a  new 
debt  and  could  never  be  declared 
upon  as  a  judgment  of  any  other 
term  than  that  of  the  judgment  on 
the  scire  facias." 

51  Fries  v.  Watson,  5  S.  &  R.  220. 
See  Meason's  Est.,  4  Watts  341. 

It  is  said  in  an  amicable  action  to 
revive  and  continue  the  lien  of  a 
judgment  that  the  statute  does  not 
require  that  the  amount  of  princi- 
pal and  interest  then  due  should  be 
liquidated.  A  general  judgment 
upon  the  scire  facias  to  revive  that 
judgment  is  all  that  is  prescribed 
No  douljt  it  may  often  be  advisable, 


where  no  interest  has  been  paid,  to 
ascertain  the  amount  of  the  debt; 
but  tlie  judgment  of  revival  points 
the  subsequent  purchaser  or  incum- 
brancer directly  to  the  original 
judgment  wiiere  the  amount  is  tixed, 
and  a  simple  calculation  ascertains 
the  interest  due  upon  it.  Appeal 
of  Fogelsville  L.  &  B.  Ass'n,  89 
Pa.  293;  Kistler  v.  Mosser,  140  Pa. 
367. 

Wliere  there  was  an  amicable  re- 
vival of  a  judgment  for  $.500,  upon 
which  interest  was  due,  for  "$500, 
with  interest,"  it  was  held  that  the 
judgment  bore  interest  from  the 
date  of  its  revival  only  and  that  in- 
terest prior  thereto  could  not  be  al- 
lowed to  the  prejudice  of  a  subse- 
quent incumbrancer.  Kistler  v. 
Mosser,  supra.  See  In  re  Assigned 
Est.  of  McCamant,  6  Delaware  Co. 
Kep.  192,  12  Lancaster  L.  Rev.  251. 

52  Pliillips  V.  South  Park  Com'rs, 
119  111.  627;  Alloway  v.  Nashville, 
88  Tenn.  510,  8  L.R.A.  123;  Clough 
V.  Unity,  18  N.  H.  75;  Cook  v. 
South  Park  Com'rs,  61  111.  115; 
Commonwealth  v.  Boston,  etc.  R., 
3  Cush.  25;  Chicago  v.  Palmer,  93 
111.  125;  Reed  v.  Hanover  Branch  R. 
Co.,  105  Mass.  303 ;  Atlantic,  etc.  R. 
Co.  V.  Koblentz,  21  Ohio  St.  334. 
See  South  Park  Com'rs  v.  Dunlevy, 
91  111.  49,  and  §  1091,  where  the 
subject  is  more  fully  considered. 


3361 


INTEREST. 


1003 


though  proceedings  are  not  instituted  until  suhscquently,^^  and 
it  will  run  during  the  pendency  of  an  appeal  if  the  assessment 
appealed  from  is  confirnied  or  increased ;  "  but  not  otherwise." 
The  right  to  interest  will  be  affected  by  circumstances.  If  the 
owner  has  had  the  profitable  use  of  the  premises,  or  has  received 
rents  pending  the  appeal,  these  facts  should  be  taken  into  ac- 
count and  interest  abated  accordingly,^^  So  if  the  owner  ap- 
peals and  is  the  sole  occupant,  interest  should  not  be  allowed." 
But  if  the  condemning  party  also  appeals  interest  should  be  al- 
lowed where  collection  is  thereby  stayed. ^^  Before  possession 
is  taken  interest  is  not  allowed;  until  then  there  is  a  locus  pen- 
itentia  to  those  moving  the  condemnation,^^  and  the  money  is 
not  considered  as  detained.®"  If  the  first  assessment  is  set  aside 
on  motion  of  a  corporation  which  has  instituted  proceedings  for 
condemnation  of  private  property  and  taken  possession  it  is 
competent  for  the  jurj',  in  nuiking  a  second  assessment,  to  allow 
and  include  in  their  verdict  interest  from  the  time  when  jjosses- 


53  Velte  V.  United  States,  76  Wis. 
278;  Sweaney  v.  United  States,  62 
Wis.  396. 

54  Illinois,  etc.  E.  Co.  v.  McClin- 
tock,  68  111.  296;  Beebe  v.  Newark, 
24  N.  J.  L.  47. 

If  the  condemning  pai'ty,  not- 
withstanding an  appeal,  may  de- 
posit the  money  for  the  use  of  the 
landowner  or  give  security  for  the 
costs  and  damages  which  may  be 
awarded  on  appeal,  and  if  the 
money  deposited  may  be  taken 
without  prejudice  to  the  owner's 
right  to  appeal,  interest  is  only  al- 
lowable on  the  amount  finally 
awarded  in  excess  of  the  deposit; 
if  no  deposit  is  made  interest  on 
the  whole  amount  is  due.  Concord 
R.  Co.  V.  Greely,  23  N.  H.  237; 
Shattuck  V.  Wilton  R.  Co.,  id.  269. 
But  if  the  owner  may  not  take  the 
money  deposited  under  the  award 
of  the  commissioners  and  the  party 
condemning  may  occupy  the  land, 
the    former    is    entitled    to    interest 


from  tlie  time  compensation  was 
due  him,  the  damages  given  being 
increased  on  the  appeal.  Sioux 
City  R.  Co.  V.  Brown,  13  Neb.  317; 
Hayes  v.  Chicago,  etc.  R.  Co.,  64 
Iowa  703 ;  West  v.  Milwaukee,  etc. 
R.  Co.,  56  Wis.  318;  Uniack  v.  Chi- 
cago, etc.  R.  Co.,  67  Wis.  108. 

55  Reisner  v.  Atchison  Union  De- 
pot Co.,  27  Kan.  382. 

56  Donnelly  v.  Brooklyn,  121  N. 
Y.  9;  Hamersly  v.  Mayor,  56  N.  Y. 
533;  Hilton  v.  St.  Louis,  99  Mo. 
199;  West  v.  Milwaukee,  etc.  R. 
Co.,  supra;  Metier  v.  Easton,  etc. 
R.  Co.,  36  N.  J.  L.  222. 

67  Metier  v.  Easton,  etc.  R.  Co., 
supra;  Matter  of  Trustees  of  New 
York  &  B.  Bridge,  137  N.  Y.  95. 

58  Metier  v.  Easton,  etc.  R.  Co., 
supra. 

59  Chicago  V.  Barbian,  80  ill.  482. 
eOFisk  V.   Chesterfield,   14  N.   H. 

240.  But  see  Bcvoridgo  v.  West 
Ciiicago  Park  Com'rs,  KKt  111.  7."). 


10(54  SUTll  Klv'I-ANl)    ON     DAMAUKS.  [§     336 

sioii  was  taken,  although  the  company  had  paid  into  oonrt  the 
aiiionnt  of  tho  daniap:os  and  the  snm  continued  to  be  retained 
by  the  court.^^  The  Hiato  is  liable  to  pay  interest  upon  the 
amount  of  a,  legal  ap])raiKOiiicnt  of  damages  foi-  land  taken  for 
j)ubli('  use  (mly  after  a  dciiiaiid  made  by  the  party  entitled  of 
the  oHiccrs  of  the  law  charged  with  the  dnty  of  making  pay- 
ment; ®^  and  so  with  a  city  where;  an  award  is  ])ayable  upon  .its 
confirmation.^^  If  a^  city  is  not  anthoriz(!d  to  institute  proceed- 
ings for  th(;  asc(M-taiiiiiicnl  of  the  datiiagcw  resulting  to  |)rof)erty 
owners  from  a  change  in  the  grade  of  streets  the  pai'ty  (daiming 
compensation  cannot  recover  interest  thereon  until  he  exercis<\s 
his  right  t,o  have  th(;  damages  li(pii(hit(i(l,  and  int(M'esl,  will  be 
allow(!iI  only  from  I  he  llnu!  \\p,  began  proceedings  foi-  that  ]uir- 
p08e.°*  Hut  if  the  municipality  may  take  the  initiative  the  ])rop- 
erty  owncu-  is  entitled  to  interest  from  the  time  the  damages 
\\'^'^•^^  sustained.'^''  In  Pennsylvania,  interest  as  such  is  not  al- 
lowed in  actions  sonnding  in  tort  when  llie  danuiges  sought  to 
be  recovered  are  nidiepiidated.  In  condenmation  proceedings 
the  jury  may  consider  the  la})se  of  time  between  tlie  taking  of 
tli(!  lam!  and  the  trial  in  making  up  the  damages.^^ 

§  337.  Interest  on  taxes,  license  fees,  special  assessments  and 
customs  duties,  Taxes  do  not  di'aw  interest  as  contracts  or  as 
(laniag(!S  except  by  force  of  a  statute.^'''     A  county  is  not  liable 

ci  Atlaiiiic,    etc.    \l.    Co.    V.    Kob-  Mass.   324;    Haslccll   v.   Bartlett,   34 

Iciil/,    131     Oliio    St.    :i34;     Hct4)(>    v.  Cal.  28]  ;   Iliininelniaii  v.  Oliver,  id. 

N('war]<,  24  N.  .1.   L.  47.  24(;;   Perry    v.    Waslihiuii,    20    Cal. 

82  Po()|)le   V.   Canal   Coiii'rs,   f)  T)c-  318;    Perry    County    v.    Selnia,    ote. 

iiio  401.  Iv.    Co.,    ().')     Ala.    3!ll  ;     Louiaville, 

63  lianics  V.  Mayor,  27   llnii   23(i.  etc.  R.  Co.  v,  Coiniiioiiwealth,  8!)  Ky. 

64TyHoii    V.    Milwaukee,    .')!)    Wis.  r)31;    Ormsby  v.   Louisville,   79    Ky. 

78.  202;    People  v.  Central   I'ac.  R.  Co., 

GBCiiieinnati     v.     Wlietstone,     47  lOfj  Cal.  .^)7();  McWillianis  v.  Jacobs, 

Ohio  St.  ]!)().  128  Ga.  375. 

66  Klagos  V.  Philadelphia  &  R.  T.  A  statute  deelarin<4  tliat  every 
Co..  If)!)  i'a.  38fl;  lieeker  v.  Same,  tax  has  tlie  efTect  of  a  judgment 
177  I'a.  2r>2,  35  L.R.A.  583.  a.iiainst  the  person  does  not  impose 

67  Illinois  Cent.  R.  Co.  v.  .Adams,  lialiiiity  for  interest  on  taxes;  but 
78  Miss.  8!)5;  Camden  v.  Allen,  2(i  a  jud^iiicnl,  I'or  (axes  I)ears  interest 
N.  J.  L.  3!)8;  Shaw  v.  Peekeli,  2(1  like  any  olhcr  judiimcnt.  People  v. 
Vt.    482;     Danfortli    v.    Williams,    •)  Central    Pac.    R.    Co.,   mipra. 


§  '5'"7J 


INTEREST. 


1065 


to  tho  state  for  interest  on  taxes  by  way  of  damages.®^  Non- 
payment by  a  city  of  tlie  tax  on  its  funded  debt  carries  liability 
for  interest  daring  the  default.^'  If  taxes  are  illegally  de- 
manded and  paid  under  a  protest  interest  may  be  recovered/" 
from  the  time  judgment  was  rendered/^  but  not  anterior  there- 
to.'''^ Interest  may  not  be  recovered  if  payment  was  made  hy 
mistake  as  to  the  parties'  rights  and  the  over-payment  has  not 
been  vexatiously  withheld."^^  One  who  secures  an  abatement  of 
his  taxes  is  entitled  to  interest  on  the  sum  paid  in  excess  of  that 
which  he  was  liable  for'''*  from  the  time  the  excess  was  paid.'^* 
Under  the  Michigan  law  concerning  the  taxation  of  railroads, 
though  the  reports  of  a  company  to  the  auditor-general  correctly 
show  its  gross  earnings  interest  is  not  demandable  for  delay  in 
paying  the  amount  thereby  appearing  to  be  due  until  that  officer 
acts  upon  the  reports  and  notifies  the  company.'''®  An  assess- 
ment made  for  public  improvements  does  not  carry  interest  un- 
less it  is  so  expressed  in  the  statute/'^  and  if  that  fixes  the 
conditions  upon  which  interest  ma}^  be  demanded  it  must  be 


68  state  V.  Multnomah  County,  13 
Oro.  287.  Sec  Fuller  v.  Cousins, 
167  Mich.  453. 

A  statute  imposing  liability  for 
interest  in  case  of  delay  by  county 
treasurers  in  paying  over  state 
taxes  applies  to  other  officers  wlio 
perform  duties  such  as  are  imposed 
upon  such  treasurers.  People  v. 
Myers,   138   N.   Y.   590. 

Tf,  through  neglect  of  the  state's 
officers,  a  county  treasurer  fails  to 
make  "a  prompt  return  of  the  tax 
due  the  state  and  afterwards  em- 
bezzles it,  the  county  is  not  liable 
for  interest  on  that  part  of  the 
money  which  the  state  must  return 
to  it.  Commonwealth  v.  Philadel- 
phia County,  157  Pa.  531;  Common- 
wealth V.  Philadelphia  City  &  Coun- 
ty,  157   Pa.  555. 

69  Baltimore  v.  State,  105  Md.  1. 
70Atwell  V.  Zeluff,  20  Mich.  118; 

Shaw  V.  Becket,  7   Cush.  442;   Gal- 
veston County  V.  Galveston  G.  Co., 


72  Tex.  509;  Pennsylvania  Co.  v. 
McClain,  9  Pa.  Dist.  Ct.  747;  Kin- 
ney V.  Conant,  166  Fed.  720,  92  C. 
C.   A.   410. 

71  Miller  v.  Kern  County,  150  Cal, 
797. 

72  Lewis  V.  San  Francisco,  2  Cal. 
App.    112. 

73  Fairbank  Co.  v.  Chicago,  153 
111.  App.  140;  Home  Sav.  Bank  v. 
Morris,  141  Iowa,  560. 

74  Amoskeag  Mfg.  Co.  v.  Man- 
chester, 70  N.  ir.  336,  348. 

75  Neil  V.  Ridge,  220  Mo.  233. 

76  Lake  Shore,  etc.  R.  v.  People, 
46  Mich.  193. 

77  Road  Com'rs  v.  Hudson,  45  N. 
J.  L.  173;  Brennert  v.  Farrier,  47 
id.  75;  Mall  v.  Portland,  35  Ore. 
89;  Sargent  v.  Tuttle,  67  Conn.  162, 
32  L.R.A.  822;  Hartford  v.  Poin- 
doxter,  84  Conn.  121;  McChesney  v. 
Chicago,  213  111.  592. 

But  this  rule  has  no  application 
to   ordinary   taxes   if   the   taxpayer 


1066  SUTHERLAND    ON    DAMAGES.  [§    337 

complied  witli.'^*  A  reassessment  carries  interest  from  the  time 
the  original  assessment  became  delinquents^  If  liability  for 
interest  on  taxes  is  imposed  a  taxpayer  who  appeals  from  an  ex- 
cessive assessment  is  not  exempted  therefrom  to  the  extent  that 
the  assessment  is  sustained,  neither  does  interest  cease  during 
the  time  the  assessment  is  being  reviewed  unless  he  tenders 
enough  money  to  meet  his  liability.®"  A  fee  required  to  be  paid 
by  a  foreign  insurance  company  as  a  condition  imposed  upon 
its  right  to  do  business  is  not  a  tax,  and  if  the  privilege  is  ap- 
plied for,  obtained  and  used  without  making  the  required  pay- 
ment the  company  is  responsible  for  the  fee  and  for  interest 
upon  it.®^  Under  a  statute  prescribing  that  all  executions  for 
taxes  shall  bear  interest  taxes  accruing  against  a  railroad  com- 
pany while  its  property  is  in  the  hands  of  a  receiver  are  in- 
cluded. Such  a  provision  does  not  impose  a  penalty.®^  The 
l^al  rate  of  interest  on  the  sum  bid  for  land  sold  under  pro- 
ceedings to  collect  an  assessment  is  the  basis  of  the  owner's 
liability  when  he  redeems.®'  Liability  for  interest  accrues 
when  execution  may  issue  for  the  collection  of  taxes,®*  unless 
the  tax  is  collectible  by  suit,  in  which  case  interest  runs  from 
the  time  the  petition  is  filed.®^  When  a  void  tax  foreclosure  is 
set  aside  the  legal  rate  of  interest  governs  rather  than  the  stat- 
utory penalty  imposed  for  the  nonpayment  of  taxes.®®    One  who 

can  ascertain  from  the  records  the  ed.  Walsh  v.  Rarthel,  85  Conn.  552. 
exact  sura  due  notwithstanding  81  Travelers'  Ins.  Co.  v.  Fricke, 
error  was  committed  in  apportion-  99  Wis.  367,  41  L.R.A.  557;  South- 
ing the  tax.  Louisville  v.  Louisville  ern  C.  &  F.  Co.  v.  State,  133  Ala. 
R.   Co.,    118   Ky.   534.  624. 

78  Benjamin  L.  &  T.  Syndicate  v.  A  license  fee  is  a  tax  under  some 
Bradsher,  99  Ark.  348.  circumstances.     See  Mays  v.  Cincin- 

79  Young    V.    Tacoma,    31     Wash.  nati,  1  Ohio  St.  268;   State  v.  Rob- 
153;   Johnson  v.   Seattle,  53   Wash.  crts,  11   Gill  &  J.  506. 

564    (it  seems.)  82  Sparks  v.  Lowndes  County,  98 

Interest    is    recoverable    upon    a  Ga.  284. 

"back  assessment"  made  by  the  state  83  Miller    v.    Winslow,    70    Wash, 

against    railroad    property.      People  401. 

V.    Chicago    &    A.    R.    Co.,    228    111.  84  Georgia   R.  Co.  v.  Wright,   125 

102.  Ga.  589. 

80  Western   U.   Tel.    Co.    v.   State,  85  Henderson   B.   Co.   v.   Comnion- 
64  N.  H.  265;  Hartford  v.  Hills,  72  wealth,  120  Ky.   690. 

Conn.  599.     Interest  may  be  collect-  86  Gould  v.  White,  62  Wash.  406. 


§  339] 


INTEEEST. 


10G7 


asks  relief  from  an  invalid  tax  sale  must  pay  interest  on  all 
just  taxes  from  the  time  of  sale.*'^  Interest  on  liquidated 
customs  duties  nuiy  be  recovered  after  demand,  and  where  they 
have  been  reliquidated  on  the  additional  sum  due  at  the  legal 
rate  of  the  state  in  which  the  goods  have  been  taken.** 

§  338.  Infants  liable  for.  It  was  the  conviction  of  Lord 
Ellenborough  that  an  infant  could  not  give  security  for  a  debt, 
and  that  his  bond  conditioned  for  the  payment  of  the  princii)al 
sum  and  interest  was  clearly  prejudicial.*^  Following  this  view 
it  w^as  held  in  Vermont  that  interest  could  not  be  allowed  on  an 
account  against  a  minor,^°  but  tliis  position  was  soon  receded 
from  on  the  ground  that  any  general  rule  exem])ting  infants 
from  interest  w^ould  be  unjust.^^ 

§  339.  Interest  as  between  landlord  and  tenant.  Interest  is 
allowable  in  personal  actions  for  the  recovery  of  specific  sums 
agreed  to  be  paid  for  rent  after  the  same  become  due  and  in 
arrears  on  the  principles  that  apply  to  other  debts  after  it  be- 
comes the  debtor's  duty  to  pay.^^    In  New  York  and  Wisconsin 


87  State  Finance  Co.  v.  Beck,  15 
N.  D.  374,  overruling  contrary 
cases. 

88  United  States  v.  Mexican  I.  R. 
Co.,   ]54   Fed.   .519. 

89  Fisher  v.  Mowbray,  8  East, 
3;?0;  Baylis  v.  Dinely,  :j  M.  &  S. 
477. 

90Taft  V.  Pike,  14  Vt.  40.'),  39 
Am.   Dec.   228. 

91  Bradley  v.  Pratt,  23  Vt.  378. 

92  Lloyd  V.  Campbell,  186  111.  App. 
.')r)6;  Waialua  A.  Co.  v.  Oahu  R.  & 
L.  Co.,  19  Hawaii  446;  Vande- 
voort  V.  Gould,  36  N.  Y.  639;  Hack 
V.  Norris,  46  Mich.  587;  Heissler 
V.  Stose,  131  111.  393;  Pearson  v. 
Sanderson,  128  111.  88  (appraise- 
ment of  improvements  made  under 
terms  of  a  lease;  interest  allowed 
from  time  appraisement  made)  ; 
Elkin  V.  Moore,  6  B.  Mon.  462; 
Honore  y.  Murray,  3  Dana  31 
Walker  v.  Hadduok,  14  Til.  399; 
Buck  V.  Fisher,  4  Whart.  516;   Ten 


Eyck  V.  Iloughtaling,  12  How.  Pr. 
523;  Obermeyer  v.  Nichols,  6  Bin. 
159,  C  Am.  Dec.  439;  Cook  v.  Far- 
inholt,  3  Ala.  384;  Xaglee  v.  Inger- 
.soll,  7  Pa.  185;  Clark  v.  Barlow,  4 
Johns.  183;  Dennison  v.  Lee,  6  Gill 
&  J.  383;  West  Chicago  A.  Works 
V.  Sheer,  8  111.  App.  367.     See  §  854. 

In  .Tackson  v.  Wood,  24  Wend. 
443,  it  was  Iield  tliat  in  ascertain- 
ing the  mesne  profits  or  the  rents 
of  premises  situate  in  New  York 
city  interest  may  be  computed  upon 
rents  from  the  expiration  of  tlie 
quarter   days   when    payal)le. 

In  Stockton  v.  Guthrie,  5  Harr. 
204,  it  was  held  that  interest  is 
recoverable  for  arrears  of  rent  pay- 
able in  money  on  a  day  certain, 
tliough  the  letting  he  l)y  parol  from 
year  to  year.  Bayard,  J.:  "'It  is 
suflicient  to  determine  tliat  in  this 
state,  whenever  a  sum  certain 
is  payable  by  contract  on  a  day  cer- 
tain, interest  is  reeovci  alile  of  riglit 


1068 


SUTHERLAND    ON    DAMAGES. 


[§    339 


it  is  settled  that  when  the  rent  is  payable  in  specified  kinds  of 
property  which  the  tenant  has  failed  to  deliver  interest  is 
recoverable  on  the  value  of  the  rent  from  the  time  it  became 


against  the  party  in  default;  and 
this  whether  the  contract  be  under 
seal  in  writing  or  merely  verbal.  The 
interest  is  allowed  as  a  legal  in- 
cident to  the  principal  sum  exist- 
ing from  the  default  in  the  non- 
performance of  his  contract  by  the 
debtor  whenever  there  is  a  certain- 
ty in  the  sum  to  be  paid  and  the 
time  of  payment;  nor  can  any  suffi- 
cient reason  be  given  for  a  distinc- 
tion in  the  allowance  of  interest  be- 
tween contracts  for  the  payment  of 
money  under  seal  or  in  writing  and 
verbal  contracts.  The  contract  be- 
ing valid  the  breach  is  as  injurious 
to  the  creditor  in  the  one  case  as 
in  the  other  and  the  exact  character 
of  the  act  or  duty  to  be  performed  as 
fully  ascertained  in  the  one  case  as 
in  the  other,  and  the  consequences 
of  the  default  should  therefore 
be  the  same.  There  would  seem  to 
be  but  one  exception  to  this  rule, 
and  that  is  where  interest  becomes 
due  on  a  principal  sum  on  a  day 
certain ;  yet  interest  on  the  inter- 
est so  in  arrears  is  not  recoverable. 
This  exception  is  founded  on  the 
statute  which  prohibits  the  taking 
of  more  than  a  certain  rate  of  in- 
terest for  the  use  or  loan  of  money ; 
and  until  the  interest  in  arrears  is 
severed  from  the  principal  sum  by 
the  agreement  of  the  parties  it  has 
been  held  that  it  cannot  be  treated 
as  a  new  loan.  Arrears  of  rent, 
however,  have  no  analogy  to  arrears 
of  interest,  and  fall  neither  within 
the  words  or  intent  of  the  statute. 
In  the  ease  of  lands,  whether  the 
fee  or  a  life  estate  be  parted  with, 
there  can  be  in  reason  no  difl'erence  . 
in  the  right  to  interest  on  the  sum 
payable  for  the  estate  acquired  by 


the  vendee  or  tenant;  provided  it 
is  payable  in  money  on  a  day  cer- 
tain, and  no  question  could  be 
made  as  to  the  right  of  the  vendor 
to  recover  interest  on  the  unpaid 
purchase-money  of  land  sold  in  fee 
from  the  time  it  became  payable, 
whether  there  was  an  express  stipu- 
lation for  the  payment  of  interest 
or  not.  Nor  can  any  difference  or 
distinction  as  to  the  right  to  in- 
terest arise  from  the  fact  that  no 
greater  estate  at  law  in  lands  can, 
in  Delaware,  be  granted  than  for 
one  year  except  by  deed ;  for  the 
estate  acquired  by  the  tenant  from 
year  to  year,  holding  under  a  verbal 
contract,  for  a  sum  certain,  is  just 
as  valid  as  that  acquired  by  the 
lessee  for  a  term  of  years,  or  a 
vendee  in  fee  under  a  demise  or 
conveyance  by  deed.  The  tenant 
equally  with  the  lessee  for  years,  or 
the  vendee,  acquires  the  estate  for 
which  he  is  to  pay  by  a  contract 
ascertaining  and  fixing  the  sum  to 
be  paid,  and  the  day  of  payment, 
and  in  default  of  payment  interest 
should  equally  follow  as  of  right  in 
either  case.  It  may  be  observed 
that  the  allowance  of  interest  is,  in 
general,  a  rule  of  practice  (In  re 
Badger,  2  Barn.  &  Aid.  691,  and 
Windle  v.  Andrews,  id.  696)  ;  and 
in  this  state  the  practice  of  allow- 
ing interest  on  arrears  of  rent  has 
been  uniform  and  settled."  But  see 
Breckenridge  v.  Brooks,  2  A.  K. 
Marsh.  335,  12  Am.  Dec.  401 ;  Cooke 
v.  Wise,  2  Hen.  &  M.  463;  Skipweth 
V.  Clinch,  2  Call  253;  Graham  v. 
Woodson,  id.  249;  Kyle  v.  Roberts, 
6  Leigh  495;  Van  Rensselaer  v. 
Platner,  1  Johns.  276;  Dowe  v. 
Adams,  5  Mimf.  21. 


§    340]  INTEREST. 


1069 


payable. ^^  When,  however,  the  landlord  seeks  his  remedy  for 
rent  by  distress  or  by  re-entry,  to  hold  nntil  the  arrears  are 
paid,  this  remedy  does  not  extend  to  the  interest.^*  A  lessee 
who  is  ejected  is  entitled  to  interest  on  the  fair  value  of  the 
leased  premises  to  him.^^  A  mortgagee  in  possession  of 
the  mortgaged  premises  mnst  answer  for  interest  on  their  rea- 
sonable rental  value  if  entitled  to  interest  on  the  debt.^^ 

§  340.  Interest  on  damages  for  infringing  patents.  "The 
general  rule  is  that  interest  should  be  allowed  on  n^yalties  from 
the  time  those  royalties  ought  to  have  been  paid,  in  all  eases 
where  a  royalty  is  the  measure  of  the  complainant's  damages; 
the  theory  in  such  cases  being  that  damages  are  liquidated  at 
such  time  as  the  royalty  would  have  been  due  if  the  defendant 
had  elected  to  purchase  instead  of  to  infringe  the  right  to  the 
use  of  the  invention  in  suit,  but  that  no  interest  is  due  on  dam- 
ages measured  otherwise  than  by  a  royalty  because  such  damages 
are  unliquidated  until  they  are  ascertained  by  an  action.^'  But 
the  latter  part  of  this  rule  is  subject  to  exceptions,  and  in  equity 
the  allowance  of  interest  appears  to  have  been  left  largely  to  the 
discretion  of  the  court."  ^^     The  profits  allowed  in  equity  for 

93  Lush  V.  Druse,  4  Wend.  313;  tive  S.  T.  Co.  v.  Railroad  Co.,  2 
Van  Rensselaer  v.  Jones,  2  Barb.  Fed.  681 ;  Mowry  v.  Wliitney,  14 
643;  Livingston  v.  Miller,  11  N.  Y.  Wall.  053,  20  L.  ed.  867;  Jarocki 
80;  Van  Rensselaer  v.  Jewett,  2  id.  v.  Hays,  161  Pa.  613. 

135,     5     Denio     135;     Vaughan     v.  98  Creamer    v.    Rowers,    35     Fed. 

Howe,    20   Wis.   523,    91    Am.    Dec.  206,  per  Wales,  J. 
436;    Gammon   v.  Abrams,   53   Wis.  It  was  held  in  Graham  v.  Piano 

323.  Mfg.    Co.,    35    Fed.    597,    that    the 

94  Tanton  v.  Boomgaarden,  89  111.  allowance  by  a  court  of  a  named 
App.  500;  Marr  v.  Ray,  151  111.  340,  sum  for  each  machine  manufactured, 
20  L.R.A.  799;  Lansing  v.  Rattoone,  as  damages  for  the  infringement  of 
G  Johns.  42;  Longuell  v.  Ridinger,  a  patent,  the  sum  not  resting  on  the 
1  Gill  57 ;  Bantleon  v.  Smith,  2  basis  of  a  customary  charge,  does 
Bin.  146,  4  Am.  Dec.  430;  Dough-  not  establish  a  fixed  royalty  which 
erty's  Est.  9  W.  &  S.  189,  42  Am.  may  be  made  the  basis  to  calculate 
Dec.  326;  Gaskins  v.  Gaskins,  17  interest  upon  in  favor  of  the  paten- 
S.  &  R.  390.  tee   in   a  subsequent    suit    for    an- 

95  Hodgkins  v.  Price,  141  Mass.  other  infringement,  damages  in 
162.  which   were   recovered   at   the   same 

96  Walter  v.  Calhoun,  88  Kan.  rate,  the  patentee  having  in  a  third 
801,  suit  contended  for  a  larger  measure 

97  Walker,   Pat.,    §    571;    Locomo-  of  damages.     See  §  1197. 


o'/o 


Ml,"(  IH'.lll-A,"U»    nri     ItAMMif.H. 


'i   'MO 


(lie  injury  Mud  n  ii:il<iil<<-  lia;*  ;>il,vl,;i(li<<|  \,y  iln-  ml  i  iii;'fimiil  (,l 
I.I',  ).;ii<'nl,  (in-  iiiili<|iii'l.ii' 'I,  jiimI  jik  n  ^^<ini*ri\\   iu\f,  ;iimI   m   iIk- 

lll)««)M<'<?  <»r  fij»(*<'l!il  '  M'iiiiiMtfUH':<!M,  'I')  Mol  l«-,ir  i  iil<T<^J  iinlil  ;illf|- 
tlicii    ;iiii(iiinl    li;i  ■   l.<<ii    |  ii<l  i'M!)  II  y  ;i;-.''<-il  ;i  i  ii< 'I 

'^  .J41.  J<l|^)il.  lo  liit«:H;;;l  HH  HfjiJcl.iMJ  hy  111':  m;nit;il  ichilioii. 
WlM»n<v(fr  llu<  wil'M  Iuim  »  Hopflmfc<^  mtuto  wlii'-li  r.\\i-  |.<iiiiii  •,  Ixr 
Iiii;-,|,;iimI  I.,  ii;'i-,  llx-y  ll'vin^  (o^O-l  li<- r  ;iii'l  '•iijoyin^  III''  Ikih'I'iIm 
(if  il,  itll'l  \\ti'li',  ^;^  UD  Hii  j.ilhil  I'/h  lliiil  ihl'i'-l  ,-li;ill  l.<-  ).;ii(|  \iy 
llilll  f'lr  i(,M  IIM<»,  il.  will  I"-  )ii<-  intM  'I,  III  ill'-  ,ili  '  ii''<-  .,!  ;iiiv  cir- 
<nim«I.IIIH?»tW  Mliuwill// IM'(*lill')il',y  I(Ii<I«tmI)iii'Iiii",  IIi;iI  ill''  liii>.li)iii'l 
iii  hoi  hiiM''  |i.  ;iir.,iiiil  I'mi'  or  [»il,y,  illl('r«!Hl,  IImi'-'iH  '  'I  lie  Til''! 
I.lilil,  Ik-  I  •:  llir  Ini:  I..  <.(  In  <  •.•■iff':!  (••■I;ilf  'I'K-m  n-.l  ;illi'r|  ||ic  |cf.;,| 
)»r('ilillii|ii  I'lii  "  Mill  il,  li'iiii  ill'-  iii'.'jcdi  (jiiiJiiiM  |/cIav<'<'|i  llicni, 
iJiiTfi  iiifi  iiiiv  '•ir<'iiiiiMl,iiMC(fM  Iroiii  ulii'li  il  iiiiiv  iciiiKiiuiM  y  In- 
iiilVi  I'll  lliiii  III'  nil'  III  loll  'Vii;'.  I'l  (•\^i\^•^^{',  illUm'Ml  llic>  IlllMhtilMl 
will  I.''  Ii;il.l'-  r<i(  il  ■'  II  ;i  |H.rlMiii  nf  flic  pll  |'<-||||M(!  |)iifc  (if 
|iii.|i(ily  Imii/'lil  Ir,  ii  IiiiIi;iimI  i  •:  '•' m  I  i  i  liii  1 1' I  l»y  I, lie  wilf  iiliij 
IIk  hllr  it'.  Iiikfli  III  li'i  liiiliK-  iilir.  will  linl  It"'  <hlill<'l  \<>  i  li  I  I'IchI. 
on  In  I    III'  <•  •,!  iiMiil   llii'ii'ih  r.i,  I'liiL';  i\H  l.lMt_y  rohhiiiic  lo  live  on   lln- 

|iro|il'l  I  ',    ,      lilll      ll      IIk-     IiII  rliiinil     ;.l'\l'|':<     il WIHTtllli  |i     ol      ll      illl<l 

fi'dlll.ii  llic  )iio>iii|  ■  of  llic  |no|icil  V  iiii  lim  own  iiml  liolli  |iiiiln:t 
IIIOVO  IIVVH.y  IVoii)  llii-  |iio|pfily  li(t  ill  cliiil'/^'i-iiM'  III  <<|iiil\  Willi 
illf(1l'l*Ml.    oil    In  I     iiioni  '.  A     will-    wlio    Inii    Imi|ii':i  I  lni  |     lo    Iht    ii 


»" 'riluhmiiii    V,    i'oiiliii,    r.'.li    n.   n  miIi-,    iliiiiL^i'nlilc    uilli    iiil<i.-(    hipmh 

I '111.    1(111,   :il    h,   I'll,   <lll'l,   11'/'/.  II         II     IJi'h    iin     liliii     lo    hhow     Mil' 

i(  uhiMiliiii    Hitv,    Miiiik    V,    Wliin,  tunrfwuiii    ulilrh    h'IIivi-m   IiIiii   I'roiii 

\:i'J,     Mil,     HO;      KlU-l'I'pi     I'lst,,      \M\     I'll,  III,,     |,|,y,M.,il      nl     III.      |,illirl|.ill.     Mini 

•Ht>\    VVorillhw'rt    ICsl.,,    I.'l?    I'lt..    H'l  ,  ,,„   Im  r   lu  r.li..,\    ll...  ii!.!.. m.  nl    uliLli 

LlMJiMy  V,  M«lii'y,  2  'hniit,  Uli.  ft.  'i  .„|,ii,  •    i„  i     i..    ,m(.o:-,i.    i.ui     ll..- 
\.m    'IIHl     l'HW.»ll    V.    llMl.ki.y.    'i    I'  .,.,„„,,,      ,„    ,„„..|     n,«...    n.i.v    I..' 

,    ...                       iii|t    •'<       Mini    III''   ilri'i  III--1I  iiin'H   1(1. 
Udlll    H.HIrl.    ^      li.nn.ll,    M    Ml««.   IIH  ;  '  

.,    ,.  ,  ,,.,  liiiiliiK/    Ilii'    1 1  iiin-.iti  liMii.        IIihu'I'm 

liiiLfiiii      V.      llilll,      I'l      l<nvii      -IIII  ,  ,       ... 

lliinilll  H   Ajiji.,  MM    I'll,   .111,1. 

"II,  l«  will  «..|l,l..l   lliHl    I.   I.in,l,i.nil  »!.'    Iny    V.    I.NIl.'y.   M,ll>r„  !   ("atoll 

Who  i'Mwlv.'«  im,v  porl.lun  .,1  il,,   |miii  '     >''''" •'•   '    ^'i"'"'  '*''  "•  "•••'• 

('||IHI    of    lll«    wirM'B    «M|.iiuil.'    iHlal.  "I!. .mil   v     li..|iinl  1.  «///MV( ;    Kcild.V 

luHUllllHN,  111    l.llh  lilmi'lll'K  of  (III   H.)|l't»t»'  V.     Willi'',      lllH      III      VII;     (liiil.l.i      \ 

llliMil.  I'iMilKilllii.i'  IiIh  iv.i'iiltun  of  il.  drulilM'.  '.^ll  Urn,  lllt.'l. 

Iinr    llnlilni      I,. I      III.      M ll     Mu     !•'  *\\ •'     V.     Mourn.     Mi!.     I'li       III  I  . 

rnivi'il.     lull     In-     |:<     Inil.     IIM    ll     pnlnial  In    I  <■    I  .'.'iiilinl  <|i'.    '.'Illi    l>'ni|     H'.'.ll. 


§    342]  INTEREST.  1071 

mortgage  against  lior  liusbaud  on  land  on  wliicli  they  had  li\('d 
together,  there  being  no  formal  promise  to  pay  interest  except 
to  the  testator,  cannot  recover  interest  from  the  sheriff's  vendee 
of  the  hind  except  from  the  date  of  the  sale,  notvvitlistanding 
the  husband  had  paid  the  wife  interest  for  several  yeai-s,  ho 
having  qnit  doing  so.  The  fact  that  he  had  always  supi)lied 
her  with  money  for  necessaries  for  herself  and  family,  which 
she  regarded  as  in  lien  or  satisfaction  of  the  interest,  was  con- 
sidered as  raising  the  presnniption  that  she  did  not  intend  to 
(daim  interest.^  To  recover  interest  from  hor  Imsband  for 
money  loaned  to  him  the  wife  must  prove  an  agreement  or 
promise  that  entitles  her  to  it.  J  lis  obligation  to  j)ay  interst 
(;annot  be  presumed,  but  liis  agreement  to  do  so  may  be  iuferi-ed 
from  the  circumstances  attending  the  loan.^  A  (K'uiand  by  the 
wife  for  payment  terminates  the  presumption  that  the  loan  to 
the  husband  was  not  to  draw  interest.' 

§  342.  Interest  as  between  partners.  The  right  to  interest 
on  partnership  accounts  and  dealings,  in  the  absence  of  agree- 
ment to  pay  it,  may  depend  upon  the  practice  of  each  particular 
firm  or  on  the  custom  of  the  trade  in  which  it  is  engaged.^  In 
the  absence  of  both  of  these  or  an  ex])ress  agreement,  the  rule 
is  that  interest  cannot  be  recovered  on  capital  paid  in.^  If  no 
demand  has  been  made  on  a  partner  who  has  failed  to  furnish 
the  amount  due  under  his  agreement  as  capital  and  the  business 
has  not  required  it  interest,  ac(,'ording  to  the  Nebraska  cinirt,  is 
not  recoverable  on  the  deficiency  on  a  final  accounting;  but  this 

6  Stuart    V.    Stuart,    1S2    Pa.    54:5.        15.1,    KiS;    Tirrcll    v.   .lom-s,   .S!l    Cal. 
eCornman's    Est.,    107     Pa.     125.        (irv>;     iJay     v.     I.ockwood,   24    Conn. 

Soe  Collins  v.  Hal)l)itt,  67  N.  J.  Kq.,  ]S5,    198;    San  ford     v.     Marnoy,     50 

1(55.  Hun     lO.S;      Seibert's     As8i<,'nco     v. 

7  Lamb's  Est.,   11   Pa.  Dist.  243.  Ra{,'sdale,    10:{    Ky.    2()();     Tutt    v. 
SKelley    v.    Shay,    206    Pa.    215;  i^^nd,  50  Ga.  350;   Desha  v.  Smith, 

Morris  v.    Allen,    14   N.   J.    Eq.   44;  go  Ala.  747.     Compare   Reynolds  v. 

Miller  V.  Craig,  6  Beav.  433.  Mardis,    17   id.   32. 

9  Wilson    V.     Wilkinson,    97     C,a.  „,,,,,             .            .         ,• 

^        ,             T>        1         io  Tz.r   1  Monthly    balances    in    partnersliip 

814;  Burgher  v.  Burjjher,  12  Ky.  L.  ,.          ,         ^  •  ,                    f 

Rep    95    (Ky.  Super.  Ct.)  ;   Gilmour  transael.ons  do  not  fairly  represent 

V.  Kerr,  18  Ky.  L.  Rep.  400;  Rod-ers  n.w  principal,  an.l  interest  on  them 

V.  Clement,   162  N.  Y.  422,  76   Am.  is     "<>t     comi)OundabIe.       Wells     v. 

St.  342;  Smith  v.  Putnam,  107  Wis.  Babeock,  56  Mich.  276. 


1072 


SUTHERLAND    ON    DAMAGES. 


[§    342 


iiiav  be  doiibt(3(l.^°  Though  it  is  agreed  that  capital  shall  bear 
interest  the  contract  ceases  to  operate  on  the  dissolution  of  the 
partnership  because  its  earning  capacit}^  is  then  ended  and  it  is 
no  longer  beneficial  to  the  other  partners  in  making  profits,  but 
is  resolved  into  property  held  only  for  the  purpose  of  distribu- 
tion.^^ But  in  Texas  a  surviving  partner  engaged  in  settling 
the  partnership  business  may  recover  interest  accruing  upon 
advancements  after  the  death  of  his  copartner,  as  well  as  be- 
fore, interest  being  stipulated  for  in  the  contract  of  partner- 
ship.^^ An  advance  by  a  partner  to  the  firm  is  not  treated  in 
England  and  in  some  American  courts  as  an  increase  of  his 
capital,  but  rather  as  a  loan  on  which  interest  ought  to  be  paid, 
and  by  usage  it  is  payable  on  money  bona  fide  advanced  and 
used  for  partnership  purposes,  the  advance  being  made  with 
the  knoAvledge  of  the  other  partners."  But  it  has  been  ruled 
that,  in  the  absence  of  usage  or  contract,  interest  is  not  allowed 
on  advances.^*  Such  a  general  statement  is  not  to  be  accepted 
literally;  but  as  meaning  that  if  the  moneys  paid  or  advanced 
for  the  use  of  the  firm  were  in  fact  loans  and  the  partner  who 
furnished  them  was  a  creditor  of  the  firm  he  stands  upon  the 
same  footing  as  any  other  creditor  with  respect  to  the  right  to 
interest  upon  an  accounting.  "A  partner  may  loan  money  to 
the  firm  of  which  he  is  a  member,  and  when  he  does  his  right 
to  interest  is  to  be  determined  in  the  same  way  as  that  of  any 


10  Clark  V.  Woidi'ii,  10  Xcb.  87. 
The  contrary  is  assumed,  without 
discussion,  in  Krapp  v.  Aderliolt,  42 
Kan.  247.  In  accord  witli  the  hit- 
ter case  is   Delp   v.   Edlis,   190   Pa. 

11  Kennedy  v.  Hill,  89  S.  C.  402; 
St.  Paul  T.  Co.  V.  Finch,  52  Minn. 
342;  Watney  v.  Wells,  L.  R.  2  Ch. 
2.50;  Barfield  v.  Loughborough,  L. 
R.  8  Ch.  1. 

iZGresham  v.  Harcourt,  9.3  Tex. 
149. 

13  Consaul  v.  Cummings,  24  App. 
D.  C.  36;  1  Lindley's  Part.  *3n0  (2d 
Am.  ed.)  ;  Ex  parte  Chippendale,  4 
De  G.,  M.  &  G.  36;  Denton  v.  Rodie, 


3  Camp.  491;  Baker  v.  Mayo,  129 
Mass.  517;  Berry  v.  Folkes,  60  Miss. 
576;  Matthews  v.  Adams,  84  Md. 
143;  Hill  V.  Beach,  12  N.  J.  Eq. 
31;  Uhler  v.  Semple,  20  N.  J.  Eq. 
288. 

14  Doyle  V.  Duckworth,  149  Iowa, 
623;  Ice  v.  Kilworth,  84  Kan.  458, 
35  L.R.A.(N.S.)  220;  Godfrey  v. 
White,  43  Mich.  171;  Sweeney 
V.  Neely,  53  Mich.  421;  Prentice  v. 
Elliott,  72  Ga.   154. 

A  partner  cannot  claim  interest 
on  money  in  his  possession  which 
was  produced  by  the  business  of  the 
firm  as  an  advance  thereof  by  him. 
Wells  V.  Babcock,  56  Mich.  276. 


342] 


IWTBKJiST. 


io7;j 


Other  creditor.  ]n  siieli  oases  llic  general  rule  is  to  allow  inter- 
est upon  the  advances,  although  thei-e  was  no  ex})res8  agreement 
by  the  firm  to  pay  it,  in  the  absence  of  some  agreement  to  the 
contrary,  express  or  implied.  The  right  to  interest,  or  an 
agreement  to  pay  or  allow  it,  is  to  be  implied  in  such  cases  with- 
out any  express  promise,  as  in  like  transactions  between  parties 
holding  no  partnership  relations  to  each  other.^*  A  partner 
who  executes  a  note  soon  after  an  adjustment  of  the  firm  ac- 
counts, whereby  an  equal  partnership  is  formed,  which  note  is 
for  the  benefit  of  the  firm,  is  entitled,  in  a  subsequent  account- 
ing, to  credit  for  interest  paid  by  him  on  the  note,  although  the 
maker  of  it  was  to  furnish  the  money  necessary  to  conduct  the 
partnership  business.^^  The  rule  which  applies  to  unliquidated 
demands  governs  in  the  case  of  partnership  accounts ;  and  ordi- 
narily interest  will  not  be  allowed  on  the  latter  until  a  balance 
has  been  struck,^'  if  there  has  been  no  unreasonable  delay  in 


15  Mack  V.  Engel,  165  Mich.  540; 
Rodgeis  V.  Clement,  162  N.  Y.  422, 
76  Am.  St.  342,  citing  many  New 
York  cases,  and  Morris  v.  Allen,  14 
N.  J.  Eq.  44;  Baker  v.  Mayo,  129 
Mass.  517;  In  re  German  M.  Co.,  4 
De  G.,  M.  &  G.  35;  In  re  Norwich 
Yarn  Co.,  22  Beav.  143,  168 ;  Troup's 
Case,  29  Beav.  353;  In  re  Beulali 
Park  Est.,  L.  R.  15  Eq.  43;  Hodges 
V.  Parker,  17  Vt.  242,  44  Am.  Dec. 
331;  Ligare  v.  Peacock,  109  111.  94; 
Matthews  v.  Adams,  84  Md.  143; 
Grant  v.  Smith,  70  App.  Div.  (N. 
Y.)    301,  is  to  the  same  effect.- 

16  Hake  v.  Coach,   114  Mich.  558. 
"Goodwill  V.  Heim,  212  Pa.  .595; 

Lovejoy  v.  Bailey,  214  Mass.  134; 
Kemmerer  v.  Kemmerer,  85  Iowa 
193;  Wendling  v.  Jennisch,  85 
Iowa  392;  Dexter  v.  Arnold,  3  Ma- 
son 284;  Day  v.  Lockwood,  24 
Conn.  185;  Lee  v.  Lashbrooke,  8 
Dana  214;  Prentice  v.  Elliott,  72 
Ga.  154;  Smith  v.  Knight,  88  Iowa 
257;  Jones  v.  Farquhar,  186  Pa. 
386,  396;  Gilman  v.  Vaughan,  44 
Suth.  Dam.  Vol.  I.— 68. 


Wis.  646;  Gage  v.  Parmalle,  87  111. 
330;  McKay  v.  Overton,  65  Tex.  82; 
Sweeney  v.  Necly,  53  Mich.  421. 

A  claim  for  loss  of  capital  .stock 
does  not  bear  interest  until  a  bal- 
ance has  been  found.  Juillard  v. 
Orems,  70  Md.  465. 

In  ]McCorniick  v.  McCormick,  7 
Neb.  440,  all  tlic  partners  drew  out 
sucli  sums  as  tliey  pleased,  wiiidi 
were  charged  on  tiie  books,  and  ail 
except  the  plaintiff  so  largely  over- 
drew that  in  consequence  of  bad 
debts  the  capital  was  thereby  im- 
paired to  such  an  extent  that 
money  had  to  be  borrowed  to  take 
its  place.  The  plaintiff  claimed  that 
he  was  entitled  to  interest  on  wfiat 
was  due  at  each  annual  rest  from 
the  time  the  capital  was  so  im- 
paired that  money  had  to  be  bor- 
rowed; but  it  was  held  that  he  was 
not  thus  entitled,  for  that  the  de- 
ficiency arose  from  bad  debts  tliat 
were  regarded  as  assets  without 
considering  whetlier  tliey  were  col- 
lectible, and  those  overdrawing  did 


1074  SUTIIEIJLAND    ON    DAMAGES.  [§    342 

iirriviiig  at  a  settlement. ^^  And  if  there  is  uncertainty  as  to  the 
state  of  the  accounts  interest  will  not  be  allowed  anterior  to  the 
institution  of  the  action.^^  The  allowance  or  disallowance  of 
interest  is  largely  governed  by  the  circumstances  of  the  in- 
dividual case,^''  the  character  of  the  claim,  as  well  as  the  vigi- 
lance or  laches  of  the  party  who  demands  it.  If  unusual  delay 
in  prosecuting  litigation  is  attributable  to  the  parties  that  may 
be  a  cause  for  denying  the  claim  for  interest,  although  the  ac- 
counts have  been  preserved,^^  and  there  will  be  a  more  cogent 
reason  for  so  doing  if  they  have  been  lost.^^  Interest  has  been 
allowed  where  a  partner  had  withdrawn  largely  more  than  he 
was  entitled  to  do  from  the  firm  treasury  and  used  the  money 
for  personal  purposes,  harm  resulting  to  the  other  partners,^^ 
though  the  account  was  overdrawn  inadvertently,^*  and  wdiere 
a  partner,  after  the  dissolution  of  the  firm,  had  retained  money 
due  his  copartners.^^  Interest  upon  interest  will  be  charged  a 
surviving  partner  who  wrongfully  withdraws  and  fraudulently 
appropriates  money. ^® 

"Ordinarily,  interest  on  the  balance  found  due  to  a  partner  at 
the  dissolution  of  a  partnership  will  be  allowed  from  the  date 
of  the  dissolution,  or  from  such  date  as  would  afford  a  reasonable 
opportunity  to  close  up  the  partnership  business.^'  A  partner 
who,  on  the  dissolution  of  the  partnership,  holds  the  assets  and 

iKit  intend  tlicrehy  to  cripple,  much  anterior  to  jud<,nnent  tliougli  the  ac- 

less  to  hanl<rupt,  the  firm.     Athcr-  count  between  the  partners  had  pre- 

ton    V.    Whitcomb,    60    Vt.    447,    ap-  vjously   been   stated     by    a    referee, 

proves  the  case  stated.  IJrown  v.  Rogers,  76  S.  C.  180. 

iSMagilton  V.  Stevenson,  173  Pa.  20  Lamb  v.  Rowan,  83  Miss.  45. 

560;     Brownell    v.    Steere,    1:28    111. 


21  Hunt  V.  Smith,  3  Rich.  Eq 
465,  520;  Brenner  v.  Carter,  10  Pa. 
Dist.  457,  203  Pa.  75;  Carter  v. 
Producers'  0.   Co.,  200   Pa.  579. 


209. 

19  Lemma  v.  Blanding,  139  Wis. 
156;  Carroll  v.  Little,  73  Wis.  52; 
Green  v.  Stacy,  90  Wis.  46. 

If  one  of  two  persons  engaged  in  ^^  '"^^ith   v.   Smith,   18   R.  I.   722. 

a    joint   enterprise,    not    amounting  23  Masonic    Sav.    Bank   v.    Bangs, 

to    a   partnership,    is    liable    to    ac-  10  Ky.  L.  Rep.  743. 

count  to  the  other,  but  unnecessar-  24  Forsyth  v.  Butler,  152  Cal.  396* 

ily  fails  to  do  so  he  will  be  liable  25  Wells  v.  Babcock,  56  Mich.  276. 

for  interest  from  the  time  when  the  26  Porter  v.  Long,   136  Mich.  150. 

account  could  have  first  been  stated.  27  Allen  v.  Woonsockct  Co.,  13  R. 

Jones  V.  Farquhar,  186  Pa.  400.  I.    146;    Kennedy  v.    Hill,   89   S.    C 

Interest    may    not    be    recovered  462. 


§    342]  INTEREST.  1075 

property  of  the  firm  and  is  intrusted  with  the  duty  of  winding  up 
its  affairs  is  chargeable  with  interest  as  between  liiniself  and 
copartner  if  he  mingles  the  money  of  the  firm  with  his  own  or 
neglects  unreasonably  to  settle  his  accounts."  ^^  The  assump- 
tion of  finn  obligations  by  a  solvent  surviving  partner,  whether 
paid  or  not,  is  equivalent  to  payment  so  as  to  relieve  such 
partner  from  liability  for  interest  to  the  estate  of  the  deceased 
partncr.^^  Under  the  Illinois  statute  the  delay  of  payment 
which  subjects  a  surviving  partner  to  liability  for  interest  on 
money  received  in  settling  the  partnership  aifairs  must  be  both 
unreasonable  and  v(^\atious ;  ^**  but  these  aggravating  circiiui- 
stances  are  not  everywhere  essential. ^^  A  suit  for  an  accounting 
is  not  for  the  recovery  of  unliquidated  damages,  and  interest 
may  be  allowed  from  the  date  of  the  bill.^^  A  partner  who  has 
the  firm  property  in  possession  for  the  })urpose  of  winding  up 
the  partnership  affairs  is  not  liable  for  interest  if  there  has  been 
no  mismanagement,  and  the  delay  in  settlement  is  the  result  of 
mutual  fault ;  ^^  or  if  he  has  not  been  advantaged  by  the  use  of 
the  money  of  the  firm.^^  But  if  the  partnership  property  is  used 
by  the  surviving  ])artncr  for  his  individual  benefit  and  the 
business  is  so  conducted  that  he  cannot  make  an  accounting,  he 
will  be  charged  with  the  rental  value  of  it  in  lieu  of  interest.^^ 
A  partner  who,  prior  to  the  dissolution  of  the  firm,  is  allowed  to 
take  its  property  is  liable  for  interest  on  its  value  from  the  date 

28  Per  Torrance,  J.,  in  Buckley  v.  A  defendant  is  liable  for  interest 
Kelly,  70  Conn.  411;  Dunlap  v.  Wat-  if  lie  oI)tain('d  a  contract  of  settle- 
son,  124  Mass.  305;  Crabtree  v.  nient  l)y  fraud  and  deception  and 
Randall,  133  Mass.  552;  Robbins  v.  after  its  repudiation  by  Ibc  ].laiiitilT 
Laswell,  5S  111.  203;  Kaufnuuin  v.  contested  Iii.s  rij^bt  to  ifcuvcr 
Kaufmann,  239   Pa.  42.     See  Stiles  Pliillips  v.  l^-ynolds,  23(>  111.  110. 

V.    Haigbt,    124   App.    Div.    (N.   Y.)  31  !>„„,. 11   v.  llorrell,  02  Mo.  App. 

00.  400;    (  aii\|)l)cll    v.-  ('(Kpiard,    03    :\Io. 

A  partner  wlio  lias  been  intrusted  474. 

with    money    by   a   retiring    partner  32  Young    v.    Winklfv,    101     Mass. 

to  meet  the  contingent   liability   of  570. 

the   firm   is   not   liable   for   interest  33  Pand<ilpli    v.     Iiinian,     172    111. 

so    long     as     such     liability    exists.  575;    Snell   v.   Taylor,    182    111.   473, 

Young  V.  Potter,  150  Mich.  375.  afT'g  70  111.  App.  402. 

29  Moore's  Est.,  22S  Pa.  510.  34  Condon  v.  Callahan,  115  Tenn. 
30Maynard   v.   Richards,    100    111.  285,   1    L.R..\.  (N.S.)    043. 

400,  57  Am.  St.  145.  SSSmitli   v.    Knight,  88  Iowa  257. 


1076 


SUTIIEKLAND    ON    DAMAGES. 


[§   342 


he  appropriated  it.^^  Where  by  mistake  a  sum  largely  in  excess 
of  that  due  has  been  paid  a  partner  as  his  share  of  the  firm  prof- 
its,^'' interest  was  allowed  from  the  time  the  money  was  received ; 
but  where  the  overpayment  was  the  result  of  a  mutual  and  in- 
nocent mistake  it  was  allowed  only  from  the  time  of  demand.^' 
A  surviving  partner  who  accounts  for  the  profits  of  the  business 
is  not  liable  for  intei'est  on  the  sum  improperly  withdrawn  as 
salary ;  the  profits  take  the  place  of  interest.^^  The  estate  of  a 
deceased  partner  may  require  of  the  surviving  partner  who  con- 
tinues the  business  interest  on  the  former's  share  of  the  capital 
or  the  profits  it  earned;  and  the  surviving  partner  may  claim 
interest  or  a  share  of  the  profits  proportioned  to  the  capital 
contributed.^"  A  partner  who  soils  goods  to  the  partnership  and 
receives  advances  thereon  in  the  manner  of  others  who  have  like 
dealings  with  it  is  not  liable  for  interest.*^ 

§  343.  Interest  on  stockholders'  statutory  liability.  The 
liability  of  the  stockholders  of  an  insolvent  national  bank  under 
the  federal  statutes  is  for  the  contracts,  debts  and  engagements 
of  the  bank  to  its  creditors.  Hence  the  former  are  liable  for 
interest  to  the  same  extent  the  bank  would  have  been  if  it  re- 
mained solvent,  not,  however,  to  exceed  the  maximum  fixed 
by  law,^^  from  the  time  the  comptroller  of  the  currency  makes 
his  order  determining  their  liability,^^  and  in  the  case  of  book 
accounts  in  favor  of  the  depositors,  from  the  time  of  the  sus- 
pension of  the  bank.**  In  Illinois,  South  Carolina,  Colorado 
and  Maine,  stockholders  are  not  liable  for  interest  on  the  amount 
for  which  they  are  responsible  to  the  creditors  of  the  corporation 
under  the  statutes.*^     In  New  York,  Georgia  and  Ohio  such 


86  Folsom  V.  Marlette,  23  Nev. 
459;  Powell  v.  Horrell,  02  Mo.  App. 
406;  Morrill  v.  Weeks,  70  N.  H. 
178. 

37  Atherton  v.  Cochran,  11  Ky. 
L.  Rep.  185. 

38  Gould  V.  Emerson,  IGO  Mass. 
4.38,  .39  Am.  St.  501. 

39  Clausen  v.  Puvogel,  114  App. 
Div.   (N.  Y.)   455. 

40McGibbon  v.  Tarliox,  144  App. 
Div.   (N.  Y.)    837.     See  Robinson  v. 


Simmons,  146  Mass.  167,  4  Am.  St. 
299. 

41  Forsyth  v.  Butler,  152  Cal.  396. 

42  Richmond  v.  Irons,  121  U.  S. 
27,  64,  30  L.  ed.  864,  876. 

« Casey  v.  Galli,  94  U.  S.  673, 
24  L.  ed.  168;  Davis'  Est.  v.  Wat- 
kins,  56  Neb.  288;  Bowden  v.  John- 
son, 107  U.  S.  251,  27  L.  ed.  386; 
May  V.  Ullrich,  132  Mich.  6. 

44  Richmond  v.  Irons,  supra. 

45  Munger    v.     .Taeobson,    99     111. 


§    343]  INTEREST.  1077 

liabilitj  exists  from  the  time  suit  was  begim/^  aud  in  Michigan 
from  the  time  when  it  was  adjudged  that  it  was  necessary  to 
enforce  liabilitj. ^^     In  Ohio,  in  cases  in  which  the  liability  is 
sought  to  be  enforced  before  suit  has  determined  the  extent  of 
it,  if  such  liability  equals  the  face  value  of  the  stock  interest 
will  follow  from  the  time  suit  was  begun ;  but  if  the  extent  of  lia- 
bility is  not  fixed  interest  can  only  be  recovered  from  the  time 
judgment  was  rendered.^^     In  Wisconsin,  Michigan,  Missouri 
and  Kansas  stockholders  are  liable  for  interest  on  judgments 
against  corporations.''^     In  Colorado  interest  may  be  recovered 
from  stockholders  on  any  debt  bearing  interest  against  the  cxn-- 
poration.^°     In  California  stockholders  are  liable  for  interest 
on   corporate    debts    from    the   time   they   become    due."      In 
Louisiana  interest  on  stock  subscriptions  runs  from  the  date  of 
judicial  demand;  ^^  and  so  in  Kansas. ^^    In  Missouri  a  creditor 
of  a  corporation  proceeding  by  motion  against  a  shareholder 
whose  shares  have  not  been  paid  in  full  can  recover  interest 
only  from  the  time  the  motion  is  granted;  ®*  but  the  liability  of 
a  bank  stockholder  for  interest  to  a  depositor  in  the  bank  dates 
from  the  commencement  of  suit  and  is  not  affected  because  the 
interest  extends  his  liability  beyond  the  limit  fixed  by  law."    A 
note  given  for  stock  does  not  bear  interest  until  payment  of  sub- 
scriptions is  called  for,  notwithstanding  it  may  be  past  due 

349;      Sackett's     Harbor     Bank     v.  v.    Watts,    94    Mo.    410;    Grund    v. 

Blake,    3   Rich.   Eq.     225;     Cole    v.  Tucker,  5  Kan.  70. 
Butler,  43  Me.  401 ;  Adams  V.  Clark,  50  Zang  v.   Wyant,   25   Colo.   551, 

^^  *^'«lo-  ^5-  71  Am.  St.  145. 

46Hand.yv.  Draper,  89  N.Y.  334;  51  Knowles     v.     Sandercoek,     107 

Burr  V.  Wilcox,  22  id.  551;   Mason 


Cal.  629;  Wells  v.  Enright.  127  Cal. 
6G9,  49  L.B.A.  047. 

52  Jackson    F.    &    M.    Ins.    Co.    v. 


V.  Alexander,  44  Ohio  St.  318,  fol- 
lowing Wehrman  v.  Reakirt,  1   Cln. 
Super.  Ct.  230.    See  Wheeler  v.  Mil- 
lar,  90   N.    Y.     353;     Wheatley    v.  Walle,  105  La.  89. 
Glover,.  125  Ga.  710.  53  Pi„e  v.  Western  Nat.  Bank,  n:? 

«Wedemeyer    v.    Hindelang,   161  ^'^^"-   ^^2.      See,   as   to  tlie   rate   of 

Mich.  600.  interest,  Whitman  v.  Citizens'  Bank, 

48Berger  v.   Commercial   Bank,  5  HO  Fed.  503,  49  C.  C.  A.  122. 

Ohio  Dec.  277.  64  (oquard  v.  Prendergast,  47  Mo. 

49  Cleveland  v.  Burnham,  64  Wis.  App.  243. 

347;    Grand   Rapids    Sav.    Bank    v.  65  MjHigack  v.  Mooro,  76  Mo.  App 

Warren,     52     Mich.     557;     Shickle  528. 


1078 


SUTHERLAND    ON    DAMAGES. 


[§  343 


when  the  call  is  made,  no  promise  to  pay  interest  being  in  the 
note.^^  The  provisions  in  the  articles  of  a  corporation  as  to  the 
rate  of  interest  defaulting  stockholders  shall  pay  do  not  apply 
to  calls  made  by  the  liquidators  of  the  corporation ;  they  will  be 
charged  with  the  usual  rate  from  the  time  the  call  should  have 
been  paid.^' 

§  344.  Allowed  on  annuities  and  legacies.  Annuities,  except 
those  which  are  testamentary,  are  not  very  common  in  this 
country.  In  England  and  in  Australia  they  do  not  bear  interest 
in  case  of  a  foreclosure  or  redemption  action  as  between  encum- 
brancers, and  as  against  the  property  charged ;  ^^  nor  do  liq- 
uidated demands  generally  after  default  except  on  commercial 
securities. ^^  But  on  the  principles  which  govern  on  this  side  of 
the  Atlantic,  after  a  sum  is  due  (which  is  not  interest)  and 
ought  to  be  paid,  it  bears  interest.^"  There  is  no  reason  why  an 
annuity  should  be  an  exception. ^^    The  courts,  however,  are  not 


56  Seattle  T.  Co.  v.  Pitner,  18 
Wash.  401. 

57  In  re  Welsh  Flannel  &  T.  Co., 
L.  Pt.  20  Eq.  3G0 ;  In  re  Spottiswoode 
Est.  Co.,  21  Viet.  L.  R.  334. 

58  Earl    of    Mansfield    v.    Ogle,    4 
.De  Gex  &  J.  41;   Booth  v.  Coulton, 

L.  R.  S  Ch.  684;  Blogg  v.  Johnson, 
L.  R.  2  Ch.  225;  Wiglcy  v.  Crozier, 
9  AiLst.  Com.  L.  R.  425.  See  Buson 
V.  Elliot,  1  Del.  Cli.  368. 

It  is  otherwise  in  the  working  out 
of  a  judgment  in  an  action  for  the 
administrator  of  the  estate  of  the 
grantor  of  an  annuity.  In  re  Salvin, 
[]912]    ]    Ch.  332. 

59IIiggins  V.  Sargent,  2  B.  &  C. 
348.  See  quotation  from  Mayne  on 
Damages  in  note  to  §  320. 

60  Dobl)ins  V.  Higgins,  78  111.  440. 

Interest  niay  be  claimed  on 
monthly  wages  on  eacli  sum  as  it 
becomes  due.  Butler  v.  Kirby,  53 
Wis.  188. 

61Brotzman's  App.,  133  Pa.  478; 
Parker  v.  Cobe,  208  Mass.  .260,  33 
L.R.A.(N.S.)  978;  Stringer  v. 
Stevens'     Est.,     146    Mich.     181,     8 


L.R.A.(N.S.)  393,  117  Am.  St.  620 
(liability  continues  after  death  of 
annuitant) . 

"Where  the  bequest  is  of  an  an- 
nuity, in  the  absence  of  any  direc- 
tion to  tlie  contrary,  the  annuity 
will  commence  from  the  death  of 
the  testator,  and  the  first  payment 
become  due  at  the  end  of  the  first 
year  from  tliat  event."  Welsh  v. 
Brown,  43  N.  J.  L.  37. 

An  annuity  is  due  at  the  death  of 
the  testator  notwithstanding  the 
executors  wore  directed  to  invest  the 
principal  of  the  legacy  and  failed 
to  do  so.  Eichelberger's  Est.,  170 
Pa.  242. 

Where  a  legatee  was  erroneously 
informed  by  one  of  the  ex'ecutors 
that  her  annuity  did  not  begin  to 
run  until  the  death  of  her  mother, 
acquiescence  in  such  mistake  and 
omission  for  seventeen  years  to  de- 
mand the  annuity  was  not  such 
laches  as  barred  the  right  to  inter- 
est on  each  annual  payment  as  it 
became  due.  Hoffman's  Est.,  3  Pa. 
Dist.    663.      But   where   there   is   no 


§  34i] 


IJS'TEKEST. 


1079 


agreed  on  the  qiicstiuii.  Some  deny  the  allowance  of  iuteix'st  on 
general  principles;®^  others  consider  that  the  circumstances  of 
each  case  are  detenninative  of  the  ([ne-stion."  On  the  principle 
that  where  a  debt  is  payable  by  instalments  each  instalment  will 
bear  interest  after  it  is  due,®*  interest  should  Ix;  allowed  where 
there  is  unexcused  defanlt  in  the  payment  of  annuities. 

The  rule  as  to  legacies  is  that  they  bear  interest  after  they 
are  payable,  which  is  nsually,  by  legal  intendment,  at  the  ex- 
piration of  one  year  from  the  testator's  death,®^  unless  the  will 


such  mistake  long  delay  in  demand- 
ing interest  prevents  recovery  of  it 
anterior  to  demand  or  suit.  Gaskins 
V.  Gaskins,  17  S.  &  R.  390. 

In  some  cases  the  annuitant's 
right  to  interest  is  for  the  jury. 
Rohn  V.  Odenwelder,  162  Pa.  346. 

62  Adams  v.  Adams,  10  Leigh 
527;  Isenhart  v.  Brown,  2  Edw.  Cli. 
341. 

63  Laura  Jane  v.  Hagen,  10 
Humph.  332;  Savage  v.  Savage,  141 
Fed.  346,  72  C.  C.  A.  404,  3  L.R.A. 
(N.S.)    923. 

64  Knettle  v.  Grouse,  6  Watts  123. 
65Redfield    v.    Marvin,    7S    Conn. 

704;  Lupton  v.  foffel,  47  Ind.  App. 
446;  Graham  v.  Whitridge,  99  Md. 
248,  66  L.R.A.  408;  Wherley  v. 
Rowe,  106  Minn.  494,  citing  the 
text;  Berkmeir  v.  Peters,  111  Mo. 
App.  717;  In  re  Rutherfurd,  196  N. 
Y.  311;  Bunting's  Est.,  14  Pa.  Dist. 
7  (on  the  corpus  of  the  legacy)  ; 
Twell's  Est.,  11  Pa.  Dist.  713;  Low- 
man  v.  Lowman,  69  S.  C.  543;  Wal- 
ford  V.  Walford,  [1912]  App.  Gas. 
658;  In  re  Walford,  [1912]  1  Ch. 
219;  Duffield  v.  Pike,  71  Conn.  521  ; 
Bartlett,  Petitioner,  163  Mass.  509; 
Moore  v.  Pullen,  116  N.  C.  284; 
Watt's  Est.,  3  Pa.  Dist.  343;  Chap- 
pel  V.  Theus,  3  Tenn.  Gas.  457 ;  Bon- 
ham  V.  Bonham,  38  N.  J.  Eq.  419, 
Dustan  v.  Garter,  3  Dema.  149 ;  Bliss 
V.  Olmstead,  id.  273;  Verne  v.  Wil- 
liams,   id.    349;    Bartlett    v.    Slater, 


53  Conn.  102,  .■)5  Am.  ]\v\).  73;  Wood 
V.  liauimond,  Ki  R.  I.  9S;  Gliambers 
V.  Gliambers,  87  Ky.  144;  Sevear- 
ingliam  v.  State,  4  liar.  &  :McHen. 
38;  Lyons  v.  Magagno,  7  Gratt.  377; 
Shobcs  V.  Garr,  3  Munf.  10;  King 
v.  Dielil,  9  S.  &  R.  409 ;  Page's  App., 
71  Pa.  402;  Hoagland  v.  Schenek, 
16  N.  J.  L.  370;  Bradner  v.  Faulk- 
ner, 12  N.  Y.  472;  Darden  v.  Or- 
gain,  5  Cold.  211;  Daniels  v.  Benton, 
ISO  :\Iass.  559.  In  Valentine  v. 
Ruste,  93  111.  585,  it  was  held  that 
where  legacies  or  bequests  in  a  will 
are  by  their  terms  to  be  paid  wlien 
the  testator's  estate  is  settled,  the 
legatees  cannot  demand  the  same 
until  the  happening  of  tlie  con- 
tingency. If  the  executors  siiould 
fail  to  settle  the  estate  when  by  law 
they  ougiit  to  do  so,  the  court  can 
compel  them  to  make  such  settle- 
ment, and  then  the  legacies  miglit 
be  demanded;  the  legatees  were  not 
entitled  to  interest  upon  tiie  legacies 
before  the  principal  was  demand- 
able. 

A  contingent  general  legacy  does 
not  l)ear  interest  until  tlie  precedent 
event  occurs.  Cannon  v.  Apperson, 
14  Lea  553. 

\\'here  the  legacy  was  payable  on 
the  death  of  a  life  beneficiary  of  the 
income  the  residuary  legatee,  to 
whom  the  estate  had  been  transferred 
charged  with  the  payment  of  the 
legacy,  was  liable  for  interest  only 


1080 


SUTHERLAND    ON    DAMAGES. 


[§   344 


discloses  a  contrary  intention. ^^  Legacies  payable  at  a  desig- 
nated time  bear  interest  from  such  time;^'  if  payable  out  of 
the  proceeds  of  lands  to  be  sold  at  any  time  within  two  years 
after  the  testator's  death  interest  runs  from  that  time  or  from 
the  time  of  sale  if  that  was  earlier.^^  A  legacy  payable  out  of 
a  reversionary  fund  bears  interest  from  the  time  the  fund  falls 
into  possession ;  ^^  and  if  given  in  satisfaction  of  a  debt  carries 


from  tlie  time  of  demand.  Gilbert 
V.  Taylor,  148  N.  Y.  298. 

66  Brown's  Est.,  143  Cal.  450; 
Palmer  v.  Palmer,  106  Me.  25;  Gib- 
bon V.  Chaytor,  [1907]  1  Irish  65. 
See  Langhorst  v.  Ahlers,  12  Ohio 
Dec.  405. 

"On  bequest  of  the  residue  of  the 
testator's  estate,  or  of  some  aliquot 
part  or  portion  thereof,  in  trust  to 
pay  the  interest  or  income  to  a  leg- 
atee for  life  with  the  gift  of  the 
principal  over  at  his  death,  the  in- 
terest or  income  payable  to  the  ten- 
ant for  life  will  be  computed  from 
the  testator's  death."  Welsh  v. 
Brown,  43  N.  J.  L.  37;  Marsh  v. 
Taylor,  43  N.  J.  Eq.  1;  Williamson 
V.  Williamson,  6  Paige  304;  Lover- 
ing  V.  Minot,  9  Gush.  151 ;  Couch  v. 
Eastham,  29  W.  Va.  784;  Town- 
send's  App.,  106  Pa.  268,  51  Am. 
Rep.  523. 

Such  intention  is  not  to  be  in- 
ferred as  to  general  legacies  because 
of  a  clause  in  the  will  extending  the 
time  for  paying  legacies  to  certain 
institutions.  Bartlett,  Petitioner, 
163  Mass.  509.  Nor  because  the  will 
gives  the  executors  three  years  in 
which  to  settle  the  estate  in  their 
discretion.  Warwick  v.  Ely,  59  N. 
J.  Eq.  44;  Spencer's  Petition,  16 
R.  I.  25. 

Where  it  is  directed  tliat  a  legacy 
be  paid  as  soon  as  convenient  to  the 
executors,  the  legatee  being  one,  he 
is  not  entitled  to  interest  though 
payment  was  not  made  until  sixteen 


months  after  letters  were  issued. 
Matter  of  Hodgman,  140  N.  Y.  421, 
Interest  is  not  demandablc  where 
legacies  are  payable  out  of  the  pro- 
ceeds of  real  estate,  the  conversion 
being  made  within  a  reasonable 
time.  Warner's  Est.,  18  Pa.  Dist. 
262. 

It  is  not  a  reason  for  denying  in- 
terest that  the  legacy  is  limited  as 
to  time.  Entcrmann's  Est.,  18  Pa. 
Dist.,  343. 

The  rule  stated  in  the  text  is  not 
affected  because  of  the  death  of  the 
legatee  within  the  year,  nor  because 
an  administrator  of  his  estate  was 
not  appointed  until  after  the  year 
expired  and  within  that  time  the 
person  afterwards  appointed  admin- 
istrator claimed  a  personal  interest 
in  the  legacy  and  notified  the  ex- 
ecutor to  pay  it  to  no  one  else.  Es- 
mond V.  Brown,  18  R.  I.  48. 

67Dufrield  V.  Pike,  71  Conn.  521; 
Doten  V.  Doten,  66  N.  H.  331;  Lang- 
horst V.  Ahlers,  9  Ohio  Dec.  607 ; 
Langendorfer's  Est.,  8  Pa.  Dist.  273 ; 
Hodges  V.  Phelps,  65  Vt.  303;  Harri- 
son V.  Denny,  113  Md.  509;  Kennedy 
V  Dickey,  99  Md.  295 ;  Bank  v.  Tal- 
bot, 110  App.  Div.  (N.  Y.)  519. 
See  Lambert  v.  Lambert,  [1910]  1 
Irish  280. 

68  Re  Robinson,  22  Ont.  438;  In 
re  Gunning's  Est.,  234  Pa.  148. 

69  Gibbon  v.  Chaytor,  [1907]  1 
Irish  65 ;  Wheeler  v.  Ruthven,  74  N. 
Y.    428,    30    Am.    Rep.    315;    In    re 


^    ^^^-i  INTEREST.  lOSl 

interest  from  the  time  of  the  testator's  deatli;  '«  and  so  does  a 
legacy  consisting  of  the  next  interest  or  income  of  a   given 
sum.        In   Massachusetts  this  rule  has  been   extended '''to   -i 
legacy  given  absolutely  to  a  widow  in  lieu  of  dower  ''  but  it  is 
otherwise  in  Pennsylvania^^  New  Jersey/*  and  New  York  '« 
especially  where  the  testator  leaves  no  real  estate  and  the  widow 
parts  with  nothing  by  accepting  the  legacy.     But  if  the  legacy 
IS  the  income  of  a  trust  fund  and  is  given  in  lieu  of  dower  the 
widow^is  entitled  to  interest  from  the  time  of  the  testator's 
death.'^     Where  creditors'  rights  will  not  be  affected  interest 
on  a  note  payable  to  the  testator  ceases  to  run  at  the  time  of  his 
death,  the  note  providing  that  if  it  was  not  paid  before  such 
death  it  might  be  deducted  from  tlie  maker's  sluire  of  the  tes- 
tator's estate.''     Where  a  will  sets  apart  a  fund  and  impresses 
It  with  a  trust  in  favor  of  the  legatee,  to  be  paid  before  dis- 
tribution of  the  estate,  the  legacy  bears  interest  from  tlie  time 
of  the  testator's  death.'^    An  exception  is  made  where  a  legacy 
is  given  by  a  parent  to  a  child  or  by  one  in  loco  imrentis  by  \vay 
of  maintenance,  the  possession  of  the  principal  being  deferred.'^ 
In  Vermont  legacies,  unless  otherwise  controlled  by  tlie  will, 

Rutherfurd,  133  App.  Div.    (N.  Y.)  73  Martin  v.  Martin,  6  Watts  67; 

\    ,              ,          ,  Gill's  App.,  2  Pa.  221. 

A  legacy  charged  upon   land,  the  ,^  r.   ,  , 

possession  of  which  is  postponed  im-  °''*^''   *^'''"'''''   ''•   Ackern.an,   1 

til  the  termination  of  an  intervening  ■'^'  '^-  ^^-  ^^■ 

estate,  bears  interest  from  the  date  75  Matter  of  Uarnos,   7   App.   Div. 

when  the  devisee  who  is  required  to  (N.  Y.)    13,  affirmed  witliout  opin- 

pay  the  legacy  from  the  land  may  ion,  154  N.  Y.  737. 

take  possession  or  receive  the  prof-  An    absolute    legacy    in    lieu    of 

its.     Bowen  v.  True,  74  S.  C.  486.  dower  carries  interest'only  from  one 

70  Clark    V.    Sewell,    3    Atk.    99;  year  after  letters  testanuMitarv  are 
Knauss's  Est.,  148  Pa.  265.  issued.      In    re    Postwick's    E.st..    4!» 

71  In  re  Estate  of  Catron,  82  Mo.  N.  Y.  Misc.  186. 

App.  416;   Ayre  v.  Ayre,  128  Mass.  vBMoffn..     t  t> 

nnn     t7i-  i      •  .     -r^  ^     -,„^   ^  ^"Matter  of  Barnes,  supra. 

575;    Fhckwir's  Est.,   136   Pa.   374;  ^ 

Cooke  V.  Meeker,  36  N.  Y.  15;  Mat-  ''"' ^"  ^^  ^^''"  "^  Neweomb.  !)S  Towa 

ter    of    Stanfield,    135    N.    Y.    292;  ^^''^^ 

Green    v.    Blackwell,    32   N.    J.    Eq.  '*  Ensley    v.    Ensley,    105    Tenn. 

768;  Griffith's  Est.,  21  Pa.  Dist.  82.  ^^^7;      Harrison     v.     Henderson,     7 

72  Pollard  V.  Pollard,  1  Allen  490;  Heisk.  348. 

Pollock   V.   Learned,    102   Mass.   49;  79  Robinson's   Est.,   35   Pa.   Snper. 

Towle  V.  Swasey,  106  Mass.  100.  192. 


1082  SUTHERLAND    ON    DAMAGES.  [§    344: 

draw  interest  after  one  year  from  its  probate,^"  and  in  Kew 
York  at  the  expiration  of  one  year  after  the  granting  of  letters 
testamentary  or  of  administration,  whether  temporary  or  final" 
If  the  probate  of  a  will  is  revoked  and  a  final  will  is  established 
interest  on  a  legacy  begins  to  run  one  year  after  the  issuance 
of  letters  under  the  latter  will.*^  In  the  absence  of  any  con- 
trary expression  or  unavoidable  implication  of  a  contrary  in- 
tent of  the  testator,  devises  or  bequests  subordinate  to  a  life 
estate  in  his  widow  and  contingent  upon  her  death,  or  payment 
of  which  is  postponed  until  then,  become  presently  payable 
upon  her  election  to  take  under  the  intestate  laws.  As  to  its 
effect  to  take  upon  all  claims  under  the  will  her  election  is 
equivalent  to  her  death. ^^  But  the  right  to  interest  may  not 
exist  simultaneously  with  such  election.  Where  there  was  a 
contest  over  the  will  and  the  executors  could  not  pay  until  it 
was  settled  the  Kentucky  court  held  that  interest  did  not  be- 
gin to  run  until  the  termination  of  the  litigation.^*  The  rule 
is  otherwise  in  Massachusetts.^^  Inability  to  ascertain  the 
amount  of  a  legacy  is  cause  for  postponing  the  liability  for 
interest.^^ 

There  is  a  difference  of  opinion  concerning  the  effect  of  a 
statute  which  provides  that  if  no  time  is  fixed  in  the  will  for 
the  jiayment  of  legacies  the  executor  or  administrator  shall 
have  one  year  after  its  probate  to  pay  and  satisfy  them.  Some 
courts  hold  or  say  that,  inasmuch  as  a  legacy  does  not  draw 
interest  before  it  becomes  legally  payable,  the  effect  of  the  stat- 
ute is  to  postpone  the  right  to  interest  for  one  year  after  the 
will   has   been   established,    no    direction   being   given    in    it,*'^ 

80  Bradford  Academy  v.  Grover,  55  82  Patterson's  Est.,  5  N.  Y.  Misc. 
Vt.    4G2;     Vermont     State     Baptist       178. 

Convention  v.  Ladd,  58  id.  95.  83  Coover's  App.,  74  Pa.  143;  Fer- 

81  Matter  of  McGovvan,  124  N.  Y.  g"son's  Est.,  138  Pa.  208;   Trustees 

526;  Matter  of  Oakes,  19  App.  Div.  Church  Home  v.  Morris,  99  Ky.  317. 

(N    Y  )    19'?  84  Trustees,  etc.,  v.  Morris,  supra. 

\'    T    1-  "  ,1  1  85Claflin    V.    Holmes,    202    Mass. 

In  Indiana  a  general  legacy  draws 

interest  only  from  the  expiration  of  -^  t  ^        ,   ttt-h    ,-».t    tt     a 

/  86  In   re  Gans'   Will    (N.  Y.  App. 

Div.),  114  N.  Y.  Supp.  975. 
ters.     Stimson  v.  Rnuntree,  51  Ind.  87  Bradner  v.  Faulkner,  12  N.  Y. 


one  year  from  the  granting  of  let- 
ters. Stimson  v.  Rnuntree,  51  Ind. 
App.  207.  364;   Thorn  v.  Garner,  113   id.  198. 


§   o44J 


INTEKEST. 


lUb3 


The  surrogates'  courts  of  New  York  regard  the  expressions  of 
the  court  of  api^eals  in  tlie  cases  referred  to  as  dicta,  and  hold 
that  the  interest  runs  in  favor  of  a  legatee  one  year  after  the 
death  of  the  testator.^^  This  is  in  accord  with  the  view  in  New 
Jersey,^^  but  not  with  tiiat  declared  in  Ohio  and  Michigan.^" 

Where  the  legacy  is  to  a  child  of  the  testator,  or  one  to 
whom  he  stood  in  loco  parentis,  and  for  whom  no  other  pro- 
vision is  made  in  the  will  interest  thereon  is  given  iVoiii  tlie 
death  of  the  testator  on  the  presumption  that  such  was  his  in- 
tention,^^ The  right  of  an  infant  legatee  to  interest  from  the 
time  of  the  testator's  death  is  not  affected  because  the  will 
contains  a  provisi(m  for  the  maintenance  of  the  child  out  of 
the  income  of  the  legacy,  or  out  of  the  income  of  a'  share  of 
the  residue  given  to  him  equally  with  the  other  children.     This 


88  See  Matter  of  Gibson,  24'  Abb. 
N.  C.  45;  Lawrence  v.  Enibree,  3 
Bradf.  354;  Wallace's  Est.,  24  N.  Y. 
St.  405;  Campbell  v.  Cowdrey,  31 
How.  Pr.  172;  Dustan  v.  Carter,  3 
Dema.  14!) ;  Carr  v.  Bennett,  id.  433, 
457;  In  re  Rutherfurd,  106  N.  Y. 
311,  wliicli  is  in  liarniony  witb  this 
view. 

89  Davidson  v.  Rake,  45  N.  J.  Eq 
767. 

90  Gray  v.  Case  School  of  Applied 
Science,  62  Ohio  St.  1;  \N'iieeler  v. 
Hathaway,  54  Mich.  550. 

91  Robinson's  Est.,  If!  Pa.  Dist. 
31;  Budd  v.  Garrison,  45  Md.  420; 
Langendorfer's  Est.,  8  Pa.  Dist.  273; 
Webb  V.  Webb,  92  Md.  101  ;  Keating 
V.  Bruns,  3  Dema.  233;  Brown  v. 
Knapp,  79  N.  Y.  136;  Flinn  v. 
Flinn,  4  Del.  Ch.  44;  King  v.  Talbot, 
50  Barb.  453;  Martin  v.  Martin,  6 
Watts  67;  Magoffin  v.  Patton,  4 
Rawle  113;  Heath  v.  Perry,  3  Atk. 
101;  Harvey  v.  Harvey,  2  P.  Wms. 
21 ;  Green  v.  Belchin,  1  Atk.  506. 
See  Cooke  v.  Meeker,  42  Barb.  533; 
Incledon  v.  Nortbcote,  3  Atk.  438; 
Hearle  v.  Greenbank,  id.  716;  Cole- 
man   V.    Seymour,    1    Ves.    Sr.    210; 


Beckford    v.    Tobin.    id.    308;    Carey 
V.  Askew,  2  Bro.  Ch.  58. 

\\'here  a  sum  is  left  in  trust,  with 
direction  that  the  interest  and  in- 
come be  applied  to  the  use  of  a  per- 
son, he  is  entitled  to  interest  from 
the  deatli  of  the  testator.  Cooke  v 
Meeker,  36  N.  Y.  15. 

Tiie  rule  does  not  extend  to  minor 
grandcliildrcn  nor  to  an  adult  child 
(Brinkerhoff  v.  Merselis,  24  N.  J.  L. 
082;  Howard  v.  Francis,  30  N.  J. 
Eq.  444),  unless  tlie  testator  stood 
in  loco  parentis  to  the  grandchild. 
Marsh  v.  Taylor,  43  N.  J.  Eq.  1. 

The  fact  tliat  an  infant  legatee 
lias  extraneous  means  of  support 
does  not  affect  the  right  to  interest 
from  tlie  testator's  death.  Neder 
v.  Zimmer,  (i  Dema.  180. 

Where  the  son  of  tlic  fcstafor  was 
legatee  of  $1,000,(100,  payabh-  eight- 
een months  after  the  death  of  (he 
testator,  and  there  was  no  clause  in 
the  will  r(dating  to  interest  or  for 
the  su])port  of  the  legatee  until  l>ay- 
ment  of  the  legacy,  intt'rest  was  de- 
nied notwithstanding  the  legatee, 
wlio  was  twenty-seven  years  old  and 
had    always    been    supported    by    his 


1084  SUTHERLAND    ON    DAMAGES.  [§    344 

rule  rests  on  the  theory  that  the  residue  is  an  unascertained 
amount  and  may  be  insufficient  for  the  support  of  the  lega- 
tee— the  question  is  to  be  regarded  with  reference  to  the  suffi- 
ciency of  the  provision  made  for  the  infant.^^  A  legacy  for  the 
maintenance  of  the  legatee  draws  interest  from  the  time  of  the 
testator's  death.^^  But  it  must  be  shown  that  it  was  the  inten- 
tion of  the  testator  to  give  the  legacy  for  that  purpose  if  the 
relation  of  loco  parentis  does  not  exist.  Where  a  grandfather 
bequeathed  pecuniary  legacies  to  his  grandchildren  to  be  paid 
at  their  majority,  with  a  condition  that  if  either  of  them  died 
before  attaining  that  age  the  share  to  which  he  would  have  been 
entitled  should  go  into  the  residue  of  the  testator's  estate,  the 
legatees  were  not  entitled  to  interest.  "To  require  in  the  mean- 
time the  payment  of  interest  would,  in  effect,  add  a  provision  to 
the  will,  or  would  imply  that  the  testator  intended  interest  to 
be  paid  because  of  the  existence  between  him  and  the  legatees 
of  the  relation  of  parent  and  child  though  there  is  not  the  slight- 
est evidence  that  such  a  relation  did  in  fact  exist."  ^*  Neglect  to 
demand  interest  may  affect  the  time  for  which  it  may  be  re- 
covered where  the  time  of  payment  is  within  the  discretion  of  a 
person  named.^^ 

The  date  from  which  and  the  rate  at  which  a  legacy  bears 
interest  is  to  be  determined  by  the  law  of  the  testator's  domi- 
cile.^^  After  a  legacy  is  due  it  bears  interest  although  the  fund 
liable  therefor  may  not  have  come  to  the  executor's  hands  with- 
in that  time,  and  notwithstanding  the  delay  was  occasioned  by 
something  in  the  will ;  ^'  or  the  will  was  not  probated  at  the  ex- 
father,  was  in  delicate  health,  is  payable  lie  forfeits  the  right  to 
though  not  incompetent  to  transact       interest. 

business.     Thorn  v.  Garner,   113  N.  92  Re  Moody,   []S!t5]    1    Ch.  101. 

Y.  198.  93  In  re  Mackay,  107  Cal.  303. 

Where  a  legacy  given  for  the  edu-  9*  Vonder  Horst  v.  Vonder  Horst, 

cation  of  the  legatee  was  not  applied       88  Md.  127;   In  re  Todd's  Est.,  237 
for  by  him  until  he  was  thirty  years       Pa.  466,  43  L.R.A.(N.S.)    869. 
of  age  it  was  awarded  with  interest.  95  Harrison   v.    Watkins,    127    Ga. 

Lynch's  App.,  12  W.  N.  C.  104.    But       314. 

see  Bohrer  v.  Otterback,  21  D.  C.  32,  96  Welch  v.  Adams,  152  Mass.  74, 

holding  that  if  the  legatee  permits       9  L.R.A.  244;  Graveley  v.  Graveley, 
the  legacy  to  remain  in  the  corpus       25  S.  C.  ],  60  Am.  Rep.  478. 
of  the  estate  for  many  years  after  it  97  In    re    Ewing's    Est.,    103    App. 


§  J344] 


INTEEEST. 


108: 


piration  of  a  year  from  the  testator's  death,"'  or  the  executors 
have  not  been  able  to  realize  from  the  estate  because  of  unjusti- 
fiable proceedings  taken  by  the  legatees.""  But  if  a  legatee  who 
is  chargeable  with  knowledge  that  his  legacy  must  Im  jtiiid  out 
of  the  proceeds  of  the  sale  of  land  wrongfully  enters  into  tlie 
possession  of  the  land  and  prevents  its  sale  he  is  not  entitled  to 
interest  during  the  time  the  sale  is  delayed.^  If  the  legacy 
produces  interest  the  legatee  is  entitled  to  it  though  the  amount 
is  realized  contrary  to  the  testator's  direction.^  The  interest  is 
payable  at  the  legal  rate  though  it  is  in  excess  of  that  produced 
by  the  fund.^  But  a  legatee  who  causes  delay  in  payment  can 
recover  only  such  interest  as  the  fund  produced.*  If  a  legacy 
consists  of  sums  directed  to  be  paid  annually  it  seems  that  inter- 
est on  arrears  is  not  allowed  unless  under  special  circumstan- 
ces.^    A  testamentary  annuity  to  the  widow  in  lieu  of  dower 


Div.  (N.  Y.)  500;  Davis  v.  Rake 
44  N.  J.  Eq.  506;  Kent  v.  Dunham 
106  Mass.  586;  Huston's  App.,  0 
Watts  472;  Hoagland  v.  Schenck 
16  N.  J.  L.  370;  Martin  v.  Martin 
6  Watts  67 ;  Addams  v.  Heffernan 
9  id.  529.  See  Turrentine  v.  Per 
kins,  46  Ala.  631;  Magoffin  v.  Pat 
ton,  4  Rawle  113;  Brownlce  v.  Steel 
Walk.  (Miss.)   170. 

Interest  is  due  after  judicial  de 
mand.  Fuentcs  v.  Canon,  0  Philip 
Isl.  117. 

98  0gdcn  V.  Pattec,  149  Mass.  82^ 
14  Am.  St.  401;  Lawrence  v.  Em 
bree,  3  Bradf.  364. 

99  Kent  V.  Dunham,  106  Mass.  586 
1  Haight    V.    Pine,    10    App.    Div 

(N.  Y.)  470. 

2Whitwortli  V.  Kwing,  15  Lea 
595;  Stephenson  v.  Harrison,  3  Head 
729:  Stroud  v.  Gwyer,  28  Beav.  130. 
See  Dimes  v.  Scott,  4  Russ.  195. 

3  Welch  V.  Adams,  152  Mass.  74, 
9  L.R.A.  244;  Ogdcn  v.  Pattec,  149 
Mass,  82,  14  Am.  St.  401;  Loring 
V.  Woodward,  41  N.  H.  381,  77  Am. 
Dec.  769;  Kent  v.  Dunham,  100 
Mass.  586;   Stevens  v.  Melclier,  152 


N.  Y.  551,  580;  Matter  of  Oakes,  19 
App.  Div.  (N.  Y.)  192;  Gray  v.  Case 
School  of  Applied  Science,  62  Ohio 
St.  1;  Watt's  Est.,  3  Pa.  Dist.  343; 
Sloan's  App.,  168  Pa.  422,  47  Am. 
St.  889;  Griffith's  Est.,  21  Pa.  Dist. 
82.  In  Matter  of  O'Hara,  19  N.  Y. 
Misc.  254,  it  is  held  that  a  bequest 
in  trust,  with  direction  that  the  in- 
come shall  be  applied  to  a  person's 
use  for  life,  docs  not  entitle  the  lega- 
tee to  interest  from  th(»  time  of  the 
decedent's  death  where  there  was  no 
income  from  it  during  the  year  fol- 
lowing the  granting  of  letters. 

4Baugh's  Est.,  12  Pa.  Dist.  303. 
lender  a  statute  the  rate  of  interest 
is  fixed  by  the  court  within  the  legal 
rate  according  to  the  circumstances 
of  the  case.  See  Twell's  Est.,  11 
id.  713. 

6  Watt's  Est..  3  Pa.  Dist.  343; 
McNairy  v.  McNairy,  1  Tenn.  Cas. 
.329;  Grant  v.  Edwards,  92  N,  C. 
447;  Isenhart  v.  Brown,  2  Edw.  341; 
Adams  v.   Adams,    10   Leigh   527. 

A  legatee  is  not  bound,  in  the  ab- 
sence of  an  order  of  court,  to  ac- 
cept    payment     of     his     legacy     in 


1086  SUTHERLAND    ON    DAMAG-KS.  [§    344 

will  be  considered  as  intended  for  support  and  looked  upon  with 
favor,  and  interest  will  be  allowed  while  in  arrears;  ^  but  not  if 
payable  in  agricultural  products  at  a  particular  place,  in  the 
absence  of  proof  of  a  demand  there.'  Where,  in  execution  of  an 
ante-nuptial  agreement  that  the  wife  should  have  one-third  of 
all  the  real  and  personal  property  her  husband  should  die  seized 
and  possessed  of  during  her  life  and  widowhood,  in  lieu  of  her 
dower  and  distributive  share,  the  court  of  chancery,  with  her 
consent,  decreed  a  sale  of  lands  of  the  deceased  husband 
free  from  all  claims  of  the  widow  and  prescribed  as  part 
of  the  terms  of  sale  that  one-third  of  the  price  should  be 
payable  on  the  termination  of  her  life  or  widowhood,  but  the 
interest  thereon  should  be  annually  paid  to  her,  it  was  con- 
sidered that  the  same  rule  should  apply  as  to  annuities  granted 
for  maintenance  and  that  interest  should  be  allowed  on  the 
arrears  of  interest.* 

If  a  legatee  is  executor  and  receives  money  from  the  estate 
from  time  to  time  which  is  charged  as  a  payment  upon  the 
legacy  and  api)lied  to  the  use  of  the  legatee,  it  is  proper  to  com- 
pute the  interest  upon  the  legacy  until  the  sum  so  received 
equals  the  interest  and  then  to  credit  it  as  a  payment  upon  the 
legacy  and  compute  the  interest  upon  the  balance  until  another 
payment  was  so  credited.^  If  a  legatee  does  not  demand  inter- 
est and  during  the  period  of  neglect  the  executrix  enjoys  the 
income  of  the  property,  interest  cannot  be  collected  thereafter 

instalments.     Welch  v.  Adams,   l.l'Z  lowed.     Welch  v.  Adams,   152  Mass. 

Mass.  74,  0  L.R.A.  244.  74,  !)  L.R.A.  244. 

6  Waplcs  V.  Waples,  1   Ilarr.  394;  7  Phillips    v.    Williams,    5    Gratt. 

Houston  V.  Jamison,  4  id.  330.     See  25!). 

Webb  V.   Lines,   77   Conn.  51  ;    Fan-  8  Tiiirentine   v.    Perkins,    40    Ala. 

ning  V.  Main,  77  Conn.  94.  031;    Beavers   v.   Smith,    11    id.   32; 

If  a  widow  accept  the  provisions  Newman  v.  Auling,  3  Atk.  579.     See 

made    for    lior    by    will    in    lieu    of  Addams  v.  Heffernan,  9  Watts  529; 

dower,  when  she  might  have  rejected  Reed  v.  Reed,  1  W.  &  S.  235;  Smyser 

them,  she  cannot  claim  the  benefit  v.    Smyser,    3    id.    437;    Stewart   v. 

of  the  rule  which  regards  her  as  a  Martin,    2    Watts,    200;    Knettle   v. 

purchaser   for   value,   and  must   ac-  Grouse,  6  id.  123.     See  also,  Wood- 

cept  the  interest  on  her  legacy  sub-  ward  v.  Woodward,  2  Rich.  Eq.  23; 

ject  to  the  general  rule;  interest  on  Gill's  App.,  2  Pa.  221. 

tlie  deferred  interest  will  not  be  al-  9  Stevens    v.    INIelcher,    152    N.    Y. 


§    345]  INTEREST.  10S7 

at  the  expense  of  the  tenants  in  reiiiaiiulor.^"  Tlie  riulit  to  in- 
terest is  waived  if  it  is  not  asserted  at  the  time  of  exerutiuii'  a 
release  and  acquittance,  the  acceptance  of  the  principal  beiiii;'  a 
sufficient  consideration  to  support  tlie  acquittance  and  release." 
The  facts  that  the  legatee  is  a  uon-rosident  of  the  state  and  thnt 
his  residence  is  unknown  to  the  executor,  and  that  tlic  n>si(hie  of 
the  testator's  estate  is  given  in  trust  for  his  mother,  tlie  income 
to  be  paid  on  the  trust  fund  from  the  death  of  the  testator,  is 
immaterial  to  the  legatee's  right  to  interest  after  the  (ixpirntioii 
of  one  year  from  the  testator's  death  though  payment  of  the 
legacy  was  not  demanded  at  the  expiration  of  the  year.^^ 
Though  an  active  spendthrift  trust  for  life  is  not  terminable  l)y 
the  act  of  the  cestui  que  trust  his  right  to  interest  ceases  wliere 
his  conduct  prevents  its  payment  or  the  setting  aside  of  it  for 
hia  benefit.^^  Interest  will  not  be  allowed  the  personal  rep- 
resentatives of  a  widow  as  legatee  of  a  sum  in  lien  of  her 
exemption  where  she  received  the  entire  income  of  the  estate 
during  her  life  and  did  not  demand  the  h^gacy.^^  Where  the 
administration  of  estates  is  regulated  by  a  statute  wliercin  m) 
mention  of  interest  is  made  none  can  be  allowed. ^^ 

§  345.  Interest  on  advancements.  Because  property  or  money 
advanced  to  a  legatee  or  distributee  belongs  to  him  tlic  gcnernl 
rule  is,  in  the  absence  of  anything  to  the  contrary  in  the 
will,  that  he  is  not  chargeable  with  interest  on  it  during  the 
life-time  of  the  ancestor,^^  though  the  amount  was  originally  an 
indebtedness  to  him  and  remained  such  until  he  made  his  wili.'^ 
If  there  is  any  liability  for  interest  it  does  not  arise  until  the 

55],    580;    German    Pioneer    Verein  15  Cohl)    v.    Stratton'.s    Kstatc',    5(i 

V.  Meyer,  70  N.  J.  Eq.  192.  Colo.  27S. 

10  Adams  v.  Adams,  55  N.  J.  Eq.  16  Cabell  v.  Puryear.  27  Tiratt. 
42.  !)02;   Barrett  v.  Morris,  83  id.  27:5; 

11  Kechner  v.  Kinder,  SI  111.  Ap]).  Davies  v.  Hughes,  8G  Va.  flO!). 

23;   Matter  of  Ilodgman,  140  N.   V.  n  Patterson's  A\>\^.,   128   Pa.  20!); 

421.  Carth  v.  Cartl),  13!t  ^[o.  45(5;   Mat- 

12  Daniels  v.  Benton,  ISO  Mass.  {vy  of  Kieiian,  1.")  \.  V.  :\lisc.  ;?(iS ; 
559.  i''arnuni's  Est.,  17(i   I'a.  3()(i;   Comer 

13  Porter's  Est.,  21   Pa.  Dist.  330.       v.  Shei.ee,  129  Ala.  588.     See  Baker 
14Bateman's    Est.,    21     Pa.     Dist.       v.    Safe    Deposit    &    T.    Co.,    93    Md. 

475.  3(18. 


10S8  SUTHERLAND    ON    DAMAGES.  [§    345 

estate  is  ready  for  final  distribution.^*  In  Pennsylvania  inter- 
est will  be  charged  from  one  year  after  the  testator's  death ;  ^^ 
but  in  Tennessee  it  is  chargeable  from  the  time  of  death,^"  al- 
though receipts  for  the  amount  provide  for  its  computation 
from  an  earlier  period.^^  In  an  English  case  ^^  the  testator 
gave  his  residuary  estate  to  his  widow  for  life  with  remainder 
to  his  children  equally,  with  a  proviso  for  bringing  into  hotch- 
pot all  sums  advanced  to  any  of  them  by  him  during  his  life. 
He  made  advances  to  some  of  them,  and  it  was  held  that  in 
distributing  the  residuary  estate  among  the  children  after  the 
death  of  the  widow  the  children  to  whom  advances  were  made 
must  bring  them  into  hotchpot  with  interest  up  to  the  distribu- 
tion of  the  estate,  such  interest  to  be  computed  from  the  death 
of  the  widow.  In  another  case  ^^  interest  was  allowed  as  from 
the  date  of  the  advance,  that  being  necessary  to  bring  about 
equality  between  the  heirs.  An  heir  who  is  a  debtor  to  the  estate 
and  who  asserts  his  right  to  share  in  the  distribution  of  it 
may  not  recover  interest  on  notes  of  the  testator  held  by  him 
after  the  death  of  the  testator.^^  If  the  representatives  of  a 
decedent  are  authorized  to  treat  an  advancement  as  a  loan  in- 
terest is  to  be  computed  only  from  the  time  they  elect  to  so 
treat  it.^®  If  land  is  conveyed  by  way  of  advancement  and  the 
value  of  its  use  and  occupation  cannot  be  shown  with  reason- 
able certainty  the  grantee  will  be  charged  with  annual  interest 
on  its  value  as  it  was  when  he  took  possession.*^     The  intent 

18  Cases  cited  first  to  this  section;       4.'?0.     Compare  McNairy  v.  McNairy, 
Tart  V.  Tart,  154  N.  C.  502.  l  Tenn.  Cas.  .329   (1874),  and  Gran- 

19  Patterson's  App.,  supra.  jjen-y  v.  Jordan,   3   id.  267    (3879). 
Where    the    testator    charges    be-  2i"Roberson  v.  Nail,  85  Tenn.  124. 

quests  with  all  sums  advanced  and  22  l„  re  Rees,  17  Ch.  Div.  701. 

with  unpaid  interest  thereon  inter-  23  Middleton' v.   Moore,    [1897]    2 

est  is  to  be  computed  from  one  year  ^^     ^^^       ^^^    Dallraeyer    v.    Dall- 

after  his  death   until  the  estate  is  r-r^r,^-,  -.  ^t     ^r,^ 

,,,    -       cii  1             »      IT  i      1-    Ti  meyer,  [1896]  1  Ch.  372. 

settled.      Stelwagon's    Est.,    17    Pa.  J     >  ^                                      ^,  .     ^ 

T-v-  J.  ann  Ti  ■  ui  n  ^*  Tobias  V.  Richardson,  5  Ohio  C. 
Dist.   609.     It   IS   payable   annually 

if  instalments  of  the  legacy  are  so  C.  (N.  S.)  74.  Under  the  statute 
I>ayable.     Schall's  Est.,  id.  471.  interest  is  not  chargeable  after  the 

20  Johnson    V.    Patterson,    13    Lea       death  of  the  ancestor.     Ibid. 

02(5 ;    Williams   v.   Williams,   15   id.  ^6  Cole  v.  Andrews,  176  N.  y.  374. 

4.'{S;    Steele   v.    Frierson,    85    Tenn.  26  Tart  v.  Tart,  s«;>rrt. 


346] 


INTEREST. 


1089 


of  the  testator  as  disclosed  by  his  will  is  determinativo  of  the 
right  to  interest,^'''  Init  siu'li  intent  mnst  lie  cloiirly  mnnifostod.^* 
§  346.  On  money  due  on  policy  of  insurance,  and  on  premiums. 
An  illustration  of  the  principle  that  all  moneys  certain  in 
amount  and  time  of  payment  bear  interest  after  they  become 
due  is  afforded  by  the  rule  applied  in  actions  on  policies  of  in- 
surance which  contain  an  agreement  to  pay  at  a  certain  time 
after  loss.  Interest  is  allowed  after  that  time  expires  until 
payment  is  made.^^  The  time  fixed  by  the  policy  may  be 
waived  by  the  conduct  of  the  insurer  and  the  money  become 
due  before  that  period  expires,  as  where,  on  proof"  of  loss  and 
demand  of  payment  at  an  earlier  day,  the  insurer,  admitting 
the  loss,  offered  a  less  sum  and  refused  to  pay  the  full  amouni.^" 
If  the  loss  is  payable  sixty  days  after  proofs  are  made  an 
agreement  to  arbitrate  the  loss  is  a  waiver  of  proofs,  and  in- 
terest may  be  recovered  from  the  time  of  the  loss,^^  or,  prefer- 


27  Gray  v.  Hayhurst,  157  111.  App. 
488;  Miller's  App.,  31  Pa.  337;  Por- 
ter's App.,  94  Pa.  332;  Farnuin'H 
Est.,  176  Pa.  366. 

28  Stahl's  Est.,  25  Pa.  Super.  402. 

29  Hartford  Ins.  Co.  v.  Enoch,  79 
Ark.  475;  Grand  Lodge  of  L.  F.  v. 
Orrell,  206  111.  208,  109  111.  App. 
422;  Boening  v.  North  American 
Union,  155  111.  App.  528;  Gray  v. 
Merchants'  Ins.  Co.,  125  111.  App. 
370;  Supreme  Lodge,  etc.  v.  Rehg, 
116  111.  App.  59:  Knights  Templars 
&  M.  L.  Ind.  Co.  V.  Crayton,  110 
111.  App.  648;  Crook  v.  New  York 
L.  Ins.  Co.,  132  Md.  268;  Palatine 
Ins.  Co.  V.  O'Brien,  107  Md.  341,  16 
L.R.A.(N.S.)  1055;  Home  Ins.  Co. 
V,  Schiffs,  103  Md.  648;  Amory  v. 
Reliance  Ins.  Co.,  208  Mass.  378; 
Bamberge  v.  Supreme  Tribe,  159  Mo. 
App.  102;  Berry  v.  Virginia  State 
Ins.  Co.,  83  S.  C.  ]3;  Lodfonl  v. 
Hartford  F.  Ins.  Co.,  161  111.  App. 
233;  McNeills  v.  Etna  Ins.  Co.,  I7(i 
111.  App.  575;  Catholic  Knights  v. 
Franke,   137  111.  118;   Grand  Lodge 

Suth.  Dam.  Vol.  I.— 69. 


A.  0.  U.  W.  V.  Bagley,  164  111.  340, 
60  111.  App.  589;  Southern  Ins.  Co. 
V.  White,  58  Ark.  277;  Hanover  F. 
Ins.  Co.  V.  Lewis,  28  Fla.  209;  Pratt 
V.  Manliattan  L.  Ins.  Co.,  47  La. 
Ann.  855:  Hardy  v.  Lancashire  Ins. 
Co.,  166  Mass.  210,  33  L.R.A.  241. 
55  Am.  St.  395;  Randall  v.  Ameri- 
can F.  Ins.  Co.,  10  Mont.  340,  24 
Am.  St.  50;  Wood  v.  Ca.scade  F.  & 
M.  Ins.  Co.,  S  Wasli.  427,  40  Am. 
St.  917;  Unsell  v.  Hartford  L.  &  A. 
Ins.  Co.,  32  Fed.  443;  Guarantee  Co. 
V.  Mechanics'  Sav.  Bank  i-  T.  Co., 
SO  Fed.  766;  Home  Ins.  Co.  v.  Adler, 
71  AIji.  5J(I;  Hastings  v.  Westches- 
ter F.  Ins.  Co.,  73  N.  V.  141;  Queen 
Ins.  Cn  y  .Toflferson  Ice  Co.,  64  Tex. 
578;  Field  v.  Insurance  Co.,  0  Diss. 
121;  Kniek'-rboeker  Ins.  Co.  v. 
Gould.  SO  111.  388;  Peoria  M.  &  F 
Ins.  Co.  V.  Lewis,  18  111.  553. 

30  Baltimore  F.  Ins.  Co.  v.  Lom-y, 
20  Md.  20. 

31  Glover  v.  Rocliester  German  Ins. 
Co.,   11    Wash.   142. 


1090 


SUTHERLAND    ON    DAMAGES. 


[§    346 


ably,  sixty  days  after  the  waiver.^^  On  the  denial  of  its 
liability  the  insurer  becomes  immediately  liable  for  interest 
though  formal  demand  of  payment  was  not  made.^^  In  at  least 
one  case  liability  for  interest  related  back  to  the  time  of  loss.^* 
If  the  policy  provides  for  the  payment  of  the  loss  after  its 
adjustment  or  after  proofs  of  it  have  been  made,  in  the  former 
case  there  will  be  no  liability  for  interest  anterior  to  judicial 
demand  if  reasonable  efforts  are  made  by  the  insurer  to  effect 
an  adjustment ;  ^^  and  so  in  the  latter  case  if  proper  proofs  are 
not  fumished.^^  If  the  contract  contemplates  that  a  loss  is  to 
be  paid  within  a  specified  time  if  the  funds  on  hand  are  suffi- 
cient, and  otherwise  that  the  company  shall  make  an  assess- 
ment, and  there  is  no  laches  in  making  the  assessment,  interest 
cannot  be  recovered.^'  If  the  insurance  is  payable  to  the  person 
whose  life  is  insured,  if  he  survives  a  certain  day,  interest  is 
recoverable  only  from  the  time  demand  is  made.  If  there  is 
also  a  provision  in  the  policy  by  which  it  is  payable  ninety 
days  after  notice  of  the  death  of  the  insured  this  clause  has  no 
application  to  the  first  contingency,  and  interest  is  due  only  as 


32  East  Texas  F.  Ins.  Co.  v.  Brown, 
82  Tex.  631. 

Where' the  rights  of  the  insured 
were  repudiated  the  time  of  the  serv- 
ice of  the  complaint  was  fixed  as 
that  from  which  tlie  time  for  mak- 
ing proofs  was  to  be  computed. 
Smitli  V.  Northwestern  Nat.  L.  Ins. 
Co.,  123  Wis.  586. 

33  Bernhard  v.  Rocliester  German 
Ins.  Co..  79  Conn.  388;  Wehring  v. 
Modern  Woodmen,  107  Minn.  25; 
Ferine  v.  Grand  Lodge  A.  0.  U.  W., 
51  Minn.  224;  North-Western  Mut. 
L.  Ins.  Co.  V.  Freeman,  19  Tex.  Civ. 
App.  632. 

34  Western  &  A.  Pipe  Lines  v. 
Home  Ins.  Co.,  145  Pa.  346. 

35  Gettwerth  v.  Teutonia  Ins.  Co., 
29  La.  Ann.  30. 

36  Rogers  v.  Manhattan  L.  Ins. 
Co.,  138  Cal.  285;   Trager  v.  Louis- 


iana Equitable  L.  Ins.  Co.,  31  La. 
Ann.  235. 

Tlie  conditions  upon  which  inter- 
est may  be  demanded  against  a  state 
must  be  complied  with.  Evers  v. 
Glynn,  126  App.  Div.    (N.  Y.)    519. 

Under  a  statute  expressing  that 
no  interest  shall  be  allowed  on  any 
claim  up  to  tlie  time  of  the  rendition 
of  judgment  unless  there  be  a  con- 
tract stipulating  for  it,  a  territory 
is  not  liable  for  interest  upon  a 
judgment  of  its  highest  court,  which 
is  reversed  by  the  supreme  court  ol 
the  United  States,  prior  to  the  judg- 
ment of  the  latter.  Lowrey  v.  Terri- 
tory, 20  Hawaii   112. 

Demand  should  be  made  on  a  bene- 
ficial society.  Dary  v.  Providence 
P.  Ass'n,  27  R.  I.  377. 

37  Commonwealth  v.  Massachusetts 
Mut.  Tns.  Co.,  119  Mass.  45;  Pray 
v.  Life  Tnd.  &  S.  Co.,  104  Iowa,  114. 


§  oiBj 


INTEREST, 


1091 


daiiiages.^^  The  insurer  is  not  ]ial)lc  for  interest  Hecorrlino-  to 
the  terms  of  its  policy  so  long  as  the  person  entitled  to  receive 
the  amount  due  neglects  to  clothe  himself  with  the  legal  right  to 
demand  and  receive  it,^^  or  refuses  to  accept  because  of  a  dispute 
as  to  the  amount  due.*"  The  insured  cannot  recover  interest  if 
he  refuses  to  submit  the  extent  of  the  loss  to  arbiti-ation  in  ac- 
cordance with  the  policy ;  *^  nor  if  he  sues  to  set  asi(l(>  :iii  awai-d  ; 
there  is  nothing  on  which  to  compute  interest  before  judgment 
in  that  suit.*^  If  the  contract  is  partly  written  and  partly  un- 
written it  is  unwritten  within  the  meaning  of  the  Illinois  statute, 
and  interest  is  not  recoveralvlc  unless  there  has  been  unreasonable 
and  vexatious  delay  in  payment.*^  Interest  is  not  allowable 
in  favor  of  clainumts  against  the  assets  of  an  insolvent  insurer." 
Where  the  sum  sued  for  in  any  case  is  certain  and  liquidated  it 
does  not  cease  to  be  such  for  the  purpose  of  the  allowance  of 
interest  though  the  jury  make  an  arbitrary  deduction  there- 
from.'*^ Interest  may  not  be  recovered  on  a  policy  insuring 
credits  anterior  to  the  time  the  debtor  was  liable  therefor.*^ 
A  marine  policy  is 'a  maritime  contract,  and  the  allowance 


38  Pierce  v.  Charter  Oak  L.  Ins. 
Co.,  138  Mass.  151;  Davis  v.  Na- 
tional L.  Ins.  Co.,  188  Mass.  209. 

39  Palmer  v.  Lloyd  Mystic  Legion, 
86  Neb.  596  (if  the  time  for  making 
proof  is  not  fixed  and  tlio  loss  is 
payable  ninety  days  after  it  is  made, 
thirty  days  is  a  reasonable  time  in 
which  to  make  proof)  ;  Webster  v. 
British  Empire  Mut.  L.  Assur.  Co., 
15  Ch.  Div.  169,  overruling  Crossley 
V.  City  of  Glasgow  L.  Assur.  Co., 
4  id.  42]  ;  Britton  v.  Supreme  Coun- 
cil Royal  Arcanum,  46  N.  J.  Eq.  102, 
19  Am.  St.  376. 

Interest  is  not  due  on  an  indem- 
nity policy  until  the  insured  has 
paid  a  judgment  against  him.  Hen- 
derson V.  Maryland  Cas.  Co.,  29  Pa. 
Super.  398. 

40  Williams  v.  New  York  Life  Ins. 
Co.,  122  Md.  141. 

41  Schrepfer  v.  Rockford  Ins.  Co., 
77  Minn.  291. 


A  waiver  of  the  provision  for  ar- 
bitration is  equivalent  to  striking 
it  out  of  tlic  policy,  and  interest 
may  be  allowed  without  reference  to 
it.  Gragg  v.  Nortliwestern  Nat.  Ins. 
Co.,  140  Mo.  App.  685. 

42  Stemnier  v.  Scottisli  Ins.  Co., 
33  Ore.  65. 

43  Railway  Passenger  &  F.  Con- 
ductors' Ass'n  V.  Tucker,  157  III. 
194.     See  §  323. 

44  American  Cas.  Ins.  Co.'s  Case, 
82  Md.  535,  38  L.R.A.  97. 

45  Martin  v.  Silliman,  53  N.  Y. 
615.  If  the  jury  fail  to  award  in- 
terest in  a  verdict  for  the  face  value 
of  a  life  policy  the  court  may  add 
it  or  direct  the  jury  to  do  so. 
Knights  of  Pythias  v.  Allen.  104 
Tcnn.  623. 

46  I'ringle  v.  Pliiiad(I|ibia  Cas.  Co. 
153  App.  Div.   (N.  Y.)    180. 


1092  SUTHERLAND    ON    DAMAGES.  [§    346 

of  interest,  under  the  rules  adopted  by  the  United  States  su- 
preme court  for  the  government  of  courts  of  admiralty,  is  for 
the  discretion  of  the  court.  Where  the  insurer  admitted  lia- 
bility for  almost  the  whole  sum  claimed  but  withheld  it  for 
nearly  seven  years,  during  which  a  costly  litigation  was  carried 
on,  the  allowance  of  interest  from  the  time  the  sum  due  should 
have  been  paid  was  sustained.*'''  If  there  is  no  stipulation  con- 
cerning interest  the  rate  is  governed  by  the  statute  in  force  when 
the  right  to  recover  the  loss  occurred  unless  the  law  reducing 
the  rate  took  effect  intermediate  that  event  and  payment,  in 
which  case  interest  at  the  larger  rate  would  be  due  until  the 
reduced  rate  became  the  legal  rate,  when  that  would  govern.*^ 
Interest  is  payable  at  the  rate  provided  by  the  laws  of  the  state 
in  which  the  policy  was  executed  and  is  payable.*^  A  judgment 
rendered  in  favor  of  an  insurance  company  for  premiums  earned 
up  to  the  time  of  cancellation  of  the  policy  should  include 
interest  from  that  time.^°  Interest  on  a  delayed  payment  of  a 
premium,  made  within  the  period  of  grace,  is  not  due  until  an 
account  therefor  is  rendered  and  demand  for  payment  made.^^ 
§  347.  Not  allowed  on  unliquidated  demands.  It  is  a  gen- 
eral principle  that  interest  is  not  allowed  on  unliquidated 
damages  or  demands.  The  term  "unliquidated"  applies  to  the 
damages  recoverable  for  assault  and  battery,  other  personal  in- 
jury, or  slander,  and  also  to  those  recoverable  on  a  quantum 
meruit  for  goods  sold  and  delivered,  or  services  rendered.  In- 
terest is  denied  when  the  demand  is  unliquidated  for  the  reason 
that  the  person  liable  does  not  know  what  sum  he  owed,  and 
therefore  cannot  be  in  default  for  not  paying.  Those  damages 
which  are  wholly  at  large,  depending  on  no  legal  standard,  and 
which  are  referred  to  the  discretion  of  a  jury,  can  never  be 
made  certain  except  by  accord  or  verdict.  There  can  be  no 
default  in  respect  to  their  payment  and  they  are  never  en- 

47  New  Zealand  Ins.   Co.  v.  Earn-  49  Cudahy  P.  Co.  v.  New  Amster- 
nioor  S.  S.  Co.,  24  C.  C.  A.  644,  79       dam  Cas.  Co.,  ]32  Fed.  623. 

Fed.  368.  50  Casualty     Co.     of     America    v. 

48  Firemen's     Fund     Ins.     Co.     v.       Beattie,  75  Wash.  166. 

Western  Ref.  Co.,  162  111.  322.     See  51  People  v.  Western   Life  Indem- 

§§  368-370.  nity  Co.,  181  111.  App.  110. 


I 


1 


347] 


INTEREST. 


1093 


hanced  by  interest. ^^  "But  demands  based  upon  market  values 
susceptible  of  easy  proof,  tbougb  unlicpiidated  until  tlie  ])ar- 
ticular  subject  of  tbe  demand  has  been  made  definite  and  certain 
by  agreement  or  proof,  are  not  so  uncertain  that  no  default  can 
be  predicated  of  any  dehiy  in  making  payment.^'     A  demand  is 


52  Herrman  v.  Loland,  16-'?  App. 
Div.  (N.  Y.)  515;  Schmidt  v.  Briar- 
cliff  Lodge  A8s'n,  147  N.  Y.  Supp. 
911 ;  Illinois  Surety  Co.  v.  United 
States,  131  C.  C.  A.  476,  215  Fed. 
334;  Stephens  v.  Phoenix  B.  Co.,  139 
Fed.  248,  71  C.  C.  A.  374;  Krasilni- 
koff  V.  Dundon,  8  Cal.  App.  406; 
United  States  v.  Quinn,  122  Fed.  65, 
58  C.  C.  A.  401  ;  Clyde  M.  &  E.  Co. 
V.  Buoy,  71  Kan.  293;  Winter  v. 
Gittings,  102  Md.  464;  Myers  v. 
Radford,  167  Mich.  135;  Bull  v. 
Rich,  92  Minn.  481 ;  Excelsior  T.  C. 
Co.  V.  Harde,  181  N.  Y.  11,  106  Am. 
St.  493;  Mimson  v.  Sith  W.  Mach. 
Co.,  118  App.  Div.  (N.  Y.)  398; 
Stannard  v.  Reid,  118  App.  Div. 
(N.  Y.)  304;  Fox  v.  Davidson, 
111  App.  Div.  (N.  Y.)  174;  Penny 
V.  Ludwick,  152  N.  C.  375;  Louis- 
ville &  N.  R.  Co.  V.  Wallace,  90 
Tenn.  53,  14  L.R.A.  548;  Burrows 
V.  Lownsdale,  133  Fed.  250,  66  C. 
C.  A.  650;  Big  Sandy  R.  Co.  v.  Rice, 
147  Ky.  645;  Board  of  Com'rs  v. 
Flanagan,  21  Colo.  App.  467;  Amer- 
ican-H.  E.  &  C.  Co.  v.  Butler,  17  Cal. 
App.  764;  General  Supply  &  C.  Co. 
V.  Goelet,  149  App.  Div.  (N.  Y.)  80; 
Meyer  v.  Buckley,  22  Cal.  App.  96: 
Trego  V.  Rubovits,  178  111.  App.  127; 
Kitchin  v.  Oregon  N.  Co.,  65  Ore.  20 ; 
Brooklyn  Heights  R.  Co.  v.  Brook- 
lyn City  R.  Co.,  151  App.  Div.  (N. 
Y.)  465;  Ferrea  v.  Chabot,  121  Cal. 
233;  Coburn  v.  Goodall,  72  Cal.  498, 
1  Am.  St.  75;  Easterbrook  v.  Farqu- 
harson,  310  Cal.  311;  Cox  v.  .Mc- 
Laughlin, 76  Cal.  67,  9  Am.  St.  I(i4; 
Maeomber  v.  Bigelow,  123  Cal.  532, 
126    Cal.    9;    De.\ter    v,    Collins,    21 


Colo.  455;  Imperial  11.  Co.  v.  Claf- 
lin  Co.,  175  111.  119;  Wittenberg  v. 
Mollyneaux,  59  Neb.  203,  citing  tlie 
text;  Button  v.  Kiniictz,  88  Ilun, 
35;  Matter  of  Ilartman,  13  X.  Y. 
Misc.  486;  Meyers'  Est..  179  Pa. 
157;  Kuhn  v.  INIcKay,  7  Wyo.  42, 
65,  quoting  the  text;  Pacific  P.  Tel. 
Cable  Co.  v.  Fleischner,  14  ('.  C.  A. 
166,  66  Fed.  899;  Couburn  v.  Mus- 
kegon B.  Co.,  72  Mich.  134:  .Mans- 
field V.  New  York,  etc  \l.  Co.,  Ill 
N.  Y.  331,  4  L.R.A.  566. 

53  New  York,  etc.  R.  Co.  v.  Iv()|)(>r, 
176   Tnd.  497,   36  L.R.A.  (X.S.)    952. 

Regardless  of  the  character  of  tlic 
action  interest  is  recoverable  in  all 
cases  for  tlu'  use  or  (h-sl  nictiun  of 
property  when  the  aiimuiit  wliicli  is 
due  the  plaintiff  may  be  known  or 
ascertained  approximately  ]i\  refer- 
ence to  niiirket  valiK's.  Missoiiii, 
etc.  R.  Co.  V.  Clark,  (id  Xeli.  KKi, 
citing  tile  text  ami  De  I.avallette  v. 
Wendt,  75  \.  Y.  579;  Sullivan  v. 
McMillan,  .•i7  Fla.  i:!4.  r,:i  Am.  St. 
2:!9:  Gulf,  eti-.  I!.  Co.  v.  Dunniaii, 
6  Tex.  (  iv.  .\pp.  101;  .Mobile,  ele. 
R.  Co.  V.  -In rev.  111  r.  S.  584,  2S 
L.  ed.  527. 

In  Times  I'ul 
Tex.  Civ.  App.  - 
interest  was  allowed  on  damages  re- 
sulting from  a  breach  of  contract  to 
supply  newspapers  to  a  newsdealer. 

In  Wentworth  v.  Manhattan  Mar- 
ket Co.,  218  Mass.  9],  iiterest  was 
allowed  on  danuiges  for  lessee's  fail- 
ure to  erect  a  building  in  accord- 
ance with  Ilia  contract  with  the  les- 
sor. 


Co.    v.    Rood,    — 
-,   163  S.  W.    1037, 


1094 


SUTHEELAND    ON    DAMAGES. 


[§  347 


imliquidafed  if  one  party  alone  cannot  make  it  certain,^* — when 
it  cannot  be  made  certain  by  mere  calculation ;  but  the  allowance 
of  interest  as  damages  is  not  dependent  on  this  rigid  test.^^  The 
test  as  to  the  right  to  recover  interest  for  the  breach  of  contracts 
for  the  sale  of  property  is  the  existence  of  an  established  market 
value  of  it,  or  means  accessible  to  the  party  sought  to  be  charged 
of  ascertaining  by  computation  or  otherwise  the  amount  to  which 
the  plaintiff  is  entitled,^®  though  the  vendee  may  assert  a  coun- 
terclaim because  of  defects  in  the  quality  of  the  goods.^'  It  is 
not  sufficient  to  bring  a  case  within  this  rule  that  expert  testi- 
mony shows  the  value  of  the  property ;  market  value  must  be 
shown  by  sales,  the  current  price.^^  The  words  "debt  or  sum 
certain  payable  at  a  certain  time,"  in  the  English  statute  govern- 
ing the  right  to  interest  require  that  the  certainty  of  both  the 


54  Anthony  v.  Moore,  135  App. 
Div.  (N.  Y.)  203;  Coatcs  v.  Nyack, 
127  App.  Div.  (N.  Y.)  153;  Brook- 
lyn Heights  R.  Co.  v.  Brooklyn  City 
R.  Co.,  151  App.  Div.  (N.  Y.)  465; 
Thacher  v.  New  York,  etc.,  R.  Co., 
153  App.  Div.  (N.  Y.)  186;  Clark 
V.  Dutton,  69  111.  521;  Roberts  v. 
Prior,  20  Ga.  561. 

Where  a  contract  to  convey  land 
is  so  indefinite  in  its  description  as 
to  be  incapable  of  specific  perform- 
ance, and  its  money  value  is  un- 
known, and  the  vendor  cannot  know 
even  approximately  how  much  he  is 
liable  for,  the  rule  permitting  inter- 
est upon  damages  ascertainable  by 
computation  or  from  well  estab- 
lished market  prices  cannot  be  ap- 
plied. Harvey  v.  Hamilton,  54  111. 
App.  507. 

55  Sanderson  v.  Read,  75  111.  App. 
190,  quoting  the  text. 

56  Courteney  v.  Standard  B.  Co., 
16  Cal.  App.  600;  New  York  B.  N. 
Co.  V.  Kidder  P.  Mfg.  Co.,  192  Mass. 
391 ;  Reynolds  v.  Burr,  104  App.  Div. 
(N.  Y.)  31;  Parks  v.  Elmore,  59 
Wash.  584;  Gray  v.  Central  R.  Co., 
157  N.  Y.  483;  White  v.  Miller,  78 
N.  Y.  393,  34  Am.  Rep.  544;  Mans- 


field V.  New  York,  etc.  R.  Co.,  114 
N.  Y.  331,  4  L.R.A.  566;  Clegg  v. 
New  York  N.  Union,  72  Hun  395; 
Martyn  v.  Western  Pac.  R.  Co.,  21 
Cal.  App.  589. 

In  Parkins  v.  Missouri  Pac.  R. 
Co.,  76  Neb.  242,  the  court  said  it 
was  no  answer  to  the  claim  for  in- 
terest against  a  vendee  who  refused 
to  accept  property  that  the  amount 
required  to  compensate  the  vendor 
was  unascertained  and  could  only  be 
ascertained  by  verdict,  and,  conse- 
(juently  he  was  unable  to  tender  the 
amount,  because  that  uncertainty 
was  one  of  the  consequences  of  the 
defendant's  act,  and  if  the  loss  must 
fall  upon  one  or  the  other  because 
of  such  uncertainty,  it  is  just  that 
it  should  fall  on  the  wrongdoer. 
Wittinberg  v.  Mollyneaux,  59  Neb. 
203,  was  overruled. 

57  Dickinson  F.  &  P.  B.  Co.  v. 
Crowe,  63  Wash.  550.  This  is  re- 
garded as  doubtful,  and  is  contrary 
to  Excelsior  T.  C.  Co.  v.  Harde,  181 
N.  Y.  11,  106  Am.  St.  493. 

58  City  of  Rawlins  v.  Murphy,  19 
Wyo.  238;  Sloan  v.  Baird,  162  N. 
Y.  327. 


§    347]  INTEREST.  1095 

sum  due  and  the  time  it  is  payable  shall  be  ascertainable  from 
the  contract.  If  all  the  elements  of  certainty  so  appear  and 
nothing  more  is  required  than  an  arithmetical  computation  to 
ascertain  the  exact  sum  or  the  exact  time  for  payment,  interest 
may  be  recovered.^^  The  code  of  California  awards  interest  to 
every  person  who  is  entitled  to  recover  damages,  certain  or 
capable  of  being  made  certain  by  computation,  if  the  right  of 
recovery  exists  upon  a  particular  day.  Interest  is  recoverable 
under  this  provision  where  a  contract  has  been  fully  performed 
by  the  plaintiff  and  its  fruits  accepted  without  objection  by  the 
defendant,  who  was  in  default  as  to  payment,  the  only  question 
open  being  as  tO'  the  value  of  such  performance.^"  It  is  not 
recoverable  where  the  value  of  the  services  rendered  can  only 
be  established  by  evidence  in  court  or  by  an  accord  between 
the  parties,  and  is  not  susceptible  of  ascertainment  either  by 
computation  or  by  reference  to  known  standards  of  vnluc,^^ 
nor  where  the  price  of  the  goods  sold  fluctuated  duriui:-  tlie 
period  in  question.®^ 

In  a  leading  IvTew  York  case  suit  was  brought  foi-  tln^  \:iluo  of 
rent  long  in  arrear,  payable  in  services  and  specific  articles: 
"eighteen  bushels  of  wheat,  four  fat  hens,  and  one  day's  service 
with  carriage  and  horses,"  were  payable  yearly  as  rent.  It  was 
an  unliquidated  demand,  not  payable  in  money,  nor  was  a 
specified  sum  to  be  paid  in  any  other  way.  But  the  time  of 
payment  was  certain,  and  therefore  the  claim  of  interest  clearly 
raised  the  question  whether  the  uncertainty  of  amount  nhuie 

59  London,   etc.   R.    Co.   v.    South-  61  Cox  v.  McLauglilin,  7G  Cn\.  tin, 

eastern    R.    Co.,    [1892]    1    Ch.    120,  ,3   a,„     ^^^     1^4.    Swinnerton   v.    Ar- 

[1893]  App.  Cas.  429;  Merchant  S.  ^^^^^^^  ^    ^^   ^^    ^.„^    ^^^  ^,,,    ^--. 

Co.  V.  Armitage,  L.  R.  9  Q.  B.  99_;  s^,^.„,^^„.  ^_  (),.,riehs.  Ifi2  Cal.  318; 


Farnham   v.   California   S.   D.   «S:    T, 


McCullough  V.  Clemow,  2G  Ont.  467. 

A    sum    is    payable    at    a   certain 

time  if  the  promise  is  that  it  shall  Co.,  8   Cal.   App.  2(ii;;    CliaMilMTs  v. 

be  paid  within  six  months  after  the  Boyd,   11(1   App.    Div.    (X.   Y.)    208; 

death    of    the    promisor.      Fooks    v.  Merchants'     Colleetion      Agency     v. 

Horner,   [1890]   2  Ch.   188.  ,3  ^,^,              ,,,;   ,,.;,.„^ 

60  Mix  V.  Miller,  57  Cal.  356;  Mc- 
r,    ,  ,  r-         f     J     on    ri   1     rro         V.   Blautli,    163   Cal.    782. 

Fadden    v.    Crawford,    39    Cal.    662. 

The  latter  case  was  ruled  before  the  62  Coghlan  v.  Quartararo,   If.  Cal. 

code  was  enacted.  -^PP-  ('6-- 


1096  SUTHERLAND    ON    DAMAGES.  [§    347 

relieved  the  lessee  from  liability  for  interest  on  the  value,  he  hav- 
ing made  default  in  paying  in  the  particular  mode  provided 
for.  Bronson,  J.,  delivered  the  opinion  in  favor  of  such  lia- 
bility. He  said :  "It  was  decided  in  1806,  without  assigning  any 
reason  for  the  judgment,  that  interest  was  not  recoverable  in 
such  a  case.®^  But  since  that  time  the  supreme  court  has  de- 
liberately held,  on  three  several  occasions,  including  the  present 
one,  that  interest  is  recoverable  in  such  a  case.^*  The  principle 
to  be  extracted  from  these  decisions  may  be  stated  as  follows: 
Whenever  a  debtor  is  in  default  for  not  paying  money,  deliv- 
ering property,  or  rendering  services  in  pursuance  of  his  con- 
tract, justice  requires  that  he  should  indemnify  the  creditor 
for  the  wrong  which  he  has  done  him;  and  a  just  indemnity, 
though  it  may  sometimes  be  more,  can  never  be  less,  than  the 
specified  amount  of  money,  or  the  value  of  the  property  or 
services  at  the  time  they  should  have  been  paid  or  rendered, 
with  interest  from  the  time  of  the  default  until  the  obligation 
is  discharged.  And  if  the  creditor  is  obliged  to  resort  to  the 
courts  for  redress,  he  ought  in  all  cases  to  recover  interest,  in 
addition  to  the  debt,  by  way  of  damages.  It  is  true  that  on 
an  agreement  like  the  one  under  consideration  the  amount  of 
the  debt  can  only  be  ascertained  by  an  inquiry  concerning 
the  value  of  the  property  and  services.  But  the  value  can  be 
ascertained;  and  when  that  has  been  done  the  creditor,  as  a 
question  of  principle,  is  just  as  plainly  entitled  to  interest  after 
the  default  as  he  would  be  if  the  like  sum  had  been  payable  in 
money.  The  English  courts  do  not  allow  interest  in  such  cases ; 
and  I  feel  some  difliculty  in  saying  that  it  can  be  allowed  here 
without  the  aid  of  an  act  of  the  legislature  to  authorize  it.  But 
the  courts  in  this  and  other  states  have  for  many  years  been 
tending  to  the  conclusion,  which  we  have  finally  reached,  that 
a  man  who  breaks  his  contract  to  pay  a  debt,  whether  the  pay- 
ment was  to  be  made  in  money  or  in  anything  else,  shall 
indemnify  the  creditor  so  far  as  that  can  be  done  by  adding  in- 
terest to  the  amount  of  damage  which  was  sustained  on  the  day 

63  Van    Rensselaer    v.    Plainer,    1  64  Lush   v.    Druse,   4   Wend.    313; 

Van    Rensselaer    v.    Jones,    2    Barb. 
Johns.  276.  '  643. 


§   347] 


INTEREST. 


1097 


of  the  breach.  The  rule  is  just  in  itself;  and  as  it  is  now  nearlv 
nineteen  years  since  the  point  was  decided  in  favor  of  tlie 
creditor  and  eight  out  of  the  nine  judges  of  the  supreme  court 
have,  at  different  times,  concurred  in  that  opinion,  we  think  the 
question  should  be  regarded  as  settled."  ^^  The  doctrine  of  this 
case  has  been  adhered  to  in  that  state  and  often  re-affirmed.®^ 
In  many  other  states  there  is  a  tendency  at  least  in  favor  of 
the  allowance  of  interest  as  damages  where  there  is  default  in 
payment. ^'^  Justice  Winslow  of  the  Wisconsin  bench  has  thus 
expressed  the  trend  of  judicial  sentiment:  It  is  quite  well  es- 
tablished by  the  preponderance  of  authority  that  there  are  cases 
for  breach  of  contract,  and  cases  sounding  in  tort,  where  the 
damages  are  whoUy  unliquidated,  but  where  they  may  be  fixed 
by  known  and  reasonably  certain  market  values  or  other  definite 
standards,  where  interest  is  to  be  allowed  from  the  time  of  the 


65  Van  Rensselaer  v.  Jewett,  2  N. 
Y.  3  35  (1849).  In  McMahon  v. 
New  York  &  E.  R.  Co.,  20  id.  4G3, 
it  is  said  of  this  case  that  the  court 
went  as  far  as  it  was  reasonable  to 
go.  See  Mansfield  v.  New  York,  etc. 
R.  Co.,  114  id.  33],  4  L.R.A.  566. 

If  the  contract  price  for  work  is 
subject  to  a  reduction  for  damages 
which  must  be  ascertained  by  a 
trial,  interest  may  not  be  recovered. 
Excelsior  T.  C.  Co.  v.  Harde,  181 
N.  Y.  11,  106  Am.  St.  493. 

A  demand  payable  in  building  ma- 
terials does  not  bear  interest  before 
judgment.  Poppleton  v.  Jones,  42 
Ore.  24. 

66  Kervin  v.  Utter,  120  App.  Div. 
(N.  Y.)  610;  Degnon-McL.  C.  Co. 
V.  City  Trust,  etc.  Co.,  99  App. 
Div.  (N.  Y.)  195;  Adams  v.  Fort 
Plain  Bank,  36  N.  Y.  255;  Mc- 
Cormick  v.  Pennsylvania  Cent.  R. 
Co.,  49  id.  303;  Mygatt  v.  Wilcox, 
45  id.  406,  6  Am.  Rep.  112;  Dana 
V.  Fiedler,  12  N.  Y.  40,  62  Am.  Dec. 
130;  McMahon  v.  New  York  &  E. 
R.  Co.,  20  F.  Y.  463;  McCollum 
V.  Seward,  62  id.  316;  Pipperly  v. 
Stewart,    50    Barb.    52;    Church    v. 


Kidd,  6  Hun  475;  Mercer  v.  Vose, 
67  N.  Y.  56;  Wilson  v.  Troy,  135 
N.  Y.  104,  18  L.R.A.  449 ;  Mansfield 
V.  New  York,  etc.  R.  Co.,  114  N.  Y. 
331,  4  L.R.A.  566;  Gray  v.  Central, 
etc.  R.  Co.,  157  N.  Y.  483;  Sweeny 
V.  New  York,  173  N.  Y.  414. 

67  Sullivan  v.  McMillan,  37  Fla. 
]34,  143,  53  Am.  St.  39  (it  is  said 
in  this  case  that  the  distinction  is 
practically  obliterated  between  liq- 
uidated and  unliquidated  de- 
mands) ;  McCormack  v.  Lynch,  69 
Mo.  App.  524;    Watkins  v.  Junker, 

90  Tex.  584;  Kuhn  v.  McKay,  7 
Wyo.  42,  65;  Murray  v.  Doud,  63 
111.  App.  247;  Vierling  v.  Iroquois 
F.  Co.,  08  id.  643;  Spaulding  v. 
Mason,  161  U.  S.  375,  396,  40  L.  ed. 
738,  746;  Laycock  v.  Parker,  103 
Wis.  161  (quoted  from,  §  321); 
New  York,  etc.  R.  Co.  v.  Ansonia 
L.  &  W.  P.  Co.,  72  Conn.  703,  stated 
in  §  355;  Bartee  v.  Andrews,  12  Ga. 
407 ;  Vaughan  v.  Howe,  20  Wis.  523, 

91  Am.  Dec.  436;  Gammon  v. 
Abrams,  53  Wis.  323 ;  Ryan  v.  Bald- 
rick,  3  McCord  294;  Driggers  v. 
Bell,  94  111.  223;  Swanson  v.  An- 
drus,  83  Minn.  505,  510. 


1098  SUTHEKLAND  ON  DAMAGES.  [§  o4:7 

breach  or  the  commission  of  the  injury.  In  such  cases  inter- 
est is  not  allowed,  as  such,  but  simply  as  compensation  for  the 
delay,  and  in  order  that  the  plaintiff  may  be  fully  remunerated 
for  his  injury.  In  such  cases  interest  is  regarded,  in  the  absence 
of  special  circumstances  showing  greater  loss,  as  measuring  the 
proper  compensation  for  the  delay  which  the  plaintiff  has  suf- 
fered in  waiting  for  the  payment  of  his  damages ;  the  principle 
being  that  the  plaintiff  will  not  be  fully  compensated  unless  he 
receive,  not  only  the  value  of  the  thing  lost,  but  receive  it,  as 
nearly  as  may  be,  of  the  date  of  his  loss.^^  In  Georgia  the  allow- 
ance of  interest  is  discretionary  with  the  jury  according  to  the 
facts  and  circumstances.^^ 

§  348.  Same  subject.  The  question  is  the  same,  of  course, 
so  far  as  the  uncertainty  of  amount  affects  it,  when  the  demand 
is  for  services  rendered,  or  for  property  sold  and  delivered. 
Such  a  case  was  decided  in  New  York  in  1867.  The  referee 
found  that  the  defendant  was  indebted  for  professional  services 
to  the  plaintiff's  assignor,  on  a  certain  date,  in  a  specified  sum. 
But  the  court  remark:  "It  is  not  our  province  and  we  are  not 
called  upon  to  examine  the  evidence  to  ascertain  how  this  in- 
debtedness arose.  It  is  found  as  a  fact  that  such  indebtedness 
specifically  existed  in  a  certain  ascertained  amount,  and  con- 
sequently it  became  presently  due  and  payable,  and  an  action 
could  then  have  been  maintained  for  its  recovery,  and  it  fol- 
lows that  interest  was  recoverable  on  the  amount   from   the 

68  Darlington  v.  J.  L.  Gates  Land  jury    in    many    cases,    and    that    no 

Co.,  151   Wis.  461  ;   Bagnall  v.  City  good  reason   exists   for   drawing   an 

of  Milwaukee,   156   Wis.   642;    J.   I.  arbitrary  distinction   between  liqui- 

Case  Plow  Works  v.  Niles  &  S.  Co.,  dated     and    unliquidated     damages. 

107   Wis.    9 ;    Richards   v.    Citizens'  The  determination  of  whether  or  not 

N.  G.  Co.,  130  Pa.  37;   McCall  Co.  interest    is    to   be    recognized    as    a 

V.   Icks,   107   Wis.   232;    GrifRng  v.  proper  element  of  damage  is  one  to 

Winfield,    53    Fla.    589 ;     Gross    v.  bo  made  in  view  of  the  demands  of 

Heckert,  120  Wis.  304.     See  §  1026.  justice  rather  than  through  the  ap- 

Courts  are  coming  more  and  more  plication  of  any  arbitrary  rule. 
to  recognize  that  a  rule  forbidding  Bernhard  v.  Rochester  German  Ins. 
an  allowance  for  interest  upon  un-  Co.,  79  Conn.  388. 
liquidated  damages  is  one  well  cal-  69  Tifton,  etc.  R.  Co.  v.  Butler,  4 
culated  to  defeat  the  purpose  of  Ga.  App.  191;  Snowden  v.  Water- 
making  fair  compensation  for  an  in-  man,  110  Ga.  99. 


§    348]  INTEREST.  1099 

day  the  same  became  due."  '''"  Damages  by  way  of  interest  may 
be  allowed  the  plaintiff  in  an  action  on  a  bnildinji:  contract  for 
the  detention  of  money  due  him,  notwithstanding  the  amount 
sued  for  is  liable  to  be  reduced  because  of  his  deviation  from  the 
plans  for  the  building.'^  Where  the  rule  of  damages  is  the  dif- 
ference between  the  contract  price  and  the  market  value,  as  in 
ease  of  failure  to  deliver  goods  according  to  contract,  interest  is 
allowed  on  that  measure  from  the  date  of  the  breach."'  Johnson, 
J.,  insisted  on  the  duty  to  pay  interest  in  this  forcible  language: 
''The  party  is  entitled  on  the  day  of  performance  to  the  properly 
agreed  to  be  delivered ;  if  it  is  not  delivered,  the  law  gives  as 
the  measure  of  compensation  then  due  the  difference  between 
the  contract  and  market  prices.  If  he  is  not  also  entitled  to 
interest  from  that  time,  as  a  matter  of  law,  this  contradictory 
result  follows :  that  while  an  indemnity  is  professedly  given,  the 
law  adopts  such  a  mode  of  ascertaining  its  amount  that  the 
longer  a  party  is  delayed  in  obtaining  it  the  greater  shall  its 
inadequacy  become.  It  is,  however,  conceded  to  be  law  that 
in  these  cases  the  jury  may  give  interest  by  way  of  damages 
in  their  discretion.  IsTow,  in  all  cases,  unless  this  be  an  ex- 
ception, the  measure  of  damages  in  an  action  upon  a  contract 
relating  to  money  or  property  is  a  question  of  law,  and  does 
not  at  all  rest  in  the  discretion  of  the  jury.  If  the  giving  or 
refusing  interest  rests  in  discretion,  the  law,  to  be  consistent, 
should  furnish  some  legitimate  means  of  influencing  its  exer- 
cise by  evidence;  as  by  showing  that  the  party  in  fault  has 

70  Fairchild  v.  Bay  Point  &  C  R.  Iiility  by  computation  or  othorwiso. 

Co.,   22   Cal.   App.    328;    Bradley   v.  Poople  v.  Willcox    (App.   Div.)    138 

McDonald,   157   App.   Div.    (N.   Y.)  x.  Y.  Supp.  105;-),  citing  local  cases. 

,'372;  Adams  v.  Fort  Plain  Bank,  3(J  71  Hcaly  v.  Fallon,  f>!»  Conn.  228; 

N.  Y.   2;-);-);   Watkins  v.  Junker,  90  j^j^^.cock  "v.    Parker,' 103    Wis.    IC.l. 

Tex.  584;  Mercer  v.  Vose,  G7  N.  Y.  g^;  ^^^^^^.^^  ^.    p^.^,^^^^,   ^.    ^  ^    ^^ 

56;    Yates   v.    Shepardson,   3!)   Wis.  ^^    ^^     ^^^               ^^    L.R.A.fN.S.) 
173;   Brass  v.  Springville,  100  App. 
Div.    (N.   Y.)    197.      Contra,   Swin- 
nerton    v.    Argonaut    L.    &    D.    Co., 

IP?  Cal   375  ^""'^   ^'-    ^'^*"<''''    ^-   ^'-    ^'-    ■*^^-    '■- 

The  test  of  liability  is  the  exist-  Am.   D.-c    i:]n;    Ph.ml.  v.  Campbell, 

ence  of  means  by  which  the  debtor  P-^!>  HI-  H"  •   M'Call  Co.  v.  Icks,  107 

mav  ascertain  the  extent  of  his  lia-  ^^'i9.  232. 


88. 
72Driggers    v.    Bell,    !t4    111.    223; 


1100  SUTHERLAND  ON  DAMAGES.  [§  348 

failed  to  perform  either  wilfully  or  by  mere  accident,  and  with- 
out any  moral  misconduct.  All  such  considerations  are  con- 
stantly excluded  from  a  jury;  and  they  are  properly  told  that 
in  such  an  action  their  duty  is  to  inquire  whether  a  breach  of 
the  contract  has  happened,  not  what  motives  induced  the  breach. 
That  by  law  a  party  is  to  have  the  difference  between  the  con- 
tract price  and  the  market  price,  in  order  that  he  may  be  indem- 
nified, and  because  the  rule  affords  the  measure  of  his  injury 
when  it  occurred ;  that  he  may  not,  as  a  matter  of  law,  recover 
interest  which  is  necessary  to  a  complete  indemnity ;  that  never- 
theless the  jury  may,  in  their  discretion,  give  him  a  complete 
indemnity,  by  including  the  amount  of  interest  in  their  estimate 
of  his  damages ;  but  that  he  may  not  give  any  evidence  to  in- 
fluence their  discretion,  presents  a  series  of  propositions,  some  of 
which  cannot  be  law.  The  case  of  Van  Rensselaer  v.  Jewett  '^ 
establishes  a  principle  broad  enough  to  include  this  case,  and  has 
freed  the  law  from  this  as  well  as  other  inconsistencies  in 
which  it  was  supposed  to  have  become  involved.  The  right  to 
interest  in  actions  upon  contract  depends  not  upon  discretion, 
but  upon  legal  right ;  and  in  actions  like  the  present  interest  is 
as  much  a  part  of  the  indemnity  to  which  the  party  is  entitled 
as  the  difference  between  the  market  value  and  the  contract 

JJ  74 

price. 

Nor  is  it  an  objection  to  the  allowance  of  interest  on  the 
contract  price  of  property  sold,  not  paid  when  due,  that  there 
is  a  dispute  between  the  parties  as  to  the  quantity  and  quality.'^ 
In  actions  between  vendor  and  purchaser  for  failure  to  fulfill 
the  contract,  or  for  breach  of  warranty — where  the  measure 
of  recovery  is  the  difference  between  market  price  and  con- 
tract price,  or  the  market  price  of  a  warranted  property  and  its 
actual  value  in  a  state  or  quality  inferior  to  that  which  was 
warranted, — interest  is  to  be  added  to  the  damages  from  the 

73  2  N.  Y.  141.  91   Am.   Dec.  43G.     See  Gammon  v. 

74  In  Dana  v.  Fiedler,  12  N.  Y.  40,  Abrams,  53  Wis.  323.  Interest  is 
50,  62  Am.  Dec.  130.  Watkins  v.  not  recoverable  on  an  account  for 
Junker,  90  Tex.  584,  is  to  the  same  services  if  the  employment  is  dis- 
effect.  puted.      Griggs   v.   Ganford,   50   111. 

75  Vaughn  v.  Howe,  20  Wis.   523,  App.  172. 


§  348] 


INTEREST. 


1101 


time  of  the  breach.'^  So  where  the  action  is  on  warranty  of 
title.''  Money  is  due  immediately,  and  carries  interest  from 
the  date  of  the  transaction,  where  there  is  a  purchase  of  goods 
or  other  things  for  cash  on  delivery,  or  without  any  other  time 
being  agreed  on.'*  If  a  sale  is  made  on  a  definite  term  of  ci-edit, 
agreed  on  or  implied  from  custom,  interest  is  chargeable  from 
the  expiration  of  that  term  of  credit.'^  Where  a  party's  right 
to  compensation  under  a  contract  is  doubtful,  is  contested  uixm 
reasonable  grounds  and  a  suit  is  required  to  determine  tlio 
amount,  interest  will  not  be  allowed  for  any  time  preceding  such 
determination.*"    A  denial  in  good  faith  of  the  right  to  recover 


76  J.  I.  Case  Plow  Works  v.  Niles 
&  S.  Co.,  107  Wis.  9,  citing  the  text; 
Brown  v.  Doyle,  69  Minn.  543;  Bu- 
ford  v'.  Gould,  35  Ala.  265;  Clark 
V.  Dales,  20  Barb.  42;  Hamilton  v. 
Ganyard,  34  id.  204;  Fishell  v.  Wi- 
nans,  38  id.  228;  Dana  v.  Fiedler, 
32  N.  Y.  40,  62  Am.  Dec.  130;  Bad- 
gett  V.  Broughton,  1  Ga.  591;  En- 
ders  V.  Board  Public  Works,  1  Gratt. 
372;  Blackwood  v.  Leman,  Harp. 
143;  Bicknall  v.  Waterman,  5  R. 
I.  43;  Merryman  v,  Criddle,  4  Munf. 
542;  McKay  v.  Lane,  5  Fla.  268; 
Wolfe  V.  Sharpe,  10  Rich.  60;  Mar- 
shall V.  Wood,  16  Ala.  806;  Mayor 
V.  Purcell,  3  Munf.  243;  Sohier  v. 
Williams,  2  Curtis  195.  See  Curtis 
V.  Innerarity,  6  How.  146. 

After  demand  interest  may  be  re- 
covered for  the  breach  of  a  contract 
to  deliver  goods,  the  price  and  quan- 
tity being  agreed  upon.  Thomas  v. 
Wells,  140  Mass.  517. 

77  Rowland  v.  Shelton,  25  Ala. 
217;  Goss  v.  Dysant,  31  Tex.  186; 
Crittenden  v.  Posy,  1  Head  311; 
Eggleston  v.  Macauley,  1  McCord 
237.  But  see  Ancrum  v.  Slone,  2 
Spear  594. 

78  McAfee  v.  Dix,  101  App.  Div. 
(N.  Y.)  69;  Wyandotte,  etc.  G. 
Co.  V.  Schliefer,  22  Kan.  468; 
Foote  V.  Blanchard,  6  Allen  221, 
83     Am.     Dec.     624;      Pollock     v. 


Ehle,  2  E.  D.  Smith  541;  Salter 
V.  Parkhurst,  2  Daly  240;  Clark 
V.  Dalton,  69  111.  521;  Waring  v. 
Henry,  30  Ala.  721 ;  Smith  v.  Shaf- 
fer, 50  Md.  132;  Atlantic  P.  Co. 
V.  Grafiin,  114  U.  S.  492,  29  L.  ed. 
221.  Where  tliere  is  a  sale  of  goods 
and  the  price  is  not  a  gross  sum  tin* 
amount  is  liquidated  by  the  terms 
of  the  invoice  received  and  retained 
by  the  vendee.  Ibid.  Contra,  State 
V.  Warner,  65  Wis.  271;  Marsh  v. 
Eraser,  37  Wis.  152.  Botli  these 
cases  are  probably  overruled  by  Lay- 
cock  V.  Parker,  103  Wis.  161,  185. 
In  harmony  with  the  latter  is  Farr 
V.  Semple,  81  Wis.  230. 

79Esterly  v.  Cole,  3  N.  Y.  502; 
Kennedy  v.  Barnwell,  7  Rich.  124; 
Howard  v.  Farley,  3  Robert.  308; 
National  Lancers  v.  Lovcring,  30  N. 
H.  511;  Moore  v.  Patton,  2  Port. 
451 ;  Raymond  v.  Isham,  8  Vt.  258 ; 
Dickinson  v.  Gould,  2  Tyler  .32; 
Leyde  v.  Martin,  16  Minn.  38;  Foote 
v.  Blanchard,  6  Allen  221,  83  Am. 
Dec.  624:  VViltburger  v.  Randolph. 
Walk.  (Miss.)  20;  Wyandotte,  etc. 
G.  Co.  V.  Scliliefer,  22  Kan.  468. 

80  Shipman  v.  State,  44  Wis.  458: 
Tucker  v.  Grover,  60  id.  240.  See 
Tyson  v.  Milwaukee,  50  Wis.  78. 
Tlie  two  cases  first  cited  are  affect- 
ed by  Laycock  v.  Parker,  supra. 


1102 


SUTHEKLAND    ON    DAMAGES. 


[§  348 


avoids  liability  for  interest  prior  to  judgment  though  there  is 
no  question  concerning  the  extent  of  the  contingent  liability." 
Interest  has  been  denied  because  an  excessive  claim  was  made 
upon  an  unliquidated  demand.^^  It  has  been  laid  down  as  a 
general  rule  that  there  cannot  be  a  recovery  of  interest  on  the 
damage  sustained  in  an  action  for  the  breach  of  contract  where 
the  recovery  is  measured  by  the  loss  of  profits,^^  and  that  in- 
terest is  not  recoverable  on  profits  anterior  to  their  determination 
by  verdict.®* 

§  349.  Interest  on  accounts.  On  accounts  which  were  not 
due  when  made  nor  by  the  expiration  of  any  term  of  credit 
interest  is  allowed  after  demand  in  pais  or  by  suit.®^  A  demand 
made  by  rendering  the  account  informs  the   debtor  what  is 


81  Sorenson  v.  Oregon  P.  Co.,  47 
Ore.  24;  Baker  County  v.  Hunting- 
ton, 48  Ore.  593. 

82  Excelsior  T.  C.  Co.  v.  Harde, 
90  App.  Div.  (N.  Y.)  4,  181  N.  Y. 
11,  106  Am.  St.  493;  O'Reilly  v. 
Mahoney,  123  App.  Div.  (N.  Y.) 
275. 

83  Underwood  T.  Co.  v.  Century  R. 
Co.,  165  Mo.  App.  131-,  Wiggins  F. 
Co.  V.  Chicago  &  A.  R.  Co.,  128  Mo. 
224. 

84  Swanson  v.  Andrus,  83  Minn. 
505;  Beelcwith  v.  New  York,  121 
App.  Div.   (N.  Y.)   462. 

85  Mulligan  v.  Smith,  32  Colo. 
404;  Hunt  v.  Boston  E.  R.  Co.,  109 
Mass.  220;  Childs  v.  Krey,  199 
Mass.  352;  Hefferlin  v.  Karlman,  29 
Mont.  139;  Montague  v.  Aggarn, 
164  111.  App.  596;  Lane  v.  Turner, 
114  Cal.  396;  Evans  v.  Western  B. 
Mfg.  Co.,  118  Mo.  548;  Dempsey  v. 
Schawacker,  140  Mo.  680;  Williams 
v.  Chicago,  etc.  R.  Co.,  153  Mo.  487 ; 
Patterson  v.  Missouri  G.  Co.,  72  Mo. 
App.  492;  Laycock  v.  Parker,  103 
Wis.  161,  187 ;  Remington  v.  Eastern 
R.  Co.,  109  Wis.  154;  Ledyard  v. 
Bull,  119  N.  Y.  62;  Carricarti  v. 
Blanco,  121  N.  Y.  230;  Heidenheira- 
er   V.    Ellis,    67    Tex.    426;    Case   v. 


Hotchkiss,  3  Keyes  334,  3  Abb.  Pr. 
(N.  S.)  381,  1  Abb.  Ct.  of  App.  324; 
Mygatt  v.  Wilcox,  45  N.  Y.  306,  6 
Am.  Rep.  93;  White  v.  Miller,  78 
X.  Y.  393,  34  Am.  Rep.  544;  Mc- 
Ilvaine  v.  Wilkins,  12  N.  H.  474; 
Barnard  v.  Bartholomew,  22  Pick. 
291;  Wheeler  v.  Haskins,  41  Me. 
432;  Hall  v.  Huckins,  id.  574;  GofT 
v.  Rehoboth,  2  Cush.  475;  Wood  v. 
Hickox,  2  Wend.  501 ;  Brainerd  v. 
Chaniplain  T.  Co.,  29  Vt.  154;  Gam- 
mel  V.  Skinner,  2  Gall.  45;  Van 
Husan  v.  Kanouse,  13  Mich.  303; 
Beardslee  v.  Horton,  3  id.  560;  Mc- 
Collum  V.  Seward,  62  N.  Y.  316; 
Harrison  v.  Conlan,  10  Allen  85; 
Adams  Exp.  Co.  v.  Milton,  11  Bush 
49;  Palmer  v.  Stockwell,  9  Gray 
237;  Hunt  v.  Nevers,  15  Pick.  505, 
26  Am.  Dec.  616;  Barrow  v.  Reab, 
9  How.  366,  13  L.  ed.  177;  Enders 
V.  Board  of  Public  Works,  1  Gratt. 
389;  Ruckman  v.  Pitcher,  20  N.  Y. 
9;  McFadden  v.  Crawford,  39  Cal. 
662;  Young  v.  Dickey,  63  Ind.  31; 
Rend  v.  Boord,  75  Ind.  307 ;  Marstel- 
ler  V.  Crapp,  62  Ind.  359;  Munn  & 
Co.  V.  Americana  Co.,  82  N.  J.  Eq. 
443,  disallowing  interest  in  the  ab- 
sence of  demand. 


349] 


INTEREST. 


1103 


claimed  to  be  due  and  aives  liiiii  (he  means  of  (rxainiiiiiiir  it  in 
detail;  and  if  no  objection  is  made  it  becomes  a  stated  account — 
from  that  time  a  liquidated  debt.*^  If  a  bill  is  presented  and  the 
debtor  admits  Lis  indebtedness  for  the  items  thereof,  subject  to 
modification  and  correction  as  to  the  sum  charged,  interest  runs 
from  that  time  on  the  items  not  subsequently  objected  to,  and 
on  the  others  from  the  commencement  of  the  action."     The  ac- 


86  Dean  &  Son,  Ltd.  v.  W.  B.  Con- 
kej'  Co.,  180  111.  App.  I(i2;  l)c  La 
Cuesta  V.  Montgomery,  144  Cal.  lln; 
Reynolds  v.  Phillips,  142  111.  App. 
482;  Howell's  Succession,  121  La. 
955;  Jonesboro,  etc.  R.  Co.  v.  United 
L  W.  Co.,  117  Mo.  App.  15.3;  Brown 
V.  Gise,  14  N.  M.  2S2;  Fearon  v. 
Little,  227  Pa.  348;  Miller  v.  Ryder, 
145  Wis.  526;  Henderson  C.  Mfg. 
Co.  V.  Lowell  M.  Shops,  86  Ky.  668, 
quoting  the  text;  Walden  v.  Sher- 
burne, 15  Johns.  400;  Liotard  v. 
Graves,  3  Cai.  226;  Elliott  v.  Min- 
ott,  2  McCord  125;  Beardslee  v. 
Horton,  3  Mich.  560;  Van  Hasan 
V.  Kanouse,  13  id.  303 ;  Underhill  v. 
GafT,  48  111.  198 ;  Richard  v.  Parrett, 
7  B.  Mon.  379,  383 ;  Barnard  v.  Bar- 
tholomew, 22  Pick.  291;  Mygatt  v. 
Wilcox,  45  N.  Y.  308,  6  Am.  Rep. 
00;  Case  v.  Plitchcock,  3  Kcyes  334; 
Martin  v.  Silliman,  53  N.  Y.  615; 
Atkinson  v.  Golden  Gate  T.  Co.,  21 
Cal.  App.  168;  In  re  Hawks,  204 
Fed.  309.  See  Davis  v.  Smith,  48 
Vt.  52. 

Under  the  statute  of  Illinois  in- 
terest is  not  recoverable  on  a  verbal 
contract  unless  there  has  been  an 
unreasonable  and  vexatious  delay  of 
payment.  West  Chicago  A.  Works 
V.  Sheer,  104  111.  586.  See  §  .323; 
Falcon  E.  Co.  v.  Wright,  171  111. 
App.  521. 

It  is  not  cause  for  denying  the 
recovery  of  interest  on  a  mechanic's 
lien,  from  the  time  of  filing  notice 
of  the  claim  therefor,  that  it  would 
be   enforced   against   a   stranger   to 


tlic  (•(Mitract  wifli  (lir  lim  claimant. 
Sorg  V.  Crandall,   120  111.  App.  255. 

Interest  is  recoverable  on  the  lien 
of  a  subcontractor  tliougli  there  may 
not  have  been  unrcasonalile  or  vexa- 
tious delay  in  making  payment. 
Merritt  v.  Crane,  126  id.  337. 

If  goods  are  sold  under  a  con- 
tract in  writing  which  fixes  the 
times  at  which  payments  are  to  be 
made  interest  will  be  allowed  upon 
all  sums  not  paid  when  due  from  tlie 
time  agreed  upon  for  payment 
whether  the  delay  in  payment  is  un- 
reasonable and  vexatious  or  not. 
Rouse  V.  Western  W.  Works,  66  111. 
App.  647,  afT'd  169  111.  536,  539. 
And,  it  seems,  the  promise  to  pay 
need  not  be  in  writing  if  the  credi- 
tor presents  monthly  statements  and 
the  debtor  promises  from  month  to 
month  to  pay.  Lusk  v.  Throop,  189 
111.  127,  afT'd  89  111.  App.  509. 

The  court  may  arbitrarily  fix  the 
date  from  whicli  interest  should  be 
computed.  Faleon  E.  Co.  v.  Wright, 
supra. 

In  Colorado  interest  is  recoveralile 
on  an  account  stated  and  on  an  open 
account  from  the  date  when  it  be- 
came due  and  payable.  Mine  & 
Smelter  S.  Co.  v.  Parke,  47  C.  C.  A. 
34,  107  Fed.  881. 

In  Nevada,  in  an  action  on  an 
open  account  interest  prior  to  judg- 
ment is  not  recoverable.  Thompson 
V.  Tonopah  Lumber  Co.,  —  Nev.  — , 
141  Pac.  69. 

87  Manchester  F.  Assur.  Co.  v. 
Fitzpatrick,  120  III.  App.  535;  Bor- 


1104  SU'i'IIEKLAND    ON    DAMAGES.  [§    349 

counts  of  a  public  officer  are  liquidated  by  being  submitted  to 
the  authorities  who  have  power  to  pass  upon  and  approve  them.*' 
On  the  termination  of  mutual  accounts  the  creditor  is  entitled 
to  interest  by  way  of  damages  upon  the  balance  due  from  that 
date  until  judgment.*^  The  general  rule  as  to  accounts  may  not 
apply  to  exceptional  dealings.  Where  a  contract  for  the  re- 
organization of  a  railroad  company  was  operative  from  the  time 
it  was  made  but  was  silent  as  to  interest  for  money  or  the 
debts  of  the  company  during  the  time  of  the  proceedings  of  the 
reorganization,  interest  was  not  recoverable  upon  the  mutual 
demands  and  liabilities  of  the  parties.^*' 

The  denial  of  interest  on  accounts  rests  more  on  the  ground 
that  there  is  a  running  credit  than  because  the  demand  is  un- 
certain and  unliquidated.^^  This  latter  objection  may  exist  in 
particular  cases;  but  accounts  are  not  ordinarily  unliquidated 
demands  in  the  sense  which  prevents  the  allowance  of  inter- 
est. A  demand  is  not  to  be  assumed  to  be  unliquidated  and 
uncertain  merely  because  it  is  in  the  form  of  an  account.  A 
running  account  implies  an  indefinite  credit,  and  a  demand  is 
necessary  to  place  the  debtor  in  default.  Interest  is  properly 
due  and  recoverable  on  accounts  when  the  items  are  not  con- 
troverted nor  unliquidated,  and  where  the  circumstances  are 
such  that  a  debtor  is  in  default ; — has  unreasonably  neglected  to 
make  payment.^^  To  put  an  account  upon  interest  a  demand  is 
often  necessary,  but  not  on  the  ground  of  uncertainty.  And 
after  demand  or  commencement  of  suit  accounts  generally  bear 
interest.    The  beginning  of  suit  is  a  form  of  demand.    Accounts 

den  &   S.   Co.   Frascr,   118   id.   655;  92  ISassick  G.  M.  Co.  v.  Beardsley, 

Hand  v.  Church,  39  Hun  303.  49  Colo.  275,  33  L.R.A.(N.S.)    852; 

88  Cicero  V.  Grisko,  144  111.  App.  ^,^^^  ^^^  ^  Co.  v.  Tennant,  32 
564;    Stern  v.   People,    102   111.   540.  ^^  ,      „       „     ,.  ^,     ,    ^.    ,,.„ 

o„'  T  -Li  TVT  Colo.  71 ;  Harding  v.  York  I\.  Mills, 

89  Fearon    v.    Little,    supra;    Me-  '  * 

Keon  V.  Byington,  70  Conn.  429.  142    Fed.    228.      See    cases    in    first 

90  Davidson  v.  Mexican  Nat.  R.  note  to  §  349 ;  1  Am.  Lead.  Cas. 
Co.,  58  Fed.  653.  505;  Kinard  v.  Glenn,  25  S.  C.  590. 

91  Ledyard  v.  Bull,  119  N.  Y.  62;  interest  is  recoverable  where  there 
Cox   V.   McLaughlin,   76   Cal.   60,   9  ,     .     .       x,    .  .l, 

A        oi.    1^^     Ti  \7         II    c:i        is  an  express  admission  that  the  ac- 

Am.  St.  Ib4;   Rogers  v.  Yarnell,  51  '■ 

Ark.  198;   Miles  v.  Bowers,  49  Ore.       count  is  due.     Harvey  v.  Denver  & 
429;  Gibson's  Est.,  228  Pa.  409.  R.  G.  R.  Co.,  56  Colo.  570. 


§    349]  INTEREST.  1105 

are  generally  made  u[)  of  items  which  represent  money  paid  or 
advanced,  goods  sold  and  delivered  or  sei'vices  rendered  on  re- 
quest. They  are,  severally,  demands  on  which  interest  may  be 
claimed,  though  the  price  has  not  been  fixed  by  agreement  and 
must  be  established  by  evidence. ^^ 

An  account  is  no  more  uncertain  as  to  amount,  in  the  aggi-e- 
gate,  than  are  its  constituent  items;  and  the  fact  that  they  are 
charged  in  account  can  have  no  adverse  eifect  in  respect  to  in- 
terest; entering  them  in  a  book  has  even  been  emphasized  as 
though  it  M^ere  a  circumstance  having  some  influence  in  favor 
of  interest.^*  Where,  however,  the  account  or  demand  is  for 
particulars,  the  value  or  amount  of  which  cannot  be  measured 
or  ascertained  by  reference  to  market  rates,  and  are  intrin- 
sically uncertain,  or  the  creditor's  demand  of  payment  is  exces- 
sive or  vague,  a  different  case  is  presented.^^  Where  the  plaintiff 
merely  asked  the  defendant  for  bis  pay  for  labor  and  materials, 
an  account  not  being  presented  and  never  having  been  rendered, 
such  request  was  not  considered  a  demand  which  could  aid  any 
view  of  the  case.^°  But  a  demand  of  that  kind  would  be  suffi- 
cient where  no  information  in  respect  to  the  amount  of  the  claim 
need  be  imparted.^' 

Where  no  such  uncertainty  appears  and  the  subject  of  the 
account  and  the  circumstances  connected  with  it  indicate  that 
the  delay  has  not  been  owing  to  the  debtor's  ignorance  of  the 
amount  he  had  to  pay,  interest  iias  been  allowed  after  a  reason- 
able credit.^*    Nor  will  the  want  of  a  demand  be  any  objection 

93  Id.;  Smith  v.  Shaffer,  50  Md.  (i  Dana  7;  Ringo  v.  Biscof,  13  Ark. 
332.      See    Pomeroy    v.    Noiul,    145       56,"5. 

Mich.  37.  95  Cox  v.  McLaughlin,  supra.     See 

94  Florence  0.  &  R.  Co.  v.  McRae,       Clark   v.  (lark,  46  Conn.  586. 

40   Colo.   303;   Marsh  v.   Fraser,   37  96  Marssli   v.   Frasor,  37   Wis.   140. 

Wis.     149.       Compare     Schmidt     v.  The  debtor's   request  for  delay  is 

Limehouse,  2  Bailey  276;   Dillon  v.  the  legal  equivalent  of  presentment. 

Dudley,   1   A.   K.   Marsh.   65;    Hunt  Babcock  v.  Hul)bard,  56  Conn.  284, 

V.  Nevers,  15  Pick.  500,  26  Am.  Dec.  306. 

616;  Dodge  v.  Perkins,  9  Pick.  368;  97Gammel  v.  Skinner,  2  Gall.  45. 

Cannon  v.  Beggs,  1  McCord  370,  10  98  Bassick  G.  M.  Co.  v.  Beardsley, 

Am.  Dec.  677;   Scudder  v.  Morris,  2  supra;  Wells  v.  Brown,  3  N.  J.  L. 

N.  J.  L.  *419;   Wells  v.  Ahernethy,  411;   Wood  v.  Smith,  23  Vt.  706. 

5   Conn.  222;    Breyfogle   v.   Beckley,  In  Nebraska  accounts  do  not  show 

16  S.  &  R.  264;   Nelson  v.  Cailmel,  interest  until  the  expiration   of  six 
Suth.  Dam.  Vol.  I.— 70. 


1106  SUTHERLAND    ON    DAMAGES.  [§    349 

to  the  allowance  of  interest  where  the  debtor  has  absented  him- 
self from  the  state  without  calling-  for  his  account  and  thereby 
prevented  any  demand  being  made  upon  him.  In  snch  a  case 
interest  w^as  held  to  be  allowable  from  the  time  of  the  latest 
transaction  or  service.®^  A  demand  of  more  than  is  due  may 
well  be  treated  as  insufficient  to  put  the  debtor  in  default,  for 
it  not  only  docs  not  tend  to  liquidate  the  claim  bnt  indicates  that 
the  plaintifl"  prevents  both  adjustment  and  payment  or  that  the 
claim  is  intrinsically  uncertain.^  A  promise  to  pay  interest  on 
an  open  account  is  binding  as  to  the  amount  in  fact  due  though 
the  debtor  disputes  items  in  it.^ 

In  Vermont  the  rule  respecting  interest  is  somewhat  pecul- 
iar. In  cases  of  ordinary  running  accounts,  where  there  is  no 
express  or  implied  understanding  to  the  contrary,  annual  rests 
should  be  made  and  interest  allowed  on  the  balance  from  each 
such  rest.  In  these  cases  the  law  implies  a  contract  to  pay 
interest  on  whatever  may  remain  unsatisfied  after  the  expira- 
tion of  a  year,  on  the  ground  that  a  year  is  l)y  conmion  under- 
standing the  usual  period  of  credit  in  matters  of  open  account, 
and  that  the  debtor  should  have  seen  to  the  adjustment  of  the 
account  at  that  time,  and,  failing  to  do  so,  is  presumed  to  have 
contemplated  the  i)ayment  of  subsequently  accruing  interest. 
This  rule,  though  mainly  applied  to  cases  of  mutual  dealings, 
has  not  been  limited  thereto.  In  a  recent  case  the  plaintiff 
contracted  to  board  the  intestate's  daughter ;  no  stipulation  was 
made  respecting  the  time  board  should  be  furnished  or  paid 
for.  The  plaintiff  perfomied  his  contract  for  sixteen  years, 
during  which  but  seven  small  i:)ayments  were  made,  and  made 

months   from   tlie   date   of   the   last  made.     Browning  v.  El  Paso  L.  Co. 

item  thereof.     Stakcr  v.  Begole,  34  (Tex.  Civ.  App.),  140  S.  W.  386. 

Neb.  107;  Garneau  V.  Omaha  P.  Co.,  99  Graham   v.   Graham,    2     Keyes 

52  Neb.  383.  21 ;  Graham  v.  Chrystal,  2  Abb.  App. 

In    Pennsylvania    book    accounts  Dec.    263;    Bell    v.    Mendenhall,    78 

for  goods  bear   interest  six  months  Minn    56    67 

after  their  sale  and  delivery.    Kam-  ,  „       ,      ,         „            „o  -nt     t    t 

her  V.  Becker,  27  Pa.  Super.  266.  ^  Hoagland  v.  Segur,  38  >..  J.  L. 

The  Texas  statute  provides  for  in-  230;    Lusk   v.    Smith,    21    Wis.   28; 

terest  on  accounts  from  the  first  day  Goff  v.  Behoboth,  2  Cush.  475. 

of  the  calendar  year  after  they  were  2  Lee  v.  Hill,  92  S.  C.  114. 


!50] 


INTEREST. 


no: 


no  demand.     Interest  was  eompntable  from  the  end  of  each 


year.^ 

§  350.  Same  subject.  Claims  sonnding  in  damages  and  ae- 
connts,  where  there  has  been  no  especial  diligence  on  the  part 
of  the  creditor  or  long  and  vexations  delay  on  the  part  of  the 
debtor,  in  the  absence  of  a  demand,  present  cases  where  inter- 
est may  not  be  recovered  as  matter  of  law,  but  may  be  allowed 
in  the  name  of  damages  by  a  jnry  in  their  discretion,'*  The 
important  inquiry  is  whether  the  debtor  has  done  all  the  law 
required  of  him  in  the  particular  case.  If  he  has  he  is  not 
liable  for  interest;  if  he  has  not  he  must  pay  it  as  a  coni])ensa- 
tion  for  the  non-performance  of  his  contract.^ 

The  cases  are  numerous  in  which  it  has  been  held  or  declared 
in  general  terms  that  interest  is  not  allowed  on  open  running  ac- 
counts.®   But  they  were  those  where  there  had  been  no  demand 


3  Yearteau  v.  Bacon's  Est.,  65  Vt. 
516,  stating  the  application  of  the 
rule  to  different  classes  of  questions 
and  citing  the  cases;  Gordon  v. 
Mead,  81  Vt.  36  (account  between 
attorney  and  client). 

4  Calvert  Bank  v.  Katz,  102  :\rd. 
56;  Frazer  v.  Bigelow  C.  Co.,  141 
Mass.  126;  Eckert  v.  Wilson,  12  S. 
&  R.  393 ;  Anonymous,  1  Johns.  315 ; 
Constable  v.  Golden,  2  id.  480 ;  Hagg 
V.  Augusta  Ins.  &  B.  Co.,  Taney, 
150;  Wiltburger  v.  Randolph,  Walk. 
(Miss.)  20;  Huston  v.  Crutcher,  31 
Miss.  51  ;  Willings  v.  Consequa,  Pet 
C.  C.  172;  Gilpins  v.  Consequa,  id 
85;  Dox  V.  Day,  3  Wend.  356;  Stark 
V.  Price,  5  Dana  140;  Morford  v 
Ambrose,  3  J.  J.  Marsh.  688;  Dela 
ware  Ins.  Go.  v.  Delaunie,  3  Bin 
295;  Amory  v.  McGregor,  15  Johns 
24,  8  Am.  Dec.  205;  Kilderhouse  v 
Saveland,  1  111.  App.  65;  Chicago 
V.  AUcock,  86  111.  384;  Newson  v. 
Douglass,  7  Harris  &  J.  417;  Black 
V.  Reybold,  3  Harr.  528;  Dotter 
V.  Bennett,  5  Rich.  295;  Feeter  v. 
Heath,  11  Wend.  477;  Tatiim  v. 
Mohr,  21  Ark.  350;   Rogers  v.  West, 


n  Ind.  403;  Bare  v.  Hoffman,  79  Pa. 
71,  21  Am.  Rep.  42;  Richmond  v. 
Dubuque,  etc.  R.  Co.,  33  Iowa  422; 
McNally  v.  Sholie,  22  Iowa  49 ;  Mote 
V.  Chicago,  etc.  R.  Co.,  27  Iowa  22; 
McNear  v.  McOmber,  IS  Iowa  12; 
Xoe  V.  Hodges,  5  Humph.  103;  Wat- 
kinson  v.  Laugliton,  8  Johns.  213; 
Uhland  v.  Uhland,  17  S.  &  R.  265; 
Graham  v.  Williams,  16  S.  &  R.  257, 
16  Am.  Dec.  569.  See  Wood  v. 
Smith,  23  Vt.  706;  §  321. 

5  Dodge  V.  Perkins,  9  Pick.  368. 
This  case  is  referred  to  in  Foote  v. 
Blanchard,  6  Allen  221,  83  Am.  Dec. 
624,  as  correctly  stating  the  law. 
See  Evans  v.  Beckwith,  37  Vt.  285; 
Scroggs  V.  Cunningham,  81  111.  110. 

6  Grangers'  Union  v.  Ashe,  12  Cal. 
App.  757,  and  local  cases  cited;  Mar- 
rone  V.  Ehrat,  175  111.  App.  649; 
I'olhenius  v.  Annin,  1  N.  J.  L.  176; 
'IMicker  V.  Ives,  6  Cow.  193;  Davis 
V.  Walker,  18  Mich.  25;  Clement  v. 
McConnell,  14  111.  154;  Beardslet' 
V.  Horton,  3  Mich.  560;  Marsh  v. 
Eraser,  37  Wis.  149;  Henry  v.  Risk, 
1  Dall.  265,  1  L.  ed.  1.30;  Williams 
V.    Craig,    1    Dall.    338;     Blaney    v. 


1108 


SLlTIMOlil.AlNl)    ON    DAMAGES. 


[§   350 


of  payment  or  other  circumstances  to  impose  the  immediate 
duty  to  pay ;  or  else  the  claim  founded  on  the  account  was  ex- 
ceptionally uncertain  and  unliquidated.''^  When  a  promissory 
note  or  other  instrument  expresses  no  time  when  it  is  payable 
it  is  due  immediately  and  bears  interest  from  date ;  ®  and  other 
commercial  paper  payable  at  day  certain  will  bear  interest 
after  maturity.^  ISTotes  payable  on  demand  will  not  bear  in- 
terest until  a  demand  is  made;  the  creditor,  so  long  as  he 
refrains  from  making  a  demand,  acquiesces  in  the  debtor's 
retention  of  the  money. ^^    A  due  bill,  payable  on  demand  and 


Hendrick,  3  Wils.  205 ;  De  Haviland 
V.  Bowerbank,  1  Camp.  50;  Smith 
V.  Velie,  60  N.  Y.  106;  Benedict  v. 
Sliter,  82  Hun  190. 

In  an  action  to  recover  the  value 
of  services  as  warehouseman  the  ac- 
count between  the  parties  had  not 
been  settled  for  several  years,  and 
the  balance  due  either  party  was  un- 
certain and  indefinite;  interest  was 
allowed  only  from  the  date  the  ac- 
tion was  begun.  Tobin  v.  South, 
18  Ky.  L.  Rep.  350. 

In  Illinois  interest  cannot  be  re- 
covered on  an  account  unless  there 
has  been  an  unreasonable  and  vexa- 
tious delay  in  payment.  Sammis  v. 
Clark,  13  111.  544;  Phillips  v.  Rehm, 
64  III.  App.  477.    See  §  323. 

7  If  liability  is  denied  and  the  re- 
covery is  for  less  than  the  sum 
claimed  interest  is  allowed  only 
from  judgment.  Erickson  v.  Stock- 
ton &  T.  C.  R.  Co.,  148  Cal.^206. 

8  Gaylord  v.  Van  Loan,  15  Wend. 
308 ;  Lewis  v.  Lewis,  Mart.  &  Hay  w. 
191;  Purdy  v.  Phillips,  1  Duer  169; 
Francis  v.  Castleman,  4  Bibb  383,  1 
Am.  Neg.  Cas.  900;  Sheehy  v.  Man- 
deville,  7  Cranch  208,  3  L.  ed.  317; 
Farquhar  v.  Morris,  7  T.  R.  124; 
Collier  v.  Gray,  Overton,  110;  Rog- 
ers V.  Colt,  21  N.  J.  L.  19. 

9  Gantt  V.  MacKenzie,  3  Camp. 
51  ;    Thorndike  v.   United   States,   2 


Mason  1 ;  Hastings  v.  Wiswall,  8 
Mass.  455- 

Interest  begins  to  run  on  a  note 
payable  on  a  certain  day  with  in- 
terest after  maturity  after  it  is  due 
although  it  is  not  suable  until  ex- 
piration of  days  of  grace.  Wheless 
v.  Williams,  62  Miss.  369,  52  Am. 
Rep.  190;  Weems  v.  Ventress,  14  La. 
Ann.  267. 

10  Hudson  V.  Daily,  13  Ala.  722; 
Vaughan  v.  Goode,  Minor,  417 ; 
Freeland  v.  Edwards,  Mart.  &  Hayw. 
207;  Hurd  v.  Palmer,  21  Up.  Can. 
Q.  B.  49 ;  Pate  v.  Gray,  Hemp.  155 ; 
Patrick  v.  Clay,  4  Bibb  246;  Bart- 
lett  V.  Marshall,  2  id.  469;  Wallace 
v.  Wallace,  8  111.  App.  69;  South  v. 
Leary,  Hardin,  518;  Conyers  v.  Ma- 
grath,  4  McCord  218;  Trotter  v. 
Grant,  2  Wend.  413;  Wood  v.  Hic- 
kok,  id.  501 ;  McConnico  v.  Curzen, 
2  Call  301;  Kerr  v.  Love,  1  Wash. 
(Va.)  217;  Hadley  v.  Ayres,  12  Abb. 
Pr.  (N.  S.)  240;  Wood  v.  Smith, 
23  Vt.  706;  Shemel  v.  Givan,  2 
Blackf.  312;  Delaware  Ins.  Co.  v. 
De  Launie,  3  Bin.  301;  Crawford  v. 
Willing,  4  Dall.  286,  1  L.  ed.  836; 
Oberinger  v.  Nichols,  6  Bin.  159,  6 
Am.  Dec.  439;  Newell  v.  Keith,  11 
Vt.  214;  Esterly  v.  Cole,  1  Barb. 
235,  3  N.  Y.  502;  McKnight  v.  Dun- 
lop,  4  Barb.  36;  Hoagland  v.  Segur, 
38  N.  J.  L.  230. 


§    351]  INTEREST.  1109 

being  silent  as  to  interest,  bears  interest  only  from  the  time 
payment  is  demanded."  It  has  been  held  that,  by  consenting 
to  a  delay  of  payment,  a  creditor  is  precluded  from  recovering 
interest  during  such  delay ;  so,  if  a  person  entitled  to  money 
resists  the  reception  of  it  or  fails  to  qualify  himself  to  receive 
it  he  cannot  recover  interest.  ^^  If  a  note  be  payable  at  a  fixed 
time,  as  one  day  after  date,  and  there  be  a  subjoined  agreement 
that  suit  shall  not  be  brought  so  long  as  the  maker  is  alive  or 
the  payee  is  satisfied  that  he  is  solvent  interest  still  runs  from 
the  time  specified  for  payment.-^^  Where  an  obligation  was 
payable  in  a  certain  month  it  was  held  that  interest  did  not 
commence  until  after  the  last  day  of  that  month. ^*  Interest  is 
not  payable  before  the  maturity  of  the  principal  unless  so  ex- 
pressed. Where  a  note  is  for  several  annual  instalments  in- 
terest is  payable  on  them  as  they  become  due,  and  not  annually 
on  the  whole  sum.-^^  If  a  mortgage  given  to  secure  an  account 
provides  for  the  payment  of  a  higher  rate  of  interest  on  certain 
items  of  the  account  than  on  others  the  lower  rate  only  can  be 
recovered  if  the  plaintifi"  does  not  separate  the  items. ^^ 

§  351.  When  demand  necessary.  Although  money  lent  bears 
interest  from  the  lending  it  is  only  so  when  there  is  no  agree- 
ment of  the  parties  modifying  the  right.     If  a  note  for  money 

In  Darlington  v.  Wooster,  9  Ohio  standing  the  judgment  will  bear  in- 

St.  518,  an  action  on  a  demand  note  terest  from  its  rendition  even  prior 

where  there  was  no  proof  of  a  de-  to  the  day  specified  for  interest  to 

mand,  it  was  held  that  by  force  of  begin.     See  Ijams  v.  Rice,   17   Ala. 

tlie  statute  fixing  tlie  rate  of  inter-  4Q4 

est  the  plaintiff  was  entitled  to  re-  „  Cook  v.   Clark's   Committee,  21 

cover  interest  from  the  date  of  the  j^^    ^    j^^^^    3^^^.    ^^^,^  ^    j,^^^.^   ^ 

note.      The    statute   provides    "that  t>   yr 

all  creditors  shall  be  entitled  to  re-  ,„  ^     .     "\^        .  ,         ,    ^   ,, 

.   j_        ^               „                    r.  12  Craig  V.  Pennick,  3  J.  J.  Marsh, 

ceive  interest  upon  all  moneys  after  ° 

,,                  a,  11  .               1         -ii  16;  Webster  v.  British  Empire  Mut. 

the  same  shall  become  due  either  on  ' 

bond,  bill,  promissory  note  or  other  ^-  ^««"^-  ^'o-  ^^  ^h.  Div.  169. 

instrument  of  writing,"  etc.  ^^  P^^'^^l  v-  ^tuy,  3  Dev.  &  Batt. 

In    Billingsby    v.    Billingsby,    24  70;    Carter  v.  King,  11   Rich.   125; 

Ala.  518,  it  was  decided  that  whore  Rallman  v.  Baker,  5  Humph.  406. 

a   note   payable  on   a   specified   day  l*  Pollard     v.     Yoder,     2     A.     K. 

stipulates  that  it  shall  not  bear  in-  Marsh.  264. 

terest    until    another    specified    day  15  Bawder  v.  Bawder,  7  Barb.  560. 

after  maturity,   an   action   is  main-  16  Honnett    v.    Williams,    66    Ark. 

tainable     after     maturity     notwith-  148. 


1110 


SUTHERLAND    ON    DAMAGES. 


[§  351 


lent  be  taken  payable  on  demand  it  lias  no  advantage  on  ac- 
count of  that  consideration,  and  only  bears  interest  like  all 
other  similar  notes  from  the  time  of  demand ;  ^'^  and  so  of  a 
dishonored  check.^"  Besides  moneys  due  on  running  accounts 
and  demand  notes  there  are  various  other  kinds  of  what  may 
be  tenned  passive  liabilities  in  respect  to  which  the  party  lia- 
ble cannot  be  placed  in  default  and  be  charged  with  interest, 
until  the  money  is  demanded,  or  notice  of  some  fact  is  given, ^^ 


17  Adams  v.  Adams,  55  N.  J.  Eq. 
42;  In  re  Estate  of  King,  94  Mich. 
411;  Butler  v.  Austin,  64  Cal.  3; 
Schmidt  v.  Limehouse,  2  Bailey 
27G;  Pullen  v.  Chase,  4  Ark.  120; 
Walker  v.  Wills,  5  Ark.  166;  Ben- 
nett V.  Palmer,  128  111.  App.  626; 
Layman  v.  Detharding,  106  id.  594; 
Rosenberger  v.  Pacific  Exp.  Co.,  129 
Mo.  App.  105;  Van  Vliet  v.  Kanter, 
65  N.  Y.  Misc.  48,  citing  the  text; 
Ehrlich  v.  Brucker,  121  Wis.  495. 
Contra,  Curtis  v.  Smith,  75  Conn 
429. 

The  same  rule  applies  to  other 
contracts  silent  as  to  the  time  of 
payment  and  as  to  interest.  North 
&  South  R.  S.  Co.  V.  Xowland,  73 
111.  App.  689. 

18  Andrus  v.  Bradley,  102  Fed.  54. 

19  Where  no  demand  has  been 
made  upon  a  cotenant  in  possession 
of  the  premises,  either  for  their  pos- 
session or  the  value  of  their  use  he 
is  not  liable  for  interest.  West  v. 
Weyer,  46  Ohio  St.  66,  15  Am.  St. 
552;  Sloan  v.  Hanson  Mfg.  Co.,  150 
111.  App.  544  (loan  for  an  indefinite 
period).  See  Cully  v.  Isham,  125 
App.  Div.  (N.  Y.)  97;  Baltimore  T. 
Co.  V.  George's  Creek  C.  &  I.  Co., 
119  Md.  21  (interest  on  unpaid  divi- 
dends) ;  In  re  Cole's  Estate,  85 
Misc.  (N.  Y.)  630,  allowing  inter- 
est on  a  noninterest  bearing  claim 
against  a  decedent's  estate  from  the 
date  of  death. 

The  sureties    of    a    treasurer  are 


liable  for  interest  on  money  openly 
retained  under  an  erroneous  inter- 
pretation of  the  law  only  after  de- 
mand. Whittemore  v.  People,  227 
111.  453. 

Demand  must  be  made  upon  sure- 
ty on  a  guardian's  bond.  Pennsyl- 
vania Co.  V.  Swain,  189  Pa.  626. 

Interest  does  not  run  on  money 
deposited  to  secure  the  performance 
of  a  contract  until  demand  made  for 
it.  Kirkland  v.  Niagara  Gorge  R. 
Co.,  109  App.  Div.    (N.  Y.)    201. 

If  interest  is  not  stipulated  for 
and  the  transaction  is  not  a  mer- 
cantile loan  a  demand  must  be  made 
before  tlie  right  to  interest  accrues. 
La  Compania  General  de  Tabacos, 
etc.  V.  Araza,  7  Philip.  Isl.  455; 
Bautista  v.  Calixto,  id.  733;  and  so 
where  the  action  is  for  money  had 
and  received.  York  v.  Farmers' 
Bank,  105  Mo.  App.  127;  or  pay- 
ment has  been  made  in  excess  of  the 
contract  price.  Fort  Smith  W.  Co. 
V.  Baker,  84  Ai-k.  444;  or  one  claims 
money  as  a  donee  of  a  decedent. 
Chamberlain  v.  Eddy,  154  Mich. 
593 ;  or  an  instrument  with  coupons 
payable  to  bearer  attached  is  lost 
and  no  indemnity  is  tendered  the 
maker,  wlio  keeps  the  money  in 
hand  to  meet  his  liability.  Pensa- 
cola  &  A.  R.  Co.  V.  Hilton,  147  Ky. 
553. 

Under  a  statute  providing  that 
all  moneys  shall  bear  interest  after 
they  become  due  the  right  to  it  is 


§   ^51] 


INTEREST. 


1111 


as  a  note  given  in  paj'iiicnt  of  a  subscri{)ti()ii  i'nr  corporate 
stock,  althongii  it  is  not  paid  until  after  it  is  due,  there  being 
no  promise  to  pay  interest  and  no  call  made  I'oi-  the  payment 
of  subscriptions.^"  The  question  of  notice  has  been  much  dis- 
cussed and  is  by  no  means  setthnl.  It  is  not  necessary  to  enter 
into  it  fnlly  in  this  connection.^^  In  many  cases,  as  in  those  of 
continuing'  guaranties,  it  is  necessary  to  a  com])lete  cause  of 
action;  in  others,  to  jdace  the  defen(hint  in  (hd'ault  so  as  to 
subject  him  to  interest.^^ 

Bail  are  liable  for  interest  on  the  judgment  from  the  return 
of  the  ca.  sa.,  for  they  are  fixed  from  that  time  and  are  l)onnd 
to  take  notice  of  the  proceedings.^^  So,  on  a  rei)leviu  bond,  tlu; 
sureties  are  liable  for  interest  on  the  value  of  the  property 
adjudged  against  the  principal  from  the  date  of  the  judgment. 
The  undertaking  in  these  and  similar  cases  is  specific,  depend- 
ing only  on  contingencies  deteraiinablc  by  the  proceedings  in 
the  case  of  which  the  sureties  are  bound  to  inform  themselves. 
But  in  an  action  for  the  benefit  of  a  creditor  of  an  insolvent 
estate  brought  upon  an  administrator's  bond  against  a  surety 
it  appeared  that  the  creditor's  claims  had  been  allowed,  the 
probate  court  had  made  a  decree  of  distribution,  and  that  the 
administrator  died  soon  thereafter;   it  was  held  that  interest 


not  affected  by  laches  in  bringing 
suit.  Denver  v.  Barber  A.  P.  Co., 
141   Fed.  69,  72  C.  C.  A.  402. 

20  Soattle  T.  Co.  v.  Titner,  18 
Wash.  401. 

21  See  2  Am.  Lead  Cas.  33  ct  scq.; 
Vinal  V.  Eichardson,  13  Allen  521; 
Brown  v.  Curtis,  2  N.  Y.  225 ;  Bank 
V.  Sinclair,  60  N.  H.  100,  49  Am. 
Rep.  307. 

22  See  Orleans  &  J.  R.  Co.  v.  In- 
ternational C.  Co.,  113  La.  409. 

A  statutory  provision  that  no  in- 
terest accruing  on  a  claim  after  a 
debtor's  death  shall  be  allowed 
against  his  estate  unless  the  claim 
is  verified  and  payment  demanded 
within  one  year  of  the  personal  rep- 
resentative  may   be   waived   by   the 


latter  if  he  alone  will  be  all'ected  by 
the  waiver.  Croninger  v.  Martlien, 
83  Ky.  662.  It  is  not  waived  by  bis 
making  payment  on  an  iiiivcrilicd 
claim.  He  may  tlierefoie  insist  on 
compliance  with  the  statute  as  to 
the  unpaid  balance.  Jett  v.  Cock- 
rill,  85  Ky.  348. 

A  demand  is  waived  if  tlie  per- 
sonal representative  requests  the 
creditor  to  postpone  the  collection 
of  his  claim  and  assures  him  that 
it  will  be  paid  in  full,  at  least  where 
such  representative  is  the  only  other 
creditor  and  the  estate  is  not  sufTi- 
cient  to  pay  both  debts.  Boughncr 
V.  Brooks,  7  Ky.  L.  Rep.  599. 

28  Constable  v.  Golden,  2  Johns. 
480. 


1112  SUTHERLAND    ON    DAMAGES.  [§    351 

should  be  added  to  the  sum  fouud  due  by  the  decree  of  dis- 
tribution only  from  the  time  payment  \Aas  demanded  of  the 
surety.^* 

It  is  a  general  rule  that  a  party  is  not  entitled  to  notice  un- 
less he  has  stipulated  for  it,  or  it  is  necessary  by  the  very 
nature  of  the  transaction,  as  where  the  act  on  which  payment 
is  to  be  made  is  indefinite  and  when  it  occurs  will  be  peculiarly 
within  the  knowledge  of  the  payee,^*  On  a  giiaranty  of  pay- 
ment of  notes,  not  exceeding  in  all  a  certain  amount  that  should 
be  discounted  by  a  bank  for  another,  it  was  held  that  the  guar- 
antor was  liable  to  the  amount  of  the  guaranty,  but  not  for 
interest  until  notice  given  that  the  principal  had  failed  to 
pay.^^  If  the  event  on  which  the  money  is  to  be  payable  is 
one  not  particularly  within  the  knowledge  of  the  payee,  as  a 
death,^"^  or  a  marriage,  even  though  the  payee  be  a  party  to  it,^* 
interest  commences  to  run  from  the  time  when  the  event  occurs. 

The  general  rule  that  the  debtor  must  seek  his  creditor  and 
tender  the  amount  due  does  not  apply  when  the  debtor  is  a 
municipal  or  gwasi-municipal  corporation.  In  such  a  case,  if 
the  creditor  desires  to  secure  interest  on  the  obligation  or  claim 
he  holds,  he  must  present  it ;  failing  to  do  so,  he  will  not  be  en- 
titled to  interest  after  its  maturity,  at  least  if  funds  were 
provided  to  pay  the  principal  and  interest  due,^^  While  it  is 
the  general  rule  that  a  depositor  cannot  maintain  an  action  to 
recover  his  deposit  until  he  has  made  a  formal  demand,^"  and 
that  the  bringing  of  an  action  is  not  a  sufficient  demand,  yet,  "if 

24Heat]i    V.    Guy,    10    Mass.    371,  York,  33  N.  Y.  Misc.  249;  Donnelly 

overruling  Payne  v.  Mclnteer,  1  id.  v.  Brooklyn,  121  N.  Y.  9;  Friend  v. 

fi9.  rittsburgh,  131  Pa.  305,  17  Am.  St. 

25Vyse  V.   Wakefield,  6  M.  &  W.  sil,     6    L.R.A.     636;     South    Park 

442;    Hodges   v.   Holeman,   2   Dana  Com'rs  v.  Dunlevy,  91   111.  49.     See 


396. 


§  214. 


ficient  demand  upon  a  city  to  make 
it  liable  for  interest  on  warrants 
from    that    time.      New    Orleans    v. 


26  Washington    Bank   v.    Shirtleff,       "      ,  j.     t       -i.  •         r 

°  ,  ihe  commencement  oi  suit  is  sui- 

4   Mete.    (Mass.)    30;    Hennmgton's 

Case,  Cro.  Jac.  432. 

27  Troubar    v.    Hunter,    5    Rawle 
257 ;  Sumner  v.  Beebe,  37  Vt.  562. 

28  Fletcher   v.   Pynsett,    Cro.   Jac.       Warner.   175   U.   S.   120,   147,  44  L. 
102.  cd.  96,  109. 

29Appleton  W.  W.   Co.  v.   Apple-  30  Clark  v.   Farmers'    Nat.    Bank, 

ton,  136  Wis.  395;   Holihan  v.  New       124  Ky.  563. 


§    351]  INTEREST.  1113 

tlie  bank  by  words  or  conduct  denies  the  depositor's  ri2:bt  to 
his  bahmce  it  becomes  presently  liable  to  an  action  without 
formal  demand,"  and  interest  is  recoverable  as  damages ;  as 
where  it  initiates  proceedings  which  result  in  a  transfer  of 
the  moneys  of  its  depositors  and  thus  puts  it  out  of  its  own 
power  to  pay  on  their  demand. ^^  If  a  bank  goes  into  liquida- 
tion or  suspends  payment  the  necessity  of  a  demand  is  dis- 
pensed with  and  interest  on  the  liability  of  the  shareholders 
runs  from  the  time  of  liquidation.^^  liut  this  doctrine  does 
not  apply  to  a  state  bank  for  which  a  receiver  is  appointed  at 
the  instance  of  the  superintendent  of  banks,  there  being  no  ad- 
mission of  insolvency  on  the  part  of  the  officers  of  the  bank. 
In  such  a  case  the  bringing  of  an  action  is  a  sufficient  demand, 
and  interposing  a  counter-claim  by  way  of  answer  asking  to 
have  the  deposit  standing  to  the  defendant's  credit  applied  as 
a  set-off  against  the  plaintifP's  claim  should  be  treated  as  a  de- 
mand.^' Interest  on  claims  against  an  insolvent  bank  should 
be  computed  to  the  time  the  assignee  was  appointed. ^^  If  the 
transaction  between  the  parties  was  valid  and  was  only  void 
as  against  proceedings  in  insolvency  and  upon  action  by  the 
assignee  interest  cannot  be  collected  prior  to  demand.^^  The 
doctrine  that  taxes  illegally  assessed  may  be  recovered  with 
interest  from  the  time  of  payment  if  paid  under  protest  and 
from  the  time  of  demand  if  paid  without  protest,^^  is  not  ap- 
plicable where  payment  has  been  made  under  protest  and  the 
taxpayer  is  entitled  to  an  abatement,  the  sum  to  which  he  is 
entitled  having  been  paid.  In  such  a  case  interest  runs  only 
from  the  time  repayment  is  demanded,  and  not  from  the  date 

31  Chemical  Nat.  Bank  v.  Bailey,       first   cited    ia     not    noticed   by   the 
12  Blatch.  4S0;   Richmond  v.  Irons,       Colorado  court. 

12]  U.  S.  27,  64,  30  L.  ed.  864,  876;  33  Sickles   v.   Herold,     149    N.    Y. 

First  Nat.  Bank  v.  State  Bank,  15  332;  Patten  v.  American  Nat.  Bank, 

N.  D.  594.  supra. 

Bringing  action  is  a  good  demand.  34  Bank  Com'rs  v.  Security  T.  Co., 

Morse  v.  Rice,  36  Neb.  212.  70  N.  H.  536. 

32  Ex  parte  Stockman,  70  S.  C.  31,  35  Lewis  v.  Burlington  Sav.  Bank, 
106  Am.  St.  731;  Richmond  v.  Irons,  64  Vt.  626. 

121  U.  S.  27,  04,  30  L.  ed.  864,  876.  36  Boston   &   S.  G.   Co.   v.   Boston, 

Contra,  Patten  v.  American  Nat.  4  Mete.  (Mass.)  181;  Boston  VV.  P. 
Bank,  15  Colo.  App.  479.     The  case       Co.  v.  Boston,  9  Mete.    (Mass.)    199. 


1114 


SUTHERLAND    ON    DAMA&ES. 


[§  351 


of  the  abatement.^'  An  agreement  to  pay  a  yearly  salary,  be- 
ginning on  one  date  and  expiring  on  another,  is  simply  an 
agreement  to  pay  so  mnch  for  services  by  or  for  the  year  and 
does  not  import  that  the  stipulated  sum  is  to  be  paid  at  a  par- 
ticular time.  Hence  interest  is  not  recoverable  until  demand 
is  madc.^^ 

There  can  be  no  question  but  that  an  action  properly  brought 
is  a  sufficient  demand  to  entitle  the  creditor  to  interest, ^^  But 
aside  from  this  proposition,  the  adjudications  are  not  numer- 
ous as  to  what  constitutes  a  demand.  No  doubt  the  demand 
must  be  sufficiently  specific  to  inform  the  debtor  of  the  claim 
made  so  that  he  can  ascertain  therefrom  the  amount  he  ought 
to  pay.*°  A  demand  made  before  anything  is  due  is  ineffectual, 
and  so,  if  it  denies  the  debtor's  right  to  a  set-off,  he  being 
entitled  thereto.^^  A  demand  is  not  effectual  if  it  is  for  a  much 
larger  sum  than  was  due.**^  Accounts  rendered  the  debtor  were 
headed  with  these  words,  '"five  per  cent,  interest  charged  after 
twelve  months'  credit."  This  was  not  a  sufficient  demand  for 
the  payment  of  a  lull  made  out  of  many  items,  extending  over  a 
considerable  period.  "If  it  is  to  mean  anything  specific  it 
must  be  read  as  meaning  that  interest  will  be  charged  after  one 
year  from  the  date  of  each  item,  reddendo  singida  singulis. 
But,  to  my  mind,  it  is  impossible  to  read  it  like  that.  The  in- 
timation is  general  only."  *^  A  notice  to  a  liquidator  by  a 
creditor  demanding  interest  on  his  claim  is  not  a  sufficient  de- 
mand under  3  and  4  Wm.  IV.,  ch.  42,  sec.  28,  for  present  pay- 
ment so  as  to  make  the  debt  carry  interest  from  the  date  of  the 
notice.**     A  claim  sent  in  under  a  winding-up  order  is  not  a 


37Boott  C.  Mills  V.  Lowell,  159 
Mass.  383. 

38  Soule  V.  Soule,  157  Mass.  451. 

39  Freygang  v.  Vera  Cruz  &  P.  R. 
Co.,  154  Fed.  G40,  83  C.  C.  A.  414; 
Trimble  v.  Kansas  City,  etc.  R.  Co., 
180  Mo.  574;  Kervin  v.  Utter,  120 
App.  Div.  (N.  Y.)  610,  and  notes  to 
this  section. 

40  Lowe  V.  Ring,  123  Wis.  370; 
Lavcock  V.  Parker,  103  Wis.  161. 


41  Union  Rank  v.  iNIorgan,  12  New 
Zeal.  672. 

42  Hill  V.  South  Staffordshire  R. 
Co.,  L.  R.  18  Eq.  154,  disapproving 
Mildmay  v.  Methuen,  3  Drew.  Dl. 
See  §  349. 

43  Williams  v.  French,  61  L.  J. 
(Ch.)  22;  Lautz  v.  Archdale,  11  T. 
L.  Rep.  452. 

44  In  re  LTnited  Importers'  Co.,  7 
New  Zeal.  229. 


352] 


INTEREST. 


1115 


demand  williin  the  statute.*®  lUit  a  suiiinioiis  taken  <mt  Itv  a 
person  claiming'  the  refund  of  money  paid  nnder  a  void  aj^ree- 
nient  is  a  sufficient  demand  under  tliat  statute.*®  Interest  may 
be  recovered  in  a  meclianics'  lien  suit  from  ihe  time  the 
lien  claim  was  filed,  but  not  prior  th{n-eto  unless  notice  was 
given   that    interest   was   demanded.*'^ 

§  352.  When  allowed  on  money  had  and  received,  'rhe  action 
for  money  had  and  received  is  ecpiitable;  whether  interest  shall 
be  recovered  depends  upon  the  particular  circumstances.  In 
some  cases  it  is  said  the  defendant  ought  to  refund  the  prin- 
cipal merely;  and  in  others  that  he  ought,  ex  cquo  et  bono,  to 
refund  it  with  interest;  each  case  depends  on  the  justice  and 
equity  arising  out  of  its  facts.*^  If  the  defendant  has  derived 
an  advantage  from  the  money,  or  connnitted  some  wrong  in 
obtaining  or  disposing  of  it,  or  is  in  default  in  not  paying  it 
over,  he  will  be  charged  with  interest.*^  Thus,  where  the  com- 
mon property  is  rented  out  by  one  tenant  in  common  he  is 


45  In  ro  Herefordshire  B.  Co.,  L. 
R.  4  Eq.  250. 

46  Alison's  Case,  L.  R.  15  Eq.  394. 

47  Cornelius  v.  Washington  S.  L., 
52  Wash.  272;  Pittsburg  P.  G.  Co. 
V.  Leary,  25  S.  D.  256,  31  L.R.A. 
(N.S.)   746. 

48  Pease  v.  Barber,  3  C'ai.  20(5 ; 
Marvin  v.  McRae,  1  Cheves  61 ;  Por- 
ter V.  Nash,  1  Ala.  452;  Carrington 
V.  Basshor,   119  Md.  378. 

Where  a  mother  was  the  custodian 
of  her  son's  money,  witliout  instruc- 
tions, and  invested  portions  of  it 
from  time  to  time,  keeping  it  sepa- 
rate from  her  own  funds,  and  paid 
sums  from  time  to  time  to  him,  she 
was  liable  for  tlie  interest  actually 
received.  Hughes  v.  Miller,  ISO  Pa. 
381. 

Interest  on  the  claim  of  a  princi- 
pal against  the  estate  of  his  de- 
ceased agent  may  be  computed  from 
the  time  demand  is  made  upon  the 
administrator.  Shepherd  v.  Shep- 
herd's Est.  108  Mich.  82. 


The  allowance  of  interest  is  with- 
in tlie  discretion  of  the  jury.  Catan- 
zarodi  di  Giorgo  Co.  v.  Stock,  116 
Md.  201. 

49Jifkins  V.  Schimpff,  50  Pa. 
Super.  331;  Bialbloca's  Petition,  id. 
181  (at  the  legal,  rather  than  the 
usual  banking  rate)  ;  Willock  v. 
Hamilton,  51  id.  1  ;  Deering  v. 
Schreyer,  110  App.  Div.  (X.  Y.) 
200;  State  v.  Kno.wille,  115  Tenn. 
175. 

One  wlio  lias  been  i)aid  for  work 
as  it  progressed  is  liable  for  inter- 
est if  tlie  work  does  not  corresi)ond 
with  tlie  contract.  Ark-M.  Z.  Co.  v. 
Patterson,  79  Ark.  506.  A  garnishee 
who  holds  the  proceeds  of  property 
is  liable  for  interest.  Hul)liard  M 
Co.  V.  Roche,  133  111.  App.  602.  A 
creditor  to  whom  money  has  been 
paid  as  a  preference  is  not  lialile 
for  intere.st  to  the  trustee  of  his 
debtor  imtil  demand  made.  Tred- 
way  V.  Kaufman,  21  Pa.  Super.  256. 


1116 


SUTHEELAND    ON    DAMAGES. 


[§  352 


accountable  to  his  co-tenants  for  their  share  of  the  rents  re- 
ceived and  liable  for  interest  npon  his  receipts  of  rent  from 
the  end  of  the  rent  year,  because,  having  another's  money  and 
using  it,  he  should  pay  interest  on  it.^"  A  person  who  bought 
a  slave  with  notice  of  a  better  title  was  decreed  to  deliver  him 
and  pay  profits;  and  interest  was  charged  against  him  upon 
the  hires  actually  received  by  him  from  other  persons  from 
the  date  of  his  receipts,  but  not  upon  the  profits  of  such  slave 
while  in  his  own  possession  without  being  hired,  these  being 
unliquidated  and  conjectural  sums  which  he  was  in  no  default 
in  not  paying.^^  If  money  is  paid  to  the  defendant  under  a 
mutual  mistake,  and  fraud  is  not  imputable  to  either  party, 
interest  cannot  be  recovered  until  after  a  demand.*'^  So  a 
party  receiving  from  an  administrator  full  payment  of  his  debt 
against  the  estate  on  the  supposition  that  it  is  solvent,  when 
afterwards  sued  to  recover  the  excess  above  the  ratable  part, 
on  the  estate  proving  insolvent,  it  was  held  that  interest  was 
not  recoverable  until  after  a  demand.^^  But  interest  is  recov- 
erable from  the  time  money  was  received  if  it  was  wrong- 
fully obtained  and  fraudulently  kept,^^  unless  the  plaintiff  has 


50  Early  v.  Friend,  16  Gratt.  21; 
Lowndes  v.  City  Nat.  Bank,  82 
Conn.  8,  22  L.R.A.(KS.)  408;  Jones 
V.  Williams,  2  Call  8.5;  Dow  v. 
Adams,  5  Munf.  21;  Nnckit  v.  Law- 
rence, 5  Rand.  ,571 ;  Currier  v. 
Kretzinger,  162  111.  511,  aff'g  58 
111.  App.  288.  See  Leete  v.  Pacific 
M.  &  M.  Co.,  89  Fed.  480,  constru- 
ing the  statute  of  Nevada  to  cover 
interest   in   sucli  a  case. 

51  Raird  v.  Bland,  5  Munf.  492. 

52  Arapahoe  County  v.  Denver,  .30 
Colo.  13;  Corse  v.  Minnesota  G.  Co., 
94  Minn.  331;  Kean  v.  Landrum,  72 
S.  C.  556;  Hall  v.  Graham,  112  Va. 
560;  Lee  v.  Laprade,  106  Va.  594, 
117  Am.  St.  1021;  Vashon  v.  Bar- 
rett, 105  Va.  490;  Moylan  v.  Moy- 
lan,  49  Wash.  341 ;  Jacobs  v.  Adams, 
1  Dall.  52,  1  L.  ed.  33;  Simons  v. 
Walter,  1  McCord  97;  Passenger  R. 


Co.   v.   Philadelphia,    51     Pa.    465 
Lynch  v.  Debiar,  3  Johns.  Cas.  302 
Sanders     v.     Scott,     68     Ind.     130 
Georgia   R.   &   B.   Co.   v.   Smith,   83 
Ga.  626;  Cummings  v.  Bradford,  15 
Ky.   L.   Rep.   155;    Grim's  Est.,   147 
Pa.  190;   Craufurd  v.  Smith,  93  Va. 
G23;    Ashhurst    v.    Field,    28    N.    J. 
Eq.   315;    Simons  v.   Walter,   1   Mc- 
Cord   97 ;    Northrop    v.    Graves,    19 
Conn.   548,  50   Am.  Dec.  264. 

53  Walker  v.  Bradley,  3  Pick.  261; 
Stevens  v.  Goodell,  3  Mete.  (Mass.) 
34. 

54  Manufacturers'  Nat.  Bank  v. 
Perry,  144  Mass.  313;  Atlantic 
Bank  v.  Harris,  118  Mass.  147; 
Reynolds  Elevator  Co.  v.  Merchants' 
Nat.  Bank,  55  App.  Div.  (N.  Y.) 
1;  Southern  Pac.  R.  Co.  v.  United 
States,  186  Fed.  737,  108  C.  C. 
A.     607      (allowed     from     dati'     of 


§  3.52] 


INTEREST. 


1117 


been  gnilty  of  laclies  in  demanding  it  and  tlic  defendant  has 
not  derived  advantage  from  its  nsc.^^  A  mere  depositary, 
bailee,  stakeholder  or  trustee  is  not  liable  for  interest  by  mere- 
ly having  the  money  in  his  hands;  there  mnst  be  a  wrongful 
use  made  of  it,  refusal  to  pay  on  pro})er  demand  or  some 
neglect  of  duty  by  which  the  principal  or  intprest  was  lost.^^ 


enactment  of  statute  authorizing 
the  recovery  of  lands  erroneously 
patented)  ;  Newburyport  v.  Fidel- 
ity Mut.  L.  Ins.  Co.,  107  Mass. 
596;  Earle  v.  Whiting,  196  Mass. 
371;  McLain  v.  Parker,  229  Mo.  68; 
Lumber  Co.  v.  Railroad,  141  N. 
C.  171,  6  L.R.A.{N.S.)  225;  Mee 
V.  Montclair,  83  N.  J.  L.  274  ( money 
obtained  by  officer's  duress;  town 
liable  for  it  from  the  time  money 
received  by  it).  Contra.  American 
Mut.  Ins.  Co.  V.  Bertram,  163  Ind. 
51,  64  L.R.A.  935. 

An  action  to  recover  raonej'  paid 
on  a  wager  is  not  for  a  penalty,  and 
interest  may  be  recovered  from  the 
time  the  money  was  paid.  Motlow 
V.  Johnson,  151  Ala.  276. 

A  fraudulent  grantee  who  receives 
property  for  the  purpose  of  hinder- 
ing the  creditors  of  the  grantor  is 
liable  for  interest  on  its  value. 
Walker  v.  Montgomery,  249  111.  378. 

55  United  States  v.  Sanborn,  135 
U.  S.  271. 

Under  a  statute  allowing  interest 
on  money  received  to  the  use  of  an- 
other and  retained  without  the 
owner's  knowledge  it  need  not  be 
shown  that  any  use  was  made  of  the 
money.  Underwood  v.  Whiteside 
County  B.  &  L.  Ass'n,  115  111.  App. 
387. 

56  DeWitt  v.  Keystone  Nat.  Bank 
of  Pittsburgh,  243  Pa.  534,  52 
L.R.A.  (N.S.)  522;  Woodward's  App., 
227  Pa.  191;  Lake  v.  Park,  19  N. 
J.  L.  108;  Ex  parte  Walsh,  26  Md. 
495;  Wade  v.  Wade,  1  Wash.  ('.  C. 
477;  Huntley  v.  York  Bank,  21   Pa. 


291;  Roach  v.  Jelks,  40  Miss.  754; 
Reynolds  v.  Walker,  29  id.  250; 
Fitzgerald  v.  Jones,  1  Munf.  150; 
.Alickle  v.  Cross,  10  Md.  352;  Ruck- 
man  V.  Pitclier,  20  N.  Y.  9;  Union 
Bank  v.  Solle,  2  Strobh.  390;  Rob- 
inson V.  Corn  Exchange  &  Ins.  Co., 
1  Robert.  14;  Jacot  v.  Emmett,  11 
Paige  142;  Parsons  v.  Treadwell,  50 
N.  H.  356;  Doxey  v.  Miller,  2  111. 
App.  30;  Talbot  v.  National  Bank, 
129  Mass.  67,  37  Am.  Rep.  302; 
Wood  V.  Bobbins,  11  Mass.  504,  6 
Am.  Dec.  182;  Bell  v.  Logan,  7  J. 
J.  Marsh.  593;  Vance  v.  Vance,  5 
T.  B.  Hon.  521 ;  Johnson  v.  Ilaggin, 
6  J.  J.  Marsh.  581  ;  Taylor  v.  Knox, 
1  Dana  391;  Johnson  v.  Eicke,  12 
N.  J.  L.  316;  Knight  v.  Reese,  2 
Dall.  182,  1  L.  ed.  340;  Rayner  v. 
Bryson,  29  Md.  473;  IngcrsoU  v. 
Campbell,  46  Ala.  282;  Dilliard 
V.  Tomlinson,  1  Munf.  183;  Karr  v. 
Karr,  6  Dana  5;  Dexter  v.  Arnold, 
3  Mason  284;  Candee  v.  Skinner,  40 
Conn.  464;  Stearns  v.  Brown,  1  Pick. 
530;  Wyman  v.  Hubbard,  13  Mass. 
232;  Newton  v.  Bennct,  1  Bro.  Cli. 
359;  United  States  v.  Curtis,  100 
U.  S.  119,  25  L.  ed.  571;  United 
States  V.  Denvir,  106  id.  536;  Sco- 
field's  Est.,  99  111.  513;  Kattelman 
V.  Guthrie,  142  111.  357,  rev'g  43 
111.  App.  188;  Mathewson  v. 
Davis,  191  111.  391;  Twohy  M.  Co. 
V.  Melbye,  83  Minn.  394;  Bell  v. 
Rice,  50  Neb.  547;  Estate  of 
Smith,  1  N.  Y.  Misc.  253 ;  Boughton 
V.  Flint,  74  N.  Y.  476;  Miller  v. 
tnder,  7  Oliio  ('.  C.  97;  Thurber  v. 
Sprague,  17  R.  1.  634;  I\ittcl  v.  Au- 


1118 


SUTHERLAND    ON    DAMAGES. 


[§  ^52 


One  who  deposits  iiioiioy  given  to  indeiuiiifj  against  loss  by 
reason  of  his  signing  an  injnnction  liond  is  not  liable  to  the 
principal  in  such  bond  for  interest  aihiwed  him  on  such  de- 
posit, there  being  no  contract  between  them  as  to  interest,  and 
no  other  consideration  for  signing  the  bond  than  the  benefit 
expected  from  the  deposit."  A  debtor  who  allows  judgment 
to  be  taken  against  him  without  claiming  a  credit  to  which 
he  was  entitled  may  recover  the  money  paid  for  which  he  re- 
ceived no  credit,  and  interest  tliereon  at  the  legal  rate  from 
the  time  of  })ayment;  he  cannot  recover  the  rate  borne  by 
the  contract  upon  which  the  payment  was  niadc.^' 

§  353.  When  allowed  against  agents,  trustees  and  officers. 
An  agent  who  receives  money  for  his  principal  in  the  trans- 
action of  the  latter's  business  is  not  liable  for  interest  on  it 
before  a  demand  is  nuide  unless  he  has  received  special  in- 
structions to  remit  as  fast  as  collected,  or  is  in  default  in  neg- 
lecting to  render  his  accounts ;  and  the  same  rule  applies  to 
an  attorney  who  has  collected  money  for  his  clients.^^  But 
where  an  agent,  having  received  money,  unreasonably  neglects 


gusta,  etc.  R.  Co.,  28  C.  C.  A.  437, 
84  P'od.  38(5;  Anderson  v.  Pacific 
Bank,  112  Cal.  598,  53  Am.  St.  228, 
32  L.R.A.  479;  Barrere  v.  Somps, 
113  Cal.  97;  Winfield  M.  &  T.  Co. 
V.  Robinson,  89  Kan.  842;  Rosen- 
bauni  V.  Drunim  C.  Co.,  17G  111. 
App.  205  (the  form  of  the  action  is 
not  material;  tlius,  where  assump- 
sit was  brought,  wlien  the  action 
might  have  been  trover,  liability  for 
interest  existed  from  the  time  of  de- 
mand) ;  First  Nat.  Bank  of  Tipton 
V.  Peck,  180  Md.  649. 

If  the  profit  accruing  to  a  bank 
from  pulilic  money  unauthorizedly 
deposited  witli  it  cannot  be  ascer- 
tained it  will  be  charged  with  inter- 
est at  the  legal  rate.  State  v.  Ohio 
Nat.  Bank,  7  Ohio  N.  P.  (N.  S.)  43; 
State  V.  National  Banks,  4  id.  245. 

57Thouron  v.  Railway  Co.,  90 
Tenn.  609;  Sampson  v.  Neely,  106 
111.  App.  129  (appeal  bond). 


58  Walker  v.  Thomas,  8  Ky.  L. 
Rep.  700   (Ky.  Super.  Ct.). 

59  Wood  V.  Clailiorne,  82  Ark.  514, 
n  L.R.A.  (N.S.)  913;  Fish  v.  See- 
berger,  154  111.  30,  aff'g  47  111.  App. 
580;  Dale  v.  Richards,  21  D.  C.  312; 
Bischoffsheim  v.  Baltzer,  21  Fed. 
531  ;  Porter  v.  Grimsley,  98  N.  C. 
550;  Neal  v.  Freeman,  85  N.  C.  441; 
Chase  v.  Union  S.  Co.,  11  Daly  107; 
Williams  v.  Storrs,  6  Johns.  Ch.  353, 
10  Am.  Dec.  340;  Crane  v.  Dygert, 
4  Wend.  675;  Hauxhurst  v.  Hovey, 
26  Vt.  544;  Lever  v.  Lever,  2  Hill's 
Ch.  158;  Roland  v.  Martindale,  1 
Bailey's  Eq.  226. 

When  a  financial  a-gent  or  attor- 
ney mixes  tlie  money  of  his  princi- 
pal with  his  own  by  depositing  it  in 
his  general  bank  account  and  draws 
it  out  and  uses  it  in  his  own  busi- 
ness, it  is  presumed  that  he  has 
gained  a  benefit,  and  on  his  failure 
to  show   how  much  he  has   derived 


§  353] 


INTEREST. 


1119 


to  inform  his  principal  of  it  lio  is  liaMo  for  interest  from  the 
time  when  he  oni>ht  to  have  given  such  information.^"  Tntcrest 
is  allowed  where  the  law  by  implication  makes  it  the  duty  of 
the  party  to  pay  over  money  to  the  owner  without  previous 
demand.®^ 

Tlie  liability  of  a  trustee  for  interest  depends  upon  general 
principles  which  may  be  varied  according  to  the  circumstances 
of  each  case.^^  These  principles  are  that  he  is  not  to  make  a 
profit  out  of  the  trnst  funds  in  his  hands,  and  that  he  shall  ex- 
ercise that  degree  of  diligence  in  relation  to  the  trust  estate 
which  men  of  ordinary  prudence  exercise  with  respect  to  their 
own  estates,  and  if  any  loss  results  from  his  failure  in  this  re- 


from  its  use  he  is  chargeable  with 
interest.  When  he  has  interest- 
I)earing  securities  in  liis  possession 
whicli  belong  to  his  principal  it  is 
jiresumed  that  he  received  interest 
thereon;  and  unless  he  explains 
away  the  presumption  he  will  be 
charged  therewith.  Blodgett's  Est. 
V.  Converse's  Est.,  60  Vt.  410. 

An  agent  who  is  not  allowed  com- 
pensation should  not  be  charged 
with  interest  on  money  of  his  prin- 
cipal wliich  the  former  \ised  in  his 
business.  Riley  v.  Riley,  14  Ky. 
L.  Rep.  895. 

eOHarsant  v.  Blaine,  50  L.  J.  Q. 
B.  511  ;  Bayne  v.  Stephens,  S  Aust. 
Com.  L.  R.  ]  ;  Dodge  v.  Perkins,  !) 
Pick.  368. 

61  Laird  v.  German  Sav.  Bank  of 
Lake  Park,  —  Iowa  — ,  149  N.  W. 
90;  Farrell  v.  Garfield  M.,  M.  &  S. 
Co.,  49  Colo.  159;  Wahl  v.  Tracy, 
139  Wis.  668;  Simonds  v.  Coster,  .3 
New  Bruns.  Eq.  329;  Dodge  v.  Per- 
kins, supra;  Miller  v.  McCorniick 
H.  Mach.  Co.,  84  111.  App.  571  :  El- 
lery  v.  Cunningliani,  1  Mete. 
(Mass.)  112;  Bideli  v.  .Inimey,  9 
111.  193;  Nisbet  v.  Lawson,  1  Ga. 
275;  Bank  of  South  Carolina  v. 
Buire,   3    Strobh.   439;    Anderson   v. 


Georgia,  2  Ga.  370;  Boj'd  v.  Gil- 
christ, 15  Ala.  849;  Harrison  v. 
Long,  4  Desaus.  Ill;  Hawkins 
V.  Minor,  5  Call  118;  Kimbrel 
V.  Glover,  13  Rich.  191;  McRae  v. 
i\lalloy,  87  N.  C.  190;  Winslow  v. 
People,  117  111.  152  (dciiiand  mcd 
not  be  made  upon  a  guardian  for 
the  money  due  his  ward). 

62  In  re  Davis'  Est.,  35  Mont.  273. 

In  Real  Estate  Co.  v.  Union  T. 
Co.,  102  Md.  41,  a  trustee  who  de- 
posited funds  with  itself,  without 
using  them,  though  they  were  not 
set  apart  or  earmarked,  was  held 
not  liable  for  the  legal  rate  of  in- 
terest. Mayer  v.  McCracken,  245 
111.  551,  is  to  the  same  effect. 

In  equity  a  trustee  wlio  has  long 
retained  funds  under  an  erroneous 
decree  and  been  induced  by  the  court 
and  by  counsel  to  believe  they  were 
his  will  not  l)e  charged  with  inter- 
est on  being  ordered  to  refund  tlie 
principal.  Southern  R.  Co.  v.  Glenn, 
102  Va.  529. 

A  pledgor  who  ratifies  an  unau- 
thorized sale  of  liis  property  by  the 
pledgee  is  liound  by  th(^  terms  of  the 
sale  and  can  i('('(i\('r  interest  only 
in  accor<hitici>  Iherewitli.  Demars  v. 
Hudon,  33  IMont.   170. 


1120 


SUTHERLAND    ON    DAMAGES. 


[^  353 


spect  he,  and  not  his  cestui  que  trust,  mnst  bear  it.^'  Mere 
error  of  judgment  is  not  sufficient  to  subject  a  trustee  to  puni- 
tive responsibility,  nor  does  the  law  require  of  him  extraordi- 
nary care,  or  make  him  an  insurer  of  the  trust  property,  or 
liable  for  losses  upon  an  investment  which  may  occur  from 
depreciation  of  values  if  he  has  exercised  reasonable  care,  dili- 
gence and  prudence.®*  A  trustee  avIio  has  the  custody  and 
management  of  funds  and  uses  them  in  his  private  business,^^ 
realizes  interest  by  lending,  neglects  to  render  the  fund  pro- 
ductive when  it  was  his  duty  to  do  so,  fails  to  account  when 
called  upon,  or  is  otherwise  guilty  of  neglect,  evasion,  fraud 
or  any  wrong  administration  will  be  charged  with  interest,  and 
even  compound  interest,  according  to  the  culpability  of  his 
conduct.^® 


63  In  re  Jones,  143  App.  Div.  (N. 
Y.)  692;  Albert  v.  Saiiford,  201  Mo. 
117;  Becker's  Est.,  21  Pa.  Dist.  97; 
Brigham  v.  Morgan,  185  Mass.  27; 
Cheever  v.  Ellis,  134  Mich.  645; 
Clark's  Est.,  39  Pa.  Super.  445; 
Baker  v.  Lafitte,  4  Rich.  Eq.  392; 
Dixon  V.  Hunter,  3  Hill  (S.  C), 
204;  Tucker  v.  Richards,  58  S.  C. 
22. 

64  Estate  of  Cousins,  111  Cal.  441; 
Estate  of  Sarnient,  123  Cal.  331; 
Estate  of  Marre,  127  Cal.  128;  J.  I. 
Case  P.  Works  v.  Edwards,  71  111. 
App.  655;  Fitzgerald  v.  Paisley, 
110  Iowa  98;  Briggs  v.  Walker,  102 
Ky.  359;  Palmer  v.  Palmer,  15  App. 
Div.  (N.  Y.)  609;  United  States 
Rubber  Co.  v.  Peterman,  119  111. 
App.  610;  Martin  v.  Martin,  43 
Ore.  119.  See  Goff  v.  Goff,  123  Ky. 
78. 

The  net  result  to  the  estate  of 
unauthorized  action  by  an  adminis- 
trator will  l)e  considered  in  deter- 
mining his  liability  for  interest. 
Peterman  v.  United  States  Rubber 
Co.,  221  111.  581. 

65  "Whatever  the  actual  intention 
of  the  trustee  mav  be  the  weight  of 


authority  seems  to  be  that  where  he 
invests  trust  money  in  liis  individual 
name  he  commits  a  breach  of  trust 
whicli  sul)jects  him  to  the  same  lia- 
bility as  if  there  had  been  a  wilful 
conversion  to  his  own  use."  White 
v.  Sherman,  168  111.  589,  604,  61 
Am.  St.  132,  citing  Morris  v.  Wal- 
lace, 3  Pa.  319,  45  Am.  Dec.  641; 
Stanley's  App.,  8  Pa.  431,  49  Am. 
Dec.  530;  McAllister  v.  Common- 
wealtli,  30  Pa.  536 ;  2  Pomeroy's  Eq., 
sec.  1079;  Gilbert  v.  Welsch,  75  Ind. 
557;  Naltner  v.  Dolan,  108  Ind.  500, 
58  Am.  Rep.  61,  and  cases  cited;  De 
Jarnette  v.  De  Jarnette,  41  Ala. 
708. 

One  who  receives  money  under  an 
agreement  to  pay  it  over  to  a  party 
when  the  title  to  certain  property 
should  be  cleared  is  not  liable  for 
interest  before  that  time  merely  be- 
caiise  he  deposited  the  money,  with 
other  funds,  in  his  own  name,  there 
never  being  a  time  when  the  amount 
would  not  have  been  paid  by  the 
bank  in  which  the  deposit  was  made. 
Mathewson  v.  Davis,  191  111.  391; 
INlatter  of  Barnes,  140  N.  Y.  468. 

66  Bellevue  Mills  Co.  v.  Baltimore 


§  353] 


INTEREST. 


1121 


Trustees  are  also  liable  for  interest  on  the  principle  that  all 
profits  made  from  the  employment  of  the  trust  funds  belonj^ 


Trust  Co.,  214  Fed.  817;  Willis  v. 
Rice,  157  Ala.  252,  131  Am.  St.  55; 
McPhee's  Est.,  156  Cal.  335;  Glas- 
sell  V.  Glassell,  147  Cal.  510;  Tip- 
pin  V.  Perry,  122  Ga.  120;  Peter- 
niau  V.  United  States  Rubber  Co., 
221  111.  581;  Aldrich  v.  ilaher,  153 
111.  App.  413;  Wobl)e  v.  Sdiaub,  143 
111.  App.  301  ;  Rimelin  v.  rt'oplc,  147 
111.  App.  28;  Stanley's  Est.,  UiO  Ind. 
G3U;  Boreing  v.  Earis,  127  Ky.  67; 
Beugnot  v.  Tremoulet,  111  La.  1; 
In  re  Saier's  Est.,  158  Mich.  170; 
Union  T.  Co.  v.  Preston  Nat.  Bank, 
144  Mich.  106;  Owens  v.  Owens,  84 
Miss.  073;  Pullis  v.  Somerville,  218 
Mo.  624;  In  re  Bush's  Est.,  89  Neb. 
334;  In  re  Bullion's  Est.,  87  Neb. 
700,  31  L.R.A.(N.S.)  350;  Wyckoff 
V.  O'Neil,  71  N.  J.  Eq.  729;  In  re 
Jones,  143  App.  Div.  (N.  Y.)  692; 
In  re  Byrnes,  114  App.  Div.  (N. 
Y.)  532;  In  re  Stanton,  41  N.  Y. 
Misc.  278;  Isler  v.  Brock,  134  N.  C. 
428;  Godwin's  Est.,  22  Pa.  Super. 
469;  In  re  Flynn's  Est.,  21  id.  126; 
Everett's  Est.,  19  Pa.  Dist.  477; 
Wilvert's  Est.,  11  id.  660;  Bracken's 
Est.,  15  id.  71;  Brockschmidt  v. 
Becker  (Tex.  Civ.  App.),  132  S.  W. 
Ill;  Thomas  v.  Hawpe,  35  Tex.  Civ. 
App.  311;  Earle  v.  Burland,  6  Ont. 
L.  R.  327;  In  re  Thomas's  Est.,  20 
Colo.  110;  White  v.  Sherman,  168 
111.  589,  61  Am.  St.  132,  62  111.  App. 
271 ;  Haines  v.  Hay,  169  111.  93;  :Mc- 
Cune  v.  Hartman  S.  Co.,  87  111.  App. 
162;  Hodge  v.  Quiry,  9  Ky.  L.  Rep. 
650;  In  re  Brewster's  Est.,  113 
Mich.  561 ;  In  re  Assignment  of 
Murdoch,  129  Mo.  488,  499;  Wolfort 
V.  Reilly,  133  Mo.  463;  Miles's  Est., 
2  Pa.  bist.  103;  Noble's  Est.,  178 
Pa.  460;  Re  Hodges'  Est.,  00  Vt.  70; 
Mathewson  v.  Davis,  191  III.  391  ; 
Wilkinson  v.  Washington  T.  Co., 
Sutii.  Dam.   Vol.    1.— 71. 


102  Fed.  28;  Mades  v.  Miller,  2  D. 
C.  App.  Cas.  455;  Adanison  v.  Reid, 

6  Vict.  L.  R.  (Eq.)  164;  Eppingcr 
v.  Canepa,  20  Fla.  262;  Cannon 
v.  Apperson,  14  Lea  553;  Grant  v. 
Edwards,  93  N.  C.  488;  Aldridge  v. 
AlcClelland,  36  N.  J.  Eq,  288;  Jack- 
son V.  Sliields,  87  N.  C.  473;  Wil- 
son v.  Lineberger,  88  id.  416;  Thurs- 
ton, Matter  of,  57  Wis.  104;  Crosby 
V.  Merriam,  31  Alinn.  342;  In  re 
Sanderson,  74  Cal.  199;  May  v. 
Green,  75  Ala.  162;  Riley  v.  Mcln- 
lear's  Est.,  61  Vt.  254;  In  re  Bil- 
liard, 83  Cal.  423;  Meyer  v. 
Fletcher,  56  Mich.  508;  Brewer 
V.  Ernest,  81  Ala.  435;  Winslow  v. 
People,  117  111.  152;  In  re  Newcoml), 
32  Fed.  826;  Van  Doren  v.  Van 
Doren,  45  N.  J.  Eq.  580;  Filmore 
v.  Reithman,  0  Colo.  120;  Lomax  v. 
Pendleton,  3  Call  465;  Voorhees  v. 
Stootboff,  11  N.  J.  L.  145;  Jones 
v.  W'ard,  10  Yerg.  100;  Amos  v. 
Heatherly,  7  Dana  48;  Singleton  v. 
Singleton,  5  Dana  97 ;  Clay  v.  Hart, 

7  Dana  1 7 ;  Nixon  v.  Nixon,  8  id.  5 ; 
Hooper  v.  Winston,  24  111.  353; 
White  V.  White,  3  Dana  376;  Miller 
V.  Beverlys,  4  Hon.  &  Munf.  415; 
Quarles  v.  Quarles,  2  Munf.  321  ; 
English  v.  Harvey,  2  Rawle  305; 
Callagban  v.  Hall,  1  S.  &  R.  241; 
Yiindt's  App.,  13  Pa.  .")75,  53  Am. 
Dec.  496;  Witnian  &  Geiainger's 
App.,  28  Pa.  376;  Bronseman  v. 
Frank,  id.  475;  Verner's  Est.,  6 
Watts  250;  Robert's  App.,  92  Pa. 
407;  Bruner's  App.,  57  id.  46;  Kerr 
V.  Laird,  27  Miss.  544;  Pearson  v. 
Darrington,  32  Ala.  227;  Thomas  v. 
School,  9  Gill  &  J.  115;  Estate  of 
Isaacs,  30  Cal.  105;  Jennison  v. 
Hapgood,  10  Pick.  77;  Guardianship 
of  Dow,  133  Cal.  446;  St.  Paul  T. 
Co.  v.  StiuiiL!',  Sf)   Minn.   1;   Siiiklcr's 


1122 


SUTHERLAND    ON    DAMAGES. 


[§   353 


to  the  beneficiary,  and  that  he  is  entitled  to  be  indemnified 
for  the  loss,  throngh  their  neglect  or  frandulent  management, 
of  the  profit  and  increase  which  would  have  arisen  from  a  dil- 
igent and  judicious  performance  of  the  trust.  If  interest  is 
lost  by  negligence  of  the  trustee  he  is  charged  with  interest, 
either  simple  or  compound,  as  may  be  required  to  compensate 
that  loss,  which  may  be  greater  or  less  according  to  the  de- 
gree of  the  delinquency.  If  in  violation  of  the  trust  he  min- 
gles the  trust  funds  with  his  own  and  uses  them  in  his  busi- 
ness, he  does  so  at  his  peril ;  and  if  he  refuses  or  neglects  to 
give  an  account  of  the  profits  made,  or  makes  an  evasive  or 
unsatisfactory  one,  compound  interest  will  be  charged,  with 
rests  long  or  short,  according  to  circumstances.  The  interest 
is  thus  compounded  as  a  punishment  for  breach  of  trust  and 
as  a  substitute  for  the  undisclosed  profits.^'     The  rule  is  a 


Est.,  10  Pa.  Dist.  399;  Cooper  v. 
Cooper,  256  111.  160;  Charles  v. 
Witt,  88  Kan.  484;  In  re  Fry,  79 
N.  Y.  Misc.  180;  Elton's  Est.,  48 
Pa.  Super.  585  (the  rate  is  largely 
within  the  discretion  of  the  court 
of  original  jurisdiction). 

Where  a  solvent  executor  or  ad- 
ministrator owes  the  estate  the 
amount  of  the  debt  will  be  con- 
sidered in  law  and  equity  as  so  much 
money  in  his  hands;  but  if  it  is 
shown  that  he  has  been  and  is  un- 
able to  pay  he  will  not  be  charged 
with  the  debt  as  cash.  Harker  v. 
Irick,  10  N.  J.  Eq.  272;  Baucus  v. 
Stover,  24  Hun  109;  United  States 
V.  Eggleston,  4  Sawyer  199;  Ter- 
hune  V.  Oldis,  44  N.  J.  Eq.  146. 
But  the  proof  of  inability  to  pay 
must  be  complete  and  satisfactory; 
and  if  it  does  not  show  he  could  not 
pay  interest  he  is  chargeable  with 
it.    Terhune  v.  Oldis,  supra. 

As  to  the  liability  of  executors 
and  administrators  for  interest  un- 
der the  statutes  of  Illinois,  see 
Scliofield's  Est.,  99  111.  513. 

67Primeau  v.  Cranfield,   184  Fed. 


480;  St.  Mary's  Hospital  v.  Perry, 
152  Cal.  338;  Guardianship  of 
Hoare,  14  Hawaii  443;  Miller  v. 
Lux,  100  Cal.  609;  Bemmerly  v. 
Woodward,  124  Cal.  568;  Price 
V.  Peterson,  38  Ark.  494;  Barney  v. 
Saunders,  16  How.  539,  14  L.  ed. 
1049. 

Profits  may  be  recovered  where 
executors  have  retained  money  in 
their  hands  for  several  years  and 
invested  it  in  business,  making  large 
profits,  although  no  technical  trust 
was  created  by  the  will.  Hertzler's 
Est.,  192  Pa.  531. 

In  the  Matter  of  Harland's  Ac- 
counts, 5  Rawle  323,  Gibson,  C.  J., 
said :  "It  is  a  fundamental  rule  of 
equity  that  a  trustee  shall  not  make 
a  profit  of  the  fund  for  himself; 
and  that  substitution  of  interest  for 
profits  not  ascertainable  is  but  a 
modification  of  it.  Such  being  the 
admitted  basis  of  the  rule,  no  color- 
able reason  can  be  assigned  why  it 
should  not  be  applied  as  well  to  an 
administrator  who  has  used  tin; 
trust  moneys  without  having  ac- 
counted   for    tile    profits,    as    to    an 


^  358] 


INTEREST. 


IDili 


salutary  one,   calculated   to  protect  the  beneficiaries  of  trust 
funds  from  designing  or  negligent  trustees.     A  trustee  is  not 


executor  or  trustee  bound  by  in- 
structions or  the  nature  of  Iiis  office 
to  invest  for  accumulation.  If  he 
trade  with  the  monejs  of  the  fund, 
he  shall,  like  any  other  trustee, 
make  good  the  loss  or  render  the 
gain;  and  where  it  is  indeterminate 
by  reason  of  his  refusal  to  account 
(always  an  index  of  fraud),  the  pre- 
sumption is  that  it  was  at  least 
equal  to  simple  interest  for  the  year, 
and  that  in  his  hands  at  the  end 
of  it,  it  became  capital  and  made 
gain  in  its  turn.  If  it  were  no 
greater  in  fact  than  simple  interest 
for  the  period,  he  has  no  more  to 
do,  in  order  to  get  rid  of  the  pre- 
sumption of  compound  profits,  than 
to  show  the  truth  by  exhibiting  the 
accounts.  While  he  stands  out  the 
presumption  that  he  made  more 
than  the  sum  obtained  by  the 
method  of  computation  employed 
against  him  is  an  irresistible  one, 
else  the  result  would  make  it  worth 
his  while  to  disclose  the  truth.  If 
he  kept  no  accounts  he  cannot  mur- 
mur at  the  adoption  of  that  rule  of 
computation  which  is  most  bene^ 
ficial  to  the  fund,  and  but  a  reason- 
able penalty  for  his  negligence.  In- 
terest is  payable  periodically ;  and 
the  matter  resolves  itself  into  a 
question  whether  a  trustee  may 
superinduce  a  state  of  things  that 
shall  give  him  the  benefit  of  its 
earnings  in  prejudice  of  the  fund. 
Take  tlie  case  of  an  executor  plain- 
ly bound  to  accumulate,  who  de- 
liberately disregards  his  testator's 
directions  to  reinvest,  and  becomes 
a  borrower  from  the  fund  at  simple 
interest;  shall  not  the  interest,  as 
it  falls  due,  be  principal  in  his 
hands,  as  it  would  have  been   if  he 


had  received  it  of  a  stranger?  In 
sucli  a  conjuncture,  it  is  impossible 
to  conjecture  liow  the  fund  can  be 
rightfully  left  in  a  less  prosperous 
condition  tlian  it  would  have  at- 
tained had  he  reinvested  according 
to  the  terms  of  the  will.  To  sufler 
a  trustee  to  elude  tlie  conditions  of 
the  trust,  by  borrowing  from  it  at 
simple  interest,  and  using  the  pro- 
ceeds for  his  own  advantage,  would 
ofl'er  an  irresistible  temptation  to 
maladministration,  by  enabling  him 
to  benefit  by  his  own  wrong.  That 
interest  should  not  bear  interest  is 
not  a  dictate  of  justice;  but  the 
effect,  in  particular  cases,  of  arbi- 
trary enactment,  founded,  it  is 
thought  by  some,  on  a  questionable 
policy;  and  in  a  case  distinctly  out 
of  the  purview  of  the  statute,  where 
the  statutory  measure  is  arbitrarily 
but  necessarily  assumed  for  the  com- 
putation of  profits,  there  is  no 
imaginable  reason  why  the  prodvict 
sliould  not  be  compoimded  where 
there  is  reason  to  believe  tliat  tlie 
profits  were  compounded;  or  why 
the  party  beneficially  entitled  should 
not  be  put  in  the  condition  that  a 
conscientious  discharge  of  the  trust 
would  have  put  him.  In  a  case  of 
negligence  or  omission  consistent 
with  good  faith  policy  dictates  a 
more  indulgent  course,  such  as  was 
pursued  in  Harvey  v.  Englisli,  2 
Rawle  :?08."  ScliielVelin  v.  Stewart, 
]  Johns.  Ch.  020,  7  Am.  Dec.  507; 
Frost  V.  Winston,  32  Mo.  480;  Ogden 
V.  Larrabee,  57  111.  389;  Raphael  v. 
Boelun,  11  Ves.  fl2 ;  Barclay  v.  An- 
drew, [1899]  1  Ch.  674;  Knott  v. 
Cottee,  16  Beav.  77;  Smith  v.  Lump- 
ton,  S  Dana  73;  Torbet  v.  Mc- 
Beynolds,  4  Ihiniph.  215. 


1124 


SUTHERLAND    ON    DAMAGES. 


[§    353 


ch{irgeal)le    with    compound    interest   unless   he    receives    com- 
pound interest,  or  has  been  guilty  of  a  gross  abuse  of  his  trust/' 


68Kattelman  v.  Guthrie,  M2  111. 
357,  rev'g  43  111.  App.  188;  fSutton 
V.  Gotham,  2  Tenn.  Cas.  137; 
Mathewson  v.  Davis,  191  111.  391; 
Ames  V.  Scudder,  11  Mo.  App.  168, 
83  Mo.  189;  Thurston,  Matter  of, 
57  Wis.  104;  Alvis  v.  Oglesby,  87 
Tenn.  172;  Peelle  v.  State,  118  Ind. 
512;  Adams  v.  Lambard,  80  Cal. 
426;  Kalkner  v.  Henry,  80  Cal.  636; 
Rayner  v.  Bryson,  29  Md.  473; 
Vaughan  v.  Bibb,  46  Ala.  153;  Arm- 
strong V.  Campbell,  3  Yerg.  201,  24 
Am.  Dec.  556;  Turney  v.  Williams, 
7  Yerg.  172;  St.  Paul  T.  Co.  v. 
Strong,  85  Minn.  1 ;  Parker  v. 
Simpson,   180  Mass.   3.34,  358. 

Interest  is  only  to  be  compounded 
where  the  trustee  lias  speculated 
with  tlie  trust  funds  and  no  other 
method  can  be  adopted  to  ascertain 
tlie  profit  he  made.  Kane  v.  Kane, 
146  Mo.  605. 

Bryant  v.  Craig,  12  Ala.  354,  is  an 
instructive  case.  Ormond,  J.,  said: 
"As  the  guardian  could  not  ])e  guil- 
ty of  negligence  in  not  investing  the 
money  of  his  Avard  unless  the  law 
required  liini  to  invest  it,  the  first 
question  which  naturally  presents 
itself  is,  what  is  tlie  law  upon  that 
subject.  Our  statute  law,  thougli 
very  full  and  particular  as  to  the 
mode  of  appointing  guardians,  mak- 
ing settlements  witli  them,  etc.,  is 
silent  upon  tliis  particular.  It  re- 
sults, however,  necessarily  from  the 
nature  of  the  trust  that  the  estate 
of  the  ward  should  be  profitably  era- 
ployed,  as  otlierwise  it  would  be  con- 
sumed; and  where  it  consists  of 
money,  this  could  only  be  by  lend- 
ing it  out  on  good  security.  In 
England  a  trustee,  whose  duty  it 
is  to  invest  tlie  money  in  his  hands 
is   exonerated   from    liability    by    in- 


vesting it  in  the  public  funds, 
which,  as  the  court  would  direct  to 
be  done  on  application,  it  will  sanc- 
tion if  done  without  such  applica- 
tion; and  he  will  be  exonerated 
from  liability  though  the  stock 
sliould  fall  in  value.  Franklin  v. 
Frith,  3  Bro.  Ch.  433;  Holmes 
V.  Dung,  2  Cox's  Ch.  1.  In  Smith  v. 
Smith,  4  Johns.  Ch.  284,  Chancellor 
Kent  seems  to  think  that  personal 
security  is  insufficient  and  that  a 
trustee  lending  money  must  require 
adequate  real  security  or  resort  to 
public  funds.  Here  are  no  public 
funds  in  which  money  may  be  safe- 
ly and  securely  invested.  At  least 
there  has  been  none  until  very  re- 
cently, and  it  is  not  probable  we 
shall  be  long  burthened  with  a  pub- 
lic debt.  Personal  security,  no  mat- 
ter how  good  it  was  deemed  at  the 
time,  would  not  be  sufficient;  and  it 
may  be  added  that,  with  us,  real 
property  is  subject  to  such  fluctua- 
tions that  it  is  by  no  means  an  ade- 
quate security,  and  it  may  very  well 
be  doubted  whether  he  would  not  be 
personally  liable  for  any  loan  he 
may  have  made  of  the  money  with- 
out the  sanction  of  the  court,  no 
matter  what  security  he  may  have 
taken.  Our  statute  appears  to  have 
intended  to  place  the  whole  matter 
under  the  direction  of  the  orphans' 
court,  as  it  invests  that  court  with 
power  to  direct  a  sale  of  the  land  of 
the  ward,  if  the  personal  estate  and 
the  rents  and  profits  of  the  realty 
were  insufficient  for  his  support; 
and  it  appears  to  follow  necessarily 
that  the  same  court  would  have  the 
power  to  direct  in  what  manner  the 
money  of  the  ward  should  be  invest- 
ed. It  was  the  duty  of  the  guardian, 
if   he   desired   to   exonerate   himself 


§  353J 


IJMTEKEST. 


1125 


or,  as  is  said  in  some  cases,  unless  he  has  actually  made  such 
interest,  or  ought  to  have  made  it  or  is  presumed  to  have  made 


from  tlic  pu^'iiient  of  interest,  to 
apply  to  the  court  for  direction  in 
the  investment  of  the  funds,  who 
would  have  examined  the  proposed 
security,  and  whose  approbation 
would  have  exonerated  tiie  guardian 
from  liability,  if  afterwards  lost 
without  his  neglect.  The  guardian 
having  omitted  to  make  this  applica- 
tion must  pay  interest  on  the  funds 
in  his  hands,  whether  they  have 
been  profitable  to  him  or  not;  and 
we  next  proceed  to  inquire  whether 
this  is  such  gross  negligence  as  will 
authorize  rests  to  be  made  in  the  ac- 
count for  the  purpose  of  charging 
him  compound  interest.  The  gen- 
eral rule  undoubtedly  is,  that  where 
it  is  the  duty  of  the  trustee  to  in- 
vest the  trust  funds,  and  he  fails  to 
do  so,  he  is  chargeable  only  with 
simple  interest.  See  cases  already 
cited,  and  Newton  v.  Bennet,  1  Bro. 
Ch.  359,  in  the  note  to  which  Mr. 
Eden  has  collected  all  the  authori- 
ties, establishing  conclusively  that 
for  neglect  merely  the  practice  of  the 
court  is  to  charge  interest  at 
the  rate  of  four  per  centum.  Where 
the  trustee  is  guilty  of  fraud  or 
corruption,  or  where,  in  open  viola- 
tion of  the  trust,  he  applies  the 
funds  to  his  own  use  in  trade;  con- 
verts the  property  or  securities,  as 
for  example,  stock  into  money,  and 
applies  it  to  his  own  use;  or  otliei- 
wise  corruptly  and  frauduli'iitly 
abuses  the  trust  reposed  in  liiiii,  lie 
may  be  cliargcd  \\itli  ooiupoiind  in- 
terest. 

"Tlic  first  case,  it  is  said,  in 
which  compound  interest  was 
charged  against  an  executor  is 
Raphael  v.  Boehm,  11  Vesey  i)l. 
That  was  a  case  of  gross  miscon- 
duct, and  violation  of  the  terms  of 


H\p  trust,  by  embarking  the  funds 
in  trade  instead  of  investing  them 
for  tlie  purpose  of  accumulation  as 
directed  by  the  will.  The  principle 
estal)lished  by  this  case  does  .not  ap- 
pear to  have  been  followed  in  cases 
where  the  facts  appear  to  be  very 
similar.  See  Ashburnham  v.  Thomp- 
son, 13  Ves.  402;  and  Tehbs  v.  Car- 
penter, 1  Madd.  201.  In  this  last 
cited  authority  all  the  cases  are  col- 
lated and  elaborately  examined; 
and  although  tliere  was  in  tluit  case 
a  direction  in  tlie  will  that  the  as- 
sets should  I)e  invested  in  the  public 
funds,  wliicli  was  not  done,  yi't  the 
vice-chancellor  refused  to  allow  com- 
pound interest.  He  sums  ui»  an 
elaborate  and  able  review  of  the  au- 
tliorities,  thus:  'It  ajjpears,  there- 
fore, from  this  view  of  the  authori- 
ties, tliat  a  distinction  has  been 
taken,  as  in  every  moral  point  of 
view  tliere  ouglit  to  lie,  Ix'tween 
negligence  and  vorruiition.  in  execu- 
tors. A  spe^'ial  ease  is  necessary  to 
induce  the  court  to  rhai-^^e  executors 
with  more  than  fmir  per  cent,  upon 
the  balances  in  tluir  hands.  Tlie 
obligation  on  esreulors  (o  hiy  out 
balances  luit  wauled  foi-  the  exigen- 
cies in  the  testat(u's  a  Hairs  is  now 
better  understood,  since  it  lias  been 
settled  that  they  are  indenuiilied 
against  any  loss,  in  layin;^  tlieiii 
out  in  the  fund  which  the  court, 
sanctions, — tlie  three  per  cents.  If 
the  executor  has  balances  which  lie 
ou,i;ht  to  have  laid  out,  either  in 
compliance  with  the  express  direc- 
tions of  the  will,  or  from  his  gen- 
eral duty,  CM'ii  wheic  the  will  is 
silent  on  the  geiu'ral  suliject.  yet  if 
there  be  nothing  more  i)roved,  in 
either  case,  the  omission   to   lay  out 


112G 


SUTHERLAND    ON    DAMAGES. 


[§  35;j 


it  so  gross  as  to  anioinit  to  misfeasance  or  fraud  in  the  per- 
formance of  his   duties,   as  distinguished   from  simple  negli- 


amoiints   only    to    a    case    of   negli- 
gence and  not  of  misfeasance.' 

"Chancellor  Kent,  in  Schieffelin  v. 
Stewart,  1  Johns.  Ch.  620,  7  Am. 
Dec.  507,  adopts  the  stringent  rule 
laid  down  in  Raphael  v.  Bochm, 
supra,  withovit  adverting  to  the  dis- 
.tinction  between  neglect  and  fraud; 
but  in  the  subsequent  case  of  Clark- 
son  V.  De  Peyster,  Hopk.  Ch.  424, 
the  chancellor  refused  to  allow  com- 
pound interest  in  a  case  in  all  its 
material  features  not  distinguish- 
able from  the  case  before  us,  and 
the  decision  was  affirmed  on  ap- 
peal. 

"The  cases  cited  from  the  Tennes- 
see and  Kentucky  reports  are  not 
applicable  in  this  state.  In  both 
these  states  statutes  exist  requir- 
ing the  guardian  to  invest  the 
money  of  his  ward.  Hughes  v. 
Smith,  2  Dana  252;  Torbet  v.  Mc- 
Reynolds,  4  Humph.  215;  vol.  1,  Ky. 
Statutes,  768;  Car.  &  Nicholson's 
Dig.  368. 

"The  charge  of  compound  interest 
seems  to  be  adopted  as  a  punishment 
in  those  cases  where,  from  the  gross 
mismanagement  of  the  trustee,  it 
is  dillicult,  if  not  impossible,  to 
ascertain  what  the  income  of  the 
estate  would  otherwise  have  been ; 
but  it  may  safely  be  asserted  that 
no  estate  in  money,  under  the  most 
judicious  management,  can  be  made 
to  yield  compound  interest  at  the 
rate  of  eight  per  centmn. 

"If  it  had  been  annually  invested 
imder  the  direction  of  the  court, 
some  delay  must  have  been  encoun- 
tered in  finding  a  person  desirous  to 
borrow  and  able  to  give  the  neces- 
sary security.  Tt  is  not  reasonable 
to  presume  that  where  so  lent  it 
would  always  be  punctually  paid,  so 


as  to  be  imuK'diately  reinvested;  nor 
can  it  be  doubted  that  it  would 
frequently  be  necessary  to  coerce 
payment  by  suit;  and  that  after 
every  precaution  had  been  taken, 
l)oth  principal  and  interest  would 
occasionally  be  lost.  The  charge  of 
compound  interest,  therefore,  is  un- 
just, because  the  estate  could  not 
have  yielded  that  by  any  prudent 
management  in  the  hands  of  the 
owner,  had  he  been  able  to  manage 
it  liimself.  The  mere  omission  of 
tlie  guardian  to  apply  to  the  court 
for  authority  to  invest  it,  and  the 
failure  to  make  annual  settlements, 
are  not  evidence  of  fraud,  but  estab- 
lish negligence  merely:  and  the 
court  therefore,  acted  correctly  in 
refusing  to  allow  compound  inter- 
est. 

"We  come  to  the  consideration  of 
the  remaining  question.  In  stating 
the  account  the  judge  of  the  or- 
phans' court  charged  the  guardian 
with  interest  on  money  received  by 
him,  and  allowed  him  interest  on 
the  sums  disbursed,  calculating 
each  from  the  time  it  accrued  to  the 
time  of  settlement.  This  was  errone- 
ous. The  statute  previously  cited 
requires  the  guardian  to  render,  at 
least  once  a  year,  an  account  of  his 
receipts  and  disbursements.  If  tliis 
had  been  done,  the  disbursements 
would  have  been  extinguished  pro 
tanto  by  the  interest  which  the 
guardian  should  have  charged  for 
the  money  of  the  ward  in  his  hands, 
and  he  cannot  place  himself  in  a 
better  condition  by  this  neglect  of 
duty  than  if  he  had  performed  it. 
It  could  not  be  tolerated  that  the 
guardian  should  hold  the  estate  in 
his  hands  for  a  numl)er  of  years, 
use  the  interest  of  the  ward's  capi- 


-353] 


INTEREST. 


1  \-2' 


gence.^^  The  general  rule  is  that  an  agent  or  trnstoe  is  chargeahle 
with  the  legal  rate  of  interest  in  the  absence  of  proof  that  the 


tal,  or,  what  conies  to  the  same 
thing,  neglect  to  apply  for  its  in- 
vestment, and  encroach  annually 
upon  the  capital  for  the  support 
of  the  ward;  for  this  is  the  oll'ect 
of  the  mode  of  accounting  adopted 
by  the  court. 

"If  it  was  shown  that  the  guard- 
ian was  compelled  to  keep  on  hand 
a  certain  sum  of  money  to  meet  the 
expenditures  of  his  ward,  it  would 
be  the  duty  of  the  court  not  to 
charge  interest  on  such  sum.  In  the 
absence  of  such  necessity,  which  is 
not  shown,  and  which  probably  did 
not  exist,  it  was  tlie  duty  of  the 
court  to  charge  the  guardian  with 
interest  on  all  money  of  the  ward 
in  his  hands  from  the  time  of  its  re- 
ceipt, and  allow  him  interest  on  all 
disbursements  from  the  time  they 
were  made;  the  interest  due  from 
the  guardian  to  extinguish  jn-o 
tanto,  or  in  full,  as  the  case  may 
be,  the  expenditure  of  the  ward. 
For  which  purpose,  if  necessary, 
the  court  will  make  annual,  or 
longer  or  shorter,  rests  in  the  ac- 
count, so  as  to  carry  fully  into  effect 
the  objects  and  purposes  of  the  de- 
cree, but  so  as  not  in  any  manner  to 
compound  the  interest  against  the 
guardian.  These  principles  are 
clearly  stated  in  the  case  of  De 
Peyster  v.  Clarkson,  2  Wend.  77, 
and  other  cases." 

In  ^Miller  v.  Beverlys,  4  Hen.  & 
Munf.  415,  the  court  laid  down  this 
general  rule:  "that  in  all  cases 
whatsoever,  a  trustee  is  liable  to 
pay  interest  for  the  trust  money  in 
his  hands,  unless  he  can  show  that 
it  was  necessarily  kept  in  hand  for 
the  pi^rposes  of  the  trust."  T'anks 
V.  Machen,  40  Miss.  2.50;  Trotter 
V.    Trotter,     id.     70};      Siiiilliers    v. 


Hooper,  23  Md.  273;  Garrett 
V.  Carr,  1  Rob.  (Va.)  IDG;  Koaser  v. 
Depriest,  5  Gratt.  li,  ^O  Am.  Dec. 
94. 

In  Layton  v.  llogue,  5  Ore.  93,  an 
executor  purchased,  tlirough  an 
agent,  a  parcel  of  huul  belonging  to 
the  estate  uiuler  iiis  earc  as  sudi, 
and  afterwards  made  penniincMl  im- 
provements and  paid  taxes.  In  a 
suit  by  the  heirs  tiiis  sale  was  set 
aside  as  fraudulent,  and  allowance 
was  made  to  the  defendants,  who 
were  the  li(>irs  of  the  fraudulent 
trustee,  for  the  permanent  improve- 
ments and  taxes,  after  deducting 
rents  and  profits:  this,  together 
with  the  amount  paid  at  the  fraudu- 
lent sale,  was  required  to  Im>  paid 
back,  but  without  interest.  It  was 
observed  that  to  allow  interest  in 
such  a  case  would  be  allowing  tliem 
to  reap  advantage  from  the  wrongful 
and  inequitable  act  of  their  an- 
cestor. 

69  Cusick  V.  Langan,  ir)7  111.  App. 
472;  Hazard  v.  Durant,  14  R.  1. 
25;  Burdick  v.  Garrick,  L.  R.  o 
Ch.  233;  Attorney-General  v.  Al- 
ford,  4  De  G.,  Macn.  &  G.  (•)7r.; 
Penny  v.  Avison,  3  Jurist  (X.  S. ) , 
62;  Cruce  v.  Cruce,  81  ?klo.  (i7(i. 
But  see  Dissenger's  Case,  39  X.  .1. 
Eq.  227;  Eppinger  v.  Canepa,  20 
ria.  262;  Latham  v.  Wilcox,  9!)  X. 
C.  367. 

Regardless  of  wliether  a  trustee 
made  profits  in  his  business  by  the 
use  of  the  trust  funds,  if  he  has 
used  the  money  he  is  chargeable 
witli  compound  interest  (Speiser  v. 
^Merchants'  Exeh.  Bank,  110  Wis. 
r)07,  524),  from  the  date  of  tlieir  ap- 
j)ropriation  until  tliat  of  final  judg- 
ment,   IKitwii  h--l  ;i  Ihlill'.'    Ilie    L'i:|llli"Lr 


1128 


SUTHERLAND    ON    DAMAGES. 


[§  353 


profits  he  has  made  by  his  misconduct  are  iu  excess  thereof.'" 
A  trustee  invested  funds  in  securities  which  were  repudiated 
by  the  cestui  que  trust  and  condemned  by  the  court.  He  was 
held  liable  for  the  legal  rate  of  interest  though  the  securities 
bore  a  higher  rate.'^^  An  agent  who  invests  as  his  own  the 
funds  of  his  principal  will  be  charged  with  interest  at  the 
legal  rate  in  the  jurisdiction  where  they  were  invested.'^ 
Where  an  agent  contracted  to  invest  money  at  ten  per  cent  and 
invested  but  part  of  it,  using  the  balance,  he  was  charged  with 
that  rate  for  the  amount  invested  and  the  legal  rate  for  the 
balance.'^     The  liability  of  an  agent  for  interest  is  dependent 


of  a  new  trial.  Faulkner  v.  Hendy, 
103  Cal.  15. 

In  England  the  profits  made  must 
be  paid  to  the  trust  unless  it  is 
impossible  to  prove  what  they  were, 
in  which  case  the  trustee  will  be 
liable  for  trade  interest.  Davis  v. 
Davis,  [1902]  2  Ch.  314. 

A  trustee  should  not  be  charged 
with  compound  interest  unless  it  is 
necessary  to  do  so  to  deprive  him  of 
all  profit  and  to  give  the  cestui  que 
trust  that  which  he  is  entitled  to. 
Silver  King  Consol.  Min.  Co.  v. 
Silver  King  Coalition  Min.  Co.,  122 
C.  C.  A.  402,  204  Fed.  166. 

70McIntire  v.  Mclntire,  192  U.  S. 
116,  48  L.  ed.  371;  Clapp  v.  Vatcher, 
9  Cal.  App.  462;  Sidway  v.  Ameri- 
can M.  Co.,  119  111.  App.  502  (money 
not  reported)  ;  Estate  of  Cousins, 
111  Cal.  441;  In  re  Assignment  of 
Murdoch,  129  Mo.  488;  Sanguinett 
V.  Webster,  1 53  Mo.  343 ;  Re  Hodges' 
Est.,  06  Vt.  70,  44  Am.  St.  820; 
Speiser  v.  Merchants'  Excli.  Bank, 
110  Wis.  507;  Parker  v.  Nickerson, 
137  Mass.  487;  Cruce  v.  Cruce,  81 
Mo.  676;  Rochester  v.  Levering,  104 
Ind.  526,  54  Am.  Rep.  334;  White 
V.  Ditson,  140  Mass.  351,  54  Am. 
Rep.  473.  See  Munson  v.  Plmiiiner, 
59  Iowa  136. 


One  of  three  executors  with  whom 
tru.st  funds  are  deposited  is  liable 
only  for  tlie  rate  of  interest  paid  by 
it  on  ordinary  deposits.  Moore's 
Est.,  .211  Pa.  348. 

For  mere  neglect  to  deposit  funds 
interest  will  be  charged  at  the  rate 
tliey  would  have  earned  if  deposited. 
In  re  Smitli,  97  App.  Div.  (N.  Y.) 
157. 

A  person  who  possesses  himself  of 
the  property  of  a  bankrupt  is  liable 
for  the  legal  rate  of  interest  on  its 
value  at  least  from  the  time  he  dis- 
poses of  it;  a  demand  upon  him  for 
it  is  not  necessary  after  he  has 
knowledge  that  the  trustee  in  bank- 
ruptcy regards  his  possession  as 
wrongful.  Ommen  v.  Talcott,  175 
Fed.  261. 

71  Coghill  V.  Boyd,  79  Va.  1. 

72  Bischoffsheim  v.  Baltzer,  21 
Fed.  531. 

73  Rogers  v.  Priest,  74  Wis.  538. 
A   decedent   to   whom   money   had 

been  intrusted  for  investment  in- 
formed its  owner  that  it  was  earn- 
ing five  per  cent.  It  was  not  shown 
that  it  earned  more.  The  estate  was 
liable  for  that  rate  until  action  was 
begun,  and  thereafter  for  the  legal 
rate.  De  Crano  v.  Moore,  50  App. 
Div.   (N.  Y.)   361. 


§    353  j  INTEREST.  1129 

upon  liis  detention  of  the   fnnds  of  his   |»i'iiici|iiil    without    the 
latter's  consent.'* 

The  law  does  not  look  with  favor  upon  guardians  who  abuse 
their  trust  or  neglect  their  duties.  They  are  subject  to  the 
general  rules  of  liability  which  follow  the  trust  relationship, 
reinforced  by  the  desire  of  the  courts  to  protect  the  interests 
of  their  wards.  A  guardian  de  facia  may  be  liable  for  com- 
pound interest.'*  The  legal  rate  of  interest  will  be  charged 
against  a  guardian  who  improvidently  invests  the  funds  of  a 
ward  unless  it  is  shown  he  could  have  obtained  a  higher  rate 
on  proper  security.'^  While  a  guardian  is  usually  not  liable 
for  both  the  profits  made  on  an  investment  of  his  ward's  funds 
and  interest  yet  if  the  ward  elect  to  recover  the  profits  and 
there  is  a  refusal  to  account  for  them  the  guardian  is  liable  for 
interest  on  both  principal  and  profits  from  the  date  of  the 
ward's  election.''  Where  a  guardian's  misconduct  subjected 
him  to  liability  for  compound  interest,  he  was  charged  with  it 
at  the  highest  legal  rate  up  to  the  time  the  ward  became  of  age 
and  thereafter,  because  at  that  time  the  debt  assumed  the 
nature  of  an  ordinary  one,  at  the  lowest  legal  rate.'®  If  the 
loss  resulting  from  the  trustee's  neglect  is  less  than  the  income 
of  the  fund  at  the  statute  rate  of  interest  he  may  be  relieved 
on  making  it  good.'^     The  pendency  of  litigation  against  the 

74  Young  V.  Kimher,  44  Colo.  448,  Where    executors    allowed    money 
28  L.R.A.(N.S.)   626.  to  remain  on  deposit  without  inter- 
ns Watts  V.  Watts,  104  Va.  269.  est  for  five  years  they  were  ciiarged 

76  Parker  v.  Wilson,  08  Ark.  553.  with   interest  at  four  per  cent,   for 

77  Meyers    v.    Martinez,    172    Ala.  the  first  year,  and  at  six  per  cent. 
641.  subsequently,  after  they  were  hound 

The  highest  legal  rate  may  be  col-  to  pay  the  juoney    to    the    legatees. 

Iccted   if  the  funds  have  been   used  They  were  not    relieved    from    tliis 

by  a  guardian.      Fisher    v.    Brown,  liability  because  they  did  not  know 

135  N.  C.  198.  to  whom  to  pay.     Almy  v.  Probate 

78  Armstrong      v.      Walkup,      12  Court,  18  R.  I.  612. 

Gratt.   608;    Tanner   v.   Skinner,   11  79  Livermore      v.      Wortman,      25 

Bush    120;    Clay   v.    Clay,    3    Mete.  Hun,  241. 

(Ky.)   548;  State  v.  Richardson,  29  If  money  is  deposited  subject  to 

Mo.  App.  595;  Stewart  v.  Sims,  112  check,  instead  of  upon  certificate,  he 

Tenn.  296   (compound  interest  up  to  will   be   charged    with     interest    at 

time    of    removal;      thereafter    the  bank   rates.     In   re  Brewster's  Est., 

statutory  rate).  113  Mich.  561. 


1130 


SlITUKKLAND    ON    DAMAGES. 


[§  353 


estate  may  affect  the  trustee's  liability  for  interest  ou  funds  iu 
his  possession/" 

Trustees  are  not  ordinarily  chargeable  with  interest  for  fail- 
ing to  invest  funds  until  the  lapse  of  a  reasonable  time  after 
they  have  come  to  their  hands.  ISTo  absolute  rule  can  be  an- 
nounced as  to  what  constitutes  such  time  because  the  condi- 
tions vary,  six  months  has  been  regarded  as  sufficient  under 
ordinary  circumstances.*^  But  there  will  be  no  exemption 
from  the  payment  of  interest  during  that  period  where  the 
trust  funds  are  mingled  with  those  of  the  trustee.*^  There  is 
a  tendency  to  lessen  the  time  for  making  investments.  The 
six  months'  rule  grew  out  of  the  circumstances  of  an  earlier 
time,  and  its  applicability  to  existing  conditions  has  been 
doubted.*^  Executors  who  act  honu  fide,  under  an  irregular 
judgment,  in  retaining  a  larger  sum  than  was  necessary  will 
not  be  liable  for  interest  thereon  after  the  reversal  of  such  judg- 


A  trustee  who  withdraws  funds 
from  a  bank  paying  interest  on  bal- 
ances and  deposits  them  in  his  own 
bank  must  pay  such  a  rate  of  in- 
terest as  he  coukl  reasonably  liave 
secured  from  the  bank  from  which 
they  were  taken  or  from  other 
reputable  banks  in  the  same  region. 
Diclv's  Est.,  183  Pa.  647. 

80  Howe  V.  Winn,  150  Ky.  667. 

81  In  re  Thomas's  Est.,  26  Colo. 
110;  Griffith's  Est.,  147  Pa.  274; 
Crosby  v.  :\Ierriam,  31   Minn.   342; 

-Dunscomb  v.  Dunscomb,  1  Johns.  Ch. 
508,  7  Am.  Dec.  504;  Thurston,  Mat- 
ter of,  57  Wis.  104;  Corcoran  v. 
Renehan,  24  App.  D.  C.  411;  Mcln- 
tire  V.  Mower,  204  Mass.  233.  See 
Price's  Est.,  18  Pa.  Dist.  442. 

The  time  allowed  executors  to  set- 
tle estates  varies  according  to  the 
circumstances.  Interest  is  not 
usually  charged  during  the  period 
necessarj^  therefor :  it  has  been 
charged  thereafter  and  imtil  the  fil- 
ing of  the  account.  Reed's  Est.,  22 
Pa.  Super.  635. 

Guardians  are  not  liable  for  inter- 


est during  the  year  following  their 
appointment  unless  it  is  earned. 
Griffin  v.  Collins,  125  Ga.  159. 

82  Gay  V.  Whidden,  64  Fla.  295; 
Noble's  Est.,  178  Pa.  460.  Compare 
In  re  Sexton,  61  N.  Y.  Misc.  569, 
and  cases  cited. 

83  About  one  year  has  been  al- 
lowed, and  allowance  has  also  been 
made  because  all  the  money  cannot 
be  invested  all  the  time.  Becker's 
Est.,  21  Pa.   Dist.  97. 

"The  time,"  it  was  said  in  Wit- 
mer's  App.,  87  Pa.  120,  "should  be 
such  as  the  circumstances  of  each 
particular  case  would  show  to  be 
reasonable,"  and  was  fixed  at  two 
months.  "But  in  view  of  the  facil- 
ity with  which  trust  funds  may  now 
be  deposited  at  interest  until  per- 
manent investment  can  be  had,  it  is 
at  least  questionable  whether  rests 
in  tlie  ordinary  sense  should  Ije  al- 
lowed at  all."     Xoble's  Est.,  supra. 

Trustees  have  been  held  lial)le  for 
interest  for  the  whole  six  months 
next  after  they  received  funds  which 
they  failed  to  invest,  no  excuse  being 


§   .353] 


lATEKKST. 


ii;;i 


mciit.®^  A  trust  for  support  and  niaintenanco,  if  the  trust  does 
not  direct  that  the  expense  thereof  shall  be  paid  out  of  the  in- 
come, necessarily  implies  that  a  sutHcient  amount  of  cash  is  to 
be  kept  on  hand  to  supply  ilic  c-iiriH'iit  wants  and  expenses  of  the 
cestui  que  lru.sl;  and  unless  the  trustee  kee-ps  an  unnecessarily 
large  balance  on  hand  he  is  not  chargeable  with  interest  there- 


on. 


85 


If  funds  are  converted,*®  or  are  not  applied  and  ])aid  over 
according  to  a  trustee's  duty,*''  he  is  chargeable  with  interest 
from  the  conversion  or  time  when  it  was  his  duty  to  jjay  tlie 
money.**  A  failure  to  account  is  ground  for  charging  interest 
from  the  time  the  account  was  acted  upon  because  the  extent 
of  the  executor's  liability  was  then  iixed.*^  An  unjustifiable  ap- 
peal from  an  order  of  distribution  may  afford  cause  for  c-hai-o-- 
ing  an  executor  with  interest  from  the  time  the  order  was 
made.^°  The  executor  of  a  deceased  trustee  who  has  become 
liable  for  compound  interest  is  not  bound  to  keep  unearmarked 


offered.  Adamson  v.  Reid,  6  Vict.  L. 
R.    (Eq.)    1G4. 

In  South  Carolina  the  general 
rule  is  that  an  administrator  is 
chargeable  with  interest  from  the 
beginning  of  the  year  in  which  he 
was  appointed.  Koon  v.  Munro,  11 
S.  C.  139.  It  is  also  a  general  rule 
tliat  all  funds  received  during  the 
current  year  are  to  be  regarded  as 
unproductive  until  the  end  thereof, 
and  all  expenditures  made  during 
the  course  of  the  year  should  be  re- 
garded as  made  before  tlie  balance 
struck  that  is  to  bear  interest. 
Nicholson  v.  Wliitlock,  57  S.  C.  36; 
Anderson  v.  Silcox,  82  S.  C.  109. 

Under  the  Illinois  statute  an  exec- 
utor who  fails  to  make  annual 
reports  and  thus  bring  to  the  notice 
of  the  court  the  fact  tliat  legacies 
are  unpaid  is  liable  for  ten  per  cent, 
interest  on  the  legacies  after  the  ex- 
piration of  two  and  one-half  years. 
Cox  V.  Cox,  53  111.  App.  84:  Boyd 
V.  Swallows,  59  id.  635. 

An  administrator  who  is  prevent- 
ed bv  litiiiation  from  distril)uting  a 


fund  is  not  liable  for  interest  be- 
cause lie  dejiosits  it  to  his  individual 
credit  if  his  account  was  much 
larger  than  the  fund  and  lie  did  not 
profit  by  tlie  deposit.  Kerr's  Est., 
35  Vd.  Super.  350. 

84  Boys'  Home  v.  Lewis,  3  Out.  L. 
R.  208. 

85  Griffith's  Est.,  147   Pa.  274. 

A  trustee  wiiose  sole  duty  it  is 
to  liold  money  until  it  is  demanded 
is  not  liable  for  interest.  Strauss 
V.  Gilbert,  135  111.  App.  130. 

86McI\im  V.  Blake,  139  Ma.ss.  593. 

87Judd  V.  Dike,  30  Minn.  380; 
Yeatman's  App.,  102  Pa.  297;  Mc- 
Donald V.  People,  222  111.  325; 
Trotter's  Est.,  15  Pa.  Dist.  352. 

88Shickler's  E.st.,  13  Phila.  5(14; 
Ramsey's  App.,  4  Watts  71  ;  Tomlin- 
.son's  App.,  90  Pa.  224;  Miller  v. 
Lux,  100  Cal.  609,  039;  Wyckoff  v. 
O'Xeil,   71    N.  J.   Eq.  729. 

89  Fuller  v.  Diipont,  1S3  Mass. 
590. 

90  1,1  re  Settb'inent  (if  Peters,  128 
Mo.  .App.  •!(!(!. 


1132 


SUTHERLAND    ON    DAMAGES. 


[§  353 


funds  which  the  trustee  had  mingled  with  his  own  invested, 
and  inasmuch  as  the  demand  for  the  trust  funds  could  not  be 
satisfied  until  action  by  the  probate  court  the  estate  is  not 
liable  for  interest  after  the  trustee's  death.^^  In  an  accounting 
by  a  trustee  there  is  no  inflexible  mode  of  computing  the  in- 
terest on  annual  balances.  If  it  appears  that  the  disbursements 
in  any  given  year  exceed  the  year's  receipts  the  whole  of  the 
balance  in  the  trustee's  hands  at  the  beginning  of  the  year  does 
not  bear  interest  for  twelve  months,,  but  the  interest-bearing 
balance  must  be  ascertained  by  adding  to  the  annual  balance 
found  to  be  in  his  hands  at  the  beginning  of  the  year  the  re- 
ceipts for  the  next  year  and  deducting  from  the  sum  thus  as- 
certained the  whole  amount  of  the  payments  made  during  such 
year ;  the  residue  only  will  constitute  the  interest-bearing  fund 
for  that  year.^*^ 

If  the  conduct  of  the  cestui  que  trust  prevents  the  use  of 
funds  according  to  the  judgment  of  the  trustee  his  liability 
will  be  limited  to  the  rate  of  interest  they  bore.^^  Public 
officers  who  fail  to  pay  over  money  in  their  hands,  according  to 
duty  will  be  charged  with  interest  from  the  time  they  should 
have  paid  it ;  ^*  they  are  also  liable  for  interest  on  the  value  of 
property  lost  by  neglect,^^  and  on  claims  allowed  them  in  excess 
of  the  fees  by  law  from  the  time  of  their  allowance.^^     An 


91  Bemmerlj^  v.  Woodward,  124 
Cal.  568. 

92  Tucker  v.  Richards,  58  S.  C.  22, 
20. 

93  Ford  V.  Wilson  (Del.  Cli.),  85 
Atl.  1073. 

94  Zuelly  V.  Casper,  37  Ind.  App. 
186;  Havre  De  Grace  v.  Fahey,  108 
Md.  533;  Adams  v.  Savinders,  93 
Miss.  520;  Gartley  v.  People,  28 
Colo.  227;  Sheridan  v.  Van  Winkle, 
43  N.  J.  L.  125 ;  Cassady  v.  Trustees 
of  Schools,  105  111.  560;  Stern  v. 
People,  102  id.  540;  Common- 
wealth V.  Porter,  21  Pa.  385; 
Magner  v.  Knowles,  67  111.  325 ;  Peo- 
ple V.  Gasherie,  9  Johns.  71,  6  Am. 
Dec.  263;    Slingerland  v.  Swart,   13 


Johns.  255;  Lawrence  v.  Murray,  3 
Paige  400;  Board  of  Justices  v. 
Fennimore,  1  N.  J.  L.  242;  Hudson 
V.  Tenney,  6  N.  H.  456;  Crane  v. 
Dygert,  4  Wend.  675;  Board  of 
Supervisors  v.  Clark,  25  Hun  282. 

An  exception  has  been  made  where 
the  funds  were  not  wilfully  with- 
lield,  the  object  being  to  test  the 
right  of  the  officer  thereto.  People' 
V.  Maddox,  176  111.  App.  480. 

In  some  cases  this  has  been  taken 
to  mean  from  the  time  of  demand  by 
the  successor.  State  v.  Keadle,  63 
W.  Va.  645 ;  State  v.  McDermitt,  72 
W.  Va.  291. 

95  Hearn  v.  Ayres,  77  Ark.  497. 

96  Tucker  v.   State,   163   Ind.  403. 


§    353]  INTEREST.  1133 

officer  is  not  liable  for  interest  on  money  held  in  his  official 
capacity  after  the  expiration  of  his  term  if  ho  was  j)rcpareil 
to  pay  it  on  demand.^'  A  prulhonotary  who  legally  receives 
fees  due  other  officers  is  not  liable  to  them  for  interest  nntil 
after  demand.^*  If  a  public  officer  whose  duty  it  is  to  collect 
and  receive  money  is  bound  for  it  at  all  hazards  unless  the  law 
requires  him  to  place  it  in  a  depository  as  the  money  of  tlio 
public,  lie  is  not  liable  for  interest  on  it  although  he  nuiy  have 
mingled  it  with  his  own  funds  and  received  interest.^'  But 
where  the  legal  ownership  of  moneys  coming  into  the  hands 
of  a  public  treasurer,  is  in  the  state  the  interest  jjaid  for  the 
deposit  thereof  by  him  may  be  recovered  from  the  treasurer  or 
his  sureties.^  The  danuiges  resulting  to  a  creditor  fi-oiu  tlie 
escape  of  his  debtor,  against  whom  he  has  recovered  judgineut, 
includes  the  amount  of  the  judgment  with  interest,  and  the 
sheriff  is  liable  for  the  latter.^  In  the  case  of  a  United  States 
disbursing  officer,  from  whom  it  is  claimed  funds  were 
abstracted  without  his  knowledge,  he  being  innocent  in  reference 
thereto,  interest  cannot  be  recovered  in  a  suit  against  him 
to  recover  the  missing  funds,  no  demand  upon  him  being 
shown.^  A  collector  of  internal  revenue  who  unlawfully  exacts 
taxes,  which  are  paid  under  protest,  must  respond  for  interest 
thereon.*  The  nonperformance  of  a  duty  by  an  officer  which 
prevents  the  receipt  of  money  by  the  person  entitled  to  it  is 
ground  for  charging  the  officer  with  interest  on  it.^     An  officer 

97  Strauss  v.  Gilbert,  232  111.  441  Schott,    id.   522;    State  McFetridgo, 
(redemption  money).  84    Wis.   473,   505,   20   L.R.A.   223; 

98  Sliafer  v.  Mcllhaney,  1  Pa.  Dist.  Board   of   Supervisors   v.   Verkerke, 
765,  154  Pa.  58.  128   Mich.   202;    Eshelby   v.   Cincin- 

99  State  V.  Walsen,   17  Colo.   170,  nati    Board   of   Education,   GG   Ohio 
15  L.R.A.  456;   Board  of  Education  St.  71.     See  note  to  §  479. 

V.  Cooper,  98  Minn.  535;   Common-  2  Dunford    v.    Weaver,    84    N.    Y. 

wealth   V.   Godshaw,    92    Ky.    435;  445      ggg  §  439. 

Shelton     V.     State,     53     Ind.     331;  3  United  States  v.  Den vir,  lOG  U. 

Bocard  v.  State,  79  Ind.  270;  Snapp  ^    ggg^  ^^  ^   ^^   264;  United  States 

V.  Commonwealth,  82  Ky.  173.     See  -r,    ,,        n^  n   1    ^oo 

'  ''  v.  Butler,  114  Ped.  582. 

note  to  §  479. 

INew    Haven    v.     Fresenius,     75  '  ^reat  v.   Farmers'  L.  &  T.   Co., 


185  Fed.  760 
5  Hupe  v. 
Ohio   N.   P.    (N.    S.)    513;    State   v.       43  L.P.A.  (N.S.)  565 


Conn.  145;  Furnas  County  v.  Evans, 

90  Neb.  37;    State  v.  McKinnon,  9  5  Hupe  v.   Sommer,   88  Kan.   5G1, 


1134 


SUTHERLAND    ON    DAMAGES. 


[§  354 


who  holds  funds  as  a  statutory  trustee  must  account  for  in- 
terest received  on  them.^ 

§  354.  On  money  obtained  by  extortion  or  fraud,  or  wrong- 
fully withheld  or  disposed  of.  Money  obtained  wrongfully  or 
by  extortion  or  fraud  is  recoverable  with  interest  from  the 
time  it  was  obtained ;  '  and  if  money  received  to  another's  use 
is  wrongfully  withheld  or  disposed  of  it  carries  interest,'  and 
so  does  money  received  by  a  party  for  property  tortiously  taken 
or  converted  by  him.^  On  the  setting  aside  of  a  sale  for  fraud 
interest  may  be  allowed  from  the  time  of  rescission.^"     Where 


6  McKane    v.     O'Brien,    40     New 
Briins.  392. 

7  United  States  Home  Co.  v. 
O'Connor,  48  Colo.  .354;  Siltz  v. 
Springer,  236  111.  276;  Meyer  v. 
Johnson,  122  111.  App.  87;  Robbins 
V.  Selby,  144  Iowa,  407;  Whitcomb 
V.  Collier,  ]33  Iowa  303;  Steele  v. 
Kellogg,  163  Mich.  132;  Corse  v. 
Minnesota  G.  Co.,  94  Minn.  331; 
Goldberg  v.  West  End  H.  Co.,  78 
N.  J.  L.  70;  Sykes  v.  Life  Ins.  Co., 
148  N.  C.  13;  Webster  v.  Douglas 
County,  102  Wis.  181,  196,  72  Am. 
St.  870;  Bur  rough  v.  Abel,  105  Fed. 
366  (in  the  absence  of  laches; 
if  that  has  existed  the  recovery  may 
not  extend  beyond  the  time  suit  was 
brought)  ;  Woldert  v.  Nedderhut  P. 
P.  Co.,  18  Tex.  Civ.  App.  602;  Com- 
monwealth V.  Press  Co.,  156  Pa. 
516;  Arthur  v.  Wheeler  &  W.  Mfg. 
Co.,  12  Mo.  App.  335 ;  Atlantic  Nat. 
Bank  v.  Harris,  118  Mass.  147; 
Conyer  v.  Magrath,  4  McCord,  218; 
Win.slow  V.  Hathaway,  1  Pick.  211  ; 
Trustees,  etc.  v.  Lawrence,  11  Paige, 
80;  Boston  &  S.  G.  Co.  v.  Boston, 
4  Mete.  (Mass.)  181;  Greenly  v 
Hopkins,  10  Wend.  96;  Adkins  v 
Ware,  35  Tex.  577;  Wood  v.  Rob 
bins,  11  Mass.  504,  6  Am.  Dec.  182 
Clayton   v.    O'Connor,   35   Ga.    193; 


Kornegay  v.  White,  10  Ala.  255; 
Goddard  v.  Bulow,  1  Nott  &  Mc- 
Cord 45,  9  Am.  Dec.  663;  Gregga 
V.  Greggs,  56  N.  Y.  504;  Mason  v. 
Waite,  17  Mass.  560;  Shaw  v.  Gil- 
bert, 111  Wis.  165,  195;  John  V. 
Farwell  Co.  v.  Wolf,  96  Wis.  10, 
20,  37  L.R.A.  138. 

In  Chew  v.  Bank,  14  Md.  299,  a 
transfer  of  stock  under  a  bill  of  sale 
and  power  of  attorney  executed  by 
a  lunatic  was  avoided,  and  it  was 
held  that  the  defendant  should  pay 
simple  interest  on  the  dividends  ac- 
crued on  the  stock  since  the  transfer, 
from  the  time  the  defendant  knew 
of  the  lunacy.  See  Lincoln  v. 
Claflin,  7  Wall.  132,  19  L.  ed.  106. 

8  Rapelie  v.  Emory,  1  Dall.  349, 
1  L.  ed.  170;  Shipman  v.  Miller,  2 
Root,  405;  Black  v.  Goodman,  1 
Bailey,  201 ;  Simpson  v.  Feltz,  1 
McCord's  Eq.  213,  16  Am.  Dee.  602; 
Commonwealth  v.  Crevor,  3  Bin. 
121;  Crosby  L.  Co.  v.  Smith,  2  C.  C. 

A.  97,   51   Fed.   63;    American   T.   & 

B.  Co.  V.  Boone,  102  Ga.  202,  66 
Am.  St.  167,  40  L.R.A.  250. 

SMcBeth  V.  Craddock,  28  Mo. 
App.  380;  Chauncey  v.  Yeaton,  1  N. 
H.  151. 

10  Felt  V.  Bell,  205  111.  213. 


§  355] 


INTEREST. 


1135 


the  damages  are  iiiilitjuidatecl,  interest  is  williin  the  diseretiun 
of  the  jury.^^ 

§  355.  Interest  in  actions  for  torts.  In  actions  for  torts,  in 
order  to  give  the  injured  party  full  indemnity,  interest  is  al- 
lowed in  trover,  or  where  any  analogous  remedy  is  sought, 
on  the  value  of  the  property  from  the  date  of  conversion ;  ^* 
in  trespass,  also,  on  the  value  from  the  date  of  the  taking.^^  [u 
case  of  injury  to  real  [)roperty  interest  will  be  computed  from 
the  time  of  such  injury, ^^  and  if  the  wrong  was  done  in  good 
faith  it  will  be  allowed  only  from  the  time  the  action  was  be- 


11  Xicliols  V.  Coleman,  9G  App. 
Div.   (N.  Y.)   353. 

12  Brown  v.  First  Nat.  Bank,  49 
Colo.  393;  Davis  v.  Gott,  130  Ivy. 
486;  East  Tennessee  L.  Co.  v.  Lee- 
son,  183  Mass.  37;  Durham  v.  Com- 
mercial Nat.  Bank,  45  Ore.  385; 
Arpin  v.  Burch,  68  Wis.  019;  Bone- 
steel  V.  Orvis,  22  Wis.  523 ;  Schmidt 
V.  Nunan,  63  Cal.  371;  Hudson  v. 
Wilkinson,  61  Tex.  610;  Grimes 
V.  Watkins,  59  id.  140 ;  Watson  v. 
Harmon,  85  Mo.  443;  Kamerick  v. 
Castleman,  29  Mo.  App.  658;  Hyde 
V.  Stone,  7  Wend.  354,  22  Am.  Dec. 
582;  McConnick  v.  Pennsylvania 
Cent.  R.  Co.,  49  N.  Y.  303 ;  Dows  v. 
National  Exch.  Bank,  91  U.  S.  618, 
23  L.  ed.  214;  Taylor  v.  Knox,  1 
Dana  400;  Bissell  v.  Hopkins,  4 
Cow.  53 ;  Richmond  v.  Bronson,  5 
Denio  55 ;  Garrard  v.  Dawson,  49 
Ga.  434;  Wehl  v.  Butler,  43  How. 
Pr.  5;  Schwerin  v.  McKie,  51  N. 
Y.  180,  10  Am.  Rep.  581;  Beals  v. 
Guernsey,  8  Johns.  446,  5  Am.  Dec. 
,348;  Kennedy  v.  Whitwell,  4  Pick. 
466;  Johnson  v.  Sumner,  1  Mete. 
(Mass.)  172;  Hogg  v.  Zanesville  C. 
&  Mfg.  Co.,  5  Ohio  410;  Hepburn 
V.  Sewell,  5  Harr.  &  J.  212,  9  Am. 
Dec.  512;  Kennedy  v.  Strong,  14 
Johns.  128;  Ekins  v.  East  India  Co., 
1  P.  Wms.  395;  Thomas  v.  Stcrn- 
heimer,     29     Md.    268;     Fowler    v. 


Davenport,  21  Te.x.  626;  Pease  v. 
Smith,  5  Lans.  519;  Vaughan  v. 
Howe,  20  Wis.  497 ;  Ciiauncey  v. 
Yeaton,  1  N.  H.  151;  Varco  v.  Chi- 
cago, etc.  R.  Co.,  30  Minn.  18; 
Swanson  v.  Andrus,  83  Minn.  505. 
See  Pierce  v.  Rowe,  1  N.  H.  179; 
Hamer  v.  Hathaway,  33  Cal.  117; 
Northern  T.  Co.  v.  Sellick,  52  111. 
24!) ;  Tarpley  v.  Wilson,  33  Miss. 
467;  Isabella  G.  M.  Co.  v.  Glenn, 
37   Colo.   165,   §   1109. 

If  there  has  been  a  recovery  of 
profits  lost  by  reason  of  the  wrong 
done,  the  property  interest  cannot 
be  allowed.  McGuire  v.  Galligan, 
53  Mich.  453. 

In  Montana  interest  cannot  be 
recovered  in  an  action  for  conversion 
for  any  period  before  judgment. 
Randall  v.  (ireenhood,  3  Mont.  506; 
Palmer  v.  ^Murray,  8  id.  174,  8  Mont. 
312. 

13  Callen  v.  Collins,  (Tex.  Civ. 
App.)  154  S.  W.  673;  Baker  v. 
Railroad  Co.,  56  Vt.  302;  Piatt  v. 
Continental  Ins.  Co.,  62  Vt.  166; 
Blackie  v.  Cooncy,  8  Nev.  41  ; 
Shepherd  v.  ]\IcQuilkin,  2  W.  Va. 
90;  Beals  v.  Guernsey,  8  Johns.  446, 
5  Am.  Dec.  348;  Bradley  v.  Geiscl- 
man,  22  111.  494.  See  §  1006,  also 
§  1026. 

14  Union  W.  P.  Co.  v.  Lcwiston, 
101  Me.  564. 


1136 


SUTHERLAND    ON    DAMAGES. 


[§  355 


guii.^^  Where  a  statute  fixes  the  damages  for  the  wrongful 
cutting  of  timber  at  the  highest  market  vahie  thereof  iu  what- 
soever place,  shape  or  condition,  manufactured  or  unmanufac- 
tured, the  same  may  have  been  at  any  time  before  the  trial 
while  in  possession  of  the  defendant,  interest  is  not  allowed 
on  the  value  so  found  before  judgment.  By  pursuing  his  stat- 
utory right  the  plaintiff  waives  that  which  he  had  independ- 
ently of  it.^®  In  replevin  interest  is  allowed  to  the  plaintiff  on 
the  value  of  the  property  during  the  period  of  wrongful  de- 
tention, and  this  is  the  ordinary  measure  of  damages  where 
no  special  damage  is  shown;  ^"^  but  in  the  absence  of  any  stat- 
ute allowing  damages  to  the  defendant  for  wrongful  detention 
by  means  of  the  suit  interest  is  not  recoverable  by  him  in  that 
action.^^  Where  property  is  destroyed,  or  its  value  diminished 
by  negligence  interest  is,  in  some  jurisdictions,  likewise  a  part 
of  the  compensation  to  which  the  injured  party  is  entitled.^' 


15  Gulf,  etc.  Pv.  Co.  V.  Moseley,  6 
rnd.  T.  369 

16  Smith  V.  Morgan,  73  Wis.  375. 
nSlieffield    V.    Hanna,     136     Iowa 

579;  Pierce  v.  Banton,  98  Me.  553, 
64  L.R.A.  55]  ;  Wegner  v.  Second 
Ward  Sav.  Bank,  76  Wis.  242; 
Schmidt  v.  Nunan,  63  Cal.  371; 
Brizsee  v.  Maybee,  21  Wend.  144; 
Bigclow  V.  Doolittle,  36  Wis.  115; 
Gillies  V.  Wofford,  26  Tex.  76  IMc- 
Donald  v.  Scaife,  11  Pa.  381,  51 
Am.  Doc.  556;  Scott  v.  Elliott,  63 
N.  r.  45;  McDonald  v.  North,  47 
Barb.  530;  Robinson  v.  Barrows,  48 
Me.  185;  Oviatt  v.  Pond,  29  Conn. 
479.     See  §  1144. 

In  Delaware  the  allowance  of  in- 
terest is  discretionary  with  the  jury. 
Boyce  v.  Cannon,  5  Houst.  409. 

18  Chapman  v.  Kerr,  80  Mo.  158, 
following  Pope  v.  Jenkins,  30  id. 
528,  and  disapproving  Woodburn 
V.  Cogdall,  39  id.  228,  and  Miller  v. 
Whitson,  40  id.  101;  Andrews  v. 
Costican,  30  Mo.  App.  29;  McCarty 
V.  Qiiimby,  12  Kan.  494 ;  New  York, 
etc.  R.  Co.  V.  Estill,  147  U.  S.  591, 


622,  37  L.  ed.  292,  306,  citing  the 
text,  but,  following  Missouri  au- 
thority, holding  that  interest  was 
not  recoverable. 

Interest  not  recoverable  as  of 
right.  Anierican  S.  F.  Co.  v.  Shell, 
160  N.  C.  529.  See  Booth  v.  Able- 
man,  20  Wis.  602. 

19  Albany  &  N.  R.  Co.  v.  Wheeler, 
6  Ga.  App.  270;  Buel  v.  Chicago, 
etc.  R.  Co.,  81  Neb.  430;  New  York, 
etc.  R.  Co.  v.  Roper,  176  Ind.  497, 
36  L.R.A.  (N.S.)  952:  Chicago,  etc. 
R.  Co.  V.  Schultz,  55  111.  421  ;  Chap- 
man V.  Chicago,  etc.  R.  Co.,  26  Wis. 
295,  7  Am.  Rep.  81:  Whitney  v. 
Same,  27  Wis.  327;  Buffalo  &  H.  T. 
Co.  V.  Buffalo,  58  N.  Y.  639;  Par- 
rott  V.  Knickerbocker  I.  Co.,  46  id. 
361  ;  Hogg  V.  Zanesville  C.  &  Mfg. 
Co.,  5  Ohio  410;  Walrath  v.  Red- 
field,  18  N.  Y.  457;  Hinds  v.  Barton, 
25  id.  544;  Kendrick  v.  Towle,  60 
Mich.  363,  1  Am.  St.  .526:  Mote  v. 
Chicago,  etc.  R.  Co.,  27  Iowa  22,  1 
Am.  Rep.  212  (carrier  liable  for  in- 
terest on  value  of  baggage  stolen)  ; 
Arthur   v.   Chicago,   etc.   R.   Co.,   61 


§    355]  INTEREST.  11;]  7 

This  rule  is  not  eslaljlisLcd  in  sonic  slates.  The  quostiou  was 
recently  jDassed  upon  for  the  first  time  in  Massachusetts.^"  The 
court,  by  Holmes,  J.,  said:  Interest  "is  allowed  as  of  right 
in  trover  and  other  like  actions;  and  although  it  is  suggested 
that  in  such  cases  the  defendant  may  be  presumed  to  have  had 
the  use  of  the  goods  since  the  conversion,  this  is  not  necessarily 
the  fact,  and  if  it  were  would  have  no  bearing  on  the  indemnity 
due  the  plaintiff.  .  .  .  We  will  assume  that  the  sum  ulti- 
mately found  by  the  jury  cannot  be  said  to  have  been  wrong- 
fully detained  before  the  finding  in  such  a  sense  that  interest  is 
due  eo  nomine.  T]ut  we  have  heard  no  reason  suggested  why, 
if  a  plaintiff  has  been  prevented  from  having  his  damages 
ascertained,  and,  in  that  sense,  has  been  kept  out  of  the  sum 
that  ^^■ould  have  made  him  whole  at  the  time,  so  long  that  that 
sum  is  no  longer  an  indemnity,  the  jury,  in  their  discretion, 
and  as  incident  to  determining  the  amount  of  the  original  loss, 
may  not  consider  the  delay  caused  by  the  defendant.  In  our 
opinion  they  may  do  so;  and,  if  they  do,  we  do  not  see  how  they 
can  do  it  more  justly  than  by  taking  interest  on  the  original 
damage  as  a  measure."  The  enjoyment  of  the  rents  and  prof- 
its of  land  by  the  vendee  is  cause  for  denying  him  interest 
against  an  abstractor  for  negligently  certifying  to  the  title 
thereto.^^  In  the  federal  courts  the  allowance  of  interest  in 
tort  actions  is  for  the  discretion  of  the  jury.^^ 

Iowa  648;   Jolinson  v.  Same,  77  id.  Koith  Co.  v.  P.ootli  F.  Co.   (Del.)  87 

606;  Fremont,  etc.  R.  Co.  v.  Marley,  Atl.  7i5. 

25  Neb.  138,  13  Am.  St.  482;   Gal-  The  allowance  of  interest  is  witli- 

veston,    etc.    R.    v.    Home,    69    Tex.  in  tlie  discretion  of  the  jury.     Seck- 

643;   Varco  v.   Chicago,  etc.  R.  Co.,  crson  v.  Sinclair,  24  N.  D.  625. 

30  Minn.   18;    Houston,  etc.   R.   Co.  20  Fraser  v.   Bigelow   C.   Co.,    141 

V.  Jackson,  62  Tex.  209;  T.  &  P.  R.  .Alass.  126,  followed  in  Ainsworth  v. 

V.  Tankersley,  63   id.  57;   Toledo  v.  Lakin,  ISO  Mass.  397,  57  L.R.A.  132, 

Grasser,  12  Ohio  C.  C.  520;  Watkins  and   in   Atwood   v.   Boston   F.  &   T. 

V.    Junker,    90    Tex.    584.      Contra.  Co.,   185  Mass.  557;   Union  Pac.  R. 

Danihorst  v.  Missouri   Pac.   R.   Co.,  Co.  v.   Holmes,   68   Kan.   810;    Mis- 

32  Mo.  App.  350,  and  Missouri  cases  souri,  etc.  R.  Co.  v.  Cherry,  44  Tex. 

cited;  Latta  v.  New  Orleans,  etc.  R.  Civ.    App.    232,    and    Missouri    case 

Co.,  131  La.  272.    See  Bla<;k  v.  Cam-  cited  in  preceding  note, 

den  &  A.  R.  &  T.  Co.,  45  Barb.  40;  21  Keuthan  v.  St.  Louis  T.  Co.,  101 

Richmond  v.  Bronson,  5  Denio,  55;  Mo.  App.  1. 

Lakeman  v.  Grinnell,  5  Bosw.  625;  22  Edely  v.   LaFayette,   163   U.   S. 
Suth.  Dam.  Vol.  I.— 72. 


1138 


SUTMEBLAND    ON    DAMAOES. 


[§   355 


111  ail  action  to  recover  for  the  value  of  goods  destroyed, 
they  having  a  market  vahie  susceptible  of  easy  ])roof,  the  court 
thus  vindicated  the  right  to  interest.  A  loss  of  property  hav- 
ing a  definite  money  value  is  practically  the  same  as  the  loss 
of  so  much  money ;  the  loss  of  the  use  of  the  projierty  is  prac- 
tically the  same  as  the  loss  of  the  use  (or  interest)  of  so  much 
money.  A  just  indemnity  to  the  plaintiff  required  the  addition 
to  the  value  of  the  goods  at  the  time  of  their  destruction  of  the 
interest  from  that  time  to  the  date  of  judgment.^^  Interest  is 
recoverable  on  the  damages  found  for  the  destruction  of  grow- 
ing crops.^*  In  Georgia  the  code  provides  that  where  an  amount 
ascertained  would  be  the  damages  at  the  time  of  the  breach  it 
may  be  increased  by  the  addition  of  interest  from  that  time 
till  the  recovery..  Though  limited  to  breach  of  contract  the  rule 
may  be  api3lied  in  actions  ex  delicto  for  the  destruction  of 
property,  the  measure  of  damages  being  the  value  of  it;  but 
this  must  be  done  by  the  jury,  in  its  discretion,  in  the  form  of 
damages  and  not  as  interest.^^  In  Pennsylvania  there  are  dis- 
cordant expressions  in  the  opinions  as  to  the  right  to  interest 


458,  41  L.  ed.  226 ;  White  v.  United 
States,  202  Fed.  501,  121  C.  C.  A. 
33  (laches  in  beginning  suit  for  con- 
version). In  Fetzer  v.  South  Side 
L.  Co.,  202  Fed.  878,  121  C.  C.  A. 
236,  the  court  said  it  could  not  see 
why  interest  should  not  be  allowed 
from  the  date  of  the  conversion.  In 
202  Fed.  491,  123  C.  C.  A.  1,  inter- 
est in  favor  of  the  government 
against  an  innocent  purchaser  from 
a  trespasser  was  allowed  from  the 
time  suit  was  brought,  no  previous 
demand   having  been   made. 

23  Regan  v.  New  York,  etc.  R.  Co., 
60  Conn.  124,  142,  25  Am.  St.  306; 
Burdick  v.  Chicago,  etc.  R.  Co.,  81 
Iowa  384;  Union  Pac.  R.  Co.  v.  Ray, 
46  Neb.  750;  Coan  v.  Brownstown, 
126  Mich.  626;  Jacksonville,  etc.  R. 
Co.  V.  Peninsular  L.,  etc.  Co.,  27 
Fla.  1,  140,  17  L.R.A.  33,  disapprov- 
ing Ancrum  v.  Stone,  2  Spcers,  594 ; 


Varco  V.  Chicago,  etc.  R.  Co.,  30 
Minn.  18;  St.  Louis,  etc.  R.  Co.  v. 
INIiggs,  50  Ark,  169;  Parrott  v. 
Knickerbocker,  etc.  I  Co.,  46  N.  Y. 
361;  Georgia  Pac.  R.  Co.  v.  Fuller- 
ton,  76  Ala.  298;  Atlanta  &  B.  A. 
L.  R.  Co.  V.  Brown,  158  Ala.  607. 

In  Tennessee  the  question  of  inter- 
est is  discretionary  with  the  jury. 
Loui-sville  &  N.  R.  Co.  v.  Fort,  112 
Tenn.  432. 

The  jury  may  allow  interest  from 
the  time  the  property  was  destroyed. 
Harper  v.  Atlantic  C.  L.  R.  Co.,  161 
N.  C.  451. 

24  Trinity,  etc.  R.  Co.  v.  Doke, 
(Tex.  Civ.  App.),  152  S.  W.  1174. 

25  Maryland  Cas.  Co.  v.  Lanham, 
124  Ga.  859;  Mayor,  etc.  v.  Stem- 
bridge,  139  Ga.  692;  Western  &  A. 
R.  Co.  v.  Brown,  102  Ga.  13,  3  Am. 
Neg.  Rep.  793;  Snowden  v.  Water- 
man, 110  Ga.  99. 


355] 


INTEREST. 


1139 


in  tort  actions  ;^^  the  latest  cases,  however,  establish  the  rule 
that  it  cannot  be  allowed  as  such,  but  that  in  conqmtiiig  the 
damages  the  time  elapsed  since  the  cause  of  action  arose  may 
be  considered."  There  tlic  right  to  recover  interest  may  be 
lost  by  insisting  upon  the  payment  of  a  sum  much  larger  than 
was  awarded  by  the  jury,'^*  In  Indiana  the  jury  in  ascertain- 
ing the  damages  resulting  to  lands  from  the  wrongful  removal 
of  material  therefrom  may,  in  their  discretion,  add  interest  to 
the  damages  without  tiudiug  that  there  has  Ik-cu  unreasonable 
delay  of  payment.^ 

Where,  through  the  defendant's  negligence,  a  break   in  its 


26  See  Pittsburgh  R.  Co.  v.  Taylor, 
104  Pa.  30G,  49  Am.  Rep.  580;  Alle- 
ghany V.  Campbell,  107  Pa.  530,  52 
Am.  Rep.  478 ;  Railroad  Co.  v.  Ges- 
ner,  20  Pa.  242;  Delaware,  etc.  R. 
Co.  V.  Biirson,  61  id.  380. 

27  Plymouth  v.  Graver,  125  Pa.  24, 
11  Am.  St.  807;  Pennsylvania,  etc. 
R.  Co.  V.  Ziemer,  124  Pa.  560;  Emer- 
son V.  Schoonmaker,  135  Pa.  437 ; 
Richards  v.  Citizens'  N.  G.  Co.,  130 
Pa.  37 ;  Reading  &  P.  R.  Co.  v.  Bal- 
thaser,  126  Pa.  1;  Brent  v.  Thorn- 
ton, 45   C.   C.  A.  214,   106  Fed.   35. 

In  Richards  v.  Citizens'  N.  G.  Co., 
supra,  Mitchell,  J.,  said  interest 
cannot  "be  recovered  in  actions  of 
tort  or  in  actions  of  any  kind  where 
tlie  damages  are  not  in  tlieir  nature 
capable  of  exact  computation,  Ijoth 
as  to  time  and  amount.  In  such 
cases  tlie  party  chargeable  cannot 
pay  or  make  tender  luitil  both  the 
time  and  the  amount  liave  been 
ascertained,  and  his  default  is  not 
therefore  of  that  absolute  nature 
that  necessarily  involves  interest 
for  the  delay.  But  there  are  ca.ses 
sounding  in  tort  and  cases  of  un- 
liquidated damages,  where  not  only 
the  principle  on  which  the  recovery 
is  to  be  had  is  compensation,  but 
where  also  the  compcuisation  can  be 
measured  by  market  value  or  other 


definite  standards.  Such  are  cases 
of  the  unintentional  conversion  or 
destruction  of  property,  etc.  Into 
these  cases  the  element  of  time  may 
enter  as  an  important  factor  and 
tlie  plaintili'  will  not  be  fully  com- 
pensated unless  lie  receive,  not  only 
the  value  of  liis  property,  but  re- 
ceive it,  as  nearly  as  may  be,  as 
of  the  date  of  liis  loss.  Hence  it 
is  that  tlie  jury  may  allow  addi- 
tional damages  in  the  nature  of 
interest  for  the  lapse  of  time.  It  is 
never  interest  as  sucli,  nor  as  a 
matter  of  right,  but  compensation 
for  the  delay,  of  which  the  rate  of 
interest  ail'ords  tlie  fair  legal 
measure." 

In  cases  of  personal  injury  there 
can  be  no  general  compensation  for 
delay,  and  it  cannot  exceed  tlie  legal 
rate  of  interest.  McGonnell  v.  Pitts- 
burgli  R.  Co.,  234  Pa.  396. 

Damages  for  delay  in  settling  a 
claim  for  unlawful  discrimination 
by  a  carrier  may  be  awarded  by  the 
court  which  hears  the  case.  Puri- 
tan C.  M.  Co.  v.  Pennsylvania  R. 
Co.,  237  Pa.  420. 

28  Pierce  V.  Lehigh  Valley  C.  Co., 
232  Pa.  170. 

29Pittsl)urgh,  etc.  H.  Co.  v,  Swin- 
ney,  07  Ind.  586. 


1140 


SUTHERLAND    ON    DAMAGED. 


[§  355 


reservoir  wall  occurred,  in  consequence  of  which  there  was  a 
washout  of  the  plaintiff's  road-bed,  interest  was  recoverable  as 
matter  of  law  on  the  ground  that  the  cost  of  the  necessary  re- 
pairs was  a  definite  sum  which  could  have  been  approximately 
ascertained  immediately  after  the  injury  was  done.  In  con- 
sequence of  the  injury  the  plaintiff  incurred  cost  in  trans- 
ferring passengers  around  the  place  where  the  washout  occurred. 
As  to  this,  the  sum  in  which  it  was  damaged  was  not  definitely 
ascertainable  until  a  bill  of  particulars  was  rendered ;  from 
that  time  the  defendant  was  liable  for  interest.  Though  dis- 
tinct and  separable  items  of  damage  resulted  from  the  same 
cause  each  could  be  dealt  with  separately  for  the  purpose  of 
determining  the  right  to  interest.^" 

The  tendency  is  to  increase  the  number  of  actions  in  which 
the  jury  may  allow  interest  as  damages ;  ^^  but  this  may  not  be 
done  where  exemplary  damages  are  given  at  discretion.^^ 
There  is  a  divergence  of  view  as  to  the  right .  to  interest  on 
damages  resulting  from  the  killing  of  animals  by  the  negligence 
of  railroad  companies.  Under  the  statute  of  Missouri,^^  Colo- 
rado,^* Georgia,^^  Kansas,^^  Texas,^^  Indiana,^^  and  Illinois^' 


30  New  York,  etc.  R.  Co.  v.  An- 
sonia  L.  &  W.  P.  Co.,  72  Conn.  703. 

31  Lawrence  R.  Co.  v.  Cobb,  35 
Ohio  St.  94;  Duryee  v.  Mayor,  96 
N.  Y.  477 ;  Central  R.  Co.  v.  Sears, 
66  Ga.  499  (negligent  killing  of  hus- 
band; time  elapsed  between  death 
and  trial,  considered  by  jury). 

32Dunshee  v.  Standard  Oil  Co., 
152  Iowa  618,  36  L.R.A.(N.S.)  263; 
Schulte  V.  Louisville  &  N.  R.  Co., 
]28  Ky.  627;  Western  &  A.  R.  Co. 
V.  Young,  81  Ga.  397,  12  Am.  St. 
318;  Ratteree  v.  Chapman,  79  Ga. 
574,  11  Am.  Neg.  Cas.  350. 

33  De  Steiger  v.  Hannibal,  etc.  R. 
Co.,  73  Mo.  33. 

34  Denver,  etc,  R.  Co.  v.  Conway, 
8  Colo.  1,  54  Am.  Rep.  537. 

35  Western  &  A.  R.  Co.  v.  McCau- 
ley,  68  Ga.  818;  Macon,  etc.  R.  Co. 


v.  Hasty,  10  Ga.  App.   103    (in  the 
discretion  of  the  jury) . 

36  Atchison,  etc.  R.  Co.  v.  Gabbert, 
34  Kan.  132. 

37  St.  Louis  S.  R.  Co.  V.  Cham- 
bliss,  93  Tex.  62;  International,  etc. 
R.  Co.  V.  Barton,  93  Tex.  63.  Con- 
tra, Houston,  etc.  R.  Co.  v.  McMil- 
lan, 37  Tex.  Civ.  App.  483. 

In  the  later  cases  interest  is  al- 
lowed where  the  injuries  are  sus- 
tained during  transportation.  Kan- 
sas City,  etc.  R.  Co.  v.  West  (Tex. 
Civ.  App.)  149  S.  W.  206,  and  cases 
cited. 

38  New  York,  etc.  R.  Co.  v.  Zum- 
baugh,  12  Ind.  App.  272.  Compare 
Wabasli  R.  Co.  v.  Williamson,  3  Ind. 
App.  190,  205. 

39  Toledo,  etc.  R.  Co.  v.  Johnston, 
74  111.  83. 


§  355] 


INTEREST, 


1141 


interest  is  not  allowed.  It  is  otherwise  in  Minnesota,^"  Arkan- 
sas,*^ and  Alabama  *^  from  the  time  of  the  injury,  and  in  Wis- 
consin,*^ and  Utah  **  from  the  commencement  of  the  action. 
If  the  statute  makes  the  company  liable  for  double  tlic  damage 
the  owner  of  the  animal  has  sustained,  interest  on  the  value 
of  it  is  not  recoverable.** 

In  actions  to  recover  for  personal  injuries  juries  have,  ac- 
cording to  many  authorities,  no  discretion  to  allow  interest. 
The  sum  awarded  in  gross  for  mental  suffering  and  physical 
pain,  loss  of  time  and  expenses  incident  to  the  injury,  and  for 
prospective  suffering  and  disability  is  the  full  measui-e  of  re- 
covery and  it  cannot  be  added  to  by  including  damages  for  the 
detention  of  the  sum  awarded.*^    According  to  others,  it  is  dis- 


40  Varco  V.  Chicago,  etc.  R.  Co., 
30  Minn.  18. 

41  St.  Louis,  etc.  R.  Co.  v.  Biggs, 
50  Ark.  1G9. 

42  Alabama,  etc.  R.  Co.  v.  McAl- 
pine,  75  Ala.  1]3;  Georgia  Pac.  R. 
Co.  V.  Fullefton,  79  id.  298. 

43  Chapman  v.  Chicago,  etc.  R. 
Co.,  26  Wis.  295,  7  Am.  Rep.  81. 

44  Woodland  v.  Union  Pac.  R.  Co., 
27  Utah  543. 

45  Brentner  v.  Chicago,  etc.  R.  Co., 
68  Iowa  530. 

46  The  Argo,  127  C.  C.  A.  456,  210 
Fed.  872;  Seaboard  A.  L.  R.  v. 
Bishop,  132  Ga.  71;  Jacobson  v. 
United  States  G.  Co.,  150  Iowa  330; 
Missouri  &  K.  Tel.  Co.  v.  Vander- 
vort,  71  Kan.  101;  Leisenring  v.  La 
Croix,  68  Neb.  803 ;  Sorenson  v.  Ore- 
gon P.  Co.,  47  Ore.  24;  Iloltham  v. 
Seranton  R.  Co.,  15  Pa.  Dist.  401; 
Cochran  v.  Boston,  211  Mass.  171, 
39  L.R.A.(KS.)  120;  Railroad  v. 
Wallace,  91  Tenn.  35,  14  L.R.A.  548; 
Sargent  v.  Hampden,  38  Me.  581 ; 
Ratteree  v.  Chapman,  79  Ga.  574; 
Western  &  A.  R.  Co.  v.  Young,  81 
Ga.  397,  12  Am.  St.  320,  11  Am. 
Neg.   Cas.   350;    Pittsburgh,   etc.   R. 


Co.  V.  Taylor,  104  Pa.  306,  49  Am. 
Rej).  580;  State  v.  Harrington,  44 
Mo.  App.  301;  Sonnonfeld  M.  Co.  v. 
People's  R.  Co.,  59  id.  668;  Te.vas, 
etc.  R.  Co.  V.  Carr,  91  Tex.  332; 
Penny  v.  Atlantic  C.  L.  R.  Co.,  161 
N.  C.  523. 

Interest  has  been  allowed  as  com- 
pensation for  delay  in  receiving  the 
sum  allowed  for  loss  of  earnings. 
Bentz  V.  Johnson,  21  Pa.  Dist.  1068. 
And  such  allowance  has  been  recog- 
nized as  proper  in  McPherson  v. 
Pittsburg  R.  Co.,  50  Pa.  Super.  233. 

In  Virginia  a  verdict,  silent  as  to 
interest,  bears  interest  from  its  date. 
Atlantic  C.  L.  R.  Co.  v.  Grubbs,  1 13 
Va.  214. 

Wliere  tlie  damages  consist  of  sev- 
eral elements  and  the  sum  claimed 
is  grossly  in  excess  of  the  award 
made,  interest  cannot  be  recovered. 
McPherson  v.  Pittsburg  R.  Co.,  50 
Pa.  Super.  233. 

The  damages  are  assessed  as  of 
tlie  date  of  the  trial  and  not  of  the 
injury;  hence  there  can  be  no  gen- 
eral compensation  for  delay.  Mc- 
Gonnell  v.  Pittsburg  R.  Co.,  234  Pa. 
396. 


1142 


SUTHERLAND    ON    DAMAGES. 


[§  355 


cretionary  with  the  jury  to  award  interest.*''^  In  some  states 
the  jury  may  consider  the  time  Avhich  has  elapsed  since  the 
injury  was  sustained.^^  In  West  Virginia  interest  from  the 
time  of  verdict,  there  being  one,  or,  if  not,  from  the  time  of 
judgment,  is  recoverable  under  a  statute.*^  In  Texas  and 
South  Carolina  interest  may  be  recovered  from  the  date  of 
bringing  suit  against  a  telegraph  company  to  recover  for  a 
loss  sustained  in  buying  property  because  of  the  failure  to 
deliver  a  message.^"  In  Missouri  and  Kansas  liability  for  in- 
terest in  actions  ex  delicto,  based  upon  mere  negligence,  is  not 
determined  by  the  injury  sustained  by  the  plaintiff ,  but  de- 
pends upon  whether  any  benefit  accrued  to  the  defendant  by 
reason  of  the  wrong  done  by  him.^^  Interest  has  been  recovered 
for  causing  death  from  the  time  thereof  to  the  date  of  recov- 
ery ;  ^^  and  it  has  been  allowed  from  the  time  of  verdict  in  a 


47  Wilson  V.  Troy,  135  N.  Y.  96, 
31  Am.  St.  817,  18  L.R.A.  449;  Dur- 
yee  v.  Mayor,  96  N.  Y.  477;  Mans- 
field V.  New  York,  etc.  R.  Co.,  314 
N.  Y.  331,  4  L.R.A.  566;  Jamieson 
V.  New  York,  etc.  R.  Co.,  11  App. 
Div.  (N.  Y.)  50,  affirmed  without 
opinion,  162  N.  Y.  630;  Ell  v. 
Northern  Pac.  R.  Co.,  1  N.  D.  336, 
n  Am.  Neg.  Cas.  136,  12  L.R.A. 
97,  26  Am.  St.  621 ;  Johnson  v. 
Same,  1  N.  D.  354;  Uhe  v.  Chi- 
cago, etc.  R.  Co.,  3  S.  D.  563; 
Taylor  v.  Coolidge,  64  Vt.  506; 
King  V.  Southern  Pac.  Co.,  109  Cal. 
96;  Eddy  v.  Lafayette,  163  U.  S. 
456,  41  L.R.A.  225;  Brent  v.  Thorn- 
ton, 45  €.  C.  A.  214,  106  Fed.  -35; 
Western  &  A.  R.  Co.  v.  Calhoun,  104 
Ga.  384.     See  §  1205. 

48  Zipperlein  v.  P.  C.  &  St.  L.  R. 
Co.,   8  Ohio  Dec.   587.     See   §   1256. 

In  a  tort  action  the  verdict  speci- 
fied the  damages  to  which  the  plain- 
tiff was  entitled  at  the  time  the 
wrong  was  done,  and  how  much  the 
interest  thereon  would  amount  to, 
and  gave  the  total  sum  as  its  ver- 


dict. The  verdict  was  sustained, 
thougli  interest  was  not  recoverable 
as  such.  Norton  v.  Parker,  17  Ohio 
C.  C.  715,  following  Railroad  Co.  v. 
Cobb,  35  Ohio  St.  94. 

49  Campbell  v.  Elkins,  58  W.  Va. 
308,  2  n.R.A.(N.S.)    159. 

50  Western  U.  Tel.  Co.  v.  Carver, 
15  Tex.  Civ.  App.  547 ;  Eureka  Cot- 
ton Mills  V.  Western  U.  Tel.  Co., 
88  S.  C.  498.  Compare  Pacific 
Postal  Tel.  C.  Co.  v.  Fleischner,  14 
C.  C.  A.  160,  66  Fed.  899. 

51  Marshall  v.  Schricker,  63  Mo. 
308;  .Wiggins  F.  Co.  v.  Chicago  & 
A.  R.  Co.,  128  Mo.  224,  255,  16  Am. 
Neg.  Cas.  426,  and  cases  referred  to; 
Atchison,  etc.  R.  Co.  v.  Ayers,  56 
Kan.  176;  Gerst  v.  St.  Louis,  185 
Mo.  191,  105  Am.  St.  580. 

Interest  in  a  personal  injury  ac- 
tion is  not  to  be  computed  from  the 
time  of  the  injury.  Staley  v.  For- 
est, 157  Iowa  188.  But  compare 
Stoddart  v.  Myers,  52  Pa.  Super. 
179. 

52  St.  Louis,  etc.  R.  Co.  v.  Cleere, 
70  Ark.  377. 


§   ^50] 


Ix\TEKi:ST. 


ii-i;j 


state  cdiirt   in   a   personal    injui'v   adion    in   pi-occcdiniis   in   ad- 
niiraliy  by  tlic  vessel  owner  for  tlic  liniilafion  of  his  liahililv.*^ 

A  distinction  has  heen  made  in  rcsjicd  to  interest  in  cases 
of  an  agent  or  trustee  becoining  liaMe  lor  |irnj)ci'ty  in  his  hands 
between  loss  by  negliiience  and  malfeasance.  Where  liis  lia- 
bility is  not  for  any  actnal  or  intended  beneiit  to  himself,  as 
by  conversion  of  the  pro})erty  to  his  own  use,  he  is  only  liable 
for  the  value  without  interest;  bnt  if  lie  has  derive(|  a  j)i-ivate 
advantage  out  of  it  he  will  be  liable  for  interest.^* 

In  actions  for  damages  caused  by  collision  interest  is  al- 
lowed on  the  cost  of  repairs  and  rental  \alne  while  the  vessel 
is  undergoing  repairs.^*  It  is  allowed  on  all  pecuniary  ele- 
ments of  damage  resulting  from  torts,  consisting  of  moneys, 
property  or  labor,  the  value  of  which  is  reasonably  certain.®^ 
The  rate  of  interest  allowable  in  an  action  of  tort  is  governed 
by  the  statute  in  force  when  the  verdict  is  rendered  "  and  the 
law  of  the  forum.^* 

Section  6. 


THE  LAW  OF  WHAT  TLACE  AND  TIME  GOVERNS. 

§  356.  Importance  of  subject.     As  interest  is  generally  regu- 
lated by  statutes  and  these  are  not  the  same  in  all  jurisdictions 


53  The  City  of  Boston,  182  Foci. 
174. 

54  Marshall  v.  Schricker,  G3  Mo. 
308;  Dawes  v.  Winship,  5  Pick.  97, 
note;  Tliompson  v.  Stewart,  3  Conn. 
171,  8  Am.  Dec.  108;  Rootes  v. 
Stone,  2  Leigh,  650;  Ricketson  v. 
Wright,  3  Sumner  335;  Short 
V.   Skipwith,  1   Brock.   103. 

55  Straker  v.  llarlland,  2  H.  &  M. 
570;  The  Mary  J.  Vaughan,  2  Bene. 
47;  Mailler  v.  Express  Propeller 
Line,  61  N.  Y.  312;  Warrall  v. 
Munn,  38  id.  151;  Whitehall  T.  Co. 
V.  New  Jersey  S.  Co.,  51  id.  369. 
See  §  1294. 

But  where  Iioth  vessels  are  at 
fault  interest  on  Die  amount  award- 
ed is  chargeable  only  from  the  date 


of   tlie   decree.      The    Manitoba,    122 
U.  S.  97,  30  L.  ed.  1095. 

If  strip))ings  are  rescued  from  the 
offending  ship  and  the  owners  real- 
ize large  sums  tiierefrom  the  court 
will  exercise  its  discretion  in  allow- 
ing interest  thereon.  The  Scotland, 
118  U.  S.  507,  30  L.  ed.  153. 

56  Mailler  v.  Express  Propeller 
Line,  supra  ;  Jay  v.  .\lniy,  1  Woodb. 
&  M.  262;  Bcmke  v.  Clinton,  2  Utah 
230;  Grosvenor  v.  Ellis.  44  Mich. 
452:   Snow  v.  Xowlin,  43  :Mich.  383. 

57  Salter  V.  I'tica,  etc.  R.  Co.,  80 
X.  Y.  401,  12  Am.  Xeg.  Cas.  362, 
disapproving  Ewing  v.  X^ovcrsink  S. 
Co.,  23  ITun  578. 

58  Bischoffsheim  v.  Baltzer,  21 
Fed.  531. 


1144  SUTHERLAND    ON    DAMAGES.  [§    356 

and  liuctuate  more  or  less  in  each,  it  is  of  great  practical  im- 
portance that  definite  rules  or  principles  shovdd  exist  for  deter- 
mining the  force  and  effect  of  these  laws  and  by  which  of  them 
any  contract  or  liability  is  to  be  governed.  Owing  to  the  wide 
domain  of  commerce,  international  and  interstate,  questions 
of  interest  arising  under  statutory  regulations  and  restrictions 
are  not  of  local  concern.  They  arise  upon  every  form  of  in- 
debtedness incident  to  that  commerce ;  and  often  between 
parties  widely  separated,  not  only  by  distance  but  by  national 
and  state  lines,  each  performing  his  part  of  the  transaction  at 
home  or  in  different  jurisdictions  and  under  the  influence  of 
dissimilar  laws.  These  transactions  involve  expenditures,  in- 
dependent or  subsidiary  contracts,  and  the  performance  of 
them  in  places  having  no  common  rate  of  interest. 

§  357.  General  rule  as  to  contracts.  The  general  rule  is  that 
the  contract,  in  respect  to  its  construction  and  force,  in  other 
words  its  meaning  and  validity,  is  governed  by  the  law  of  the 
place  where  it  is  made  and  to  be  performed.^^  This  rule  rests 
on  the  theory  that  it  accords  with  the  intention  of  the  parties 
if  such  intention  was  a  legal  one.  The  other  rules  which  are 
applied  are  also  based  on  the  same  theory.  Lord  Herschell 
said  in  a  recent  case :  Where  a  contract  is  entered  into  between 
parties  residing  in  different  places,  where  different  systems 
of  law  prevail,  it  is  a  question  in  each  case  with  reference  to 
what  law  the  parties  contracted,  and  according  to  what  law  it 
was  their  intention  that  their  rights  either  under  the  whole  or 
any  part  of  the  contract  should  be  determined.  In  consider- 
ing what  law  is  to  govern,  no  doubt  the  lex  loci  solutionis  is  a 
matter  of  great  importance.  The  lex  loci  contractus  is  also  of 
importance.  In  the  present  case  the  place  of  the  contract  was 
different  from  the  place  of  its  performance.     It  is  not  necessary 

59  Wittkowski  v.  Harris,   64   Fed.  other  state  may  claim  only  such  in- 

712;    Archer   v.   Dunn,   2   W.    &    S.  terest  as  is  allowed  by  the  laws  of 

327;    Ralph   v.    Brown,    3    id.    395;  the  latter,  and  not  the  rate  author- 

Findlay  v.  Hall,   12   Ohio   St.   610;  .^^^         .^^  ^  ^^       .^^^j,,^^  ^^ 

Land  Title  &  T.  Co.  v.   Fulmer,  24  j  j  i 

-r,      o  oro      ,  \  c       •  he  charffed   hv   similar  corporations 

Pa.  Super.  256.     (A  foreign  corpora-  '^         *'  * 

tion   which   loans   money   and  takes       of  the  state  in  which  the  loan  was 
security  on  property  situated  in  an-       made.) 


§    35 Y]  INTEREST.  1145 

to  enter  upon  the  incpiiry  to  which  of  tliese  considerations  the 
greatest  weight  is  to  be  attributed,  the  i)hice  where  the  contract 
was  made,  or  the  place  where  it  is  to  be  performed.  In  my  view 
they  are  both  matters  which  must  be  taken  into  consideration, 
but  neither  of  them  is,  of  itself,  conclusive,  and  still  less  is  it 
conclusive  as  to  the  particular  law  which  was  intended  to 
govern  particular  parts  of  the  contract  between  the  parties.  In 
this  case,  as  in'  all  such  cases,  the  whole  of  the  contract  must 
be  looked  at  and  the  rights  under  it  must  be  regulated  by  the 
intention  of  the  parties  as  appearing  from  the  contract.  It  is 
perfectly  competent  to  those  who,  under  such  cireuuistauces  as 
I  have  indicated,  are  entering  into  a  contract,  to  indicate  by 
the  terms  which  they  employ,  which  system  of  law  they  intend 
to  be  applied  to  the  construction  of  the  contract  and  to  the  de- 
termination of  the  rights  arising  out  of  it.^°  If  it  is  valid 
where  made  it  is  jure  gentium.^  valid  every where,^^  if  it  is  not 
injurious  to  the  public  rights  of  the  people  in  the  jurisdiction 
in  which  its  enforcement  is  sought,  or  does  not  offend  their 
morals,  contravene  their  policy  or  violate  public  law,^^  and  if 
valid  where  made  is  so  everywhere.^^ 

eOHamlyn    v.     Talisker     D.     Co.,  378;    French  v.  Hall,  9  N.  H.   137, 

[1894]   App.  Cas.  202.     See  Pritch-  32  Am.  Dec.  341;  Andrews  v.  Cred- 

ard  V.  Norton,  106  U.  S.  124,  27  L.  iters,   11   La.  404;    Sniead  v.  Mead, 

ed.    104;    Wayman   v.   Southard,   10  3  Conn.  253,  8  Am.  Dec.  183;   Med- 

Wheat.  1,  48;  Robinson  v.  Bland,  2  bury   v.    Hopkins,   3    Conn.    472;    2 

Burr.  1077;  Lloyd  v.  Guibert,  L.  E.  Kent's    Com.    457    et    seq.;    Story's 

1   Q.  B.  115,  120;   Bigelow  v.  Burn-  Conf.  L.,  §  242;  Andrews  v.  Herriot, 

ham,  83  Iowa  120,  32  Am.  St.  294;  4  Cow.  510;   Watson  v.  Orr,  3  Dev. 

Minor  on  Conf.  L.,  §  181.  161;    Chartres   v.   Cairnes,   4   Mart. 

61  Reiff  V.  Bakken,  36  Minn.  333;  (N.  S.)   1;  Courtois  v.  Carpenter,   I 

Matthews    v.    Paine,    47    Ark.    54;  Wash.  C.  C.  370;   Brackett  v.  Nor- 

Pearsall   v.   Dwight,   2   Mass.   88,   3  ton,  4  Conn.  517,  10  Am.  Dec.  179; 

Am.  Dec.  35;  W^illings  v.  Consequa,  Palmer   v.    Yarrington,    1    Ohio    St. 

1  Pet.   C.   C.   317;    De   Sobry  v.  De  253;    Harper   v.   Hampton.    1    H.   & 

Laistre,  2  H.  &  J.  193,  3  Am.  Dec.  J.  453,  622;   Warrender  v.  Warren- 

535;  Trimby  v.  Vignier,  1  Bing.  N.  der,  9  Bligh  110. 

C.  151;   Houghton  v.  Page,  2  N.  II.  62  Rartlett   v.    Collins,    109     Wis. 

42,  9  Am.  Dec.  30;  Dyer  v.  Hunt,  5  477;  Edgerly  v.  Bush,  81  N.  V.  199; 

N.    H.    401;    Andrews    v.    Pond,    13  Rousillon  v.  Rousillon,   14  Ch.  Div. 

Pet.  65;  Whiston  V.  Stodder,  8  Mart.  351:     Hallam    v.    Telleren.    55    Neb. 

95,  13  Am.  Dec.  281  ;  Bank  of  United  255. 

States    V.    Donnally,    8    Pet.    301,    8  63  Cases  cited  in  next  to  l:ist  pre- 

L.  ed.  974;    Wilcox  v.  Hunt,   13   id.  ceding    note;    ITnited    States    v.    La 


114G 


SUTHERLAND    ON    DAMAGES. 


[§  357 


What  is  the  place  of  contract  is  not  always  easy  to  deter- 
mine; nor  have  the  courts  arrived  at  the  same  conclusion  from 
the  same  or  similar  facts.  The  inquiry  is  made  for  two  ob- 
jects— one  to  ascertain  the  amount  of  interest  which  the 
creditor  is  entitled  to  receive  on  an  agreement  for  interest 
generally,  specifying  no  rate;  the  other  to  determine  whether 
the  contract,  when  it  contains  an  agreement  for  a  specific  rate 
of  interest  or  on  one  which  at  its  inception  interest  was  taken 
is  usurious.  It  is  a  general  rule  that  where  the  contract  stipu- 
lates for  interest  it  is  payable  agreeably  to  the  law  of  the  place 
where  made,  but  if  it  is  made  with  reference  to  the  laws  of  an- 
other state  or  country  and  is  to  be  performed  there  the  interest 
is  to  be  calculated  according  to  the  law  of  the  place  where  the 
contract  is  to  be  performed  or  the  money  paid.  The  place  of 
performance  is  chiefly  regarded ;  it  locates  the  contract ;  the 
parties  are  presumed  to  have  the  law  there  in  force  in  view  in 
making  their  contract.^^     Where  no  other  place  is  specified  for 


Jeune  Eugenie,  2  Mason  409;  Van 
Scliaick  V.  Edwards,  2  Johns.  Cas 
355;  Robinson  v.  Bland,  2  Burr 
1077;  Touro  v.  Cassin,  1  N.  &  McC 
173,  9  Am.  Dec,  680;  Vao  Rumsdyl 
V.  Kane,  1  Gall.  371 ;  Alves  v.  Hodg 
son,  7  T.  R.  241;  McAllister  v 
Smith,  17  111.  328,  65  Am.  Dec.  651 
Kanaga  v.  Taylor,  7  Ohio  St.  134; 
Nichols  &  S.  Co.  V.  Marshall,  108 
Iowa  518. 

64Pana  v.  Bowler,  107  U.  S.  529, 
27  L.  ed.  424;  Scotland  County  v. 
Hill,  132  U.  S.  107,  33  L.  ed.  261; 
Eastfield  S.  S.  Co.  v.  McKeon,  208 
Fed.  580;  Sloss-Sheffield  Steel  & 
Iron  Co.  V.  Tacony  Iron  Co.,  183 
Fed.  645,  case  affirmed  110  C.  C.  A. 
530,  188  Fed.  896;  The  Mary  N. 
Bourke,  145  Fed.  909,  76  C.  C.  A. 
441 ;  Robinson  v.  Queen,  87  Tonn. 
445,  3  L.R.A.  214,  10  Am.  St.  090; 
Baura  V.  Birchall,  150  Pa.  104,  30 
Am.  St.  797 ;  Stevens  v.  Gregg,  89 
Ky.  461;  Al)t  v.  American  Bank,  159 
HI.  467,  50  Am.  St.  175;   Shoe  &  L 


Bank  v.  Wood,  142  Mass.  503 ;  Liver- 
pool &  G.  W.  S.  Co.  V.  Phenix  Ins. 
Co.,  129  U.  S.  397,  458,  32  L.  ed. 
788,  799;  Hibernia  Nat.  Bank  v. 
Lacombe,  84  N.  Y.  367,  38  Am.  Rep. 
518;  Sutro  T.  Co.  v.  Segregated  B. 
M.  Co.,  19  Nev.  121,  quoting  the 
text;  Jaffray  v.  Dennis,  2  Wash.  C. 
C.  253;  Cowqua  v.  Landebrun,  1  id. 
521;  Bushby  v.  Camac,  4  id.  296; 
Bank  v.  Brady,  '3  McLean  268; 
Moore  v.  Davidson,  IS  Ala.  209; 
Lefflcr  V.  McDcrmotte,  18  Ind.  246; 
Van  Hemert  v.  Porter,  11  Mete. 
(Mass.)   210;  Winthrop  v.  Carleton, 

12  Mass.  4;  Ferguson  v.  Fyffe,  8  CI. 
&  F.  121 ;  Cubbedge  v.  Napier,  62 
Ala.  518;  Cash  v.  Kennion,  11  Ves. 
311  ;  Robinson  v.  Bland,  2  Burr. 
1077;  Fanning  v.  Consequa,  17 
Johns.  511,  8  Am.  Dec.  442,  3  Johns. 
Ch.  587;  Houghton  v.  Page,  2  N.  H. 
42,  9  Am.  Dec.  30;  Lapice  v.  Smith, 

13  La.  91,  33  Am.  Dec.  555;  Mullen 
V.  Morris,  2  Pa.  85;  Slacum  v. 
Pomerv,  6  Cranch  221,  3  L.  ed.  205; 


§    o^^l 


INTEREST. 


11 


the  perforiiiaiiec  of  :i  contract,  it  is  to  he  pcrronncd  wlicrc 
made.^^  The  law  of  tliat  place  (leteriiiiiu's  its  const iiictioii, 
obligation  and  place  of  payment.^®  If  a  contract  is  to  be  partly 
performed  \vliere  made  and  })ai'tly  in  other  countries  or  states, 
the  law  of  the  place  where  it  is  made  will  govern  nnless  a  clear 
mutual  intention  is  manifested  that  it  shall  be  governed  ])y  the 
law  of  some  other  jurisdiction.^' 


Cliampant  v.  Raiu'lagli,  Proc.  C'h. 
128;  Tlioiiipson  v.  Ketcliain,  4 
Johns.  285;  Smith  v.  Smith,  2  id. 
235,  3  Am.  Dec.  410;  Kuggles  v. 
Keeler,  3  Johns.  20.'?,  :]  Am.  Dec. 
482;  Van  Schaick  v.  Edwards,  2 
Johns.  Cas.  355;  Licardi  v.  Cohen,  3 
Gill  430;  Lewis  v.  Owen,  4  B.  & 
Aid.  654;  Quin  v.  Keefe,  2  H.  Bl. 
553;  Bainbridge  v.  Wilcocks,  Baldw. 
C.  C.  536 ;  Boyce  v.  Edwards,  4 
Pet.  Ill,  7  L.  ed.  7!»!);  Smith  v. 
Buchanan,  1  East  6;  Frazier  v. 
Warfield,  9  Sni.  &  M.  220;  Lloyd 
V.  Scott,  4  Pet.  205;  Hosford  v. 
Nichols,  1  Paige  220;  Boyle  v. 
Zacharie,  6  Pet.  635,  048,  8  L. 
ed.  527,  532;  Elkins  v.  East  India 
Co.,  1  P.  Wms.  395:  Barnes  v. 
Newcomb,  9  Cush.  40;  Bell  v. 
Bruen,  1  How.  169,  11  L.  ed.  S9 ; 
Andrews  v.  Pond,  13  Pet.  77,  10  L. 
ed.  67;  Scofield  v.  Day,  20  Johns. 
102;  Healy  v.  Gorman,  15  N.  J.  L. 
328;  Arrington  v.  Gee,  5  Ired.  590; 
Irvine  v.  Barrett,  2  Grant's  Cas 
73;  Roberts  v.  McNeeley,  7  Jones 
506,  78  Am.  Dec.  261;  Swott  v. 
Dodge,  4  Sm.  &  M.  667;  Gaillard 
V.  Ball,  1  N.  &  McC.  67;  Peck  v. 
Mayo,  14  Vt.  33,  39  Am.  Dec.  205; 
Hunt  V.  Hall,  37  Ala.  702 ;  Hanrick 
V.  Andrews,  9  Port.  9 ;  Chumascro 
V.  Gilbert,  24  111.  293;  Hawley  v. 
Sloo,  12  La.  Ann.  815;  Little 
V.  Riley,  43  N.  H.  109;  Pa)lt<)n  v. 
Street,  3  Cold.  31  ;  Summers  v. 
Mills,  21  Tex.  77;  Wliitlock  v.  Cas- 
tro, 22  Tex.  108;  Butler  v.  Myer,  17 


Ind.  77;  Bent  v.  Lauve,  3  La.  Ann. 
88;   Howard  v.  Branner,  23  id.  309. 

65  Shipnian  v.  Bailey,  20  W.  \  a. 
140;  Kavanaugii  v.  Day,  10  K.  I. 
393,  14  Am.  Rep.  691;  Pomeroy  v. 
Ainsworth,  22  Barb.  119;  Davis  v. 
Coleman,  11  Ired.  303;  Don  v.  Lipp- 
man,  5  CI.  &  F.  1  ;  De  W  olf  v.  .lolin- 
.son,  10  Wlieat.  367,  383,  0  L.  ed. 
343,  347;  Wilson  v.  Lazier,  11 
Gratt.  477;  Ulodgett  v.  Durgin,  32 
Vt.  361,  78  Am.  Dec.  597;  Thomp- 
son V.  Ketcham,  8  Johns.  189;  Short 
V.  Tral)ue,  4  Mete.  (Ky.)  299;  Peek 
V.  llibbard,  26  Vt.  698,  62  Am.  Dec. 
005;  Gage  v.  ilcSweeney,  74  Vt. 
370. 

eePritchard  v.  Norton,  106  U.  S. 
124,  140,  27  L.  ed.  104,  110;  Bryant 
V.  Ed  son,  8  Vt.  325,  30  Am.  Dec. 
472;  Bank  v.  Cclby,  12  N.  II.  520; 
Sherrill  v.  Hopkins,  1  Cow.  103; 
Clark  V.  Seariglit,  135  Pa.  173,  20 
Am.  St.  868;  Bank  v.  Gibson,  60 
Ark.  269;  Farmers'  Sav.  B.  &  L. 
Ass'n  V.  Ferguson,  69  Ark.  352.  See 
Union  Nat.  Bank  v.  Chapman,  169 
N.  Y.  538,  57  L.R.A.  513.  In  tliis 
case  an  acconunodation  note,  payable 
in  Illinois,  had  been  signed  by  a 
married  woman  in  Alabama  as  sure- 
ty for  lier  Iiusband.  It  was  held 
lliat  tile  contract  was  made  in  Ala- 
bama though  the  note  was  first  ne- 
gotiated in  Illinois. 

67  r?ar<Irtt  V.  Collins,  109  Wis. 
477 ;  Morgan  v.  New  C)rleans,  etc. 
R.,  2  Woods  244;  Edwards  B.  Co.  v. 
Stevenson.    TOO    Md.   516,    is   similar 


1148 


SUTHERLAND    ON    DAMAGES. 


[§  '{57 


The  place  of  contracting  is,  prima  facie,  where  the  instru- 
ment is  dated;  but  if  written,  dated  and  signed  in  one  place 
and  delivered  at  another  the  latter  is  the  place  of  its  consum- 
mation.    A  contract  takes  effect  according  to  the  law  of  the 
place  where  it  is  consummated  or  where,  if  it  is  written,  it  is 
delivered  and  put  in  force.^®     Where  a  note  is  expressly  made 
payable  at  a  designated  place  its  legal  effect  in  this  particular 
cannot  be  changed  by  parol  evidence.®^     But  if  it  is  payable 
generally  extrinsic  evidence  may  be  resorted  to  to  show  that 
it  was  intended  to  be  paid  at  a  particular  place  and  thereby 
subject  it  to  the  law  of  that  place.     In  such  case  interest  will 
be  allowed  at  the  rate  established  by  the  law  in  force  there.'''° 
A  debt  was  payable  in  Great  Britain,  and  the  creditor  agreed 
with  the  debtor,  for  the  latter's  accommodation,  that  it  might 
be  paid  in  one  of  the  states  in  this  country.     It  was  held  that 
the  interest  accruing  upon  it  thereafter  should  be  computed 
according  to  the  rate  in  that  state.'^     If  no  place  of  payment 
or  rate  of  interest  is  specified  and  there  is  no  proof  of  the  in- 
tention of  the  parties  as  to  the  former,  the  instrument  is  pay- 
able anywhere  and  the  rate  of  interest  is  determinable  by  the 
law  of  the  jurisdiction  in  which  suit  is  brought  upon  it.'^     Con- 
'  tracts  relating  to  real  property  are  governed  by   the  lex  rei 
sitce?^ 


to  the  Wisconsin  case  on  the  facts, 
but  announces  the  opposite  conclu- 
sion. 

The  rule  as  stated  has  been  ap- 
plied to  a  contract  silent  respecting 
interest,  which  was  made  in  Mis- 
souri and  wholly  performed  in 
Mexico.  Freygang  v.  Vera  Cruz  & 
P.  E.  Co.,  154  Fed.  640,  8.3  C.  C.  A. 
414. 

68  Walker  v.  Lovitt.  2.50  111.  543 ; 
Baum  V.  Birchall,  150  Pa.  164,  30 
Am.  St.  707;  Hyde  v.  Goodnow,  3 
N.  Y.  266;  Cook  v.  Litchfield,  5 
Sandf.  330;  Davis  v.  Coleman,  7 
Ired.  424;  Fant  v.  Miller,  17  Gratt. 
47;  Cook  v.  Moffat,  5  How.  295,  12 
L.   ed.    159;    Whiston   v.   Stodder,   8 


I\lart.  (La.)  95,  13  Am.  Dec.  291; 
Snaith  v.  .Mingay,  1  W.  &  S.  87; 
Lenwig  v.  Ralston,  1  Pa.  139. 

69  Thompson  v.  Ketcham,  8  Johns. 
189;  Frazier  v.  Warfield,  9  Sm.  & 
M.  220. 

70  Austin  V.  Imus,  23  Vt.  286; 
McKay  v.  Belknap  Sav.  Bank,  27 
Colo.  50;  Fccles  v.  Herrick,  15  Colo. 
App.  350.  See  Sentcr  v.  Bowman,  5 
Heisk.  14. 

7iPearce  v.  Wallace,  1  Har.  &  J. 
48. 

72  Kopelke  v.  Kopelke,  112  Ind. 
435. 

73  Baum  V.  Birchall,  supra.  See 
§  362. 


§    358]  INTEREST.  111!) 

§  358.  Rule  as  to  notes  and  bills.  1  Jills  of  cxchimii'o  and 
promissory  notes  illustrate  these  principles  in  res|)ec't  to  the 
lex  loci  contractus.  The  maker  of  a  note  and  the  acceptor  of 
a  bill  are  bound  to  pay  the  money  therein  mentioned  at  the 
places  severally  specified  for  payment;  to  those  places  they 
have  given  express  assent.  They  are  the  parties  primarily 
bound  and  the  agreements  appearing  by  the  face  of  tlio  paper 
are  respectively  theirs.  The  place  of  making  the  note  or  ac- 
cepting the  bill  is  that  where  the  contract  is  made,  and  where, 
but  for  the  appointment  of  another  place  for  payment,  they 
would  be  bound  to  perform  it.  As  the  place  of  performance, 
when  expressly  fixed,  is  the  place  of  contract  within  the  sense 
of  the  lex  loci,  these  parties  are  held  to  pay  the  bill  or  note  ac- 
cording to  its  interpretation  and  force  by  the  "law  of  thnt 
place.'*  Bills  of  exchange  are  usually  addressed  to  a  drawee  at 
a  particular  place;  the  place  so  mentioned  is  that  at  which  the 
drawer  agrees  that  his  bill  shall  be  honored ;  and,  when  ac- 
cepted, it  is  the  place  where  the  acceptor  agrees  to  pay  it 
unless  the  bill  specifies  another  place  of  payment;  the  phu-e 
of  payment  is  the  place  of  contract  and  the  laws  there  in  force 
govern  it. 

The  drawer  of  a  bill  and  the  indorscr  of  a  note  or  bill  con- 
tract by  the  act  of  drawing  and  indorsing.  Their  contracts 
are  implied.  The  undertaking  of  the  former  is  that  the  drawee 
will  accept  the  bill  and  pay  the  amount  of  it  where,  according 
to  its  face,  it  is  payable;  and  that  if  the  l)ill  is  dishonored  ;m<l 
due  notice  of  the  dishonor  is  given  him  he  will  himself  pay 
the  amount  to  the  holder.  His  agreement,  so  implied,  is  not 
to  pay  at  the  place  mentioned  in  the  bill;  but  at  the  place 
where   he   draws    it    and    where,    consecpiently,    he    is    legally 

74  Josppli  V.  ]i\(iii,  !)  Ky.  L.  Rep.  iij^reciiiciit  was  Milid  in  (lie  state  in 
324    (Ky.  Super.  Ct.).     Soo  §  357.  whidi  it  was  iikuIc     llallaiii  v.  'I'd 


A  clause  in  a  noti-   providing  for        l,.rcii,  ').■>  Xcl 


•>;-,-. 


).). 


the    payment    of    attorney's    fees    if  .  ,,.,        ,      ,,.         ,. 

*    •'  "5  llarnson   \.   ril<e,  4S   .Miss.    n> ; 

suit    should    be    begun,    they    to    lie  ,  .     x,   ,     r>      i 

^     .  ,,  ,  ,    ,       ,  8turdivant   v.    Memphis  Nat.    Maiik, 

taxed  as  part  of  the  costs,  relates  to 

the  remedy  and  will  not  be  enforce,]  ^  ^-   f-   ^-   -'^'<'-  «^   ^-Vd.  730;   Todd 

by  the  courts  of  a  state  which  hold  v.     Hank.    3    Hiisli.    ti'ili;     P.axter    v. 

such     provisions     void     tbougli     tlic  I'.cckwilli,  'J.')   Colo.  -Ajip.  322. 


1150 


SUTHERLAND    ON    DAMAGES. 


[§  358 


bound  to  perforin,  no  other  place  of  performance  being  implied 
or  specified.'®  The  act  of  drawing  is  interpreted  bj  the  law  of 
the  place  Avhere  it  is  drawn.  Its  validity  and  effect  are  deter- 
mined by  that  law ;  '''^  and  the  money  due  there,  by  reason  of 


76  story    on   Prom.   Notes,   §    339,|«^ 
note;  Story  on  Bills,  §  154. 

Rothschild  v.  Currie,  1  Q.  B.  43, 
proceeded  upon  the  opposite  theory, 
that  the  law  of  the  place  of  payment 
governed  as  to  all  the  parties.  It 
was  the  case  of  a  bill  drawn  in  Eng- 
land on,  and  accepted  by,  a  house 
in  France,  payable  at  Paris,  in  favor 
of  a  payee  domiciled  in  England,  by 
wliom  it  was  .indorsed  there  to  an 
indorsee  who  was  also  domiciled 
there.  The  bill  was  dishonored  at 
maturity,  and  due  notice  was  given 
to  the  payee  according  to  the  law  of 
France;  but  not,  as  it  was  suggest- 
ed, according  to  the  law  of  England. 
And  it  was  held,  in  a  suit  brought 
by  the  indorsee  against  the  payee, 
that  the  notice  was  good,  being  ac- 
cording to  the  law  of  France,  the 
lex  loci  contractus  of  acceptance.  In 
a  note  to  §  339  of  Story  on  Prom. 
Notes  this  decision  is  criticised  by 
the  author :  "With  the  greatest 
deference  for  that  learned  judge 
(who  delivered  the  opinion),  it 
seems  to  me  that  the  decision  of  the 
court  is  not  sustained  by  the  rea- 
soning on  which  it  purports  to  be 
founded.  The  court  there  admit 
tliat  the  notification  of  the  dishonor 
is  a  parcel  of  the  contract  of  the  in- 
dorser;  and,  if  so,  then  it  must  be 
governed  by  the  law  of  the  place 
where  the  indorsement  was  made, 
upon  the  very  rules  cited  by  the 
court  from  Pothier.  The  error  (if 
it  be  such)  seems  to  have  arisen 
from  confounding  the  contract  of  the 
acceptor  with  the  contract  of  the 
drawer  and  the  indorser."  In  a  pre- 
ceding   part    of   the    same    note    the 


learned  author  says:  "The  acceptor 
agrees  to  pay  in  tlie  place  of  accept- 
ance, or  the  place  fixed  for  the  pay- 
ment (Cooper  V.  Waldegrave,  2 
Beav.  272)  ;  l)ut  upon  his  default, 
the  drawer  and  the  indorser  do  not 
agree,  upon  due  protest  and  notice, 
to  pay  the  like  amount  in  the  same 
place;  but  agree  to  pay  the  like 
amount  in  the  place  where  the  bill 
was  drawn  or  indorsed  by  them  re- 
spectively. Hence  it  is  that  the  no- 
tice to  be  given  to  each  of  them 
must  and  ought  to  be  notice  accord- 
ing to  the  law  of  the  place  where  he 
draws  or  indorses  the  bill,  as  a  part 
of  the  obligations  thereof.  The 
drawer  and  indorser,  in  effect,  con- 
tract in  the  place  where  the  bill  is 
drawn  or  indorsed  a  conditional  ob- 
ligation; that  is,  if  the  bill  is  dis- 
honored, and  due  notice  is  given  to 
them  of  the  dishonor  according  to 
the  law  of  the  place  of  their '  con- 
tract, they  will  respectively  pay  the 
amount  of  the  bill  at  that  place. 
The  law  of  the  place  of  the  accept- 
ance or  payment  of  the  bill  has 
nothing  to  do  with  their  contract; 
for  it  is  not  made  there,  and  has  no 
reference  to  it."  See  Shanklin  v. 
Cooper,  8  Blackf.  41,  overruled  in 
Hunt  V.  Standart,  15  Ind.  33,  77 
Am.  Dec.  79. 

77  Coghlan  v.  South  Carolina  R. 
Co.,  142  U.  S.  101,  111,  35  L.  ed. 
051,  955,  and  cases  cited;  Cooper  v. 
Waldegrave,  2  Beav.  282;  Ayrman 
V.  Sheldon,  12  Wend.  439 ;  Everett  v. 
Vendryes,  19  N.  Y.  436;  Yeatman 
V.  Cullen,  5  Blackf.  240;  Slacum  v. 
Pomery,  6  Cranch,  221,  3  L.  ed. 
205 ;  Powers  v.  Lynch,  3  Mass.  77 ; 
Williams  v.  Wade,  1  Mete.   (Mass.) 


358] 


INTEREST. 


llf)! 


the  violation  of  the  drawer's  niulertakiiip;  that  the  drawee 
should  accept  and  pay  according  to  the  tenor  of  the  hill,  is  the 
amount  specified  in  it,  together  with  interest,  after  his  own  de- 
fault, if  not  fixed  by  the  bill,  at  the  rate  allowed  In-  the  law  of 
the  place  of  drawing. '^^  The  damages  are  to  be  ascertained 
by  the  same  law,'^  for  not  having  the  money  for  the  holder  at 
the  place  where,  according  to  the  bill,  it  shonld  have  been 
paid.  The  contract  implied  from  indorsement  is  in  legal  effect 
the  same  as  that  im])lied  from  drawing  a  bill ;  the  language 
of  an  indorsement  expressed  in  full  is  a  bill  of  exchange.*" 
It  is  a  new  and  substantive  contract;®^  and  the  obligations  of 


82;  Trimbey  v.  Vignier,  1  Bing.  N. 
C.  151 ;  Potter  v.  Brown,  5  East 
124;  Hicks  v.  Brown,  12  Johns.  142; 
Hunt  V.  Standart,  ffupra;  Van 
Raugh  V.  Van  Arsdaln,  3  Cai.  154, 
2  Am.  Dec.  259 ;  Burrows  v.  Han- 
negan,  1  McLean,  315. 

78  Bailey  v.  Heald,  17  Tex.  102; 
Bank  of  United  States  v.  United 
States,  2  How.  711,  11  L.  ed.  439; 
Raymond  v.  Holmes,  11  Tex.  54; 
Crawford  v.  Brancli  Bank,  6  Ala.  12, 
41  Am.  Dec.  33. 

In  Gibbs  v.  Fremont,  9  Ex.  25,  the 
action  was  by  the  indorsers  of  sev- 
eral bills  of  exchange  drawn  by  the 
defendant  in  California  on  B.  at 
Washington,  D.  C.  The  bills  were 
made  payable  to  H.,  and  were  dis- 
counted by  him  at  the  place  where 
they  were  drawn ;  they  were  dishon- 
ored, and  the  question  was  whether 
the  plaintiff  was  entitled  to  recover 
against  the  defendant  six  per  cent., 
the  rate  in  W.,  where  they  wt  re 
payable,  or  twenty-five  per  cent.,  the 
rate  of  interest  in  C,  where  they 
were  drawn.  The  court  gave  in- 
terest according  to  the  rate  in  C. 

In  Hunt  V.  Standart,  15  Ind.  33, 
77  Am.  Dec.  79,  a  note  made  and 
indorsed  in  Indiana  was  payable 
in  New  York.  The  indorsement 
was  sufficient  according  to  flic 
laws  of  N.  Y.,  but  it  was  not  suf- 


ficient under  the  laws  of  Indiana. 
The  question  was  by  what  law  the 
sufllciency  of  the  indorsement  was  (o 
be  tested.  It  was  held  that  the  in- 
dorsement was  governed  by  the  law 
of  Indiana,  where  it  was  made. 
The  following  cases  involved  a  simi- 
lar qm-stion  and  were  decided  in  the 
same  way:  Ayrman  v.  Sheldon,  12 
Wend.  439;  Everett  v.  Vendryes,  19 
N.  Y.  436;  Yeatman  v.  Cullen,  5 
Blackf.  240;  Williams  v.  Wade,  1 
Mete.  (Mass.)  82;  Trimbey  v. 
Vignier,  1  Bing.  N.  C.  151;  Bur- 
rows V.  Tlannegan,  1  ^IcLean,  315; 
Holbrook  v.  Vil)l)ard,  3  111.  405; 
Currie  v.  Lockwood,  40  Conn.  349; 
Lowry  v.  Western  Bank,  7  Ala. 
120.  See  Trabue  v.  Short,  5  (old. 
293;  Short  v.  Trabue,  4  Mete. 
(Ky.)  299;  Artisans'  Bank  v.  Park 
Bank,  41  Barb.  599;  Trabue  v. 
Short,  18  La.  Ann.  257;  Allen  v. 
Kemble,  6  Moore  P.  C.  314;  alien 
v.  Merchants'   Baidc,  22  Wend.  215. 

79  Slacum  v.  Poniery,  G  Cranch 
221,  3  L.  ed.  205. 

sOBayley  on  Bills,  ch.  5,  §  3; 
Story  on  Bills,  §  108;  Ayrman  v. 
Sheldon.  12  Wend.  439;  Ballingallis 
v.  (;iost.'r,  3  Kast,  482;  lleylyn  v. 
Adamson,  2  Burr.  G74 ;  Ogden  v. 
Saunders,  12  Wheat.  213,  341,  0  L. 
ed.  (iOfi,  050. 

81  Slaciun    V.    I'omery,    (5    Cranch 


1152  SUTJIKRLAND    ON    DAMAGES.  [§    358 

the  parties  arc  to  be  determined  according  to  the  law  of  the 
country  in  which  it  is  made.^^  This  seems  now  to  be  the  doc- 
trine of  both  the  English  and  American  conrts;  bnt  it  has  not 
been  established  without  dissent.^^ 

The  contract  of  the  drawer  or  indorser  in  relation  to  the 
payment  is  twofold :  that  the  acceptor  or  maker  will  pay  ac- 
cording to  the  tenor  of  the  paper  the  amonnt  therein  men- 
tioned, at  the  specified  time  and  place;  and  that  in  case  the 
]jarties  primarily  bound  fail  to  make  such  payment,  then, 
upon  due  notice  of  such  default,  the  drawer  or  indorser  will 
pay  that  amount.  The  measure  of  their  liability  rests  upon 
the  theory  that  they  should  pay  a  sum  which  will  be  a  full 
compensation  to  the  holder  for  the  acceptor's  and  maker's 
default,  consisting  of  damages  for  being  obliged  to  receive 
the  money  at  a  different  place,  and  interest  during  the  delay 
of  payment.  The  interest  that  the  primary  parties  are  charge- 
able with  is  the  rate  of  the  country  or  state  where  the  paper 
was  payable.  They  are  liable  to  that  rate  because  the  contract 
was  to  be  there  performed.  Although  these  secondary  parties 
did  not  agree  to  pay  at  the  same  place,  they  agreed  to  pay  the 
same  debt ;  that  is,  the  face  of  the  paper.  Now,  if  the  interest 
which  the  primary  parties  are  liable  for  is  an  incident  to  that 
debt,  and  follows  it  as  the  shadow  follows  the  substance,  why 
should  not  the  subsidiary  obligation  in  respect  to  the  amount 
1)0  the  same  as  the  primary?  But  the  cases  appear  to  proceed 
upon  the  principle  that  on  the  default  of  the  primary  parties, 
the  immediate  requisite  steps  being  taken  to  render  the  con- 
ditional liability  of  the  drawer  and  indorser  absolute,  the 
amount  specified  in  the  bill  or  note  becomes  their  debt;  that 
they  are  not  responsible  for  the  continued  default  of  the  prin- 
cipals;   nor,    therefore,    liable   for   the   interest   chargeable   to 

221,  3  L.  ed.  205;  Edwards  on  Bills,  41,  overruled  in  Hunt  v.  Standart, 

26.3;   Everett  v.  Vendryes,  19  N.  Y.  15  Ind.  33,  77  Am.  Dec.  79;  Mullen 

430.  v.    Morris,    5    Pa.    87;    Hanrick    v. 

82  Id.;  McClintock  v.  Cummins,  3  Andrews,  9  Port.  10;  Peck  v.  Mayo, 

McLean,    158;    Mix.   v.   State   Bank,  14  Vt.  33,  39  Am.  Dee.  205;  Roths- 

13    Ind.    .521;    Butters    v.    Olds,    11  cliild  v.  Currie,  1  Q.  B.  43;  Phillips 

Iowa,  1.  V.  Im  Thurn,  L.  R.  1  C.  P.  463;  Able 

83,Shanklin    v.    Cooper,    8    Blackf.  v.  McMurray,  10  Tex.  3,50. 


§    3  GO]  INTEREST.  lin.'i 

them;  but  only  for  their  own  (Idaiilt  in  not  [Kiyini;  tlic  sum 
which  becomes  their  absolute  debt,  in  pursuance  of  their  cdii- 
tract  as  drawer  or  indorser.  And  their  agreement  is  to  ]»m_v  at 
the  place  where  their  contract  was  made.  Thev  are  liabh*  on 
account  of  their  own  default  to  i)ay  intoi-est  accordiuii;  to  the 
law  of  that  place.  Their  default  for  which  interest  is  com- 
puted against  them  dates  from  receivinii,- notice  of  the  dishojioi- 
of  the  bill  or  note.^* 

§  359.  Bonds  to  the  United  States.  An  apparent  oxcc|.tinn 
exists  in  the  case  of  otlicial  bonds  executed  to  the  fcdcfal  gov- 
ernment. It  sometimes  happens  that  they  are  executed  by 
the  principals  in  one  state  and  by  the  sureties  in  another  or 
in  different  states.  The  rights  and  duties  of  sureties  are 
known  to  be  dissimilar  in  the  several  states.  Tt  has  been  de- 
cided, how^ever,  that  such  bonds  must  be  treated  as  made  and 
delivered  and  to  be  performed  by  all  the  parties  at  the  seat  of 
government,  upon  the  ground  that  the  principal  is  bound  to 
account  there,  and  therefore,  by  necessary  implication,  all  the 
parties  look  to  that  as  the  place  of  performance,  by  the  law 
of  which  they  are  to  be  governed,*^ 

§  360.  Between  parties  in  different  states.  AVhere  parties 
meet  together  und  face  to  face  make  contracts  the  place  of 
making  is  fixed  with  certainty;  and  also  the  place  of  perform- 
ance where  no  other  is  designated.  But  all  obligations  to  pay 
money  are  not  initiated  in  this  manner.  The  same  rule,  how- 
ever, applies  to  less  formal  or  more  complicated  transactions. 
Interest  is  allowed  according  to  the  law^  of  the  ])lace  where  an 
indebtedness  arises  and  where  the  money  ought  to  be  paid. 
In  cases  of  accounts  and  advances  between  parties  residing  in 
different  countries  inquiry  is  made  to  ascertain,  as  a  matter  of 
fact,  where,  by  their  intention,  the  balance  is  to  be  repaid, 
whether  in  the  country  of  the  creditor  of  that  of  the  debtor.*^ 

84  Walker  V.  Barnes,  5  Taunt.  r)40.       drawer    receives    Jintiee    (if    tlie    dis- 
It   was   held    in    this   case   that    tlie       lionor. 
drawer  of  a  bill  whicli  is  dishonored 
by  the  acceptor  is  not  liable  to  pay 
interest  for  the  time  which  elapses 
between   the  day   when   the  bill   be-       '»»  ^'-  t^'iit''<l  States,  7  Pet.  4:?r>. 
comes   due   and   the   day    when    the  S^Crant  v.  Ilealey,  .'}  Sumn.  r}2ll 

Suth.  Dam.  Vol.  I.— 73. 


85  Story   Conf.   L.,   §   200 ;    Cox   v. 
I'liited  States.  C,  IVt.  172,  202;    Dun- 


1154  SUTHERLAND    ON    DAMAGES.  [§    360 

When  ascertained,  the  law  of  that  place  governs  as  to  interest. 
In  the  absence  of  any  stipulation  on  the  subject,  or  circum- 
stances indicating  a  different  intention,  the  party  advancing 
money  for  another  is  entitled  to  interest  at  the  rate  established 
at  the  place  where  the  advance  is  made ;  for  the  contract  to  re- 
fund, implied  by  law,  is  to  pay  with  interest  according  to  the 
rate  which  prevails  where  the  transaction  takes  place. ^'  This 
rule  was  applied  in  favor  of  the  consignee  of  a  ship  in  South 
Carolina  who  paid  certain  charges  on  account  of  the  last  sick- 
ness aii^l  funeral  of  the  master  in  accordance  with  the  custom 
of  the  port  where  the  ship  was.  The  owner,  a  resident  of 
Massachusetts,  was  held  liable  to  reimburse  him  according  to 
the  rate  of  interest  of  the  place  where  the  money  was  ad- 
vanced.®* So  when  a  balance  of  account  exists  in  favor  of  a 
commission  merchant  residing  and  doing  business  in  one  state 
against  his  correspondent  in  another  the  cause  of  action  is 
deemed  to  arise  where  the  creditor  resided  and  did  the  busi- 
ness.*^ And  in  a  case  where  an  agent  advanced  his  money  at 
J^ew  Orleans  for  his  principal,  residing  in  another  state,  upon 
an  undertaking  of  the  principal  to  replace  it  by  accepting  and 
paying  drafts  drawn  by  the  agent  at  New  Orleans  it  was  held 
that  the  debtor  was  liable  to  pay  ISTew  Orleans  interest  if  he 
suffered  the  bills  to  be  dishonored  as  well  as  to  meet  any  neces- 
sary loss  on  account  of  the  difference  of  exchange.^" 

A  Chinese  merchant,  residing  at  Canton,  consigned  goods 
to  a  merchant  in  New  York  to  be  sold  by  him,  the  net  pro- 
ceeds to  be  remitted  to  the  consignor  at  Canton,  at  which  place 
the  goods  were  delivered  to  the  agent  of  the  consignee.  The 
question  was  whether  interest  at  twelve  per  cent.,  according 
to  the  custom  of  Canton,  should  be  charged  during  the  delay  of 
payment  or  whether  the  creditor  was  entitled  only  to  the  rate 
in  New  York,  It  was  held  that  the  goods  consigned  were  at 
the  risk  of  the  consignor  on  their  voyage  to  New  York,  and 

87  Winthrop  v.  Carleton,  12  Mass.  89  Coolidge  v.  Poor,  15  Mass.  427. 
4 ;  Arnott  v.  Redfern,  2  C.  &  P.  8S ;  90  Lanusse  v.  Barker,  3  Wheat. 
Edwards  on  Bills,  713.  101;   Milne  v.  Moreton,  6  Bin.  353, 

88  Winthrop  v.  Carleton,  12  Mass.  6  Am.  Dec.  466;  Bainbridge  v.  Wil- 
4.  cocks,  Baldw.  C.  C.  536 


§    301]  INTEREST.  1155 

the  entire  duty  of  the  consignee  to  nuike  sale  jiiul  nMiiiltiiiice 
of  the  net  proceeds  was  to  be  performed  there.  The  diitv  of 
remitting  meant  no  more  than  a  delivery  of  tlic  money  on 
board  a  proper  vessel  at  New  York  to  a  suitable  agent  for  the 
purpose  of  being  transported  to  Canton  by  the  usual  route 
and  duly  consigned  to  the  principal.^^  Hence  the  place  of 
contract  may  be  determined  in  cases  of  this  sort,  where  no 
other  intention  is  manifest,  by  a  rule  of  easy  application:  that 
advances  ought  to  be  deemed  reimbursable  at  the  placi;  whore 
they  are  made,  and  sales  of  goods  to  be  accounted  for  where 
they  take  place  or  are  authorized  to  be  made.^^  So  it  has  been 
held  that  if  a  trustee  receives  money  as  such  in  a  foreign  state 
and  applies  it  to  his  own  use  he  must  account  for  inter(!st  ac- 
cording to  the  law  of  the  place  where  it  was  received.^'  Loans 
bear  the  interest  of  the  place  where  made  unless  payable  else- 
where.^* 

§  361.  Same  subject.  On  the  same  principle  of  paying  in- 
debtedness where  is  arises,  moneys  due  on  purchases  will  be 
referred  to  the  law  of  the  place  where  a  party,  personally  or 
by  letter,  orders  or  requests  to  be  supplied,  or  a  seller  nego- 
tiates and  completes  a  sale  unless  there  is  an  agreement  by 
note  or  otherwise  to  pay  somewhere  else.®^  If  a  written  ob- 
ligation for  the  purchase-money,  payable  generally,  is  dated 
and  delivered  where  the  sale  is  actually  consummated  by 
negotiation  of  its  terms  and  delivery  of  the  i)roi)erty,  and 
especially  if  one  of  the  parties  resides  there,  it  is  the  place  of 

91  Fanning  V.  C'onsequa,  17  .Tolins.  104  Ga.  318;  Bigi'low  v.  Burnliain, 
511,  8  Am.  Dec.  442;  Cartwriglit  v.  8:i  Iowa  120,  32  Am.  St.  291;  Thorn 
Greene,  47  Barb.  9.  v.  Alvord,  32  N.  Y.  Misc.  456;  Stepp 

92  Id.;  Grant  v.  Hcaloy,  3  Sunm.  v.  National  Life,  etc.  Ass'n,  37  S. 
523:  Bainbridge  V.  Wilcocks,  .s«7>/a ;  ('.  417;  Coghlan  v.  South  Carolina 
Story  Conf.  L.,  §§  283-285;  Hall  v.  R.  Co.,  142  IJ.  S.  101,  .3.1  L.  ed.  951  ; 
Woodson,  13  Mo.  462.  Clarke  v.  Taylor,  69  Ark.  612,  617; 

93  Bischoffsheim  v.  Baltzor,  21  Columhns,  S.  &  II.  R.  Co.'a  Appeals, 
Fed.  531;  Neill  v.  Neill,  31  Miss.  31),  109  Fed.  177,  48  C.  C.  A.  275. 

94Kraus  v.  Torry,  146  Ala.  54S;  95  ^niliken    v.    Pratt,    125    Mass. 

Consequa    v.    Willinga,    Pet.    C.    C.  374,  28  Am.  Rep.  241;   Mclntyre  v. 

229;    Anonymous,  Martin   &.  Hayw.  Parks,  3  Mete.   (Mass.)   207;   Whis- 

149;  Stewart  V.  Ellice,  2  Paige  604 ;  ton    v.   Stodder,   8   ]\Tart.    (La.)    95, 

Hollis   V.   Covenant   B.   &   L.   Ass'n,  13  Am.  Dec.  281. 


1156 


SUTHERLAND    ON    DAMAGES. 


[§    361 


contract;  and  this  conclusion  will  not  be  affected  though  such 
obligation  be  signed  by  other  parties  as  sureties  or  as  co-obligors 
at  other  places.®^ 


96  Arrington  v.  Gee,  5  Ired.  590, 
is  an  instructive  case  upon  the  doc- 
trine of  lex  loci  contractus.  A  citi- 
zen of  North  Carolina  took  a  num- 
ber of  slaves  to  Alal)ama  and  there 
sold  them  to  a  citizen  of  that  state, 
Avho  agreed  to  give  him  a  bond,  with 
sureties,  for  the  price;  tliis  bond 
was  executed  by  the  principal  at 
Mobile,  Ala.,  where  it  bore  date; 
afterwards  two  sureties  signed  it  in 
North  Carolina,  where  they  resided; 
the  bond  mentioned  no  place  of  pay- 
ment. It  was  held  that  all  the  par- 
ties were  bound  for  the  payment  of 
interest  according  to  the  laws  of 
Alabama.  'J  he  court  say :  "The 
contract  of  sale  from  which  the 
bond  sued  on  had  its  origin  was 
made  and  completed  in  Alabama, 
and  the  money  which  the  purchaser 
engaged  to  pay  to  the  seller  would, 
if  not  paid  when  due,  thereafter 
bear  interest  at  the  rate  of  eight 
per  cent.;  it  not  being  stipulated  by 
the  parties  that  tiie  payment  should 
be  made  in  any  other  place.  For  it 
is  an  undoubted  principle  of  law  that 
not  only  the  validity  of  the  contract 
depends  on  the  lex  loci  contractus, 
but  its  effects,  including  the  right 
of  the  creditor  to  interest  and  its 
amount,  depends  on  it  also.  The 
only  question  in  this  case,  then,  is 
which  is  the  locus  contractus,  so  as 
to  apply  to  this  transaction  the 
above-mentioned  principle.  We  think 
clearly  it  is  Alabama.  Beyond  ques- 
tion, that  is  true  of  the  original  con- 
tract: namely,  that  of  the  purchase, 
sale  and  delivery  of  the  negroes. 
And  'the  rate  of  interest  which  the 
debtor  should  pay  is  a  part  of  that 
contract,'  so  that  taking  a  new  se- 
curity here  expressing  that  the  rate 


of  interest  should  be  eight  per  cent., 
or  including  therein  eight  per 
cent,  for  interest  accrued  (unless  it 
.be  a  new  contract  for  further  for- 
bearance here) ,  would  not  be  in  viola- 
tion of  our  law,  but  would  be  valid. 
McQueen  v.  Burns,  1  Hawks  47G. 
Such  is  even  the  case  wlicn  a  loan  is 
made  in  one  country  and  a  subse- 
quent collateral  security  is  taken 
on  real  estate  in  another.  De  Wolf 
V.  Johnson,  10  Wheat.  367.  Much 
more  must  that  be  true  when  the  se- 
curity taken  in  a  foreign  country  is 
merely  personal.  For  the  original 
contract  obliged  the  del)tor  to  pay  a 
particular  rate  of  interest  and  the 
new  security  is  merely  the  means  of 
more  readily  enforcing  the  perform- 
ance of  that  obligation.  If,  then, 
Charles  S.  Gee,  the  principal  debtor, 
had  executed  his  note  for  this  debt 
in  this  state,  that  would  not  have 
altered  the  rate  of  interest,  provided 
the  note  should  become  payable 
when  the  debt  would  fall  due  ac- 
cording to  the  original  contract  and 
did  not  designate  some  other  place 
of  payment ;  in  otlier  words,  if  the 
note  was  but  a  security  for  the  pre- 
existing debt  and  in  no  respect 
changed  its  character. 

"But  in  truth,  this  security  by 
bond  was  given  by  liim  in  Alabama, 
as  well  as  the  debt  originally  con- 
tracted there;  and  the  bond  is  dated 
at  Mobile,  and  specifies  no  other 
place  of  performance.  Now,  al- 
thougli  it  be  true  that  the  rule  of 
the  lex  loci  contractus,  before  stat- 
ed, is  subject  to  the  modification 
that  it  must  yield  to  the  lex  loci  in 
quo  solveret,  yet  that  is  only  in 
those  cases  in  which  it  appears  from 
the  contract  that  the  performance  is 


§  361] 


INTEREST. 


iir,7 


A  contract  for  tlic  payment  of  money  entered  into  with  such 
circumstances  as  alone  would  bring  it  under  the  operation  of 


to  be  at  some  othor  placo.  For  Avlion 
a  contract  states  that  the  parties 
had  in  view  the  law  of  another  conn- 
try,  when  they  made  it,  then  it  is 
but  right  to  say  that  the  contract 
should  be  governed  by  the  law  the 
parties  thus  appear  to  have  intend- 
ed, rather  than  by  that  of  the  loci 
contractus.  Thus  notes  made  and 
dated  in  Dublin  for  £100  mean  Irish 
and  not  English  currency,  unless 
they  be  payable  on  their  face  in 
England;  in  which  latter  case  the 
money  would  be  English.  Kearney 
V.  King,  2  B.  &  Aid.  301;  Sproule  v. 
Legge,  1  B.  &  C.  16;  Don  v.  Lipj)- 
man,  5  Clark  &.  ¥.  1.  For  debts 
have  no  situs,  and  are  payable  every- 
where, including  the  locus  contrac- 
tus; and  therefore  the  law  of  that 
place  shall  govern,  since  it  does  not 
appear  from  the  contract  that  the 
parties  contemplated  the  law  of  any 
other  place.  There  cannot  be  any 
otlier  rule  but  that  of  the  place  of 
the  origin  of  the  debt,  unless  it  l)e 
that  where  the  creditor  may  be 
found;  since  the  debtor  must  find 
the  creditor  for  the  purpose  of  mak- 
ing payment.  But,  manifestly,  this 
last  can  never  be  adopted,  because 
it  would  vary  with  every  cliange  of 
domicile  or  residence  of  the  creditor. 
Then,  as  was  observed  by  Lord 
Brougham  in  Don  v.  Lippinaii,  a 
contract,  payalile  generally,  naming 
no  place  of  payment,  is  to  be  taken 
to  be  payable  at  the  place  of  con- 
tracting tlie  debt,  as  if  it  was  ex- 
pressed to  be  there  payable.  Being 
payable  everywhere,  the  rate  of  in- 
terest must  be  determined  by  the 
law  of  the  origin,  since  there  is 
nothing  else  to  give  a  rule.  .  .  . 
We  are  to  suppose  that  as  to  Charles 
S.   Gee   the   bond   expressed   that   it 


was  payal>le  at  Mol)ile.  When  the 
others  executed  it,  can  it  also  lie 
supposed  that  they  insisted  tliat,  as 
to  tliem,  the  bfind  should  l)e  payable 
in  Xortli  Carolina?  Certainly  not; 
for  to  say  nothing  more,  it  cannot 
be  presumed  that  the  same  debt  is 
payal)le  at  {wo  dilVerent  places,  un- 
less it  be  so  expressed.  It  is  said, 
indeed,  that,  as  in  our  law  the  con- 
tract is  several,  it  is  the  same  thing 
as  if  these  parties  had  given  dis- 
tinct notes  in  this  state  for  the  debt. 
lUit  it  is  to  be  recollected  that  tin- 
bond  is  also  joint;  and  therefore 
that  all  tliree  of  tlu-  obligors  obliged 
tluMuselves  jointly  to  do  the  same 
thing;  that  is  to  say,  to  pay  a  cer- 
tain sum  of  money;  and  the  only 
question  is,  whether  we  are  to  un- 
derstand tliem  as  contracting  to  pay 
the  sum  at  one  and  the  same  place. 
For,  if  we  are  so  to  understand, 
there  can  be  no  doubt,  from  wliat 
has  been  already  said,  that  the  place 
is  jNIobile;  and  then,  according  to 
the  rule  that  the  interest  is  to  be 
regulated  by  the  law  of  the  place  of 
performance,  the  bond  would  tiear 
Alabama  interest.  There  would 
have  l)een  nothing  unlawful  in  fak- 
ing a  bond  in  tliis  state  for  tbat  in 
terest,  as  we  have  liefore  seen,  as 
it  would  merely  be  a  supplement;!! 
security  for  a  prcx  ioiis  hiwfiii  com 
tract.  Now,  it  is  impossible  tn  su|i- 
pose  tliat  these  defendants  could 
have  eontomi)lated  the  ])ayment  be- 
ing made  here  liy  them,  and  not  at 
Mobile,  by  the  principal.  The  very 
statement  of  the  case  is,  that  they 
executed  the  bond  as  the  sureties  of 
Charles  S.  Cee;  and  in  the  nature 
of  things,  therefore,  tiiey  expected 
to  be  only  secondarily  liatde,  and 
they  were  to  be  liable   for   what  be 


1158 


SUTHERLAND    ON    DAMAGES. 


[§   361 


the  laws  of  a  particular  place  as  the  place  of  contract  will  not 
be  withdrawn  from  the  effect  of  those  laws  merely  by  taking 
security  for  the  performance  of  the  contract  by  mortgage  upon 
lands  situated  in  another  jurisdiction.  Taking  such  security 
does  not  necessarily  draw  after  it  the  consequence  that  the  con- 
tract is  to  be  fulfilled  where  tlie  security  is  taken.  The  legal 
fulfillment  of  a  contract  or  a  loan  on  the  part  of  the  bondsman 
is  repayment  of  the  money;  and  the  security  given  is  but  the 
means  of  securing  what  he  has  contracted  for,  which  in  the  eye 
of  the  law  is  to  pay  where  he  borrows  unless  another  place  of 
paj^Tiient  be  expressly  designated  by  the  contract.^'  But  when 
there  is  nothing  else  to  indicate  where  the  transaction  took 
place,  or  where  the  contract  to  pay  is  to  be  performed,  the  law 
of  the  place  where  the  real  estate  is  situated  on  which  the 
money  is  secured  will  govern  as  to  the  rate  of  interest.  A  mar- 
riage settlement,  though  made  in  another  state,  was  held  to 
bear  interest  according  to  the  law  of  South  Carolina  because 
secured  on  lands  in  that  state.^^  Creditors  residing  in  Penn- 
sylvania, where  the  limit  of  interest  is  six  per  cent.,  held  a 


liad  hound  liinisclf.  If  that  were 
not  so  it  would  lead  to  endless  con- 
fusion. For,  suppose  a  principal  in 
Alahania  and  three  sureties,  one  liv- 
ing and  executing  the  bond  in  Lou- 
isiana, one  in  North  Carolina  and 
one  in  New  York,  would  there  be 
four  distinct  contracts  as  to  the 
rate  of  interest?  It  would  be  al)- 
surd  to  hold  so.  In  reality  the 
contract  of  sureties,  in  reference  to 
the  (piestion  under  consideration,  is 
one  of  guaranty  for  the  performance 
of  his  contract  by  his  principal;  and 
therefore  each  surety,  no  matter 
where  he  lives,  must  be  liable  for 
precisely  the  same,  which  is  that  for 
which  the  principal  is  liable,  neither 
more  nor  less." 

In  Findlay  v.  Hall,  12  Ohio  St. 
610,  three  persons  owed  a  debt  in 
'New  Mexico  on  a  promissory  note 
payable  there.  Two  of  them  as- 
sumed to  renew  it,  and  accordingly 


executed  a  new  note  at  Santa  Fe. 
Afterwards  the  third  executed  the 
same  note  in  Missouri,  with  a  knowl- 
edge of  all  the  facts.  It  was  lield 
that  he  ratified  the  agreement  made 
by  his  codebtors,  and  that  the  new 
note  was  to  be  regarded  as  made  in 
and  to  be  governed  by  the  laws  of 
New  Mexico  in  respect  to  the  stipu- 
lation for  interest. 

97  Shipman  v.  Bailey,  20  W.  Va. 
G40;  Sheldon  v.  Haxtun,  01  N.  Y. 
124;  De  Wolf  v.  Johnson,  10  Wheat. 
367,  6  L.  ed.  343;  Varick  v.  Crane, 
4  N.  J.  Eq.  128;  Story's  Conf.  L., 
§  287a;  Kavanaugh  v.  Day,  10  R. 
I.  303,  14  Am.  Rep.  601  ;  Hosford  v. 
Nichols,  1  Paige  220;  Butters  v. 
Olds,  11  Iowa  1 ;  South  Missouri  L. 
Co.  V.  Rhodes,  54  Mo.  App.  120; 
Farmers'  Sav.  B.  &  L.  Ass'n  v.  Fer- 
guson, 60  Ark.  352. 

98  Quince  v.  Callender,  1  Desaus. 
160.     See  §  357,  at  end. 


§    361]  INTEREST.  1150 

mortgage  made  in  New  York  uimui  Iniids  sitiialo  in  tliat  stato. 
In  the  absence  of  anything  indu*ating  wlierc  the  sei'uritics  were 
payable  or  showing  that  a  different  rate  of  interest  from  that 
of  jSTew  York  was  intended  the  rate  of  that  state  was  adopted.^® 
The  general  doctrine  is  that  the  law  of  the  place  where  the 
contract  is  made  is  to  determine  the  rate  of  interest  when  the 
'contract  specifically  gives  interest;  and  this  will  be  the  case 
though  the  loan  Ix'  secured  by  a  mortgage  on  lauds  in  aui»tlicr 
state  unless  there  are  circumstances  to  show  that  the  parties 
had  in  view  the  laws  of  the  latter  place  in  respect  to  interest. 
When  that  is  the  case  the  rate  of  interest  of  the  place  of  pay- 
ment is  to  govern.^  Where  a  mortgage  is  a  mere  incident  to 
the  debt,  as  security  for  the  performance  of  a  personal  oldiga- 
tion,  it  will,  as  a  security,  follow  the  condition  of  the  contract 
in  respect  to  interest.^ 

There  is  a  tendency  manifested  in  some  recent  cases  to  limit 
the  rule  that  the  validity  of  a  contract  is  to  be  determined  by 
the  law  of  the  place  of  its  performance  to  contracts  which  are 
purely  personal,  and  to  favor  the  view  that  the  transfer  of 
lands  and  the  execution  of  liens  thereon  are  governed  by  the 
laws  of  the  place  where  such  property  is  situate.  In  a  North 
Carolina  case  ^  a  loan  was  made  to  a  citizen  of  that  state  by  a 
Georgia  corporation,  application  therefor  being  made  to  a 
branch  of  the  corporation  located  in  North  Carolina,  to  whom 
payinents  were  to  be  made,  though  the  contract  recited  that 
it  was  solvable  in  Georgia.  The  loan  was  secured  by  a  mort- 
gage of  land  in  the  latter  state.  Tlie  oi)inion  contains  a^pic- 
tation  from  a  Georgia  case,*  in  which,  speaking  of  a  loan  nuide 

99  Lewis  V.  Ingorsoll,  ?,  Abl).  App.  3  Meroney    v.    Atlanta     ?>.    i^-    L. 

Dec.  55.  Ass'n.    11  fi   N.   C.    S82,   47    Am.   St. 

IBank  v.  Doherty,  42  Wash.  317,  841.     In    Faison  v.  Grandy,   12S   X. 

114  Am.  St.  123;   Central  T.  Co.  v.  C.   4;!S,   the   same   rule   was   a|)plie(l 

Burton,  74  Wis.  320;  2  Kent's  Com.  tlmugli    tlie   loan    was   made    in    au- 

4G0;  De  Wolf  V.  Johnson,  10  Wheat.  otlier    state.      Shannon    v.    Geor<<ia 

3G7,  C  L.  ed.  343.  State   B.  &  L.   Ass'n,   78   Miss.  055. 

2  Sands  v.  Smith,   1  Neb.   108,  !I3  .IT  L.R..\.  800,  is  t..  mndi   thr  same 

Am.    Dec.    331 ;    Fitch    v.    Renier,    1  eti'ect. 

Biss.  337;  Cope  v.  Wheeler,  41  N.  Y.  4  Jackson  v.  American   M.  Co.,  88 

303;  Williams  v.  iMtzhiipIi,  37  N.  Y.  Ca.  7")<i.     See  Tliompsoii  v.  Edwards. 

444.  85    Ind.  414;    I'aiutoast  v.  Travelers' 


1160  SUTHERLAND    ON    DAMAGES.  [§    361 

by  the  defendant  to  the  plaintiff  in  New  York,  but  secured  by 
mortgage  on  land  in  Georgia,  where  the  borrower  resided,  the 
court  said :  There  was  not  one  contract  for  making  the  notes 
and  another  for  securing  them  by  a  conveyance,  but  a  part  of 
one  and  the  same  contract  was  expressed  in  the  notes  and  a 
part  in  the  deed  executed  at  the  same  time.  There  was  no  in- 
tention to  make  a  loan  without  having  it  secured  both  by  the 
notes  and  the  deed.  It  was,  therefore,  impossible  to  accom- 
plish the  object  Avithout  calling  in  the  laws  of  Georgia  as  a 
part  of  the  transaction.  New  York  had  no  law  which  could 
make  any  contract  conveying  land  situated  in  Georgia  opera- 
tive or  obligatory.  As  the  law  of  Georgia  would  thus  be  es- 
sential with  respect  to  a  part  of  the  transaction  that  law,  if 
possible,  ought  to  be  applied  to  the  whole.  There  was  no  in- 
tention to  make  a  mere  personal  contract,  but  the  scheme  was 
to  make  one  partly  personal  and  partly  confined  by  its  very 
nature  to  a  given  situs — the  state  of  Georgia.  In  other  recent 
cases  the  place  of  performance  has  been  given  its  usual  con- 
trolling effect  notwithstanding  the  negotiations  were  conducted 
and  the  property  securing  the  debt  was  situated  in  a  state  the 
laws  of  which  forbade  the  rate  of  interest  agreed  to  be  paid.^ 

Contracts  and  securities  executed  to  take  the  place  of  others 
previously  made  for  the  same  debt  will  be  construed  in  the 
light  of  the  antecedent  facts  and  by  the  law  which  governed 
the  former  contracts  or  securities,  if  executed  and  to  be  per- 
formed in  the  same  place ;  but  they  may  by  new  provisions  be 
brought  under  other  laws. 

§  362.  Where  usury  is  involved.  On  the  question  of  usury 
courts  have  another  function  than  that  of  merely  interpreting 
the  contract  of  the  parties  to  effectuate  their  intention.  If 
the  contract  is  tainted  with  usury  the  intention  of  the  parties 
is  wholly  or  in  part  set  aside  and  frustrated.^     In  determining, 

Ins.  Co.,  79  Ind.  172;  Pino  V.  Smith,  v.    Hall,    92    Wis.    565;    Building    & 

11  Gray  38;   Building  &  L.  Ass'n  v.  l    Ass'n  v.  Logan,  14  C.  C.  A.  13:5, 

Grillin,  90  Tex.  480.  ^.g  p^^^j   ^27;  Brower  v.  Life  Ins.  Co., 

6  Ware  v.   Bankers'   L.   &   I.   Co., 

95    Va.    680,   64   Am.    St.    826,    and  ''^'  ^^^-  ' 
other  Virginia  cases  cited;  Maynard  «  Ol'^rch  v.  Malloy,  9  Hun  148. 


§  362] 


INTEREST. 


1101 


tlierefoi-e,  the  ))laee  of  contract  with  a  \iow  to  disposiii^^  of 
the  defense  of  usury  courts  do  not  limit  thomseivcs  to  a  con- 
sideration of  where,  by  the  terms  of  the  agreenicnt,  tlio  par- 
ties say  it  was  made  or  to  ho  performed.  The  transaction  in 
its  incipient  details  is  looked  into,  and,  even  if  fair  on  its  face 
and  conformable  to  law,  it  may  be  shown  to  he  a  transaction 
belonging  to  a  different  place  and  to  include  unlawful  interest.' 
When  the  contract  specifying  the  amount  reserved  is  express 
its  form  will  not  hinder  the  inquiry  whether  the  i)arties  re- 
sorted to  it  as  a  means  of  disguising  usury  in  violation  of  the 
law  of  the  state  where  it  was  made  and  to  bo  executed ;  and  in 
arriving  at  this  intention  all  the  facts  are  to  be  taken  into  con- 
sideration.^ Two  citizens  of  Massachusetts  cannot  make  a 
contract  in  that  state  payable  there  or  in  New  York,  and  agree 
to  be  governed  by  the  law  of  Iowa  of  California,  and  thereby 
avoid  the  consequence  of  the  agreement  for  the  payment  of 
usurious  interest.  Nov  can  a  citizen  of  one  state  make  his  note 
in  another  to  a  resident  there,  payable  in  a  third,  with  interest 


7  Davis  V.  Tandy,  107  Mo.  App. 
437;  Pratt  v.  Adams,  7  Paige  615; 
McAllister  v.  Smith,  16  111.  328: 
Clayes  v.  Hooker,  G  Tliomp.  &  C. 
448,  4  Hun  231;  Agricultural  Nat. 
Bank  v.  Sheffield,  4  Ilun  421 ;  Rich- 
ardson V.  Brown,  9  Baxter  242 ; 
Meroney  v.  Atlanta  Nat.  B.  &  L. 
Ass'n,  112  N.  C.  842. 

"It  appears  that  the  rule  as  to 
the  law  of  contracts  made  in  one 
state  to  he  performed  in  another  is 
modified  or  softened,  when  applied 
to  contracts  for  interest,  so  tliat  the 
intentions  of  the  parties  are  effec- 
tuated, as  a  concession  to  trade  and 
commerce."  Bigelow  v.  Burnham, 
83  Iowa  120,  32  Am.  St.  294. 

8  Royal  L.  Ass'n  v.  Forter,  68 
Kan.  468 ;  Arnold  v.  Potter,  22  Iowa 
194;  Building  &  L.  Ass'n  v.  Griffin, 
90  Tex.  480:  Meroney  v.  Atlanta  B. 
&  L.  Ass'n,  116  N.  C.  882,  47  Am. 
St.  841 ;  Falls  v.  United  States  Sav., 


L.  &  B.  Co.,  97  Ala.  417,  38  Am.  St. 
194,  24  L.R.A.  174 ;  Hayes  v.  Soutli- 
ern  Home  B.  &  L.  Ass'n,  124  Ala. 
663;  Jackson  v.  American  !M.  Co., 
88  Ga.  756;  Odom  v.  New  England 
M.  S.  Co.,  91  Ga.  305. 

Notes  in  favor  of  the  dcfcndaHt 
were,  by  their  terms,  payable  in  tlie 
state  of  its  domicile.  They  were 
made  in  another  state  and  secured 
by  a  mortgage  of  land  situated 
tlierc;  the  maker  was  a  resident  of 
sucli  state,  and  throiigli  a  series  of 
years  had  made  all  payments  of  dues 
and  interest  in  the  state  of  his  resi- 
dence to  an  officer  of  the  local  board 
established  there  and  operated  by 
the  defendant  under  its  charter.  The 
usury  laws  of  such  state  were  ap- 
plicable to  the  notes.  Shannon  v. 
Georgia  State  B.  &  L.  Ass'n,  78 
Miss.  955,  57  L.R.A.  800;  Building 
&  L.  Ass'n  V.  Griffin,  90  Tex.  480, 
488. 


1162  SUTHERLAND  ON  DAMAGES.  [§  362 

as  allowed  in  a  fourth.''  Parties  by  a  mere  mental  operation 
cannot  import  the  law  of  one  state  into  another  for  the  pur- 
pose of  altering  the  character  of  a  loan  made  in  the  latter  and 
to  be  there  retained,  without  any  undertaking  or  duty  to  use 
the  money  anywhere  else,  or  any  understanding  that  in  respect 
to  the  use  or  repayment  of  it  the  loan  shall  differ  from  any 
other.^°  Ijiit  where  there  is  no  intention  to  evade  the  laws 
against  usury  parties  whose  transactions  for  legitimate  pur- 
poses extend  into  several  states  may  conform  their  interest  con- 
tracts to  the  la\y  of  the  state  where  the  debt  is  contracted  or  to 
the  law  of  that  where  it  is  to  be  paid ;  in  other  words,  they 
may  adopt  the  highest  rate  allowed  by  the  law  of  either.  There 
are  many  cases  in  this  country  which  illustrate  both  parts  of 
this  proposition.^^  A  leading  case  arose  and  was  decided  in 
Louisiana  upon  a  note  given  in  that  state,  payable  in  ITew 
York,  for  a  large  sum,  bearing  interest  at  ten  per  cent.,  the 
legal  rate  of  Louisiana,  that  of  l^ew  York  being  only  seven. 
The  defense  of  usury  was  set  up ;  but  it  was  held  that  the  note 
was  not  usurious ;  that,  although  it  was  payable  in  iSTew  York, 
the  interest  might  be  stipulated  for  either  according  to  the  law 
of  Louisiana  or  that  of  New  York.^^  In  a  Wisconsin  case  the 
loan  was  made  in  that  state  by  parties  residing  there  and  for 
use  there ;  but  the  note  given  was  payable  in  ]^ew  York,  with 
interest  at  a  higher  than  the  legal  rate  of  that  state,  and  was 
transferred  to  a  ISTew  York  bank,  and  afterwards  renewed  by 
a  note,  made  and  sigiied  by  a  part  of  the  makers  in  Wisconsin 
and  by  one  in  !New  York ;  this  note  was  given  for  the  same 
amount,  provided  for  the  same  rate  of  interest  as  the  other  and 
was  also  payable  in  jSTew  York.  It,  however,  was  made  to  the 
payee  in  the  first  note,  which  was  thus  paid  by  that  party. 
The  facts  are  discussed  in  the  opinion  and  emphasis  is  put 
upon    the    conclusion    that    it    was    a    Wisconsin    transaction. 

9  Arnold  v.   Potter,  22  Iowa  194.       ]25    Ga.    72,    6    L.R.A.(KS.)     658; 

10  Cope  V.  Wheeler,  41  N.  Y.  303;       steinman   v.   Midland   S.   &   L.   Co., 

Jackson  v.  American  M.  Co.,  88  Ga.  -„   t         ^-rr.     ivr-ji      j   o     o    t     f 

-,^„  r,,  ,,  ^  .  ^  I  r^  „  78  Kan.  479;  Midland  S.  &  L.  Co. 
756 ;  Stansell  v.  Georgia  L.  &  T.  Co., 

96  Ga   "^27  ^"  ^olo^^o")  71  Kan.  185. 

11  Miller  v.  Tiffany,   ]    Wall.  298,  ^^  Depeau  v.  Humphreys,  8  Mart. 
n  L.  ed.  540;  Thomas  v.  Clarkson,  (N.  S.)   1, 


§  3G2] 


INTEREST. 


11' 


Upon  the  point  that  nicrclv  niakiiiii,  llic  nolo  ])ii_viil»l('  in  New 
York  (lid  not  make  it  a  New  York  contract,  ( "ole  .1.,  said: 
"The  authorities  .  .  .  are  too  clear  and  emphatic  and 
leave  no  room  for  doubt.  They  certainly  establish  the  proi)o- 
sition  that  if  the  rate  of  interest  be  specified  in  the  contract, 
and  it  be  according  to  the  law  of  the  ])lace  where  the  contract 
was  nuule,  thoui>h  the  rate  be  higiier  than  is  lawful  by  the  law 
of  the  place  where  payment  is  to  be  made,  still  tlu^  contract  w  ill 
be  valid  and  binding."  " 

Where  the  evidence  show(^d  that  a  note  which  j)m-j)oi'ted  on 
its  face  to  have  been  made  in  Towa  was  in  fact  made  and  de- 
livered in  ISTew  York,  where  the  payee  resided,  and  it  did  not 
appear  where  the  indebtedness  for  which  it  was  given  was  in- 
curred or  where  the  consideration  for  it  was  delivered,  or  that 
there  was  any  agreement  as  to  the  place  of  jiayment  the  pre- 
sumption was  indulged  that  it  was  payable  in  Iowa  and  it  was 
sustained  as  valid  under  the  laws  thereof  though  it  would  have 
been  void  if  it  were  a  New  York  contract.^*  On  a  second  ap- 
peal it  appeared  that  the  money  loaned  was  paid  to  the  borrow- 
er in  ISTew  York.  This  was  immaterial,  in  view  of  the  rule 
that  a  citizen  of  one  state  may  loan  money  to  a  citizen  of  an- 


13  Richards  v.  Globe  Bank,  12 
Wis.  692;  Kilgore  v.  Dcmpsey,  25 
Ohio  St.  413,  18  Am.  Rep.  306;  Bank 
V.  Lewin,  4.5  Barb.  340;  Balme  v. 
Wombough,  38  id.  3.52;  Houston  v. 
Potts,  64  N.  C.  33 ;  Duncan  v.  Helm, 
22  La.  Ann.  418;   Andrews  v.  Pond, 

13  Pet.  77,  10  L.  ed.  67;  Pratt  v. 
Adams,  7  Paige  015;  Peck  v.  Mayo, 

14  Vt.  33,  3!)  Am.  Dec.  20,5;  Chap- 
man V.  Robertson,  6  Paige  633; 
Fitch  V.  Remer,  1  Biss.  337;  At- 
water  v.  Rodofson,  4  Am.  L.  Reg. 
.549,  2  Handy  19;  Merchants'  Bank 
V.  Griswold,  9  Hun  .561;  Berrien  v. 
Wriglit,  26  Barb.  208;  Carnegie  v. 
Morrison,  2  Mete.  (Mass.)  381; 
Kellogg  V.  Miller,  2  McCrary  39.5; 
Wayne  County  Bank  v.  Law,  81  N. 


Y.  .566,  37  Am.  Rep.  5.33;  Pancoast 
V.  Traveler's  Ins.  Co.,,  70  Ind.  172; 
Thornton  v.  Dean,  19  S.  C.  583,  45 
Am.  Rep.  796;  New  England  M.  S. 
Co.  V.  Vader,  28  Fed.  265 ;  Brown  v. 
American  F.  Co.,  31  id.  516;  United 
States  V.  North  Carolina,  136  U.  S. 
211,  222,  34  L.  ed.  33(1.  341:  Coad 
V.  Home  C.  Co.,  .32  Neb.  761,  2i>  .\m. 
St.  465;  Mott  v.  Rowland,  S5  .Micii. 
501;  Sniitli  v.  Parsons,  ')')  Minn. 
520:  Sturdivant  v.  Memphis  Nat. 
Bank,  9  C.  C.  A.  256,  60  Fed.  730; 
United  S.  &  L.  Co.  v.  Berkley.  137 
Ala.  119,  97  Am.  St.  19.  62  L.R..A. 
33.  But  see  Ringer  v.  Virgin  Tim- 
ber Co.,  213  Fed.  1001. 

14  Bigelow   V.    Buriiham,    S3    Iowa 
120,  32  Am.  St.  204. 


1164 


SUTHERLAND    ON    DAMAGES. 


[§    363 


other  state  and  contract  for  the  rate  of  interest  legal  in  the 
latter.  ^^ 

§  363.  Same  subject.  The  same  liberal  rule  is  applied  to 
contracts  for  a  greater  rate  than  that  allowed  by  the  law  of  the 
place  where  tliej  are  made,  such  rate  not  exceeding  that  al- 
lowed at  the'  place  of  payment. ■^^  An  instructive  case  upon 
this  point  was  decided  in  Iowa  in  1867.  A  resident  of  that 
state  negotiated  a  loan  in  Massachusetts.  The  notes  were 
dated  at  Keokuk,  Iowa,  but  were  delivered  in  Massachusetts 
and  the  money  there  received ;  they  were  payable  in  New 
York,  and  included  interest  at  a  higher  rate  than  was  allowed 
by  the  law  of  Massachusetts  or  New  York,  but  legal  in  Iowa. 
The  payment  of  the  notes  was  secured  by  a  trust  deed  of  Iowa 
land,  acknowledged  by  the  borrower  in  Massachusetts  and  by 
his  wife  in  Iowa,  to  an  Iowa  trustee."  The  notes,  though 
dated  in  Iowa,  were  delivered  and  therefore  had  their  legal 
inception  in  Massachusetts ;  the  deed  of  trust,  though  convey- 
ing Iowa  lands,  being  a  mere  security,  would  not  change  the 
situs  of  the  loan ;  the  securities  were  delivered  and  the  money 
loaned  received  in  Massachusetts.  These  facts  could  not  in- 
fluence the  interpretation  of  the  contract,  but  they  were 
material  on  the  question  of  its  validity  in  respect  to  the  defense 


I 


15  Bigelow  V.  Burnham,  90  Iowa 
300,  48  Am.  St.  442. 

16  Middle  States  L.,  B.  &  C.  Co. 
V.  Miller,  104  Va.  464;  Hayes  v. 
Southern  Home  B.  &  L.  Ass'n,  124 
Ala.  663;  Ames  v.  Benjamin,  74 
Minn.  335;  Long  v.  Long,  141  Mo. 
352;  Central  Nat.  Bank  v.  Cooper, 
85  Mo.  App.  383;  Bennett  v.  East- 
ern B.  &  L.  Ass'n,  177  Pa.  233,  55 
Am.  St.  723,  34  L.R.A.  595  (com- 
pare the  last  case  with  Southern  B. 
&  L.  Ass'n  V.  Biggie,  4  Pa.  Dist. 
617);  Commission  Co.  v.  Carroll, 
104  Tenn.  489,  500;  Neal  v.  New 
Orleans,  etc.,  Ass'n,  100  Tenn.  607; 
National  Mut.  B.  &  L.  Ass'n  v.  Ash- 
worth,  91  Va.  706;  Nickels  v.  Peo- 
ple's B.  L.  &  S.  Ass'n,  93  Va.  380; 


Ware  v.  Bankers'  L.  &  L  Co.,  95 
Va.  680,  64  Am.  St.  826;  Buchanan 
V.  Drovers'  Nat.  Bank,  5  C.  C.  A. 
S3,  55  Fed.  223;  Building  &  L. 
Ass'n  V.  Logan,  14  C.  C.  A.  133,  66 
Fed.  827;  Hieronymus  v.  New  York 
Nat.  B.  &  L.  Ass'n,  101  Fed.  12; 
Coghlan  v.  South  Carolina  R. 
Co.,  142  U.  S.  101,  35  L.  ed.  951; 
Vermont  L.  &  T.  Co.  v.  Dygert,  89 
Fed.  123;  Brower  v.  Life  Ins.  Co., 
86  Fed.  748;  Lines  v.  Mack,  19  Ind. 
223;  Newman  v.  Kershaw,  10  Wis. 
333;  Bolton  v.  Street,  3  Cold.  31; 
Butters  v.  Olds,  1 1  Iowa  1 ;  Cockle 
V.  Flack,  93  U.  S.  344,  23  L.  ed. 
949. 

17  Arnold  v.  Potter,  22  Iowa  194. 


§    363]  INTEREST.  llGf) 

of  usury.  Stating  the  case  according  to  its  legal  elVcct,  inde- 
pendently of  the  question  of  usury,  it  was  briefly  this:  A  loan 
was  obtained  in  Massachusetts,  and  a  contract  was  there  made 
for  its  repayment  in  New  York.  Had  the  notes  contained  a 
promise  generally  to  pay  interest,  without  specifying  the  rate, 
there  can  be  no  doubt  that  the  law  of  New  York  would  have  in- 
terpreted that  promise  and  the  rate  of  that  state  would  have 
been  adopted.  The  courts  of  any  state  or  country  where  suit 
on  the  note  might  be  brought  would  have  ailo})ted  that  rate 
because  it  would  l)e  deemed  of  the  substance  of  the  cdntract. 
If  the  notes,  instead  of  being  founded  on  a  loan,  had  been  given 
for  lottery  tickets  sold  and  delivered  in  a  state  where  such 
sales  were  unlawful  and  were  written  payable  in  a  state  where 
such  sales  were  not  unlawful,  there  can  be  no  doubt  that  the 
illegality  of  the  consideration  by  the  law  of  the  state  where  the 
sale  took  place  would  vitiate  and  render  the  note  invalid  every- 
where. The  circumstance  that  the  maker  of  the  note  was  a 
resident  of  Iowa  would  give  no  recourse  to  the  laws  of  that 
state  to  determine  the  force  and  effect  of  the  interest  contract 
and  supply  the  rate,  in  the  one  case  supposed;  nor  would  his 
residence  in  a  state  permitting  traffic  in  lottery  tickets  affect 
the  question  of  illegality  in  the  other.  Chancellor  Kent  says :  " 
"According  to  the  case  of  Thompson  v.  Powles,^^  it  is  now  the 
received  doctrine  at  Westminster  Hall  that  the  rate  of  interest 
on  loans  is  to  be  governed  by  the  law  of  the  place  where  the 
money  was  to  be  used  or  paid,  or  to  which  the  loan  has  refer- 
ence." ^^  And  since  the  letter  of  a  contract  does  not  preclude 
inquiry  into  the  facts  and  situation  of  the  parties  to  establish 
usury  it  is  doubtless  equally  comj^etent  to  show  where  the 
loaned  money  was  intended  to  be  used  and  other  facts  to  repel 
such  a  charge.  In  delivering  the  o])inion  of  the  court  in  the 
Iowa  case  just  mentioned  Wright,  J.,  said :  "The  plaintiff 
claims  that  the  parties  in  good  faith  contracted  with  reference 
to  the  laws  of  this  state,  intending  to  make  this  an  Iowa  con- 
tract, and  upon  this  subject  the  court  instructed  as  follows: 

18  2  Kent's  Com.  461.  .344,  2.3  L.  od.  t)49;  Copo  v.  \V1iooler, 

19  2  Sim.  211. 

20  See  Cockle  v.   Flack,  93   U.  S.       41  N.  Y.  303. 


1166  SUTHEKLAND    ON    DAMAGES,  •  [§363 

'If  defendant  went  to  Boston  and  urged  the  loan  and  promised 
ten  per  cent  under  the  laws  of  Iowa  and  all  the  arrangements 
and  contracts  were  made  as  to  the  laws  of  Iowa  in  good  faith, 
and  no  more  than  ten  per  cent,  was  contracted  for,  then  the 
defense  fails  and  the  plaintiff  can  recover.'  Our  opinion  is 
that  if  the  parties  acted  in  good  faith,  that  is,  if  there  was  no 
intention  to  evade  the  law,  it  was  competent  for  them  thus  to 
contract,  and  that  the  defense  could  not  avail ;  .  .  .  the 
parties  may,  in  good  faith,  contract  with  reference  to  the  law 
of  the  place  where  the  payer  resides,  and  where  the  property 
upon  which  the  security  is  taken  is  located."  ^^ 

§  364.  Same  subject.  As  a  promissory  note  or  bill  of  ex- 
change has  no  validity  until  it  has  been  delivered  such  paper 
may  be  dated,  signed,  indorsed  and  written  payable  in  any 
place  for  a  greater  rate  of  interest  than  is  there  allowed  and 
not  be  subject  to  the  defense  of  usury  by  the  law^  of  that  place, 
if  it  is  afterwards  delivered  and  has  its  inception  where  the 
rate  of  interest  therein  specified  is  lawful,  if  such  delivery  is 
upon  an  actual  transaction  at  the  place  where  it  occurs,  as  by 
the  instrument  being  there  discounted.  Such  a  note  or  bill 
will  be  regarded  as  though  made  where  it  is  delivered.^^     It  is 

21  Scott  V.  Perlee,  39  Ohio  St.  63,  delivered  and  made  payable  in  New 
48  Am.  Rep.  421 ;  Jones  v.  Rider,  60  Jersey.  In  tlie  absence  of  any  dif- 
N.  H.  452.    See  §  361.  ferent    understanding    between    the 

22  Kuhn  V.  Morrison,  75  Fed.  81;  parties  the  laws  of  New  Jersey  con- 
Pratt  V.  Adams,  7  Paige  636;  City  trolled  on  the  question  of  usury. 
Sav.  Bank  v.  Bidwell,  29  Barb.  325 ;  Hubble  v.  Morristown  L.  Co.,  95 
Bowen  v.   Bradley,  9  Abb.   Pr.    (N.  Tenn.  585. 

S.)  395;  First  Nat.  Bank  v.  Morris,  A  bond  dated  in  North  Carolina 

1   Hun  680;    Connor  v.  Donnell,  55  and   delivered   in  Virginia  specified 

Tex.  167.  no  place  of  payment,  and  was  held 

But  the  delivery  of  the  security  to  be  subject  to  the  usury  laws  of 
for  the  payment  of  money  and  the  the  former;  but  if  it  had  appeared 
handing  of  the  latter  to  the  borrower  that  it  was  given  pursuant  to  a  con- 
are  not  conclusive  as  to  the  place  tract  made  in  Virginia  it  is  suggest- 
where  the  contract  was  made.  Coad  ed  that  it  would  have  been  other- 
V.  Home  C.  Co.,  32  Neb.  761,  29  Am.  wise.  :\Iorris  v.  Hockaday,  94  N.  C. 
St.  465.  286. 

A  note  secured  by  mortgage  on  In  Tilden  v.  Blair,  21  Wall.  241, 
land  in  Tennessee  was  given  for  a  22  L.  ed.  632,  a  draft  dated  in  one 
loan  negotiated  in  Connecticut,  but  state  and  drawn  by  a  resident  there- 
was  executed  in  North  Carolina  and  of   on   a   resident  of   another   state, 


364] 


INTEREST. 


iih: 


the  first  delivery  of  the  executed  instrument  wliicli  (Ictcnuiiie.s 
the  law  by  which  its  validity  is  to  be  tried.     If  the  original 


and  accepted  l)y  the  latter  purely 
for  the  accoiiunodation  of  the  draw- 
er, and  returned  to  liiiii  for  negotia- 
tion in  the  state  of  his  residence, 
the  proceeds  to  be  used  tliere  and 
payment  of  it  to  be  made  bj'  him, 
was  negotiated  to  an  innocent  holder 
for  value.  Held,  that  it  was  to  be 
governed  by  the  law  of  the  state  in 
which  it  was  dated  and  drawn, 
though  by  the  terms  of  its  accept- 
ance it  was  payable  at  the  accept- 
or's residence;  and  if  by  the  law 
thereof  the  holder  is  entitled  to  the 
sum  to  be  paid  for  it,  though  he 
bought  it  usuriously,  he  may  re- 
cover such  sum,  notwithstanding  the 
law  of  the  state  where  the  accept- 
ance was  made  declared  the  contract 
void  for  usury. 

In  the  first  edition  of  this  work 
the  author  expressed  his  dissent 
from  the  doctrine  laid  down  in  Jew- 
ell V.  Wright,  30  N.  Y.  259,  86  Am. 
Dec.  372.  Subsequent  decisions  in 
New  York  have  more  clearly  ex- 
plained the  ruling  there  made  and 
settled  the  law  more  nearly  in  har- 
mony with  the  text  than  it  was  un- 
derstood to  be  before  they  were 
made.  In  Wayne  County  Sav.  Bank 
V.  Low,  81  N.  Y.  566,  570,  37  Am. 
Rep.  533,  Rapallo,  J.,  says;  "In 
Dickinson  v.  Edwards,  77  N.  Y.  573, 
33  Am.  Rep.  671,  the  decision  in  Jew- 
ell V.  Wright  was  adhered  to,  and 
it  was  held  that  where  a  promissory 
note  was  made  in  this  state  by  a 
resident  thereof,  bearing  date  and 
by  its  terms  payable  in  this  state, 
with  no  rate  of  interest  specified, 
and  was  delivered  to  the  payees 
without  consideration,  to  he  used  by 
them  for  their  accommodation,  with- 
out restriction,  and  was  first  nego- 
tiated by  them  in  another  state  at 


a  rate  lawful  tlicic  but  greater  tlian 
that  allowed  by  law  in  tliis  state,  it 
was  usurious  and  void,  there  being 
no  evidence  in  the  case  of  any  inten- 
tion on  the  part  of  the  maker  that 
tiic  note  should  be  discounted  or 
used  out  of  tins  state.  That  case, 
as  well  as  Jewell  v.  Wright,  was  dis- 
tiiiguislied  from  Tilden  v.  Blair,  21 
Wall.  241,  22  L.  ed.  632,  expressly 
upon  the  ground  tliat  in  Tilden  v. 
Blair,  altliougli  the  acceptance  was 
made  payable  in  New  York  by  the 
acceptors  who  were  residents  of  New 
York,  yet,  after  having  accepted  in 
New  York,  they  returned  the  accept- 
ance to  the  drawer  in  Illinois  for 
the  purpose  and  witli  the  intention 
that  it  should  he  negotiated  by  him 
in  that  state.  And  tliis  court  says 
in  its  opinion  in  Dickinson  v.  Ed- 
wards that  tiiat  was  the  controlling 
fact  in  Tilden  v.  Blair,  and  that  the 
ruling  consideration  was  the  inten- 
tion of  the  acceptors  that  the  draft 
sliould  be  used  in  Illinois,  while  in 
Jewell  V.  Wright  and  in  the  case 
then  before  tlie  court  there  was 
nothing  to  show  an  intention  on  the 
part  of  the  maker  of  the  note  to 
give  authority  to  deal  with  it  other- 
wise than  as  the  law  of  this  state 
would  allow.  The  case  of  Bank  v. 
Lewin,  45  Barb.  340,  and  other  cases 
are  distinguished  from  Jewell  v. 
Wright  on  tiie  same  ground,  and  it 
may  safely  be  said  that  the  case  of 
Dickinson  v.  Edwards  rests  upon  the 
ground  that  there  was  no  evidence 
of  knowledge  or  intention  on  the 
part  of  the  maker  of  the  note  that 
it  was  to  be  used  out  of  this  state, 
and  that,  in  the  absence  of  such 
proof,  it  must  be  governed  by  the 
law  of  (he  place  of  payment. 

"In    the    present    case    the    fact 


1168 


SUTllEKLAND    ON    DAMAGES. 


[§   364 


delivery  is  made  where'  the  execution  took  place  and  where  the 
iustriunent  is  payable  any  subsequent  use  of  it  then  contem- 
plated by  the  parties  cannot  affect  its  validity.^^     If  prelimi- 


which  was  wanting  in  Jewell  v. 
Wright  and  Dickinson  v.  Edwards 
clearly  appears,  and  the  case  is 
brought  within  the  principle  of  Til- 
den  V.  Blair,  and  the  cases  which 
have  followed  it.  The  note  now  in 
suit  was  dated  and  made  payable  in 
New  York,  but  it  was  made  for  the 
express  purpose  of  being  used  in  re- 
newal of  another  note  for  the  same 
amount  then  held  by  the  plaintiffs, 
a  bank  in  Pennsylvania.  The  note 
in  suit  was  actually  written  in 
Pennsylvania  in  the  form  in  use  in 
tiiat  state,  by  the  cashier  of  the 
plaintiff,  at  the  defendant's  request, 
and  forwarded  by  the  cashier  to  the 
defendant  for  signature,  and  was 
signed  by  the  defendant  in  New 
York,  and  then  mailed  by  him  to 
the  plaintiff  in  Pennsylvania,  to- 
gether with  a  check  for  the  discount 
at  the  rate  of  eight  per  cent,  per  an- 
num, which  was  lawful  in  Pennsyl- 
vania. The  note  and  interest  were 
consequently  received  by  the  plain- 
tiff in  Pennsylvania,  and  all  this 
was  done  in  performance  of  a  pre- 
vious agreement  wliich  had  been  en- 
tered into  in  Pennsylvania  between 
the  plaintiff  and  the  defendant.  All 
tliat  was  done  by  the  plaintiff  in 
New  York  was  simply  in  execution 
of  that  agreement,  and  as  is  said  in 
Dickinson  v.  Edwards  in  citing  Til- 
den  v.  Blair,  the  designation  of  the 
place  of  payment  of  tlie  note  was  an 
incidental  circumstance  for  the  con- 
venience of  the  maker  and  not  an 
essential  part  of  the  contract  or 
with  the  intent  to  affix  a  legal  con- 
sequence to  the  instrument.  It  can- 
not be  contended  that  a  party  who 
goes  into  another  state  and  there 
makes  an  agreement  with  a  citizen 


of  that  state  for  a  loan  or  forbear- 
ance of  money,  lawful  by  the  laws 
of  that  state,  can  render  his  obliga- 
tion void  by  making  it  payable  in 
another  state  according  to  whose 
laws  the  contract  would  be  usurious 
Neither  can  it  be  claimed  that  be- 
cause the  obligation,  instead  of 
being  signed  in  the  state  where  the 
contract  was  made,  is  signed  in  an- 
other state  and  sent  by  mail  to  the 
place  of  the  contract,  it  must  be 
governed  by  the  usury  laws  of  the 
place  where  it  was  signed."  See 
Sheldon  v.  Haxtun,  91  N.  Y.  124; 
Western  T.  &  C.  Co.  v.  Kilderhouse, 
87  id.  430;  Merchants'  Nat.  Bank 
v.  Southwick,  67  How.  Pr.  324; 
Bowen  v.  Bradley,  9  Abb.  Pr.  (N. 
S.)  395;  Simpson  v.  Hefter,  42  N. 
Y.  Misc.  482. 

In  Hanrick  v.  Andrews,  9  Port.  9. 
a  loan  was  made  in  New  York,  and 
the  interest  was  paid  tliere  on  it, 
and  the  bill  there  drawn  payable  in 
Alal)ama,  without  interest — and  it 
was  lield  to  be  governed  by  the  law 
of  New  York,  and  usurious.  The  in- 
terest contract  was  made  and  per- 
formed in  that  state  at  the  time  of 
the  loan.  The  court  held  that  an 
instrument,  as  to  its  form,  and  the 
formalities  attending  its  execution, 
the  mode  of  construing  it,  the  mean- 
ing to  be  attached  to  the  expres- 
sions by  which  the  parties  have  con- 
tracted and  the  nature  and  validity 
of  the  contract  is  subject  to  the  law 
of  the  place  where  it  is  made,  and 
that  the  law  of  the  place  where  it 
is  to  be  executed  must  regulate  its 
jierformance. 

23  Merchants'  Nat.  Bank  v.  Soutli- 
wick,  67  How.  Pr.  324. 


§    3G4]  INTEREST.  1169 

nary  negotiations  for  a  loan  arc  made  in  uiio  state,  and  it  is 
agreed  that  the  security  shall  l)e  executed  and  recorded  in  the 
state  of  the  borrower's  residence,  the  contract  is  complete  and 
the  papers  are  delivered  to  the  lender  when  they  are  put  in 
possession  of  the  proper  officer  to  be  recorded  though  they  are 
subsequently  mailed  to  the  creditor.^* 

How  is  a  contract  to  be  considered  which  is  usurious  where 
it  was  made  and  also  by  the  law  of  the  palce  where,  by  its 
terms,  it  is  to  be  performed  by  payment?  If  the  interest  al- 
lowed by  the  law  of  the  place  of  performance  is  higher  than 
that  permitted  by  law  where  the  contract  was  made  the  parties 
may,  as  has  been  stated,  stipulate  for  the  higher  interest  with- 
out incurring  the  penalties  of'  usury.  Ihit  if  the  contract  is 
made  payable  in  another  state  for  the  mere  purpose  of  evading 
the  usury  law  of  the  place  where  it  was  made  the  form  of  the 
transaction  will  not  sustain  it.  The  contract  will  be  disposed 
of  by  the  law  of  the  state  in  which  it  is  made.  The  court  will 
decide  according  to  the  real  object  of  the  parties.^*  An  action 
was  brought  on  a  bill  of  exchange  drawn  in  New  York,  pay- 
able in  Alabama,  for  an  antecedent  debt,  which  included  a 
sum,  in  addition,  greater  than  the  interest  in  either  state  for 
the  time  of  forbearance.  The  court  say:  "The  defendants 
allege  that  the  contract  was  not  made  with  reference  to  the  law 
of  either  state  and  was  not  intended  to  conform  to  either;  that 
a  rate  of  interest  forbidden  by  the  law  of  New  York,  where  the 
contract  was  made,  was  reserved  on  a  debt  actually  due  and 
that  it  was  concealed  under  the  name  of  exchange  in  order  to 
evade  the  law."  If  this  defense  be  true,  and  shall  be  so  found 
by  the  jury,  tlie  question  is  not  which  law  shall  govern  in  ex- 
ecuting the  contract,  but  which  is  to  decide  the  fate  of  a 
security  taken  upon  a  usurious  contract  which  neithei-  will 
execute.  Unquestionably  it  nuist  be  the  law  of  the  place  where 
the  agreement  was  made  and  the  instrument  taken  to  secure;  its 
performance.  It  was  remarked  that  a  contract  of  this  kind 
cannot  stand  on  the  same  ju-inciples  with  a  bona  fide  agreement 
made  in  one  place  to  be  executed  in  another.     In  the  last  men- 

24  Kellogg  V.  Millor,    2    McCrary  25  story's  Conf.  L.,  §  2n.^r7;   Davia 

395.  V.  Tandy,  107  Mo.  App.  437. 

Suth.  Dam.  Vol.  I.— 74. 


1170  SUTHERLAND    ON    DAMAGES.  [§    364 

tioned  case  the  agreement  was  permitted  by  the  lex  loci  con- 
tractus, and  will  even  be  enforced  there  if  the  parties  be  fonnd 
within  that  jurisdiction.  But  the  same  rule  cannot  be  applied 
to  contracts  forbidden  bj  its  laws  and  designed  to  evade  them. 
In  such  cases  the  legal  consequences  of  such  an  agreement  must 
be  decided  by  the  law  of  the  place  where  the  contract  was 
made.^^  What  would  be  the  fate  of  a  contract  made  with  ex- 
press reference  to  the  law  of  the  place  of  payment,  though 
stipulating  interest  above  the  rate  allowed  there,  as  well  as 
where  it  was  made,  is  not  decided  by  that  case.  The  contract, 
if  intended  to  evade  the  usury  law  of  l^ew  York,  and  usurious, 
if  governed  by  that  law,  is  void.  But  if  made  with  reference 
to  the  law  of  Alabama,  and  usurious  by  it,  it  is  not  wholly 
void.  A  contract  of  the  latter  kind  is  in  part  enforced  by  that 
law.  May  parties  in  New  York,  where  the  limit  of  interest  is 
seven  per  cent  make  a  contract  in  a  transaction  which  legiti- 
mately extends  into  Alabama  for  the  payment  of  money  there 
at  a  rate  exceeding  both  the  rate  of  New  York  and  that  of 
Alabama,  and  have  the  benefit  of  the  law  of  the  latter  state  to 
determine  their  rights  if  the  defense  of  usury  be  made  ? 

In  an  Indiana  case  a  resident  of  that  state  borrowed  money 
there  of  a  domestic  corporation  upon  a  draft  drawn  there  on 
New  York,  specifying  six  per  cent  interest  for  the  time  it  had 
to  run ;  it  was  discounted  at  the  rate  of  twelve  per  cent,  and 
the  question  was  by  what  law  the  fate  of  the  contract  was  to 
be  determined.  It  was  held  to  be  an  Indiana  contract  because 
the  transaction  was  a  loan  made  there  and  because  the  bill 
specified  the  Indiana  rate  of  interest.^' 

A  resident  of  Massachusetts  applied  to  a  citizen  of  New 
York  for  a  loan,  and  the  latter  agreed  to  lend  him  a  sum  at 
eight  per  cent  on  security  of  real  estate  situate  in  Massachu- 
setts ;  the  lender  wrote  the  borrower  to  send  him  the  note  and 
mortgage  which  were  accordingly  sent,  and  the  lender  caused 
the  loan  to  be  paid  over  to  the  borrower  in  Massachusetts. 
Hence,  the  contract  had  its  legal  inception  in  New  York ;  and 
the  consideration  therefor,  the  loan,  passed  to  the  maker  of  the 

26  Andrews   v.   Pond,    13   Pet.   65,        27  Mix  v.  Madison  Ins.  Co.,  11  Ind. 
10  L.  ed.  61.  117;   Davis  v.  Tandy,  supra. 


§    304]  INTEREST.  1171 

note  in  Massachusetts;  tlic  contruet  was  held  to  l>e  governed  hy 
the  hiw  of  that  state  though  the  agreed  rate  of  interest  was 
usurious  by  the  law  of  both  states.  It  was  deemed  a  ]\Ias- 
Bachusetts  contract  because  the  important  facts  of  the  transaction 
took  place  in  that  slate.^^  An  important  case  in  New  Vork 
seems  to  answer  the  question  just  stated.^^  A  New  York  cor- 
poration negotiated  a  loan  of  two  bank  corporations  of  Phila- 
delphia; the  bargain  was  made  in  New  York,  and  the  contract 
for  repayment,  in  th(>  form  (jf  certificates  of  deposit,  was  made 
there,  stating  the  deposit  of  the  money  loaned  with  the  borrow- 
ing corporation  in  New  York;  these  certificates  were  payable 
on  time  at  Philadelphia  with  interest  at  six  per  cent,  the  legal 
rate  in  Pennsylvania.  The  loan  was  to  be  in  depreciated 
paper,  but  was  paid  in  an  equivalent  of  cash  funds;  aud  the 
difference  between  the  amount  received  and  that  stated  in  the 
certificates  of  deposit,  it  was  claimed,  rendered  it  usurious  by 
the  laws  of  both  states.  Without  deciding  absolutely  whether  the 
contract  was  usurious,  a  majority  of  the  court  concurred  in 
the  conclusion  that  if  it  was  usurious  by  the  laws  of  both  states 
it  should  be  governed  by  the  law  of  Pennsylvania  where  tlu; 
loan  was  to  be  repa,id. 

In  an  Illinois  case  ^^  a  suit  in  chancery  was  commenced  for 
the  purpose  of  settling  the  rights  of  different  creditors  in  the 
proceeds  of  a  mortgage  given  for  their  connnon  benefit.  The 
demand  of  one  creditor,  a  bank,  was  upon  acceptances  of  bills 
of  exchange  drawn  and  accepted  in  Indiana  and  jiayable  in 
New  York.  These  bills  were  based  upon  actual  transactions, 
namely,  the  shipment  of  hogs  and  cattle.  Where  the  transac- 
tions took  place  does  not  very  distinctly  appear,  but  from  some 
indications  in  the  report  it  is  inferred  that  they  occurred  in 
Indiana.  Two  of  the  bills  were  purchased  by  the  bank  with  a 
reservation  of  seven  and  a  half  per  cent  interest,  which  was 
greater  than  the  amount  allowed  by  law  in  either  Indiana  or 
New  York ;  and  the  question  discussed  was  by  the  law  of  which 
state  the  fate  of  the  security  should  be  determined.     It  was 

28  Pine  V.  Smith,  11  Gray  38.  30  .\(lams  v.  Hohcrtson.  :?7  111.  4r.. 

29  Curtis  V.   Leavitt,   15   N.   Y.  !). 


1172 


SUTHERLAND    ON    DAMAGES. 


[§  364 


held  that  the  law  of  Indiana  was  to  govern  because  the  contract 
was  made  there.^^ 


31  On    a    rehearing    of    this    case 
the   court   adopted   an   opinion   pre- 
pared by  one  of  the  judges  who  sat 
at  the  first  hearing  but  not  at  the 
second.      In    this    the   writer    said: 
"Great  conflict  of  opinion  has  pre- 
vailed in  respect  to  the  laws  affect- 
ing the  validity  of  contracts  made  in 
one  country  but  to  be  performed  in 
another.     The   laws  of   the  country 
where  a  contract  is  made  are  obliga- 
tory   upon    the    parties,    and,    upon 
principle,  no  contract  declared  void 
by  these  laws  ought  to  be  enforced 
in  any  other  country.     As  an  excep- 
tion  to   the   rule,   it  has  been   held 
that  no  nation  is  bound  to  take  no- 
tice  of    or   to    protect    the    revenue 
laws  of   another   country;    but  this 
exception     has     no     foundation     in 
principle,   although   it   is   so   firmly 
established  that  courts  cannot  now 
overturn   it.     No  man   ought  to  be 
heard  in  a  court  of  justice  to  enforce 
a  contract  founded  in  or  arising  out 
of  moral  or   political  turpitude,  or 
in   fraud   of  the  just  rights  of  the 
country   in   which   the  contract   was 
made.      Story's    Conf.    L.,    p.    435. 
The    laws    of    every    country    allow 
parties    to    enter    into    obligations 
with   reference   to   the   laws   of   the 
country  where  such  obligations  are 
to  be  performed;  and  although  such 
o))ligations   may   not   be   in   accord- 
ance with  the  laws  of  the  country 
where  they  are  made,  as  regards  ob- 
ligations  to   be   performed    in    that 
country,  they  may  be  strictly  in  ac- 
cordance with  such  laws  as  to  ob- 
ligations to  be  performed  in   other 
countries.     The  right  to  enter  into 
contracts  with  reference  to  the  laws 
of   another   country   is   one   allowed 
by    nations   for   the   convenience    of 
those    transacting    business    within 


their  respective  territorial  limits,  to 
enable  them  to  obtain  such  rights  as 
they  could  have  secured  in  the  coun- 
try where  the  contract  is  to  be  per- 
formed, by  a  just  observance  of  its 
laws.     No  nation  can  justly  be  re- 
quired to  allow  persons  subject  to  its 
laws  to  enter  into  contracts  without 
reference  to  and  not  in  accordance 
either  with  its  own  laws  or  with  the 
laws  of  the  country  where  the  con- 
tract is  to  be  performed.     A  limita- 
tion in  the  laws  of  all  nations  of  the 
right  to  enter   into  contracts  to  be 
performed    in    other    countries    re- 
quires that  they  shall  be  in  accord- 
ance with  the  laws  of  the  country 
where  they  are  made,  or  else  in  ac- 
cordance with  the  laws  of  the  coun- 
try where  they  are  to  be  performed. 
The  laws  of  a  country  have  no  ex- 
traterritorial force,  and  do  not  pro- 
hibit persons  from  doing  any  act  or 
making    any    contract    in    another 
country.    The  courts  of  any  country 
may    refuse    to    enforce    contracts 
made  in  another  country  where  they 
are  immoral  or  unjust,  or  where  the 
enforcing  of  them  would  injure  the 
rights,    interests   or    convenience   of 
that  country  or  its  citizens;  but  the 
laws  of  a  country,  as  such,  have  no 
operation  or  effect  upon  acts  done  or 
contracts  made  beyond  its  territor- 
ial  limits.     The  rights   enforced  by 
courts,  where  contracts  are  made  in 
one  country  to  be  performed  in  an- 
other, are  those  given  by  the  law  of 
the  country  where  the  contract  was 
made,  and  such  rights  are  to  be  en- 
forced in  the  country  where  the  con- 
tract is  to  be  performed,  not  as  a 
matter  of  right,  but  as  a  matter  of 
comity  extended  towards  the  coun- 
try  where   the   contract   was   made. 
Persons  making  contracts  with  ref- 


365] 


INTEREST. 


1173 


§  365.  Same  subject.  By  the  interest  laws  of  many  states 
usurious  contracts  are  not  wholly  void.  In  states  where  there 
is  any  interest  limit  there  are  various  provisions  \mder  whifh 
the  debtor  may  defend  on  the  ground  of  usury,  either  against 
the  excess  of  interest  above  the  legal  rate,  against  the  entire 
interest,  or  against  the  whole  interest  and  some  portion  of  the 
principal.  Some  question  has  arisen  how  far  the  courts  of  one 
state,  in  which  the  remedy  is  sought  on  such  contracts  made  in 


erence  to  the  laws  of  the  country 
where  such  contracts  are  to  be  per- 
formed may  expressly  or  im])liedly 
stipulate  for  the  rights  and  beiu^fits 
given  by  the  laws  of  that  country  as 
part  of  the  contract ;  and  the  laws 
of  the  country  where  the  contract  is 
made  secure  to  the  parties  the  rights 
and  benefits  thus  agreed  upon,  in  the 
same  manner  as  if  the  laws  in  ref- 
erence to  which  they  contracted  were 
incorporated  into  the  contract. 

"In  determining  the  consequences 
attendant  upon  making  a  contract 
in  one  country,  to  be  performed  in 
another,  which  is  not  in  accordance 
with  the  laws  of  either  country,  we 
should  inquire  which  country's  laws 
have  been  violated.  As,  for  example, 
the  laws  of  Illinois  allow  parties  to 
contract  for  interest  at  the  rate  of 
ten  per  cent.,  while  the  laws  of  New 
York  allow  only  seven  per  cent. 
Persons  who  make  contracts  in  Illi- 
nois for  interest  at  the  rate  allowed 
by  its  laws  violate  no  law  of  the 
state  of  New  York,  and  are  not  sub- 
ject to  the  penalties  imposed  by  the 
laws  of  that  state  upon  persons  who 
enter  into  contracts  within  its  terri- 
torial limits  in  violation  of  such 
laws.  A  creditor  who  has  made  no 
contract  in  New  York  does  not  vio- 
late its  laws  by  receiving  money 
from  his  debtor  in  that  state,  or 
undertaking  in  anotlier  state  to  re- 
ceive it  there.  The  laws  of  Indiana 
allow  persons  to  contract  for  inter- 


est at  the  rate  of  six  per  cent,  in 
case  the  contract  is  to  be  performed 
in  that  state,  and  at  the  rate  of 
seven  per  cent,  if  the  contract  is  to 
be  performed  in  New  York,  but  pro- 
liil)it  contracting  for  a  greater  rate 
in  either  case.  Persons  entering  into 
contracts  in  Indiana,  reserving  a 
greater  rate  of  interest  than  is  al- 
lowed by  its  laws  in  such  cases, 
tliereby  violate  tiie  laws  of  that 
state  and  incur  tlie  penalties  im- 
posed for  such  violation.  The  courts 
of  neitiier  state  will  enforce  the  con- 
tract, because  the  rights  asserted 
under  it  are  in  violation  of  the  laws 
of  the  state  where  it  was  made.  The 
fate  of  such  a  contract  depends  upon 
the  laws  of  the  place  where  it  was 
made,  being  sul)ject  to  the  legal  con- 
sequences attendant  upon  the  viola- 
tion of  those  laws.  Andrews  v.  Pond, 
13  Pet.  65,  10  L.  ed.  61.  In  McAl- 
lister V.  8mith,  17  111.  328,  65  Am. 
Dec.  651,  this  court  held  that  pleas 
setting  forth  tliat  bills  of  exchange 
upon  which  the  suit  was  brought 
were  made  in  Illinois  and  payable  in 
the  state  of  New  York,  under  a  con- 
tract not  in  accordance  with  the 
laws  of  either  state,  ought  not  to 
have  been  stricken  from  the  files  for 
immateriality.  While  the  reversal 
of  the  judgment  in  the  court  below 
upon  that  ground  was  undoubtedly 
correct,  upon  a  careful  review  of  the 
subject  we  are  not  satisfied  with  all 
the  reasons  given  on  tliat  occasion." 


1174  SUTHERLAND    ON    DAMAGES.  [§    365 

another  state,  will  enforce  snch  statntes  as  laws  governing  the 
contract.  It  is  a  general  rule  that  penal  laws  are  strictly  local ; 
confined  in  their  operation  to  the  territory  of  the  power  enact- 
ing them,  and  affect  nothing  more  than  they  can  reach.^^  The 
statute  of  New  York  limits  the  rate  of  interest  to  seven  per 
per  cent,  and  declares  void  all  usurious  contracts  and  securities. 
Any  contract  governed  by  this  law  and  which  would  be  held 
void  there  would  be  held  void  everywhere.^^  The  effect  of  this 
statute  is  penal,  and  for  this  reason  the  courts  hold  that  stat- 
utes taking  away  the  forfeiture  or  diminishing  it  may  be  made 
to  apply  to  existing  contracts.^^  The  eoutract  in  such  cases 
has  no  legal  inception ;  the  illegality  in  its  origin  prevents  its: 
coming  into  being,  the  law  being  more  potent  than  the  will  of 
the  parties.  When  money  is  parted  with  on  the  face  of  such 
an  agreement  it  is  irrecoverable,  forfeited ;  not  by  judicial 
sentence,  not  because  the  law  prescribes  a  fine  graduated  to  the 
sum  lent  at  usury,  but  because  the  law  is  passive  and  will  not 
aid  a  party  who  has  voluntarily  risked  his  money  in  an  un- 
lawful venture.  The  recognition  by  the  courts  of  other  states 
of  this  innate  infirmity  of  the  contract,  involving  a  forfeiture 
of  everything  of  value  invested  in  it,  though  that  be  a  penalty  for 
making  a  forbidden  contract,  is  not  deemed  the  enforcement  of 
the  penal  laws  by  the  effect  of  which  such  contracts  are  void  ah 
initio.  The  same  principle  applied  to  a  contract  which  by  the 
lex  loci  is  avoided  in  part  would  require  the  same  abatement  of 
the  debt  when  sued  for  in  another  state. 

By  the  statute  of  Iowa  the  creditor  is  entitled,  in  an  action 
for  a  usurious  debt,  to  recover  only  the  principal,  without 
interest  or  costs ;  but  the  courts  of  that  state  are  directed  in 
such  action  to  give  judginent  for  ten  per  cent  interest  to  the 
school  fund  of  the  county.     The  creditor  loses  the  interest,  but 

32Folliott  V.  Ogden,  1  H.  Bl.  135;  Bank  v.  McMillan,  76  S.  C.  501. 

Ogden  V.  Folliott,  3  T.  R.  733;  Wolff  33  See  §  357. 

V.  Oxholm,  G  M.  &  S.  99 ;  The  Ante-  34  Curtis  v.  Leavitt,   15   N.   Y.  9, 

lope,  10  Wheat.  123,  6  L.  ed.  282;  229;  Welch  v.  Wadsworth,  30  Conn. 

Scoville  V.   Canfield,   14  Johns.  338,  149,   79   Am.    Dec.    236;     Parmelee 

7   Am.  Dec.  467 ;   Commonwealth  v.  v.   Lawrence,   44   111.   405 ;    Wood  v. 

Green,  17  Mass.  515;  Sutherland  on  Kennedy,    19    Ind.    OS;     Pollock    v. 

Stat.    Const.,    §§    12-14;    Exchange  Glazier,  20  id.  262. 


§    365]  INTEREST.  1175 

the  debtor  is  relieved  only  from  paving  the  excess  over  ten  ])er 
cent.  In  an  action  in  Illinois  npon  a  contract  iiunlc  in  lln' 
former  state  the  phiintill'  was  pcniiitted  to  recover  only  accord- 
ing to  the  same  rule;  that  is,  the  principal  willxMit  intci-csl.^^ 
There,  of  course,  the  penalty  to  the  school  fund  was  not  ad- 
judged; nor  could  the  i)rovision  in  regard  to  costs  he  exec'uted. 
The  court  say:  "Here  unlaw  fnl  interest  was  contracted  joi' 
and  the  interest  was  incorporated  with  the  jji-incipal,  and  the 
law  in  effect  says  that  the  intei-est  shall  be  expunged  from  the 
note  and  it  shall  be  read  and  adjudged  the  same  as  if  the  prin- 
cipal sum  alone  had  been  expressed  in  dollars  and  cents.  And 
this  law,  entering  into  and  forming  part  of  the  contract,  goes 
with  it  wherever  it  goes.  It  is  admitted  that  such  would  be 
the  effect  of  this  law  if  it  had  declared  that  the  plaintilT  should 
have  judgment  for  nothing.  How  much  more  so  in  common 
sense  when  it  allowed  him  to  take  judgment  for  the  principal 
sum  borrowed.  The  distinction  in  the  two  cases  is  not  only 
without  reason,  but  is  against  all  reason  and  all  sound  law  and 
the  philosophy  of  the  law." 

The  statute  of  Massachusetts  fixes  the  rate  of  interest  at  six 
per  cent.  If  more  is  reserved  the  contract  is  not  void,  but  the 
defendant  recovers  full  costs  and  the  plaintiff  forfeits  three- 
fold the  amount  of  the  whole  interest  reserved,  and  is  entitled 
to  judgment  for  the  balance  only  which  shall  remain  due  after 
deducting  the  threefold  amount.  In  an  action  in  Iowa  ujion 
a  contract  claimed  to  be  usurious  under  the  laws  of  Massachu- 
setts the  trial  court  instructed  the  jury  that  ^'this  court  will  not 
enforce  the  penal  statute  of  another  state  relating  to  usury 
when  that  statute  docs  not  make  the  contract  wholly  void,  and, 
therefore,  the  statute  of  Massachusetts  is  not  to  be  consi<l(M-(Ml 
by  the  jury."  This  was  held,  on  appeal,  to  be  erroneous,  and 
that  the  legal  effect  of  the  contract  could  not  vary  in  dilferent 
states,  and  it  is  according  to  such  effect  that  all  courts  are 
bound  to  enforce  contracts.^^ 

35  Barnes  v.  Whitakcr,  22  Fll.  tlio  law  amxcd  a  penalty,  and  Hie 
Q06.  defendant   was   in   tliis  case  seeUinf,' 

36  Arnold  v.  I'otter,  22  Iowa  i!ll.  to  eolleet  it;  or  if,  as  under  our 
In   this   case   Wright,   J.,    said:  "if  statute,   the   defendmil     forfeited    a 


1176 


SUTHERLAND    ON    DAMAGES. 


[§  365 


certain  amount  to  the  school  or 
other  fund,  and  we  were  asked  to 
declare  the  same,  we  would  have 
cases  to  which  the  instruction  in 
question  would  apply.  Is  forfeiture 
the  same  as  penalty  in  this  connec- 
tion? This  is  easily  answered.  If 
the  law  attaches  a  penalty  as  the 
consequence  of  an  act,  it  may  be 
sued  for  and  recovered;  but  it  will 
be  enforced  alone  in  the  state  de- 
claring the  same.  If,  on  the  other 
hand,  a  person's  property  may  be 
forfeited  or  lost  by  some  fault  or 
offense,  the  forfeiture  is  not  en- 
forced, except  in  the  prosecution  of 
the  fault  or  offense;  and  if  the 
party  guilty  of  the  fault  seeks  to 
enforce  the  contract  which  he  has 
obtained  as  the  fruit  of  such  of- 
fense, he  can  take  no  part  of  the 
forfeiture.  And  when  he  declares 
and  seeks  to  recover  upon  such  a 
contract  in  another  state,  if  the 
courts  of  that  state  hold  that  his 
contract  shall  be  carried  out  as  in- 
terpreted by  the  laws  of  the  state 
where  made,  they  inflict  upon  him 
no  penalty;  they  are  not  enforcing 
the  penal  laws  of  another  state,  but 
enforcing  the  statute  of  a  sister 
state  so  far  as  it  effects  a  discharge 
of  the  claim.  Gambling  is  punished 
by  our  statute,  and  a  gambling 
contract  is  void.  Suppose  our  laws 
declared  that  a  party  holding  such 
a  contract  might  recover  one-half 
and  no  more.  Now,  the  penalty, 
the  penal  statute,  would  not  be 
enforced  in  another  state,  but,  in 
an  action  upon  the  contract  there, 
the  holder  would  be  limited  in  his 
recovery  to  the  one-half.  The  Mas- 
sachusetts statute  not  only  uses  the 
word  'forfeit,'  but  says  the  plain- 
tiff  shall   only   have   judgment    for 


so  much ;  tlius  unmistakably  keep- 
ing up  the  distinction  between  a 
law  of  this  kind  and  one  penal  in 
its  nature.  But  take  other  illustra- 
tions. A  stockholder  fails  to  com- 
ply with  the  terras  of  the  articles 
in  the  payment  of  his  stock,  and 
these  articles  declare  that  for  such 
noncompliance  his  share  shall  be- 
come forfeited.  Will  any  one  pre- 
tend that  this  is  a  penalty  within 
the  meaning  of  the  law?  Then, 
again,  equity  recognizes  the  dis- 
tinction when  it  is  said  that  a  party 
will  always  be  relieved  from  a 
penalty,  if  compensation  can  be 
made,  because  it  is  deemed  as  a 
mere  security;  and  yet,  though 
compensation  can  be  made,  relief 
will  not  always  be  given  against  a 
forfeiture.  So,  again,  we  speak  of 
a  forfeiture  in  case  of  a  breach  of 
a  covenant,  but  never  of  it  as  a 
penalty.  So  of  a  penalty  as  contra- 
distinguished from  liquidated  dam- 
ages, but  never  of  forfeiture  in  the 
same  connection.  Then,  again,  of 
forfeiture  as  a  recompense  to  an  in- 
jured party  for  the  wrongful  or- 
illegal  act  of  another,  by  which  the 
latter  loses  his  interest  in  the  thing. 
But  penalty  carries  a  very  different 
idea.  It  is  the  punishment  inflicted 
for  not  executing  a  prior  obliga- 
tion, the  object  being  to  insure  the 
primary  engagement  of  covenant. 
Bouvier's  Inst.,  vol.  1,  292;  2,  146; 
4,  217."  The  learned  judge,  refer- 
ring to  Sherman  v.  Gasset  9  111. 
521,  maintaining  a  different  doc- 
trine, said :  "It  was  decided  by  a 
divided  court,  Lockwood,  J.,  deliver- 
ing the  opinion  of  six  of  the  judges, 
and  Koerner,  J.,  the  dissenting  opin- 
ion of  the  other  three.  We  do  not 
propose    to    examine    it    at    length. 


§    365]  INTEREST.  1177 

In  a  recent  case  ^'  the  loan  was  negotiated  in  Connecticut, 
the  note  and  mortgage  securing  its  payment  were  executed  in 
North  Carolina,  the  land  mortgaged  was  situated  in  Tennessee 
and  the  note  and  mortgage  were  delivered  and  uiade  payable 
in  New  Jersey.  The  rate  of  interest  stipulated  for  was 
usurious  under  the  laws  of  New  Jersey  and  under  those  of 
Tennessee.  In  a  suit  to  foreclose  the  mortgage  it  was  ruled 
that  the  contract  was  governed  by  the  laws  of  New  Jersey,  and 
that  it  might  be  enforced  in  Tennessee,  less  the  excessive  in- 
terest. It  was  said:  We  cannot  presume  that  this  contract 
is  usurious  and  void  by  the  laws  of  New  Jersey.  I'hat  fact 
must  be  made  to  appear  by  proof,  and  has  been  established. 
But,  it  requiring  proof  to  establish  the  usurious  contract  under 
those  hiws,  it  follows,  under  our  own  decisions  in  such  cases, 
that  the  note  is  not  avoided,  but  only  the  usury.  If  this  were 
a  Tennessee  contract  the  usury  appearing  on  the  face  of  the 
note  would  avoid  the  whole  contract;  but,  it  being  a  New 
Jersey  contract,  and  thereby  necessitating  proof  aliunde  the 
contract  to  show  the  usury,  the  contract  is  only  avoided  to  the 
extent  of  the  usury. 

It  is  obvious  that  where  the  lex  loci  provides  that  the  inter- 
est contract  shall  not  be  void,  but  declares  certain  consequences 
of  the  usury  and,  among  them,  that  a  deduction  shall  be  made 
in  any  action  brought  upon  the  contract  from  the  amount  to 
which  it  purports  to  entitle  the  creditor,  such  consequences  are 
penal  in  their  nature  in  the  same  sense,  and  no  other,  as  the 

The  argument  of  the  majority  of  provides  for  a  forfeiture  only,  by 
the  court  strikes  us  as  being  based  which  the  creditor  loses  but  a  part 
upon  improper  assumptions,  and  as  of  his  claim,  seems  to  involve  a 
equally  inconclusive  in  its  reason-  singular  inconsistency.  It,  in  oHier 
ing;  and  most  pertinently  does  the  words,  involves  the  following  re- 
dissenting  opinion  dispose  of  the  markable  syllogism:  The  law  every- 
whole  argument  by  saying:  '"To  wliere  avoids  usurious  contracts 
maintain  that  we  are  bound  to  de-  when  they  are  declared  wholly  void 
clare  a  usurious  contract  wholly  by  the  law  of  the  place.  This  con- 
void,  when  the  laws  of  tlie  place  tract  was  void  in  part,  and  consc- 
of  contract  make  it  so,  whereby  the  quently  it  is  good  in  whole." 
creditor  is  deprived  of  the  whole  37  Hvil)l)lc  v.  .Morristown  L.  Co., 
of  his  claim,  but  that  we  are  not  95  Tenn.  .585.  See  Kuhn  v.  Morri- 
bound   to  regard   the   law   where   it  son,  75  Fed.  81. 


1178 


SUTHERLAND    ON    DAMAGES. 


[§    365 


law  which  declares  the  whole  contract  void.  Neither  law 
means,  in  an  absolute  sense,  what  it  says  by  "void,"  and  "'not 
void."  If  a  usurious  contract  were  absolutely  void  anybody 
could  allege  its  invalidity.  But  the  law  confines  the  privilege 
of  making  that  objection  to  the  debtor  party  to  the  contract  and 
those  standing  in  certain  relations  of  privity  to  him.  The  law 
which  declares  the  contract  void  itself  qualifies  the  declaration 
by  specifying  certain  effects  of  the  usury  which  substantially 
obliterate  a  part  of  the  contract  from  its  inception.^* 

The  statute  which  makes  usury  a  total  or  partial  defense  may 
hamper  it  by  nuiking  it  depend  on  some  special  method  of  local 
practice,  and  thereby  confine  its  allowance  to  the  courts  of  the 
state  by  whose  law  the  contract  and  the  remedy  are  governed. 


38Ewell  V.  Daggs,  108  U.  S.  143, 
27  L.  ed.  682. 

If  a  usurious  contract  is  wholly 
abandoned  and  the  securities  given 
to  insure  its  performance  are  can- 
celed a  subsequent  promise  by  the 
borrower  to  pay  the  money  he  bor- 
rowed is  binding.  Sheldon  v.  Hax- 
tun,  91  N.  Y.  124;  Hammond  v. 
Hopping,  13  Wend.  505;  Kilbourn 
V.  Bradley,  3  Day,  356,  3  Am.  Dec. 
273 ;  House  v.  Planters'  Bank,  57 
Ga.   95. 

Willis  V.  Cameron,  11  Abb.  Pr. 
245,  proceeds  wholly  upon  the 
ground  that  the  statute  of  usury 
of  Massachusetts,  which  applied  to 
the  contract  in  question,  is  penal, 
and  therefore  that  the  deduction  of 
threefold  the  amount  of  the  whole 
interest  reserved  can  only  be  al- 
lowed in  the  courts  of  that  state. 
Hilton,  J.:  "The  second  defense, 
though  very  ingeniously  pleaded, 
must,  I  think,  be  regarded  as  sham. 
It  assumes  to  be  a  defense  in  bar 
of  the  plaintiff's  right  to  recover 
anything  upon  the  note  in  suit; 
whereas,  by  the  statutes  of  Massa- 
chusetts, as  interpreted  by  the 
courts  of  that  state  (Kendall  v. 
Robertson,  12  Cush.  156),  although 


the  rate  of  interest  there  is  de- 
clared to  be  six  per  cent,  per  annum 
on  all  contracts  for  the  payment  of 
money,  yet  the  taking  of  a  greater 
sum  does  not  avoid  the  entire  con- 
tract, but  merely  imposes  upon  the 
person  taking  it,  by  way  of  pen- 
alty, a  forfeiture  of  threefold  the 
amount  of  interest  unlawfully  re- 
served, and  no  more;  and  which  is 
to  be  allowed  to  the  defendant  in 
the  action  upon  the  contract  when 
he  establishes  the  fact  of  taking 
such  imlawful  rate,  together  with 
his  full  costs  in  the  suit;  or  when 
the  illegal  interest  has  been  paid, 
the  party  paying  it  may  recover  it 
back  threefold.  (See  De  Wolf  v. 
Johnson,  10  Wheat.  367,  6  L.  ed. 
343  as  to  the  effect  of  such  a  stat- 
ute.) It  will  not,  I  suppose,  be 
contended  that  the  defendant,  if  he 
had  paid  the  illegal  interest,  could 
maintain  an  action  in  this  state  to 
recover  the  penalty  thus  imposed  by 
the  statute  of  Massachusetts  upon 
the  party  receiving  it;  and  this  be- 
ing the  case  I  think  it  must  follow, 
as  a  necessary  consequence,  that  he 
cannot  in  this  state  avail  himself 
of  the  statute  by  way  of  defense." 
See  Sherman  v.  Gassett,  9  111.  521. 


§   3fifi] 


INTEREST, 


1170 


This  is  illiKstratcd  by  a  caso  in  Massacliiisclls,  iipdii  a  note 
usurious  by  the  hiw  of  Xrw  IIaiiii)sbii-(\  by  wliicb  biw  the  btMic- 
fit  of  the  defense  (lei)eii(le(l  ou  the  (lefeiuhuit  otVeriiiu-  a  i)ar- 
ticular  mode  of  trial ;  that  is,  l)y  tlie  oatli  of  the  parties.  I  f  tlie 
usury  was  thus  proved  a  eertain  anioiint  was  re(|iiire(l  to  be 
deducted  fi'oni  the  ])riiici]>al  and  interest  due  on  the  contract 
in  assessiui;-  (hnnai>es.  These  provisions  were  hekl  to  aj)ply  to 
the  remedy,  and,  of  course,  to  extend  only  to  suits  brouiiiit  in 
i^ew  Hampshire ;  they  could  have  no  effect  when  a  remedy  was 
sought  in  the  courts  of  another  state.^^ 

§  366.  The  law  of  what  place  governs  the  rate  as  damages. 
Interest  before  a  debt  is  due  is  the  creature  of  agreement;  after- 
wards it  is  given  by  law  as  damages  for  detention  of  the  money ; 
but  it  may  he  governed  as  to  rate  by  contract.  In  the  absence  of 
contract  the  amount  is  regulated  by  law.  And  there  is  nnich 
authority  for  saying  that  the  law  which  governs  the  rate  is  that 
of  the  place  where  the  debt  is  payable.'*"    That  law  is  supposed 


39  Gale  V.  Eastman,  7  ]\Iotc. 
(Mass.)  H.  Tlie  distinction  Ix'- 
tween  the  law  of  the  contract  and 
the  remedy  is  very  distinctly  stated 
by  Shaw,  C.  J.,  who  delivered  the 
opinion:  "The  general  rule  is 
that  those  provisions  of  law  which 
determine  the  construction,  opera- 
tion and  effect  of  a  contract 
are  part  of  the  contract  atid  follow  ■ 
it,  and  give  effect  to  it  where- 
ever  it  goes;  but  that  in  regard 
to  remedies,  the  lex  fori,  tlie  law 
of  the  place  where  the  remedy 
is  sought,  must  govern.  ^Ve  there- 
fore cannot  be  governed  by  the  law 
of  New  Hampshire,  whicli  [)rof esses 
only  to  regulate  the  remedy  on  a 
usurious  contract.  The  law  nf 
Massachusetts,  thougli  somewliat 
analogous,  cannot  apply  because, 
although  the  mode  of  enforcing  tlie 
law  against  usury  is  by  applying 
it  to  tiie  remedy,  yet  the  law  to  lie 
enforced  is  the  law  of  Massucbu- 
setts.      The    law     of     tiiis    connnon- 


wealtii,  declaring  wliat  siuili  be  tlie 
rate  of  interest  and  what  contracts 
sliall  be  deemed  usurious,  also  di- 
rects, when  suits  are  brouglit,  wliat 
deductions  sluill  be  made;  but  it 
is  suits  l)rouglit  on  such  contracts, 
that  is,  contracts  made  in  viola- 
tion of  its  own  provisions." 

40  Healy  v.  (lorman,  15  X.  .1.  L. 
,328;  Evans  v.  Clark,  1  Port.  :5SS; 
Evans  v.  Irvin,  id.  .'iOO:  Hall  v. 
Kimball,  r)8  111.  ."iS;  llop])ins  v.  .Mil- 
ler, 17  N.  J.  L.  185;  Burton  v. 
Anderson,  1  Tex.  0.*?;  Gibbs  v.  Fre- 
mont, n  Ex.  25:  Bushby  v.  ('amac, 
4  Wash.  V.  C.  29(1;  Winllnop  v. 
Carleton.  12  Mass.  4:  lafFray  v. 
Dennis,  2  Wash.  ('.  ('.  2.'):!;  Lanusse 
v.  Barker,  'A  Wheat.  101.  4  L.  ed. 
;54."?:  Winthrop  v.  j'epoon,  1  Bay 
468;  ({aillard  v.  Ball.  1  Xott  & 
McC.  07;  Robinson  V.  Bland,  2  Burr. 
1077;  Thompson  v.  Ketcliam,  4 
Johns.  285;  Cocke  v.  Conigmaker, 
1  A.  K.  Marsh.  254:  Porter  v.  Mun- 
ger,  22  Vt.  101  ;  Crnwford  v.  Simon- 


1180 


SUTHERLAND    ON    DAMAGES. 


[§  366 


to  have  been  in  the  minds  of  the  parties  when  the  debt  was  con- 
tracted ;  at  all  events,  the  money  is  deemed  to  be  worth  the  legal 
rate  of  interest  at  the  place  where  it  was  the  debtor's  duty  to 
pay  it.  The  creditor  may  bring  suit  wherever  a  court  can  ob- 
tain jurisdiction,  but  the  damages  for  detention  of  the  debt  have 
generally  been  assessed  according  to  the  law  of  the  place  where 
jDayment  was  due,  if  that  law  is  shown.^^  This  rule  does  not 
appear  to  be  recognized  in  Massachusetts  except  in  respect  to 
contracts  containing  an  express  or  implied  agreement  to  pay 
interest.  It  is  now  declared  settled  that  in  an  action  there  upon 
a  note  made  payable  on  a  day  certain  in  another  state,  without 
any  agreement  express  or  implied  to  pay  interest,  the  plaintiff 
can  only  recover  at  the  legal  rate  in  Massachusetts  although  less 
than  such  rate  in  the  state  where  the  note  was  made  and  pay- 
able.*^ In  Indiana  if  a  note  sued  upon  was  made  in  another 
state  and  does  not  provide  for  interest  nor  specify  the  place  of 


ton,  7  Port,  110;  Evans  v.  White, 
Hemp.  296;  Peck  v.  Mayo,  14  Vt. 
33,   39   Am.   Dec.   205. 

41  2  Par.  on  Con.  585 ;  2  Par.  on 
Notes  and  Bills  370;  Fanning  v. 
Consequa,  17  Johns.  511,  8  Am.  Dec. 
442;  Chambliss  v.  Robertson,  23 
Miss.  302;  Gage  v.  McSvveeney,  74 
Vt.  370. 

42Ayer  v.  Tilden,  15  Gray  178 
77  Am.  Dec.  355;  Ives  v.  Farmers' 
Bank,   2   Allen   236. 

In  Ayer  v.  Tilden  the  action  was 
upon  a  New  York  note  in  which 
there  was  no  agreement  for  the  pay- 
ment of  interest.  Hoar,  J.:  "That 
rate  is  six  per  cent,  from  the  matu- 
rity of  the  note.  The  interest  is  not 
a  sum  due  by  the  contract,  for  by 
the  contract  no  interest  was  pay- 
able, and  is  not,  therefore,  affected 
by  the  law  of  the  place  of  the  con- 
tract; it  is  given  as  damages  for 
the  breach  of  the  contract,  and  must 
follow  the  rule  in  force  within  the 
jurisdiction  where  the  judgment  is 
recovered.  Grimshaw  v.  Bender,  6 
Mass.  157;  Eaton  v.  Melius,  7  Gray 


506;  Barringer  v.  King,  5  Gray  9. 
The  contrary  rule  has  been  held  to 
be  applicable  when  there  was  an 
express  or  implied  agreement  to  pay 
interest.  Winthrop  v.  Carleton,  12 
Mass.  4;  Von  Hemert  v.  Porter, 
11  Mete.  (Mass.)  210;  Lanusse  v. 
Barker,  3  Wheat.  10],  4  L.  ed.  343. 
Perliaps  it  would  be  difficult  to  sup- 
port the  decision  in  Winthrop  v. 
Carleton  upon  any  sound  principle; 
because  the  court  in  that  case  held 
that  interest  could  only  be  computed 
from  the  date  of  the  writ;  thus 
clearly  showing  that  it  was  not  con- 
sidered as  due  by  the  contract,  and 
yet  adopted  the  rate  of  interest  al- 
lowed at  the  place  of  the  contract. 
But  the  error  would  seem  to  be  in 
not  treating  money  paid  at  the  im- 
plied request  of  another  as  entitled 
to  draw  interest  from  the  time  of 
payment.  An  objection  to  adopt- 
ing the  rule  of  the  rate  of  interest 
in  tlie  jurisdiction  where  the  action 
is  brought  as  the  measure  of  dam- 
ages may  be  worthy  of  notice;  that 
this  rule   would   allow   the  creditor 


§    36G]  INTEREST.  1181 

payment  the  court  will  award  interest  acording  to  the  local 
law.^^  In  Illinois  the  rule  is  tliat  if  a  foreign  contract  is  silent 
as  to  the  rate  of  interest  the  lex  fori  will  determine  the  rate  to 
be  allowed,  if  any,  in  absence  of  proof  of  the  law  of  the  place 
of  the  contract.  Where  the  rate  of  interest  sought  to  be  re- 
covered is  greater  than  that  allowed  by  the  lex  fori  and  the  law 
of  the  place  of  payment  is  pleaded  and  proved,  and  it  allows  a 
greater  rate  of  interest  than  is  recoverable  where  the  remedy  is 
sought,  the  lex  loci  may  be  invoked  to  show  the  legality  of  the 
contract  and  the  intention  of  the  parlies  to  it.**  In  Kentucky 
interest  may  be  recovered  on  a  note  executed  in  another  state  at 
the  stipulated  rate  until  its  maturity,  but  thereafter  interest 
will  be  computed  at  the  rate  prescribed  by  the  law  of  Ken- 
tucky.*^ Interest  as  damages,  in  the  alisence  of  a  contract,  is 
governed  by  the  law  of  the  forum. *^ 

A  cause  of  action  arising  under  a  foreign  statute  is  vindi- 
cated in  the  tribunal  of  another  country  upon  principles  of 
comity.  The  lex  fori  is  referred  to  and  compared  with  and 
measured  by  the  lex  loci  for  two  reasons:  one  that  the  party 
defendant  may  not  be  subjected  to  diiferent  and  varying  re- 
sponsibilities, and  the  other  that  the  tribunal  trying  the  action 
may  know  that  it  is  not  lending  itself  to  enforce  a  right  which 
it  does  not  recognize  and  which  is  against  the  piiblic  policy  of 
the  forum ;  reference  is  not  made  to  the  law  thereof  as  creating 
the  cause  of  action  enforced.*'  Hence,  where  a  foreign  statute 
restricts  the  right  to  recover  to  a  sum  named  in  it  interest  will 

to    wait    until     lio     could     find     liis  bo  pcrformod."     See  Cliasc  v.  J^ow, 

debtor    or    his    i)ropt'rty     witliin     a  47    N.    IT.   405. 

jurisdiction   where    a    mucli    liij^dicr  «  Koindkc    v.    Kopidke,    112    Ind. 

rate    of    interest    was    allowed    tiian  4:55 ;    Siiaw    v.    Rij^by,    84    Ind.    .375, 

at  the   place   of  contract.      But   the  43   Am.    Rei).   Of). 

debtor  could  always  avoid  this  dan-  44  Morris,  v.  \\'iliaii\.   !.")!»   111.  (".•27, 

ger  by  performing  his  contract;  and  051;    Robinson    v.    llolnu's,     75     III. 

the   same   dilTiculty    exists    in    rcla-  App.  20:?. 

tion  to  the  action  of  trover  and  re-  45  Joseph  v.  Lyon.  0   Ky.   L.   Kcp. 

plevin.     If  such  a  case  should  arise  .324    (Ky.   Super.  Ct.) 

it  might  with  more  reason  be  argued  46  Carson  v.  Smith,  1.33  Mo.  (iOG; 

that  the  damages  should  not  be  al-  Hoddard    v.    Foster,    17    Wall.    12."!, 

lowed  to  exceed  those  which  would  21    L.     ed.     58(1;     BischofTshcim    v. 

have    been    recovered    in    the    state  Haltzer.  21    Fed.  531. 

where  the  contract  was  made  and  to  47  Per   Finch,    J.,    in    Wooden   v. 


1182 


SUTHEKLAND    ON    DAMAGES. 


[§    366 


not  be  added  though  it  is  provided  for  in  a  statute  of  the  forum. 
The  right  to  interest  is  inseparable  from  the  right  to  damages 
and  as  truly  and  of  the  essence  of  the  defendant's  liability  as  is 
the  sum  named  in  the  statute.*^ 

§  367.  Pleading  and  proof  of  foreign  law.  Courts  of  one 
state  do  not  take  judicial  notice  of  the  laws  of  other  states  or 
countries.  Hence,  where  a  contract  is  sued  out  of  the  jurisdic- 
tion Avithin  which  it  is  to  be  performed  and  the  plaintiff  seeks 
to  recover  interest  according  to  the  law  of  the  place  of  contract 
he  must  set  forth  that  law  in  his  pleading  and  prove  it  on  the 
trial.*'     Interest,  though  generally  regulated  by  statute,  is  not 


Western  New  York  &  P.  R.  Co.,  126 
N.  Y.  10,  16  Am.  Neg.  Cas.  806, 
22  Am.  St.  803,  13  L.R.A.  458. 

48Kiefer  v.  Grand  Trunk  R.  Co., 
12  App.  Div.  (N.  Y.)  28,  affirmed 
witliout  opinion,   153   N.   Y.   688. 

49  Liverpool  &  G.  W.  Steam  Co. 
V.  Phenix  Ins.  Co.,  129  U.  S.  397, 
32  L.  ed.  788;  Eastfield  S.  S.  Co. 
V.  McKeon,  208  Fed.  580;  Kraus  v. 
Torry,  146  Ala.  548;  Hubble  v. 
Morristown  L.  Co.,  95  Tenn.  585; 
Commission  Co.  v.  Carroll,  104 
Tenn.  489;  Robinson  v.  Holmes,  75 
111.  App.  203;  Morris  v.  Wibaux, 
159  111.  651;  Balfour  v.  Davis,  14 
Ore.  47 ;  Ramsey  v.  McCauley,  2 
Tex.  189;  Swett  v.  Dodge,  4  Sm.  & 
M.  667 ;  Davidson  v.  Gohagin,  2 
Bibb  634;  Richardson  v.  Williams, 
2  Port.  239;  Jaffray  v.  Dennis,  2 
Wash.  C.  C.  253;  Peacock  v.  Banks, 
Minor  387;  Hunt  v.  Mayfield,  2 
Stew.  124;  Harrison  v.  Harrison,  20 
Ala.  629,  56  Am.  Dec.  227;  Nallc 
v.  Ventress,  19  La.  Ann.  373;  In- 
graham  v.  Arnold,  1  J.  J.  Marsh. 
406;  Johnson  v.  Williams,  id.  489; 
Russell  v.*  Shepherd,  Hardin  44; 
Pawling  v.  Sartain,  4  J.  J.  Marsh. 
238;  Cavender  v.  Guild,  4  Cal.  2.^)0; 
Thompson  v.  Monrow,  2  Cal.  99,  56 
Am.  Dec.  318. 

In  Foden  v.  Sharp,  4  Johns.  183, 


action  was  brought  against  the  ac- 
ceptors of  a  bill  of  exchange  drawn 
and  payable  in  England.  On  the  in- 
quest of  damages  the  only  evidence 
was  the  bill  and  a  protest  for  non- 
payment. The  jury  allowed  seven 
per  cent,  interest,  the  rate  where 
the  action  was  brought.  The  court 
ordered  a  reduction  of  the  interest 
to  five  per  cent.,  the  rate  in  Eng- 
land, of  which  it  seemed  to  take 
judicial  notice. 

In  Schell  v.  Stetson,  12  Phila. 
187,  a  suit  upon  a  New  York  judg- 
ment rendered  for  costs,  the  court 
took  judicial  notice  of  the  fact  that 
the  laws  of  that  state  allowed  in- 
terest on  such  judgments  and  as- 
sumed that  it  was  bound  to  do  so 
by  virtue  of  the  federal  constitu- 
tion. But  this  is  not  a  tenable  posi- 
tion. Clark  V.  Child,  136  Mass. 
344. 

In  an  action  on  a  note  payable  in 
New  York  a  plea  of  usury  setting 
forth  the  statute  of  that  state,  the 
plea  not  being  demurred  to,  but 
allowed  to  stand  for  trial,  is  suffi- 
cient to  admit  the  statute  in  evi- 
dence whether  the  sum  on  which 
usury  was  to  be  paid,  the  time 
when  the  contract  was  made,  when 
payable,  and  the  amount  of  usury 
agreed     upon     be     pleaded    or    not. 


§  •'^07] 


INTEREST. 


iisn 


necessarily  so;  it  may,  in  tlio  alisenee  of  statute,  be  paynblo.  and 
its  rate  governed  hy  cnstoni.^"  Wliere  tlie  rate  of  another  state 
is  alleged  to  be  established  by  statute  the  party  so  alleging  it 
should  prove  the  statute,  as  foreign  statutes  are  required  by  the 
law  of  the  forum  to  be  proved.  But  if  the  allegation  does  not 
specify  that  the  foreigTi  rate  is  so  established  the  court  wonhl 
not  assume  that  the  foreign  rate  was  governed  by  a  written  law. 
It  would  seem  to  be  as  competent  to  take  judicial  notice  of  the 
statutory  rate  of  another  state  as  that  the  rate  of  another  state 
is  fixed  by  statute.  The  rate  of  another  state  and  the  law,  writ- 
ten or  unwritten,  which  is  the  foundation  of  it,  is  matter  of  fact 
to  be  alleged,  proved,  and  found  by  the  jury.^^ 


Odom    V.   New   England   M.    S.    Co., 
91  Ga.  505. 

50  Young  V.  Godbc,  15  Wall.  5(!2, 
21  L.  ed.  250. 

51  See  cases  cited  in  n.  40,  §  .^(iO. 
In  Kermott  v.  Ayer,  11  ^licli.  ISl, 
suit  was  brougiit  on  a  Canada  note. 
The  court  held  that  it  could  not 
take  judicial  notice  of  tlie  rate  of 
Canadian  interest,  and  that  it  was 
not  a  presumption  of  law  that  tlie 
rate  of  interest  in  a  foreign  coun- 
try is  the  same  as  that  estahlislied 
in  Michigan  by  statute.  Campliell, 
J.,  said:  "The  evidence  of  the  at- 
torney from  Canada  concerning  the 
Canadian  law  of  interest  could  not 
properly  be  received  to  sliow  the 
terms  of  a  Canadian  statute.  For- 
eign statutes  cannot  be  proved  by 
parol,  without  some  showing  why 
secondary  evidence  becomes  neces- 
sary. This  doctrine  has  been  recog- 
nized in  this  court  in  People  v. 
Lambert,  5  Mich.  349,  75  Am.  Dec. 
49,  and  is  the  settled  American  doc- 
trine.    1   Greenlf.,  §§  587-8. 

"The  rate  of  interest  is  a  matter 
of  such  common  notoriety  that  there 
might  be  reason  for  excepting  it 
from  this  general  rule,  and  there  is 
no  doubt  that,  in  many  cases,  it  has 
been   proved   by   parol,    witlioul,   ob- 


jection. But  there  would  he  danger 
in  allowing  sucii  an  exception  as  an 
arbitrary  one;  and  the  mistakes 
made  in  works  current  among  busi- 
ness men  on  the  rates  of  interest 
in  dilTerent  states  show  tliat  busi- 
ness knowledge  of  statutory  ])ro- 
visions  is  not  always  reliable.  We 
have  been  in  some  doul)t  whetlier, 
for  this  reason,  tliere  was  not  error 
in  admitting  tlie  evidence  objected 
to.  Hut  it  does  not  appear  that 
Canadian  interest  is  regulated  by 
statute;  and  we  are  not  justified  in 
making  any  inference  not  required 
by  facts  set  out,  in  order  to  estab- 
lish error;  the  presumption  must 
always  be  in  favor  of  tlie  judgment. 
It  is,  therefore,  aflirmed."  Hut.  in 
Talbot  V.  Teebles,  0  J.  .1.  :\Iarsh. 
200,  on  a  similar  record,  the  court 
thus  treated  the  subject.  The  only 
witness  who  was  sworn  to  prove 
the  rate  of  interest  in  Illinois  stat- 
ed that  the  legal  rate  was  six  per 
cent.  Con.sequently,  if  he  proved 
anything,  he  proved  that  the  rate 
of  interest  in  Illinois  was  fixed  by 
law.  The  law  must  necessarily  be 
a  public  and  written  law;  for  if  it 
be  not  a  positive  statute,  enacted  by 
the  legislature  of  Illinois,  it  must 
be  some  pre-existing  statute  of  Eng- 


1184 


SUTHERLAND    ON    DAMAGES. 


[§  367 


Where  there  is  an  allegation  of  a  foreign  rate  of  interest  of 
the  place  of  contract  differing  from  the  rate  at  the  place  where 
the  action  is  brought  unsupported  by  proof,  or,  in  the  absence 
of  any  allegation  of  the  rate  where  the  contract  is  payable, 
whether  interest  should  be  denied  altogether  or  should  be  al- 
lowed according  to  the  rate  fixed  or  permitted  by  the  law  of  the 
forum  does  not  appear  to  be  entirely  settled.  In  Texas  it  is 
held  that  no  interest  at  all  can  be  recovered  upon  a  contract  pay- 
able in  another  jurisdiction,  unless  the  rate  there  prevailing  is 
alleged  and  proved.^^  So  in  Alabama.^^  The  more  general 
rule,  and,  as  we  think,  the  more  reasonable  one,  is  to  allow  in- 
terest according  to  the  lex  fori.^^  The  law  of  the  forum  is 
adopted  in  some  states,  in  the  absence  of  proof  of  the  rate  at 
the  place  of  contract,  on  the  principle  that  it  should  be  pre- 
sumed, until  the  contrary  is  shown,  that  the  law  of  the  state 
where  the  contract  was  to  be  performed  is  the  same  as  of  that 
where  the  action  is  brought.^^ 


land  or  Virginia,  recognized  by  tlie 
constitution  of  Illinois,  or  must  be 
an  express  provision  oi  her  consti- 
tution. 

Where  the  plaintiff  seeks  to  re- 
cover interest  by  virtue  of  a  con- 
tract made  in  a  foreign  state  the 
defendant  is  bound  to  show  any  in- 
firmity in  the  contract  under  the 
laws  thereof.  If  he  admits  the  va- 
lidity of  the  contract  such  proof 
need  not  be  made.  Dearlove  v.  Ed- 
wards, 166  111.  619. 

52  Wheeler  v.  Pope,  5  Tex.  262; 
Able  V.  McMurray,  10  id.  350; 
Prigdon  v.  McLean,  12  id.  420;  In- 
gram v.  Drinkard,  14  id.  351.  See 
Cooke  V.  Crawford,  1  id.  9,  46  Am. 
Dec.  93 ;  Burton  v.  Anderson,  1  Tex. 
93. 

53  Evans  v.  Clark,  1  Port.  3S8; 
Peacock  v.  Banks,  ^Nlinor  387; 
Spain  v.  Grove,  id.   177. 

54Surlott  V.  Pratt,  3  A.  K. 
Marsh.   174;    Chumasero   v.   Cilbert, 


26  111.  39,  24  id.  651;  Deem  v. 
Crume,  46  111.  69;  Goddard  v. 
Foster,  17  Wall.  123,  21  L.  ed.  589; 
Prince  v.  Lamb,  1  111,  378;  Lougee 
V.  Washburn,  16  N.  H.  134;  Hall 
v.  Woodson,  13  Mo.  462;  Hall  v. 
Kimball,  58  111.  58;  Booty  v.  Coop- 
er, 18  La.  Ann.  565;  Leavenworth 
V.  Brockway,  2  Hill  201;  Kopelke 
V.  Kopelke,  112  Ind.  435;  Shaw  v. 
Rigby,  84  Ind.  375,  43  Am.  Rep.  96; 
Thomas  v.  Beckman,  1  B.  Mon.  34. 
See  Gordon  v.  Phelps,  7  J.  J.  Marsh. 
619;  Whidden  v.  Seelye,  40  Me.  247, 
63  Am.  Dec.  661. 

55  Hallam  v.  Telleren,  55  Neb. 
255;  Fitzgerald  v.  Fitzgerald  &  M. 
C.  Co.,  41  Xeb.  374,  472;  Law  v. 
Crawford,  67  Mo.  App.  150;  Des- 
noyer  v.  McDonald,  4  Minn.  515; 
Fouke  V.  Fleming,  13  Md.  393 ;  Mar- 
tin V.  Martin,  1  Sm.  &  M.  176.  See 
De  La  Chaunette  v.  Bank  of  Eng- 
land, 9  B.  &  C.  208:  Kcriiiott  v. 
Ayer,  11  Mich.   181. 


368] 


INTEREST. 


US; 


§  368.  Effect  of  change  in  law  of  place  of  contract.  Oiio 
branch  of  the  present  inquiry  remains  to  be  considered;  tiint 
is,  what  is  the  effect  of  changes  in  the  law  in  regard  to  tlio 
rate  of  interest  while  the  contract  on  which  the  question  of 
interest  arises  is  pending  or  after  the  principal  becomes  due. 
At  first  blush  the  principle  which  fixes  the  rate  by  the  law  of 
the  place  of  contract  might  seem  to  require  the  rate  to  ho  the 
same  throughout  the  period  of  forbearance  or  dcfaiih  as  at  the 
making  of  the  contract,  or  when  the  contract  duty  or  liability 
to  pay  interest  attaches.  It  is  so  when  interest  is  expressly  or 
tacitly  agreed  to  be  paid.  iJut  where  it  is  recoverable  for 
mere  default  in  not  paying  money  due  either  ex  coiilrarlii  or 
ex  delicto  it  is  governed  by  the  law  in  force  when  the  interest 
accrues;  the  rate  will  change  to  conform  to  the  law  if  any  change 
takes  place.  ^^ 


56  Sating  V.  Bolander,  125  Fed. 
701,  60  C.  C.  A.  469;  Watkins  v. 
Junker,  90  Tex.  584;  Gulf,  etc.  R. 
Co.  V.  Humphries,  4  Tex.  Civ.  App. 
333;  State  v.  Guenther,  87  Wis. 
673;  Wilson  v.  Cobb,  31  N.  J.  Eq. 
91;  Jersey  City  v.  O'Callaghan,  41 
N.  J.  L.  349;  White  v.  Lyons,  42 
Cal.  279 ;  Stark  v.  Olney,  3  Ore.  88 ; 
Firemen's  Fund  Ins.  Co.  v.  Western 
Ref.  Co.,  162  111.  322;  Stickler  v. 
Giles,  9  Wash.  147;  Sanders  v.  Lake 
Shore,  etc.  R.  Co.,  94  N.  Y.  641; 
First  Nat.  Bank  v.  Fourth  Nat. 
Bank,  84  id.  412;  O'Brien  v.  Youii.tr, 
nr.  id.  428. 

A  statute  changing  tiie  rate  of  in- 
terest cannot  operate  retrospective- 
ly so  as  to  diminish  the  amount  due 
upder  the  rate  established  l)y  a 
prior  statute.  Reese  v.  Rutherfurd, 
90  N.  Y.  644. 

LInder  a  statute  requiring  a  coiiii- 
ty  treasurer  if  he  has  not  funds  to 
pay  an  order  when  presented  to  in- 
dorse it  "not  paid  for  want  of 
funds,"  and  expressing  tliat  fnuii 
the  date  of  sucli  indorsement  tbe 
order  shall  bear  legal  interest,  it 
Suth.  Dam.  Vol.  I.— 7r>. 


has  been  lield  that  the  legal  rate  in 
eflect  at  the  time  tlie  indorsement 
is  made  enters  into  the  contract  as 
a  part  of  it,  and  is  not  affected  iiy 
a  subsequent  statute  reducing  the 
rate.  The  opinion  lays  some  stress 
i:pon  the  r*ile  of  construction  which 
forbids  giving  statutes  a  ntro 
active  operation ;  but  more  weight 
is  given  to  tlie  question  of  legisla- 
tive power.  Union  Sav.  B.  &  T.  Co. 
V.  Gelbach,  8  Wash.  497.  24  L.H.A. 
3.59  (two  judges  dissenting)  :  \\  il- 
liams  V.  Shoudy,  12  Wash.  362; 
Seton  V.  lloyt,  31  Ore.  266,  4:« 
L.R.A.  (i.'M,  7.")  Am.  SI.  (Ml.  is  to 
tlie  same  cll'cct,  as  is  Sliiidcy  v. 
Haclicney.    24    Ore.    :in3. 

In  a  subseijiient  Wasiiington  cas;' 
it  was  ruled  that  a  statute  reducing 
the  legal  rate  of  interest  had  no 
effect  upon  state  warrants  issued 
and  presented  for  indorsement  prior 
to  the  time  it  took  effect.  In  this 
case  there  was  no  such  statute  as 
is  referred  to  in  the  jirecetling  para- 
graph, and  the  ruling  is  rested  on 
the  custom  to  pny  interest  on  such 
warrants.      It    is   said,    referring    In 


1186 


SUTHERLAND    ON    DAMAGES. 


[§  368 


In  a  California  case,  suit  was  brought  against  an  adminis- 
trator for  the  balance  of  an  account  due  from  his  intestate. 
It  did  not  appear  when  the  account  was  made.  It  had  been 
presented  to  the  defendant,  who  rejected  it.  The  case  was  tried 
without  a  jury.  The  account  was  found  to  be  correct  by  the 
trial  court  and  interest  allowed  on  the  balance  for  a  certain 
time  at  the  Mexican  rate,  which  prevailed  until  an  interest  stat- 
ute was  adopted  increasing  the  rate,  and  from  the  time  that 
statute  took  effect  at  the  rate  fixed  thereby.  This  was  held  to 
be  erroneous.  Baldwin,  J.,  announced  this  general  principle: 
that  interest  is  governed  by  the  law  in  force  at  the  time  and 
place  of  contracting.^'^  Later  cases  in  that  state  recognize  the 
distinction  above  stated. 

In  the  absence  of  a  contract  to  pay  interest  it  is  only  allowed 
as  damages  for  failure  to  pay  money  due;  and  it  is  competent 
for  the  legislature  to  fix  the  amount  which  shall  be  recovered.^* 
Interest  for  money  lent  may  be  recovered  though  the  loan  was 
made  when  the  law  was  otherwise.^^  This  point  was  decided  in 
JSTew  York,  in  1839,  in  a  case  which  presented  the  question  in 
this  form.  After  the  debt  sued  upon  became  due  and  while 
interest  as  damages  was  accruing  the  legislature  passed  a  gen- 
eral interest  law  which  provided  that  "for  the  purpose  of  cal- 
culating interest  a  month  shall  be  considered  the  twelfth  part 
of  a  year,  and  as  consisting  of  thirty  days ;  and  interest  for 
any  number  of  days  less  than  a  month  shall  be  estimated  by 


the  county  order  case :  "If  such  was 
the  force  of  an  agreement  to  pay 
interest  provided  by  the  statute  the 
same  force  should  be  given  to  an 
agreement  to  pay  interest  author- 
ized by  a  custom  so  long  recog- 
nized and  acquiesced  in  as  to  have 
the  force  of  a  statute."  State  v. 
P.owen,  11  Wash.  432. 

57  Aguirre  v.  Packard,  14  Cal. 
171,  73  Am.  Dec.  045;  Prairie  State 
L.  &  B.  Ass'n  V.  Nubling,  G4  111. 
App.  329;  Abner  v.  York,  19  Ky. 
L.  Rep.  643. 

It  is  said  in  State  v.  Guenther, 
87   Wis.   673,   though   the  issue    did 


not  demand  the  statement,  that 
"on  a  contract  which  stipulates  for 
interest,  interest  at  the  agreed  rate, 
or,  in  the  absence  of  an  agreed 
rate,  at  the  rate  prescribed  by  law  at 
the  date  of  tlie  contract,  will  be  the 
rate  recoverable  until  the  repay- 
ment of  the  principal  sum.  Spencer 
v.  Maxfield,  16  Wis.  178.  A  change 
of  the  legal  rate  would  not  affect 
the  rate  of  interest  recoverable  upon 
such  a  contract." 

58  White   V.   Lyons,   42   Cal.   279; 
Randolph  v.  Bayne,  44  Cal.  366. 

59  Dilworth   v.   Sinderling,   1   Bin. 
488,  2  Am.  Dec.  469. 


§    308]  INTEKEST.  1187 

the  proportiou  which  .such  iiuinbcr  of  days  shall  Iwar  to  thirty." 
The  assistant  vice-chancellor  said:  ^'I  am  of  opinion  that  when 
an  account  is  stated  after  this  ])rovision  went  into  effect,  in- 
chidini>'  items  nrisiiiii'  h(>t"()r(',  (he  interest  must  he  comimted  in 
the  manner  therein  dii-ected  upon  the  prior  as  well  as  tlui  snhse- 
qnent  items  from  the  passage  of  the  act.  The  terms  of  the 
section  are  sufficiently  comprehensive  for  this.  They  are  for  the 
purpose  of  calculatini;'  interest,  etc.  The  oidy  oI)je<'tion  is 
whether  an  nnhiwful  retrospective  elfect  is  given  to  the  statute. 
To  put  the  point  more  clearly:  If  a  promissory  note  was  dated 
before  the  1st  of  January,  1830,  (when  that  act  was  passed)  aiid 
was  sued  for  afterwards,  the  interest  should  he  computed  at 
three  hundred  and  sixty-five  days  to  a  year  for  the  time  down 
to  that  date  and  three  hundred  and  sixty  days  subsequently. 
The  statute  in  question  does  in  elfect  i-aise  the  rate  of  int(>rest. 
Suppose  it  did  so  in  terms,  changing  it  to  eight  per  cent.,  and 
then  a  prior  demand  is  sued  upon.  Now,  where  interest  is  not 
specified  in  a  contract  as  a  part  of  it  it  is  allowed  as  damages 
for  the  refusal  to  pay  the  debt.  The  rate  of  interest  is  undoubt- 
edly subject  to  the  existing  law  during  the  continuance  of  that 
law.  But  is  there  any  implied  contract  between  the  parties 
restricting  the  interest  to  such  rate?  A  fresh  demand  of  the 
debt,  and  a  refusal,  is  a  new  assertion  of  a  right,  and  imposes 
a  new  liability  upon  the  party ;  so  does  a  neglect  without  a  new 
demand.  The  damages  are  imposed  for  this  renewed  violation 
of  a  contract.  I  do  not  perceive  that  in  this  the  great  principle 
of  treating  statutes  as  prospective  only  in  their  operation  is 
infringed.  The  new  law  takes  effect  upon  a  new  violation  of  an 
obligation.  It  has  no  retrospective  effect  upon  previous  rights. 
The  previous  right  was  to  discharge  the  debt  with  interest  at  a 
given  rate.  That  right  has  not  been  asserted.  By  the  general 
rule  of  law,  if  there  was  no  statute  regulating  interest,  damages 
of  i\n  uncertain  amount  would  be  recoverable  for  the  detention 
of  money,  as  for  that  of  any  other  property.  The  statute  then 
prescribes  that  for  the  continued  refusal  or  neglect  to  discharge 
the  debt  those  damages  shall  be  at  another  rate  of  interest.'"^" 

60  Bullock    V.    Boyd,    1    Ilofl.    Cli.       cdiitiiiucd    tiie    discussion    ii|iiiii    aii- 
294.      The    assistant   vice-chancellor       thority.     He  said:    "There  are  some 


1188 


SUTIIKKLAND    ON    DAMAGES. 


[§  369 


§  369.   Same  subject.     There  is  a  distinction  made  in  respect 
to  the  natnre  of  the  obligation  to  pay  interest  subsequent  to 


English  cases  wliich  hear  upon  this 
question.  By  tlie  tei'ins  of  the  act 
(2  Charles  2),  no  i)erson  from  and 
after  the  20th  of  September,  1660, 
upon  any  contract,  shall,  from  and 
after  the  said  29th  of  September, 
take,  etc.,  more  than  at  the  rate  of 
six  per  cent.  The  interest  under 
the  previous  act  was  eight  per  cent. 
In  the  case  of  Walker  v.  Penry  the 
point  was  whether,  where  interest 
upon  a  mortgage,  made  before  the 
statute,  had  been  paid  at  the  rate 
of  eight  per  cent.,  so  mucli  of  the 
extra  two  per  cent,  as  accrued  after 
the  act  of  1660  should  be  applied 
in  reducing  the  principal.  The 
mortgagee  had  entered  in  1675. 
Lord  Chancellor  JefTries  decided 
that  the  statute  had  reference  only 
to  subsequent  contracts,  and  would 
give  no  relief;  but  he  gave  inter- 
est at  six  per  cent,  only  from  the 
entry  in  1675.  On  a  rehearing  he 
adhered  to  his  opinion.  See  2 
Vernon,  42  and  78.  Mr.  Ord  cites 
this  case  as  settling  tliat  tlie  stat- 
ute had  no  effect  upon  prior  con- 
tracts (on  Usury,  p.  40)  ;  and  ^Ir. 
Comyn  treats  the  question  as  unde- 
cided. The  latter  writer  notices, 
however,  the  subsequent  reversal  of 
the  decree  upon  a  bill  of  review. 
See  2  Vernon,  14.").  Both  writers 
have  omitted  to  state  that  the  case 
was  first  determined  by  Lord  Not- 
tingham upon  a  bill  of  foreclosure, 
who  held  that  the  extra  two  per 
cent,  should  go  towards  reducing  the 
principal.  Then,  upon  a  bill  to  re- 
deem. Lord  Jeffries  determined  as 
before  stated.  LTpon  the  bill  of  re- 
view Lord  Commissioner  Trevor 
said:  'Being  there  was  a  decree 
already  made  he  would  not  reverse:' 
but   Lord   Rawlinson    and    Hutcliins 


held  that  the  act  had  a  restrospect, 
and  makes  it  unlawful  to  take  more 
than  six  per  cent,  upon  any  con- 
tract, whether  made  before  or  after 
the  act  of  parliament.  The  note  of 
the  decree  in  Mr.  Raithby's  edition 
plainly  shows  that  they  meant  six 
per  cent,  after  the  new  statute  of 
1660.  Thus,  so  far  as  this  case 
goes,  we  have  the  authority  of  Lord 
Nottingham  and  Commissioners 
Rawlinson  and  Ilutchins  against 
the  opinion  of  Lord  Jeffries.  But 
there  is  also  the  express  authority 
of  Sir  ^Matthew  Hale  to  the  same 
effect.  Hedworth  v.  Primate,  Har- 
dress,  318.  By  Hale,  chief  baron: 
'Since  the  new  act  which  reduces 
interest  to  six  per  cent.,  more  shall 
not  be  allowed  upon  any  contract, 
though  made  before  the  statute,  by 
reason  of  the  words  of  the  statute, 
which  are,'  etc.  He  then  notices 
the  difference  in  the  language  of 
the  act  and  that  of  the  21  Jac.  1, 
cap.  27. 

"His  observations  reconcile  also 
tlie  position  in  1  Eq.  Cas.  Ab.  288, 
pi.  1,  and  in  Hawkins'  Pleas  of  the 
Crown,  82,  §  10,  that  under  the 
statute  of  usury  (12  Anne,  ch.  16) 
there  was  no  retrospect  to  any  debt 
contracted  before  its  passage.  The 
language  is  express,  limiting  its 
operations  to  contracts  made  after 
the  29th  of  September,  1714. 

"There  is  another  case  (Procter 
V.  Cooper,  Prec.  in  Ch.  116),  in 
which  the  master  of  the  rolls  held, 
upon  a  bill  to  redeem  a  mortgage 
made  before  1660,  that  interest 
should  be  allowed  at  eight  per  cent, 
to  the  time  of  the  passage  of  the 
act.  See  Bodley  v.  Bellamy,  1  W. 
Black.  267. 

"The  case  of  Towlcr  v.  Chatterton 


369] 


INTEREST. 


1189 


maturity  between  cmscs  where  there  is  an  express  or  tacit  afrree- 
ment  to  pay  it  before  maturity  of  the  priii('i[)al  debt  and  cases  in 


(6  Bing.  258)  is  also  of  weight  upon 
this  question.  By  an  act  of  0 
George  IV.,  c.  14,  called  Lord  Ten- 
terden's  act,  passed  May  0,  182S,  it 
was  provided  that  in  actions  of 
debt,  or  in  cases  grounded  on  any 
simple  contract,  no  acknowledg- 
ment or  promise  by  words  only 
should  be  sufficient  evidence  of  a 
new  or  continuing  contract,  whereby 
to  take  any  case  out  of  the  enact- 
ment of  the  statute  of  limitations; ; 
but  such  acknowledgment  or  prom- 
ise must  be  made  or  contained  by 
or  in  some  writing  signed  by  tlie 
party  chargeable  thereby.  The  act 
also  contained  a  provision  tliat  it 
should  not  go  into  effect  until  the 
1st  of  January,  1829.  The  action 
was  asumpsit,  and  commenced  in 
Hilary  term,  1829.  The  debt  was 
then  of  more  than  six  years'  stand- 
ing. In  February,  1828,  a  declara- 
tion was  made  by  parol  to  pay,  un 
der  instruction  from  the  judge  to 
find  upon  that  point.  The  judge 
then  nonsuited  the  plaintiff  on  the 
ground  that  the  promise  should 
have  been  in  writing  under  the 
statute.  The  court  of  common  pleas 
refused  to  set  aside  the  nonsuit. 
Two  other  cases  were  cited  in  tlie 
judgment  upon  the  same  statute  to 
the  same  effect.  One  of  them  was 
before  Lord  Tenterden,  where  tlie 
action  had  been  brought  before  tlie 
statute  went  into  effect,  though  not 
tried   until   afterwards. 

"I  have  carefully  read  the  leading 
cases  in  the  courts  of  our  own  coun- 
try upon  the  subject  of  retrospective 
statutes,  especially  Dash  v.  Van 
Kleeck,  7  Johns.  477,  in  which  the 
strength  of  the  old  supreme  court 
of  our  state  was  fully  put  forth. 
I  see  nothing  in  the  principles  there 


advocated  or  tlie  decision  there  nuide 
to  cliange  the  result  I  have  arrived 
at.  Calder  v.  Bull.  .'<  Hall.  ."iHli.  1 
L.  ed.  648;  Bedford  v.  Shilling,' 4 
S.  &  R.  401,  8  Am.  Dec.  718;  Woart 
V.  Winnick.  3  N.  IT.  473.  14  .\m. 
Dec.  384;  Ilackley  v.  Sprague,  Id 
Wend.  113;  Sayre  v.  Wisner,  S 
Wend.  66."  Stark  v.  Olney,  3  Ore. 
88;  Perrin  v.  Lyman,  32  Ind.  10: 
Woodruff  v.  Scruggs,  27  .\rk.  2f'i. 
11   Am.  Rep.  777. 

But  see  (ox  v.  .Marlatt,  3<)  N.  .1. 
L.  389,  13  Am.  Rep.  454.  In  this 
case  the  court  decided  that  the  rate 
of  interest  which  a  judgment  will 
bear  immediately  after  its  rendition 
cannot  lie  cbaiigcd  liy  subse(|uent 
legislation.  Scu(bler,  .(.,  said:  "'Ibc 
effect  of  a  judgment  is  tn  fix  the 
rights  of  the  parties  thereto  liy  tbc 
solemn  adjudication  of  a  court  bav- 
ing  jurisdiction.  Ifow  thes"  rights 
can  be  affected  by  subse(|Uent  legis- 
lation is  not  apiiarciit.  This  con- 
tract of  tlic  liiglicst  autliirity 
cannot  be  distui-brd  x)  long  a.-*  it 
remains  unre\-ersed  and  unsatisfied. 
Changing  tlie  rate  of  interest  does 
not  affect  (>xisting  contracts  or  delits 
due  prior  to  such  enactment,  wheth- 
er tliey  be  evidenced  by  stilt ute. 
judgment  or  agreement  of  the  par- 
ties. Sucli  lias  been  i\\>-  uniform 
course  of  decision  in  our  courts. 
...  if  it  lie  said  tiiiit  till'  inter- 
est is  given  as  damages  f<u-  tlie  dc-- 
tention  of  the  del)t,  aiul  that  the  dam- 
ages are  greater  when  seven  percent, 
interest  can  be  had  than  when  only 
six  per  cent,  can  be  obtained,  and 
for  such  detention  after  the  rate  is 
increased  there  should  be  additional 
damages  allowed,  the  answer  is  that 
there  can  be  no  such  second  assess- 
ment where  the  amount  of  the  debt 


1190 


SUTHERLAND    ON    DAMAGIiS. 


[§  369 


which  there  is  no  interest  euiitraet  whatever.  It  is  true  that 
some  courts  hohl  that  if  the  agreement  is  to  pay  the  del)t,  with 
interest  at  a  specified  rate  on  a  day  certain  and  does  not  ex- 
pressly stipulate  the  interest  afterwards,  the  interest  obligation 
expires  at  the  day  fixed  for  payment,  and  the  interest  which  the 
debtor  is  obliged  to  pay  while  he  detains  the  money  after  it  is 
due  is  only  computed  at  the  legal  rate  as  damages.®^  In  these 
courts,  on  the  doctrine  that  the  interest  agreement  has  no  effect 
after  maturity,  doubtless  the  interest  after  that  time  would  be 
computed  at  whate\'er  might  be  the  legal  rate,  changing  the  rate 
in  the  computation  as  the  legal  rate  may  change.  The  rule, 
however,  as  we  have  stated,  is  more  generally  to  continue  the 
rate  agreed  on  before  maturity  until  the  debt  is  paid  or  put  in 
judgment.^^  But  there  is  yet  another  distinction: — courts 
which  concur  in  continuing  the  interest  rate,  if  agreed  on  for 
the  period  of  credit,  to  payment  or  jiidg-ment  difi"er  in  the 
reasoning  by  which  they  reach  that  result ;  and  this  difference 
will  naturally  produce  a  divergence  on  the  point  we  are  now 
discussing.  When  the  agreement  in  respect  to  the  rate  of  in- 
terest before  maturity  is  construed  as  tacitly  continuing  so  long 
as  the  debt  remains  in  contract  unpaid  the  interest  after  ma- 
turity rests  on  a  basis  of  contract  and  is  not  subject  to  he  reduced 
or  altered  by  any  law  subsequently  enacted.^^  But  when  the 
continuance  of  the  rate  agreed  on  before  maturity  is  not  put 
upon  the  ground  that  the  agreement  continues  it,  but  upon  the 
theory  that  the  rate  which  was  agreed  to  before  maturity  as  a 
just  compensation  for  the  use  must  be  deemed  a  just  and  proper 
compensation  afterwards  for  the  detention  of  the  money,  then 
the  rate  rests  not  upon  the  contract  and  is  not  so  fixed  as  to  be 
beyond  the  effect  of  subsequent  legislation  Avhich  is  plainly  in- 
tended to  modify  it. 


or  liability  has  been  once  adjudged, 
and  the  cause  of  action  remains  the 
same.  The  interest  is  the  measure 
of  damages  for  the  detention,  and 
that  must  relate  to  the  time  wlien 
the  amount  is  fixed  by  the  entry  of 
the    judgment."      See    North    Elver 


Meadow  Co.  v.  Shrewsbury  Church, 
22  N.  J.  L.  424,  .53  Am.  Dec.  258. 

61  See   §   309. 

62  Id.;    Farmer    v.    Mitchell,    128 
111.  App.  297   (verbal  agreement). 

63  Lee   V.   Davis,   1    A.   K.   Marsh. 
397,   10  Am.  Dec.   746;   Association 

leson,  60  How.  Pr.  9. 


§    3G9]  INTEREST.  1101 

This  distinction  is  illustrated  by  two  cases  in  Connecticut. 
In  one  of  them  ®*  the  action  was  brought  upon  a  proinissorv 
note,  payable  in  that  state,  for  a  specitied  sum,  "witli  taxes, 
and  interest  at  the  rate  of  fifteen  per  cent,  after  maturity." 
Here  the  contract  in  respect  to  interest  after  maturity  was  not 
tacit,  but  express.  The  difference  is  immaterial  so  far  as  the 
effect  is  concerned.  A  tacit  agreement  is  as  inviola])le  as  an 
express  contract.  jSTotes  Avliicli  provide  for  iulcrest  generally 
and  are  construed  to  mean  interest  until  paid,  arc  p(|uival<'iit 
to  the  contract  made  in  the  case  just  mentioned.  When  that 
note  was  made  the  law  of  Connecticut  permitted  parties  to  con- 
tract for  any  rate  of  interest.  But  l)efore  it  matured  an  act 
was  passed  which  provided  that  no  greater  rate  of  interest  than 
seven  per  cent,  should  be  reco\'ered  for  money  loaned  ''for  the 
time  after  the  money  loaned  becomes  due."  It  was  lield  that  the 
fifteen  per  cent,  was  to  be  regarded  as  interest  recoverable  under 
the  contract,  and  not  as  damages;  tliat  the* act  was  not  intended 
to  apply  to  contracts  in  which  there  was  an  agreement  as  to  the 
rate  of  interest  after  maturity,  and  if  it  was  intended  to  apply  to 
such  contracts  then  existing  it  was  so  far  iiiiconstitutional  and 
void  as  impairing  their  obligation.  The  other  case  ^^  was  an 
action  upon  a  note  made  in  1869,  and  payable  in  Connecticut 
in  three  years,  with  interest  at  seven  and  three-tenths  per  cent, 
per  annum.  The  statute  in  force  when  this  note  was  nnulc  pro- 
vided that  when  interest  was  reserved  at  a  higher  rate  than 
six  per  cent,  the  contract  should  be  void  so  far  as  related  to 
interest.  In  1872  an  act  was  passed  "validating  and  confirm- 
ing" usurious  contracts,  and  providing  that  th(\v  might  be 
enforced.  It  will  be  observed  that  this  note  contained  a  promise 
of  interest  wliich  was  general  as  to  time  and  in  Connecticut 
meant  from  date  to  maturity.  If  not  affected  l)y  usury,  nor 
changed  by  subsequent  legislation,  the  conventional  rate  would 
be  continued,  not  as  an  agreed  rate,  but  as  a  just  one,  being 
considered  just  after  maturity  because  the  parties  had  a<lopted 

64  Hubbard  v.  Callahan,  42  Cunn.  G5  l-'iist      iM'clesiastical      Sdc.      v. 

524,  19  Am.  Rep.  olU.     Rco  Ragoud        T.i.oiiiis,   42   ("omi.   r>70,   approved    in 
V.   Aikin,   57   Tex.  511.  Iliiniiaii   v.  (Jix.dyear,  5(1  id.  210. 


11 U2  SUTHERLAND    ON    DAMAGES.  [§    369 

it  during  the  period  of  credit.^^  In  1873  the  A^alidating  act  of 
1872  was  repealed.  It  was  held  that  the  contract  in  this  note 
was  validated  by  the  act  of  3872,  and  the  repeal  of  it  could  not 
annul  the  validating  effect.  The  note,  with  the  agreed  interest 
to  maturity,  was  recoverable ;  but  the  interest  afterwards  at  the 
conventional  rate,  not  being  secured  by  the  contract,  was  un- 
affected by  these  acts,  and  the  conventional,  being  in  excess 
of  the  legal  rate  when  the  note  was  made,  could  not  be  deemed 
a  just  rate.®' 

It  results  from  this  brief  review  of  the  adjudications  that 
whenever  interest  after  maturity  of  the  debt  is  not  fixed  by  an 
agreement  of  the  parties,  binding  for  that  purpose  by  the  law 
of  the  place  of  contract,  it  is  competent  for  the  legislature  of 
that  jurisdiction  to  change  the  rate  to  be  computed  as  damages ; 
and  by  parity  of  reason  it  is  fair  to  conclude  also  that  a  statute 
enacted  in  another  jurisdiction  where  the  remedy  is  sought,  ap- 
plying the  law  of  the  i'orum  to  the  computation  of  such  interest 
as  damages,  would  be  valid.  On  the  other  hand,  if  the  interest 
after  maturity  is  fixed  by  contract,  valid  for  that  purpose  by  the 
law  of  the  place  of  contract,  whether  it  be  by  a  promise  in  ex- 
press terms  of  interest  after  maturity  at  a  specified  rate  or  by  a 
promise  of  interest  at  a  specified  rate  generally,  it  is  as  sacred 
and  secure  against  the  impairing  effect  of  subsequent  legislation 
as  the  agreement  before  maturity  or  for  payment  of  the  principal 
itself.®^ 

§  370.  Same  subject.  The  question  has  been  considerably 
discussed  and  differently  decided  by  the  courts  whether  a  con- 
tract for  the  payment  of  money  which  is  subject  to  be  avoided 
either  wholly  or  in  part  for  usury  can  afterwards  be  validated 
by  legislation  so  as  to  deprive  the  debtor  entirely  of  that  de- 
fense.®^    A  usurious  contract,  although  declared  wholly  or  in 

66  Beckwith  v.  Trustees  of  Hart-  69  See  Mitchell  v.  Dopgett,  ]  Fla. 
ford,  etc.  R.,  29  Conn.  268,  76  Am.  ^^^^  Springfield  Bank  v.  Merrick, 
Dec.  599.  ' 

67  See  Simpson  v.  Hall.  47   Conn.  14  Mass.  322;  Wood  v.  Kennedy,  19 

417.  Iiid.   68;    Pervin   v.   Lyman,  32   Ind. 


68  Lee  V.   Davis,   1    A.   K.   Marsl 
397,   10  Am.  Dec.  746;    Association 
V.  Eagleson,  60  How.  Pr.  0.  313 


16:    jMorton  v.   Rutherford,  18   Wis. 


§    370]  INTEREST.  119;3 

part  void,  is  not  void  in  an  absolute  senso;  it  is  onlv  voidiiMc  at 
the  election  of  the  debtor.  When  he  elects  to  avail  himself  of 
the  defense  the  effect  of  the  law  in  discharging  anv  part  of  the 
obligation  to  pav  the  principal  of  the  debt  and  lawful  interest 
is  a  penalty,  and  is  imposed  not  so  much  to  benefit  or  relieve  the 
debtor  as  to  maintain  by  this  sanction  the  general  policy  of  the 
law  of  restricting  interest  transactions  within  what  are  deemed 
reasonable  limits,  regard  being  had'for  the  general  welfare.  It 
is  even  regarded  as  unconscientious  and  inequitable  for  him  to 
claim  and  accept  such  a  discharge.'"  It  is,  at  all  events,  purely 
statutory,  and  is  not  distinguishable  in  principle  from  penal 
damages  given  in  certain  actions  in  which  simple  or  actual 
damages  are  allowed  to  be  doubled  or  trebled.  Although  the 
usurious  contract  may  be  so  far  void,  if  the  debtor  chooses  to 
set  up  the  defense  of  usury,  that  the  creditor  may  not  be  able  to 
sustain  an  action  for  the  whole  or  even  a  part  of  the  deiit  for 
reasons  of  policy,  yet  a  moral  obligation  remaining  to  perform 
the  contract,  it  would  be  going  very  far  to  say  that  the  legis- 
lature may  not,  in  furtherance  of  the  original  intention  of  the 
parties,  add  a  legal  sanction  to  that  obligation  when  those  rea- 
sons have  ceased  or  such  policy  is  abandoned ;  '^  especially  as 
the  repeal  of  a  penalty  provided  by  law  would  have  this  effect 
and  thereby  establish  matters  in  the  condition  in  which  it  was 
the  intention  of  all  concerned  to  place  them.'^ 

The  privilege  of  a  debtor  to  repudiate  his  contract  by  plead- 
ing usury  or  the  privilege,  by  making  an  unconscionable  de- 

70  Curtis  V.  Leavitt,  ir,  X.  Y.  !).  etc.  Bank,  17  S.  &  R.  64,  17  Am. 
An  action  for  the  original  considcra-  Dec.  635;  Sattcrloe  v.  .Mnttliewson, 
tion  of  a  usurious  contract,  with  16  S.  &  R.  191 ;  Menkes  v.  Wertnian, 
legal  interest  thereon,  is  maintain-  1  Pa.  218;  Woodruff  v.  Scruggs.  27 
able  without  the  aid  of  a  curative  Ark.  26,  11  Am.  Rep.  777;  Perrin  v. 
statute.  Wallace  v.  Goodlett,  104  Lyman,  32  Ind.  16;  Gibson  y.  Hib 
Tenn.  670.  bard,  13  Mich.  214;  Welch  v.  Wads- 

71  See  Lewis  v.  McElvain,  16  worth,  30  Conn.  140,  79  Am.  Dec. 
Ohio,  347;  Trustees  v.  McCaughy,  236;  Woolley  v.  Alexander,  99  111. 
2  Ohio  St.  155;  Johnson  v.  Bentley,  188. 

16    Ohio    97;    Boyce   v.    Sinclair,    3  72Hinman  v.  Goodyear,  56  Conn. 

Bush  204;  Hess  v.  Werts,  3  S.  &  R.  210;     First    Ecclesiastical     Soc.    v 

361;    Syracuse    Bank    v.    Davis,    16  Loomis,  42   Conn.   570;    Johnson   v 

Barb.    188;    Bleakney    v.    Farmers,'  Utley,  79  Ky.  72. 


1 


1194 


SUTHEKLAND    ON    DAMAGES. 


[§  370 


fense;  to  have  the  benefit  of  a  penalty  given  by  statute  for  a 
violation  of  law  is  not  a  vested  right. '^  Statutes  which  take 
away  the  defense  of  usury  in  respect  to  existing  contracts,  or 
produce  the  same  effect  by  expressly  validating  and  confirming 
them,  are  generally,  and  by  a  decided  weight  of  authority, 
sustained.''*    When  they  go  no.  farther  than  to  bind  a  party  by 


73  Jenness  v.  Cutler,  ]2  Kan. 
500;   Ayers  v.  Probasco,  14  id.  J 75. 

"But  the  legislature  has  no  power 
to  substitute  one  jjenalty  for  an- 
other except  where  that  wliicli  is 
substituted  is,  as  in  the  present 
case,  in  effect  a  mere  reduction  or 
modification  of  the  original  penalty, 
and  where  a  penalty  is  once  released 
or  abrogated  it  ceases  to  be  subject 
to  legislative  control."  VVoolley  v. 
Alexander,  99  111.  188.  See  Hardin 
V.  Trimmer,  27  S.  C.  110;  Maynard 
V.   Marshall,   91    Ga.   840. 

74  Id.;  Ilardway  v.  Lilly  .(Tenn. 
Ct.  of  Ch.  App.,  affirmed  orally  by 
the  supreme  court;  see  Wallace  v. 
Goodlett,  104  Tenn.  670,  076,  which 
is  to  the  same  effect)  ;  Pattison 
V.  .Jenkins,  33  Ind.  87 ;  Andrews  v. 
Eussell,  7  Blackf.  474;  Grimes  v. 
Doe,  8  id.  371;  Thompson  v.  ]\Ior- 
gan,  6  Minn.  292;  Parmelee  v.  Law- 
rence, 48  111.  331 ;  Curtis  v.  Leavitt, 
17  Barb.  309,  15  N.  Y.  9;  Wood  v. 
Kennedy,  19  Ind.  68;  Eathbim  v. 
Wheeler,    29    Ind.    601;     Washburn 

.  V.  Franklin,  36  Barb.  599  ;  Wilson  v. 
Hardesty,  1  Md.  Ch.  66;  Pollock  v. 
Glazier,  20  Ind.  262;  Burns  v.  An- 
derson, 68  id.  181;  Sager  v.  Schne- 
wind,  83  id.  204;  Danville  v.  Pace, 
25  Gr^tt.  1,  18  Am.  Pvcp.  663; 
Ewell  V.  Daggs,  108  U.  S.  143,  27 
L.  ed.  682. 

Mr.  Justice  Matthews,  writing 
the  opinion  in  the  case  last  cited, 
said  in  reference  to  some  of  the 
other  cases  referred  to  in  this 
note :  "These  decisions  rest  upon 
solid    ground.      Independent    of   the 


nature  of  the  forfeiture  as  a  penal- 
ty, which  is  taken  away  by  a  repeal 
of  the  act,  tlie  more  general  and 
deeper  principle  on  which  they  are 
to  lie  supported  is  that  the  right  of 
a  defendant  to  avoid  his  contract  is 
given  to  him  by  statute  for  purposes 
of  its  own,  and  not  because  it 
affects  the  merits  of  his  obligation; 
and  that  whatever  the  statute  gives, 
under  such  circumstances,  as  long 
as  it  remains  in  fieri,  and  not 
realized  by  having  passed  into  a 
completed  transaction,  may  by  a 
subsequent  statute  be  taken  away. 
It  is  a  privilege  that  belongs  to  the 
remedy,  and  forms  no  element  in  the 
rights  that  inhere  in  the  contract. 
The  benefit  which  he  (the  borrower) 
has  received  as  the  consideration 
of  the  contract,  which,  contrary  to 
law,  he  actually  made,  is  just 
ground  for  imposing  upon  him,  by 
subsequent  legislation,  the  liability 
which  he  intended  to  incur.  That 
principle  has  been  repeatedly  an- 
nounced and  acted  upon  by  this 
court.  Read  v.  Plattsmouth,  107  U. 
S.  568,  27  L.  ed.  414,  and  see  Lewis 
v.  McElvain,  16  Ohio  347;  Johnson 
v.  Bentley,  id.  87;  Trustees  v.  Mc- 
Caughy,  2  Ohio  St.  152;  Satterlee 
V.  Matthewson,  16  S.  &  R.  169,  2 
Pet.  380,  7  L.  ed.  458;  Watson  v. 
Mercer,  8  Pet.  88,  8  L.  ed.  876." 

The  Virginia  code  of  1873,  ch.  15, 
§  13,  provides  that  if  by  a  new  law, 
repealing  a  former  law,  anv  penal- 
ty, forfeiture  or  punishment  be 
mitigated  by  any  provision  of  the 
new  law,  such  provision  may,  with 


370] 


INTEREST. 


11!): 


a  contract  which  he  has  attoinpted  to  enter  into,  hut  wliidi  was 
invalid  by  reason  of  sonic  personal  inability  on  his  part  to  make 
it,  or  through  neglect  of  some  legal  formality,  or  in  conserpience 
of  some  ingredient  in  the  contract  forbidden  by  law,  the  question 
which  they  suggest  is  one  of  policy,  and  not  of  constitutional 
power.'*  The  legislature  has  power  to  impose  on  all  debtors 
interest  from  the  date  of  the  enactment  for  delay  in  the  payment 
of  money  already  due.'^ 

The  repeal  of  a  statute  giving  a  judicial  remedy  ui)on  con- 
tracts usurious  on  their  face  does  not  defeat  a  suit  brought, 
under  the  repealed  act,  on  such  a  contract  and  which  was  un- 
decided in  the  appellate  court  when  the  reiaealing  statute  was 
enacted,  there  being  in  effect  a  general  statute  declaring  that 
"the  repeal  of  a  statute  does  not  affect  any  right  which  ac- 
crued, any  duty  imposed,  any  penalty  incurred,  nor  any  pro- 


the  consent  of  the  parties  affected, 
be  applied  to  any  judgment  pro- 
nounced after  tlie  new  law  takes 
effect.  Under  this  it  has  been  ruled 
that  though  the  statute  of  usury  in 
force  when  a  contract  was  made  de- 
clares it  to  be  null  and  void,  if  at 
the  time  a  judgment  is  rendered  on 
the  contract  the  statute  has  been 
amended  so  as  to  avoid  a  usurious 
contract  only  so  far  as  the  interest 
is  concerned,  such  statute  should 
govern.  Mosby  v.  St.  Louis  JIut. 
Ins.  Co.,  31  Gratt.  620;  Bain  v. 
Savage,  76  Va.  90.5. 

75  Cooley's  Const.  Lim.,  p.  374. 
See  Head  v.  Ward,  1  J.  J.  Marsh. 
280;  Outen  v.  Graves,  7  id.  020; 
Cox  V.  Marlatt,  30  N.  J.  L.  3S!),  13 
Am.  Rep.  454;  Pond  v.  Home,  G.'j 
X.  C.  84:  Williams  v.  Smitli,  id. 
87. 

It  was  held  in  Mucl<lar  v.  Cross, 
32  N.  J.  L.  423,  that  a  bond  made 
in  18G5,  when  the  legal  rate  of  in- 
terest was  six  per  cent.,  conditioned 
for  the  payment  of  tlie  primijinl 
sum  in  five  years  after  date,  witli 
lawful    interest   for   the   same,   pay- 


al)le  annually,  at  such  rate  as  then 
was  or  thereafter  might  be  fixed 
upcm  as  the  legal  rate  of  interest 
in  tluit  state  by  the  legislature,  did, 
after  the  passage  of  the  act  of 
March  1.5,  18GG,  increasing  tlie  legal 
rate  of  interest  to  seven  per  cent., 
carry  interest  at  such  increased  rate 
though  that  act  in  terms  only  ap- 
plied to  contracts  made  after  its 
passage;  tlie  increased  rate  of  inter- 
est being  payable,  not  by  virtue  of 
the  statute,  but  by  forci-  of  the 
agieement  of  the  parties. 

In  Drake  v.  Latham.  '^0  111.  270. 
suit  was  brought  on  a  (en  |n'r  cfiit. 
jiotc.  'I'll is  note  was  made  while  the 
law  (if  1S4!)  was  in  force,  which  only 
ailnwcd  six  ])i'i'  cent,  to  ln'  contract- 
ed for,  and  forfeited  the  excess. 
The  act  of  lHr)7  repealed  all  (lie 
penalties;  but  it  was  held  that  the 
enditur  could  not.  as  a  men-  efft-et 
of  tliat  repeal,  recover  a  larger  rate 
llian  he  might  lawfully  have  con- 
tracted for.  Simpson  \.  Hall,  47 
Conn.  417. 

76  Dunne  v.  Masti<k.  .'.O  Cal.  244. 


1196 


SUTHERLAND    ON    DAMAGES. 


[§   370 


ceeding  commenced  under  and  by  virtue  of  the  statute  re- 
pealed." "  Such  statute  inures  to  the  benefit  of  a  citizen  of 
another  state  who  acquired  the  usurious  obligation  in  the  state 
in  which  it  was  enacted  and  who  sued  in  the  state  of  his  dom- 
icile to  enforce  the  lien  given  to  secure  the  payment  of  the 
sum  loaned  although  his  suit  was  brought  before  the  law  was 
enacted,  and  the  right  thereby  given  was  not  affected  because 
of  the  repeal  of  the  statute  by  reason  of  the  provision  saving 
rights  of  action  after  its  repeal.'^  A  decree  rendered  prior  to 
the  enactment  of  a  statute  authorizing  the  recovery  of  princi- 
pal and  legal  interest  on  a  note  or  other  contract,  notwith- 
standing a  stipulation  on  its  face  for  an  usurious  rate  of  interest, 
refusing  foreclosure  of  a  mortgage  because  of  the  disclosure 
of  such  a  stipulation  is  not  an  adjudication  upon  the  merits 
that  will  defeat  a  suit  to  enforce  the  same  mortgage,  to  the 
extent  of  the  principal  and  legal  interest  due,  brought  after 
such  enactment.'^ 

Section  7. 

interest  as  an  incident  to  the  principal. 

§  371.  Interest  due  by  agreement  a  debt.  AVith  a  certain 
propriety  interest  may  be  said  always  to  be  an  incident  to  the 
principal ;  *°  not  only  when  it  is  a  part  of  the  contract,  but  also 
when  it  is  allowed  as  damages.  In  the  former  case  it  is,  how- 
ever, not  strictly  an  incident;  or  rather,  it  is  more  than  that. 
There  must  be  a  principal  sum ;  but  after  interest  has  accrued 
it  is  no  longer  dependent  on  the  principal,  it  does  not  neces- 
sarily follow  it.  Conventional  interest  is  of  itself  a  debt  and 
payment  of  the  principal  alone  will  not  affect  the  right  to  re- 
cover the  interest ;  ^^  and  yet  it  is  so  allied  to  the  principal  that 


77  Wallace  v.  Goodlett,  104  Tenn. 
670. 

78  Kendrick     v.     Kyle,     78     Miss. 
278. 

79  Wallace  v.  Goodlett,   supra. 

80  Leggatt    V.    Palmer,    30    Mont. 
302. 


81  Alabama  City,  G.  &  A.  R.  Co. 
V.  City  of  Gadsden,  185  Ala.  263; 
Curry  v.  La  Fon,  155  Mo.  App.  678; 
Froment  v.  Oltarsli,  60  N.  Y.  Misc. 
89;  Bennett  v.  Federal  C.  &  C.  Co., 
70  W.  Va.  456,  40  L.R.A.(N.S.)  588; 
Central   Bank    &    T.     Co.   v.   State, 


§  371] 


INTEEEST. 


Ill)' 


if  it  recovered  without  recovery  of  the  interest,  when  the  hit- 
ter is  not  secured  by  a  separate  instrument,  it  is  barred;  not 
because  it  cannot  exist  as  a  valid  demand  distinct  from  the  prin- 
cipal, but  because  demands  arising  upon  one  agreement  for 
principal  and  interest  due  to  the  same  party  at  the  same  time 
cannot  be  divided  and  each  made  the  subject  of  a  separate  ac- 
tion. In  that  respect  there  is  no  difference  between  principal 
and   interest;®^   an   action   brought   for   one   woukl    bar   lx)th, 


139  Ga.  54;  Watts  v.  Garcia,  40 
Barb.  656;  Howe  v.  Bradley,  1!)  Me. 
31;  Canfield  v.  Eleventh  School 
Diet.,  19  Conn.  529;  Still  v.  Mall, 
20  Wend.  51  ;  Stone  v.  Bennett,  8 
Mo.  51.  See  Foster  v.  Harris,  10 
Pa.  45. 

Where  the  debt  only  was  seized 
and  condemned  by  the  enemy  in 
war,  it  was  held  that  the  interest 
due  might  not  be  recovered  by  the 
original  creditor.  Bordley  v.  Eden, 
3  Plar.  &  McH.  1G7. 

82  Central  Bank  &  T.  Co.  v.  State, 
139  Ga.  54.  In  Doe  v.  Warren,  1 
Me.  48,  10  Am.  Dec.  25,  suit  was 
brought  on  a  note  payable  with  in- 
terest annually.  The  chief  justice 
says:  "What  is  interest?  It  is  an 
accessory  or  incident  to  the  ])rin- 
cipal ;  the  accessory  is  a  constantly 
accruing  one.  The  former  is  the 
basis,  or  the  substance,  from  which 
the  latter  arises  and  on  whicli  it 
rests."  Merchants'  Nat.  Bank  v. 
Whitraer,  171  Mo.  App.  352. 

In  Howe  v.  Bradley,  19  Me.  31, 
Shepley,  J.,  says:  "The  holder  in 
such  cases  may  maintain  a  suit  to 
recover  the  interest  payable  before 
the  principal,  but  cannot  have  a 
separate  action  for  it  after  the  prin- 
cipal becomes  due  and  while  it 
remains  unpaid,  because  he  may  re- 
cover it  in  an  action  for  the  princi- 
pal." The  question  in  tliis  case  was 
whether  an  indorser  of  a  note  on 
which    interest    became    due    before 


the  principal  was  payalilc  was  en- 
titled to  tiie  same  notici'  in  respect 
to  tlie  interest  as  in  regard  to  the 
Ijrincipal,  in  order  to  l)e  iield  liable 
for  it.  It  was  held  he  was  not;  that 
if  on  the  note  becoming  due  it  was 
dishonored,  and  the  indorser  then 
duly  notified,  he  was  fixed  not  only 
for  the  principal  and  interest  tlien 
maturing,  but  also  for  interest 
which  was  payable  before  and  not 
paid. 

In  Chinn  v.  Hamilton,  Hemp.  C. 
('.  438,  the  court  said:  'Tiie  pronii.se 
to  pay  the  debt  and  the  promise  to 
pay  the  interest  from  the  date  of 
the  contract  are  two  separate  and 
distinct  promises  or  undertakings: 
one  may  be  performed  witliout  per- 
forming the  other.  In  declaring 
upon  a  covenant  or  a  parol  contract 
in  writing  containing  various  undiT- 
takings  the  plaintiff  has  liis  elec- 
tion to  complain  of  the  breach  of 
one  or  of  all  of  tlie  covenants  or 
promi-ses.  If  he  complains  of  tiie 
breadi  or  non-perfornumce  of  one 
only  of  the  covenants  or  promises 
he  therel)y  admits  that  the  otliers 
iiave  lieen  performed.  Tiie  intend- 
ment is  to  be  made  moat  strongly 
against  the  pleader,  and  as  he  com- 
plains of  the  breach  of  only  one  of 
the  covenants  or  obligations  tlio 
presumption  arises  that  tlie  others 
have  been  performed..  It  at  all 
events  waives  any  right  of  action 
upon    tlieiii;    for    having   sned    upon 


1198 


SUTHERLAND    ON    DAMAGES. 


[§  3Y1 


whether  included  in  the  claim  or  recovery  or  not.  If  a  claim 
against  an  estate  has  been  allowed  by  the  administrator  as  pre- 
sented, no  interest  being  demanded,  the  claimant  cannot  there- 
after collect  interest  on  the  sum  allowed.^^  In  England  the 
principle  is  said  to  be  that  though  a  mortgagee  cannot  be  com- 
pelled to  take  payment  of  interest  for  less  than  the  stipulated 
time  yet,  if  he  puts  an  end  to  the  security  by  realization,  or  if 
by  the  inteiwention  of  a  third  party  under  the  interpleader  rule, 
the  mortgagor's  property  is  realized,  from  the  moment  the 
principal  money  gets  into  the  pocket  of  the  lender,  interest  ought 
to  stop.^*  This  rule  was  applied  where  principal  and  interest, 
secured  by  a  bill  of  sale,  was  payable  in  equal  monthly  instal- 
ments, and  the  borrower  authorized  the  lender  to  sell  and  out  of 
the  proceeds  deduct  the  sum  for  which  he  was  liable.  Interest 
ceased  to  run  on  the  making  of  the  sale.®^  But  interest  made 
payable  before  the  principal  is  due  may  be  sued  for  alone  before 


the  contract  once  he  is  forever 
barred  from  suing  again  [in  respect 
to  any  cause  that  existed  at  the 
time  of  that  suit  and  wliich  might 
have  been  included  in  it]..  It  will 
not  be  allowed  to  split  up  the  vari- 
ous covenants  and  promises  con- 
tained in  one  contract  and  sue 
upon  each  of  them;  he  can  have 
but  one  recovery  upon  one  contract, 
which  then  becomes  merged  in  the 
judgment  of  the  court." 

This  language  must  be  understood 
as  referring  to  the  facts  then  be- 
fore the  court — to  a  contract  for 
principal  and  for  interest,  both  due. 
It  is  broad,  but  is  obviously  not 
used  in  so  general  a  sense  as  to  be 
applicable  to  a  contract  requiring  a 
series  of  acts  to  be  performed  at 
different  times.  A  suit  for  a  breach 
in  respect  to  the  first  would  not 
necessarily  involve  the  whole  con- 
tract, and  the  judgment  would  not 
merge  it  so  far  as  it  contained  other 
executory  provisions.  For  instance, 
a  note  or  other  instrument  may 
provide  for  instalments  of  principaj 


or  interest.  Undoubtedly  successive 
actions  could  be  brought  for  their 
recovery.  Yet  it  is  quite  as  clear 
that  all  instalments  of  either  inter- 
est or  principal  or  both,  due  at  the 
time  of  bringing  action,  must  be 
declared  for  in  one  action;  at  all 
events  the  judgment  will  be  a  bar 
in  respect  to  all. 

A  judgment  determining  the  title 
to  and  ownership  of  securities  is 
conclusive  between  the  parties  in  a 
subsequent  action  to  recover  the  in- 
terest upon  such  securities  collected 
by  the  defeated  party  prior  to  such 
judgment;  but  a  claim  for  interest 
on  securities  collected  by  tlie  defend- 
ant is  not  necessarily  a  part  of  an 
action  to  dj?termine  the  title  to  such 
securities.  Govin  v.  De  Miranda,  9 
N.  Y.  Misc.  684,  79  Hun  320. 

83  Matter  of  Warren,  .56  App.  Div. 
(X.  Y.)    414. 

84Forster  v.  Clowser,  [1897]  2 
Q.  B.  362;  Curry  v.  La  Fon,  155 
Mo.   App.   678. 

85  West  V.  Diprose,  [1900]  1  Ch. 
337. 


i 


§  372] 


INTEKEST. 


IIUU 


the  latter   becomes  diie,^^  or   after   vitluiilarv    pavnieiil,  of  the 
principal.^' 

.  §  372.  Interest  as  damages  accessory  to  principal.  Interest 
which  is  allowed  as  damages  and  whidi  is  not  ]i(|uidatcd,  nor 
covered  by  any  contract  to  pay  it,  is  strictly  incidental  to  the 
debt.**  It  cannot  exist  after  the  debt  ceases  by  payment  or 
otherwise,*^  though  payment  is  made  after  suit  brought,^"  in 


86Greenloaf  v.  Kellogj:,  2  Mass. 
5(58 ;  Cooloy  v.  Rose,  3  id.  221  ;  Cat- 
lin  V.  Lyman,  3  6  Vt.  44;  Hastings 
V.  Wiswall,  8  Mass.  455;  Estabrook 
V.  Moulton,  9  id.  258,  6  Am.  Dec. 
64;  Bannister  v.  Roberts,  35  Me.  75; 
Scott  V.  Liddell,  98  Ga.  24. 

87  Kimball  v.  Williams,  36  App. 
D.  C.  43. 

88  A  statutory  penalty,  amounting 
to  five  times  the  legal  rate,  imposed 
on  an  attorney  wrongfully  with- 
holding money  from  a  client  is  inci- 
dent to  the  debt,  and  the  right  to 
recover  it,  being  governed  by  the 
rtiles  of  contract  rather  than  those 
of  tort,  survives  the  death  of  the 
debtor.  Griffiths  v.  Powers,  216 
Mass.  169. 

89  Louisville  &  N.  R.  Co.  v.  El- 
more &  Brame,  10  Ala.  App.  627; 
Bassick  G.  M.  Co.  v.  Beardslcy,  49 
Colo.  275,  33  L.R.A.(N.S.)  852; 
Forschirra  v.  Mechanics'  &  Trad- 
ers' Bank,  137  App.  Div.  (N.  Y.) 
149;  O'Rourke  v.  New  York,  130 
App.  Div.  (N.  Y.)  673;  In  re  Sey- 
bei,  120  App.  Div.  (N.  Y.)  291; 
Grote  V.  New  York,  117  App.  Div. 
(N.  Y.)  768  (notwithstanding  the 
reservation  of  the  claim  for  in- 
terest) ;  Bennett  v.  Federal  C.  & 
C.  Co.,  70  W.  Va.  456,  40  L.R.A. 
(N.S.)  588;  Bronx  G.  E.  Co.  v. 
New  York,  29  N.  Y.  Misc.  402; 
Graves  v.  Saline  County,  43 
C.  C.  A.  414,  104  Fed.  61,  citing  the 
text;    Walton   v.   United   States,   61 


Fed.  4S6;  Los  Angeles  v.  City  Bank. 
100  (ill.  IS:  P.ronner  B.  Co.  v.  M. 
M.  CandM  Co.;  IS  N.  Y.  Misc.  681; 
Racific  R.  v.  Cnit.-d  States,  158  U. 
S.  118,  39  L.  ed.  918;  Stewart  v. 
]5arnes,  153  U.  S.  456,  38  L.  ed. 
781  ;  Moore  v.  Fuller,  2  Jones,  205; 
Tillotson  v.  Preston,  3  Johns.  229; 
Burr  V.  liiiroh,  5  Cranch  C.  C.  506; 
Jacot  V.  Fmniett,  11  Paige  142; 
Consecpia  v.  Fanning,  3  Joluis.  Cli. 
587;  (iillcspic  v.  Mayor,  3  Kdw. 
512;  Southern  Cent.  R.  Co.  v. 
Moravia,  (il  Harh.  ISO;  Potomac  Co. 
V.  I'nion  Hank,  3  Crancli  C.  C.  101; 
Dixon  V.  Parkes,  1  Ksp.  IJO;  Fake 
V.  Eddy,  15  Wend.  76;  .lohnston  v. 
Brannan,  5  Johns.  268;  Williams  v. 
Houghtaling,  5  Cow.  36;  People 
V.  New  ^'ork  County,  5  Cow.  331; 
Stevens  v.  Barringer,  13  Wend.  639; 
American  P..  Soc.  v.  Wells,  68  Me. 
572,  28  Am.  Rep.  82;  C'uttcr  v. 
Mayor,  92  N.  ^  .  Hid. 

The  rule  ai)plii's  witli  equal  force 
wliei-e  tlie  priu'-iiial  is  extinguished 
by  a  statute,  .rcilinsou  v.  District 
of   Columlila,   31    Ct.   of   (Is.    395. 

The  payment  of  an  account,  no 
demand  being  made  for  interest, 
l)ars  a  subsequent  actjon  to  recover 
it.  Crane  v.  Brooks,  189  Mass. 
228. 

90  In  re  Oshorn's  Sons  &  Co.,  177 
Fed.  184,  29  L.R.A. (\.S.)  887.  100 
C.  C.  A.  392;  Davis  v.  Harrington, 
160  .Mass.  278. 


1200 


SUTHERLAND    ON    DAMAGES. 


[§  372 


the  absence  of  an  agreement  reserving  the  right  to  it.^^  Being 
accessory  and  incidental  to  the  principal,  it  adheres  to  and  fol- 
lows it ;  o\niership  of  the  fund  on  which  the  interest  accrues 
inclndes  the  interest.  Where  attached  property  l^ecomes  by 
process  of  law  changed  into  money  in  the  officer's  hands  and 
is  invested  by  him  so  as  to  produce  interest  tlie  accretion  does 
not  belong  to  the  officer,  but  to  the  party  entitled  to  the  money  ;  ^^ 
and  where  a  debt  is  attached  before  it  is  due  the  garnishee,  is 
liable  for  interest  thereon  from  the  time  it  is  payable.^^  A  spe- 
cific legacy  carries  interest  from  the  death  of  the  testator;  it 
becomes  then  the  propert}'  of  the  legatee.^*  The  interest  which 
accrues  on  a  claim  against  an  estate,  both  before  and  after  its 
allowance,  is  a  part  of  the  claim  and  entitled  to  preferential 
payment  to  the  same  extent  as  the  principal.^^  The  law  will  not 
frustrate  the  intention  of  parties  to  reserve  the  right  to  inter- 
est.     Thus,   where   a  drawee  made   a  payment   "on  account" 


aiGrote  v.  New  York,  190  N.  Y. 
235. 

92  Richmond  v.  Collamer,  oS  Vt. 
08;  Jackson  v.  Siiiitli,  52  N.  H.  9; 
Farley  v.  Moore,  21  id.  14(i;  Cha«e 
V.  Monroe,  30  id.  427. 

93  Cross   V.    Brown,    19    K.    1.   220. 

94  See  Ingraliani  v.  Postcll,  1  Mc- 
Cord  Ch.  94;  Hilyard's  Est.,  5  W. 
&  S.  30;  Angerstein  v.  Martin,  1 
Turn.  &  Russ.  232;  Hewett  v.  Mor- 
ris, id.  241  ;  Jones  v.  Ward,  10 
Yerg.  160;  Huston's  App.,  9  \^'att3 
472;  Real  v.  Crafton,  5  Ga.  301; 
Stephenson  v.  Axson,  Bailey's  Eq, 
274 ;  Graybill  v.  Warren,  4  Ga.  528 ; 
Yandt's  App.,  13  Pa.  575,  53  Am. 
Dec.  490;  Darden  v.  Orgain,  5  Cold. 
211  ;   §  344. 

A.  received  $6,000  from  B.  and  in 
consideration  thereof  executed  a 
bond  by  which  he  bound  himself  to 
pay  the  interest  on  that  sura  or  so 
much  thereof  as  might  bo  necessary 
for  B.'s  support  to  B.  for  life,  and 
at  her  death  to  pay  the  principal 
and  what  might  remain  unexpended 


of  the  interest  to  C.  A.  was  liable 
for  interest  at  the  legal  ratt  accord- 
ing to  the  legal  effect  of  the  bond, 
and  not  the  interest  received  by  him 
from  liis  investment  of  the  money. 
Granger  v.  Pierce,  112  Mass.  244. 
See  Cory  v.  Leonard,  56  N.  Y.  494. 

It  is  observed  in  the  course  of  dis- 
cussion jn  a  recent  case  tt)at  where 
a  demand  of  damages  constitutes 
the  very  ground  of  the  action  it 
would  seem  that  the  rule  would  be 
dififereiit.  ,  If,  for  instance,  in 
covenant  on  the  part  of  the  lessee 
to  repair  a  building,  the  lessee 
should  prove  performance  the  plain- 
tiff might  still  be  entitled  to  have 
the  jury  pass  upon  the  question  of 
his  damages,  however  small  they 
might  be,  because  in  such  a  case  the 
right  to  damages  constittites  the 
right  of  action.  But  this  doctrine 
has  no  application  to  an  action  of 
assumpsit.  Stewart  v.  Barnes,  153 
U.  S.  456,  38  L.  ed.  781. 

95  Eddy    V.    People,    187    111.    304 


373] 


INTEREST. 


1201 


upon  u  draft,  payable  without  interest  and  only  upon  (ho  coni- 
pletion  of  a  contract,  and  the  draft  was  not  tlicn  surreiid(M-ed, 
bnt  was  retained  as  an  evidence  of  deht,  it  was  inferred  that 
it  was  the  intention  of  the  parties  that  interest  should  be  pay- 
able and  the  holder  of  the  draft  was  entitled  to  recover  it  from 
the  date  of  the  drawee's  being  notified  that  the  contract  was 
completed.®^ 

Section  8. 

interest  upon  interest. 

§  373.  Compound  interest.  Strictly,  all  interest  which  is 
computed  upon  interest  is  compound  interest.  Ihit  that  which 
is  commonly  denominated  such  is  interest  annually  or  at  other 
successive  periods  added  to  the  principal  to  bear  interest  for 
the  next  interest  period  ;  in  other  words,  interest  computed  with 
annual  rests,  or  rests  at  the  end  of  the  longer  or  shorter  interest 
periods,  regularly  ad'ding  the  interest  for  the  preceding  period 
to  the  principal,  thenceforth  to  bear  interest.  Compound  in- 
terest in  this  latter  sense  is  never  computed  by  way  of  damages 
except  against  persons  acting  in  a  fiduciary  capacity  ^"^  who 
grossly  abuse  their  trust  in  respect  to  money.^*  Nor  will  a  con- 
tract in  advance  to  pay  snch  interest  be  enforced  in  several 
states;  in  others  it  will  be.^^     But  after  simple  interest  has 


96  Peck  V.  Granite  State  P.  Ass'ii, 
21  N.  Y.  Misc.  84. 

97  Ute  Indiana  v.  lliiitcd  States, 
45  Ct.  of  Cls.  440;  Shelley  v.  Cody, 
187  N.  Y.  166;  Rosenbanm  v.  I'en- 
dleton,  n  Oliio  Dec.  642,  646;  Stoke- 
ly  V.  Thompson,  34  Pa.  210;  Stevens 
I.  Co.  V.  South  Ogden  W.  Co.,  20 
Utah  267;  Stimson  v.  Rountrce,  51 
Ind.  App.  207;  Taylor  v.  Scott,  178 
111.  App.  487. 

The  assignee  of  a  mortgage  in 
possession  has  no  right  to  cast  in- 
terest to  the  time  he  took  possession 
and  make  that  a  new  principal  upon 
which  to  calculate  interest.  Lewis 
V.  Small,  75  Me.  .323. 

Suth.  Dam.  Vol.  I.— 76. 


98  See  §  353. 

A  statute  proNiding  for  interest 
means  simple  interest  only.  Kish- 
bnry  v.  Vineyard  II.  W.  Co.,  103 
Mass.  196. 

99  Such  conlracts  are  valid  in  Ore- 
gon, New  England  M.  Co.  v.  Vader, 
28  Fed.  265  (compare  Levens  v. 
Rriggs,  infra)  ;  in  Dakota,  Hovey  v. 
Edmison,  3  Dak.  440;  South  Caro- 
lina, Bowen  v.  Barksdalc,  33  S.  C. 
142;  and  Georgia,  Merck  v.  Ameri- 
can Freehold  L.  &  M.  Co.,  70  Ga. 
213,  233;  Ellard  v.  Scottish-Am.  M. 
Co.,  07  Ga.  329.  In  Maine  a  prom- 
ise to  pay  compound  interest  is 
valid,    but    tlic    court    will    not    de- 


120^3 


SUTllEKLAND    ON    DAMAGES. 


[§  373 


accrued  an  agreement  that  it  shall  thereafter  bear  interest  is 
valid.^  Such  interest,  when  contracted  for  at  the  time  the  debt 
accrues  or  the  loan  is  made,  is  refused  on  grounds  of  policy  as 
tending  to  usury  and  oppression,^     But  after  interest  is  due, 


dare  an  implied  promise.  Bradley 
V.  Merrill,  91  Me.  340.  In  Nebraska 
parties  may  contract  that  overdue 
instalments  of  interest  shall  bear 
interest  if  the  whole  interest  does 
not  exceed  the  legal  rate.  Hallam 
V.  Telleren,  55  Neb.  255.  Such  con- 
tracts have  been  sustained  in  other 
states:  Hale  v.  Hale,  1  Cold.  233,  78 
Am.  Dec.  490;  Vaughan  v.  Kennan, 
38  Ark.  114;  Mueller  v.  McGregor, 
28  Ohio  St.  265;  McNairy  v.  ]\Ic- 
Nairy,  1  Tenn.  Cas.  329;  Bowman 
V.  Duling,  39  W.  Va.  619;  Lee  v. 
Melby,  93  Minn.  4;  Palm  v. 
Fancher,  93  Miss.  785,  33  L.R.A. 
(N.S.)  296.  They  have  been  de- 
clared void  in  these  cases:  Levens 
V.  Briggs,  21  Ore.  333,  14  L.R.A. 
188;  Van  Benschooten  v.  Lawson, 
6  Johns.  Ch.  313;  Breckinridge  v. 
Brooks,  2  A.  K.  Marsh.  335,  12  Am. 
Dec.  401;  Bowman  v.  Neely,  151 
111.  37;  Fleet  v.  Lockwood,  17  Conn. 
243;  Drury  v.  Wolfe,  134  111.  294; 
Young  v.  Hill,  67  N.  Y.  162,  23  Am. 
Rep.  99;  Catlin  v.  Lyman,  16  Vt. 
44;  Perkins  v.  Coleman,  51  Miss. 
298;  Boggess  v.  GofT,  47  W.  Va. 
139;  Sanford  v.  Lundquist,  80  Neb. 
408,  414;  Reusens  v.  Arkenburgh, 
135  App.  Div.    (N.  Y.)    75. 

An  agreement  to  pay  compound 
interest  does  not  avoid  the  entire 
contract;  the  court  will  simply  re- 
fuse to  enforce  the  payment  of  in- 
terest upon  interest.  Hochmark  v. 
Richler,  16  Colo.  263;  Bowman  v. 
Neely,  137  111.  443. 

1  Wigton  V.  Elliott,  49  Colo.  1 15 ; 
Hochmark  v.  Richler,  16  Colo.  263; 
McConnell  v.  Barber,  86  Hun  360; 
Stewart  v.  Petree,  53  N.  Y.  621,  14 


Am.  Rep.  352;  Perkins  v.  Coleman, 
51  Miss.  298;  Townsend  v.  Riley,  46 
N.  II.  300;  Porter  v.  Price,  26  V.  C. 
A.  70,  80  Fed.  655;  Young  v.  Hill,- 
67  N.  Y.  162,  23  Am.  Rep.  99;  Fitz- 
iiugh  V.  McPherson,  3  Gill  408; 
Gunn  V.  Head,  21  Mo.  432;  Grimes 
V.  Blake,  16  Ind.  160;  Nilcs  v. 
Board  of  Com'rs,  8  Blackf.  158; 
Forman  v.  Forman,  17  How.  Pr. 
255 ;  Van  Benschooten  v.  Lawson,  6 
Johns.  Ch.  313,  10  Am.  Dec.  333; 
State  V.  Jackson,  1  Johns.  Ch.  13, 
7  Am.  Dec.  471;  Toll  v.  Hiller,  11 
Paige  228:  Barrow  v.  Rhinelander, 
1  Johns.  Ch.  550;  Leonard  v.  Vil- 
lars,  23  •111.  377;  Henderson  v. 
Hamilton,  1  Hall  314;  Baker  v. 
Scott,  62  111.  86;  Doe  v.  Warren,  7 
Me.  48;  Cox  v.  Smith,  1  Nev.  161, 
90  Am.  Dec.  476;  Lewis  v.  Bacon, 
3  Hen.  &  Munf.  89 ;  Stone  v.  Locke, 
46  Me.  445;  Thayer  v.  Star  M.  Co., 
105  111.  540;  Denver  B.  &  M.  Co.  v. 
McAllister,  6  Colo.  261;  Case  v. 
Fish,  58  Wis.  56;  Leonard  v.  Pat- 
ton,   106  111.   99. 

2  Lee  V.  Melby,  93  Minn.  4;  Tet- 
ley  V.  McElmurry,  201  Mo.  382. 

There  are  but  two  exceptions  to 
the  rule  that  the  law  will  not  allow 
the  recovery  of  compound  interest: 
First,  in  respect  to  interest-bearing 
coupons;  these,  when  payable  to 
bearer,  have,  by  commercial  usage, 
the  legal  effect  of  promissory  notes. 
They  are  contracts  for  the  payment 
of  a  definite  sum  of  money  on  a 
day  named,  and  pass  as  negotiable 
paper.  The  interest  on  the  bonds 
to  which  such  coupons  were  attached 
is  not  compounded  indefinitely,  but 
once  only.     The  second  exception  is 


•^] 


INTEREST. 


]  203 


no  matter  at  how  short  intervals  it  is  payable,  the  creditor  may 
sue  for  it;  or  the  parties,  by  a  new  agreemont,  may  put  it  upon 
interest.  It  has,  however,  been  decided  that  there  is  a  moral 
obligation  to  pay  interest  on  interest  for  the  time  it  has  been  in 
arrears,  and  that  a  subsequent  promise  to  pay  it  for  the  time 
already  elapsed  is  binding.^  Accounts  may  be  judicially  stated 
by  computing  interest  according  to  the  practice  of  the  parties, 
lx)th  as  to  charging  it  on  the  items  on  each  side  from  their  dates 
and  also  as  to  periodical  rests.*  Where  the  parties  to  a  trans- 
action amongst  themselves  treat  accrued  interest  as  an  addition 
to  the  original  principal  sum  and  charge  up  interest  thereon 
they  are  bound  by  their  course  of  dealing,  if  subse<|U('iit  lienors 
without  notice  are  not  aifectod.^ 

§  374.  Instances  of  interest  on  interest.  When  a  demand  con- 
sisting of  principal  and  interest  passes  into  a  judgment  or 
decree  as  a  general  rule  it  bears  interest  because  the  original 
claim  is  merged  therein.  It  is  thenceforth  a  demand  of  a  dif- 
ferent nature.  The  principal  and  interest  are  blendetl  together 
and  adjudged  to  the  creditor  for  immediate  payment  or  to  be 
at  once  collected.''    Where  strict  foreclosure  was  stipulated  for 


in  cases  wliere,  the  interest  having 
heconie  due  and  unpaid,  the  debtor 
tlien  agrees  to  have  the  accrued  in- 
terest added  to  the  principal  and  be- 
come interest-bearing.  Bowman  v. 
Neely,  151  Til.  37. 

3  Sanford  v.  Lundquist,  80  Neb. 
408,  414,  18  L.R.A.(N.S.)  633  (it  is 
immaterial  that  the  original  con- 
tract provided  for  interest  at  the 
maximum  rate  and  the  latter  agree- 
ment also  provided  therefor)  ; 
Young  V.  Hill,  07  N.  Y.  1G2,  23 
Am.  Rep.  99;  Tillotson  v.  Nye,  88 
Hun  101 ;  Hatliaway  v.  Meads,  1 . 
Ore.  66,  50  Am.  Rep.  456;  Boggess 
V.  Goflf,  47  W.  Va.  139;  Rose  v. 
Bridgeport,  17  Conn.  247;  Camp  v. 
Bates,  n  Conn.  497. 

4Goodhart  v.  Rastert,  10  Olno 
Dec.  40;  Emerson  v.  Atwater,  12 
Mich.   314;    Carpenter  v.   Welcli.  40 


Vt.  251;  Scliieflelin  v.  Stewart,  1 
Jolins.  Ch.  620,  7  Am.  Dec.  507; 
Backus  v.  Minor,  3  lal.  231. 

If  payments  are  to  be  made  with- 
in a  stipulated  time  after  quarter- 
ly statements  are  rendered,  though 
such  arc  not  rendered,  rests  may  be 
allowed  at  every  (piarter  and  inter- 
est com|iulcd  on  the  amounts  then 
due.  IMillcr  v.  Billington,  194  Pa. 
452. 

5  Hooper  v.  Hooper,  SI  Md.  155, 
177,  48  Am.  St.  49G. 

Interest  upon  the  interest  in  an 
account  stati'd  may  lie  recovered 
without  an  agreemenl  in  wriling 
therefor  as  is  required  in  <i)n(raclH 
generally.  Atkinson  v.  (ioldtii  Date 
T.  Co.,  21  Cal.  App.  108. 

6  See  Stevens  v.  Colfeen,  39  III. 
148;  State  v.  Jackson.  1  dolins.  Ch. 
13,  7   Am.   Dee.   -171. 


1204  SUTHEBLAND    ON    DAMAGES.  [§    374 

in  the  mortgage  and  six  months  given  to  pay  the  debt  with 
interest  at  the  rate  of  ten  per  cent.,  the  legal  rate  being  six,  it 
was  held  that  inasmuch  as  the  complainant  was  entitled  to 
strict  foreclosure  it  was  not  error  to  require  a  higher  rate  than 
is  provided  for  by  the  statute  upon  the  extension  of  the  time 
of  payment/ 

In  a  suit  for  specific  performance  by  the  vendee  after  he  has 
made  default  in  the  payment  of  purchase-money,  on  which  in- 
terest was  payable  annually,  the  purchase-money  to  be  paid 
on  a  decree  in  his  favor  should  include  interest  on  the  instal- 
ments of  interest  from  the  time  they  became  due.^  In  such  a 
case  the  court  said:  ''We  express  no  opinion  whether  interest 
upon  such  instalments  of  interest  could  have  been  recovered 
by  the  vendor  in  a  suit  for  damages,  or  on  a  bill  for  specific 
performance  brought  by  him.  But  the  complainant  comes  into 
court  acknowledging  his  default  in  making  the  payments  when 
due,  and  asks  specific  performance  on  making  the  payments 
now.  As  he  asks  equity  he  must  do  equity,  and  put  the  vendor 
in  the  same  condition  as  if  the  payments  had  been  made  when 
agreed.  Had  this  money  been  paid  when  due  it  would  have 
earned  interest  from  that  time."  It  was  held  that  interest 
should  be  computed  on  the  several  instalments  of  interest  from 
the  time  they  respectively  became  due.^ 

§  375.  Interest  on  instalments  of  interest.  The  question  on 
which  the  court  in  the  preceding  case  refrained  from  expressing 
an  opinion  is  one  upon  which  the  American  courts  are  divided. 
Where  the  principal  is  payable  on  long  time  and  interest  is  pay- 
able annually  or  at  shorter  periods,  and  the  latter  is  not  paid 
when  due,  according  to  the  older  cases,  and  as  the  law  seems  to 
be  settled  in  a  majority  of  the  states,  no  interest  can  be  collected 
upon  such  arrears  of  interest,^"  though  demand  has  been  made 

7Bi8sell    V.    Marine    Co.,    55    Til.  Broughton  v.  Mitchell,  64  Ala.  210; 

165.  Young  V.  Hill,  67  N.  Y.  162   (except 

8  Morris  v.  Hoyt,  11  Mich.  1.  in    mercantile   transactions   upon    a 

Sid.;  Pujol  V.  McKinlay,  42  Cal.  contract  implied  from  the  course  of 

559.     See    .3    Pomeroy    on    Equity,  dealing  or   from   custom)  ;    Dyar  v. 

§  1407.  Slingerland,   24   Minn.   267;    Mason 

10  Leonard  v.  Villars,  23  111.  377 ;  v.   Callender,  2   id.   302 ;    Stokely  v. 

Smith    V.    Luse,    30    111.    App.    37;  Thompson,   34    Pa.     210;     Ferry     v. 


375] 


INTEREST. 


120{ 


for  it.^^  In  several  states,  however,  the  rule  is  otherwise;  in- 
terest on  such  arrears  is  allowed  from  the  time  the  same  be- 
came due  without  rest  to  the  time  of  computation  for  payment 
or  judgment.  Thus  in  North  Carolina  and  Arkansas  it  is  held 
that  where  a  note  is  given  with  a  stipulation  that  the  interest 
is  to  be  paid  annually  or  semi-annually  the  maker  is  chargeable 
with  interest  at  the  like  rate  upon  such  deferred  payments  of 


Ferry,  2  Cusli.  92;  Doe  v.  Vallejo, 
29  Cal.  285;  Ackerman  v.  Emmott, 
4  Barb.  626;  Waldron  v.  Coal  Co., 
61  W.  Va.  280.     See  note  to  §  373. 

"Interest  upon  interest  whicli  has 
accrued  upon  contracts  upon  which 
interest  is  by  their  terms  payable 
at  stated  periods  before  the  princi- 
pal becomes  due  is  never  allowed  in 
making  up  judgments  in  suits  there- 
on. This  has  often  been  determined, 
and  must  now  be  considered  as  the 
settled  law  in  this  commonwealth." 
Shaw  V.  Norfolk  County  R.  Co.,  16 
Gray  407,  416,  citing  Hastings  v. 
Wiswall,  8  Mass.  455;  Wilcox  v. 
Rowland,  23  Pick.  167;  Henry  v. 
Flagg,  13  Mete.  (Mass.)  64.  To 
the  same  effect  is  Hodgkins  v. 
Price,  141  Mass.   162. 

In  Pindall  v.  Bank  of  Marietta, 
10  Leigh  481,  a  debtor  owing  a 
debt  consisting  of  principal  and  in- 
terest, it  was  agreed  between  hira 
and  his  creditor  that  he  should,  in 
the  first  place,  pay  off  the  principal, 
and  that  the  interest  might  for  a 
time  remain  unpaid.  The  creditor 
received  money  from  the  debtor  and 
applied  it  in  satisfaction  of  the 
principal.  Many  years  elapsed 
without  payment  of  the  interest. 
It  was  held  that  the  creditor  was 
only  entitled  to  the  interest  due  at 
the  time  the  principal  was  paid, 
and  not  to  the  interest  on  the  in- 
terest, there  having  been  no  agree- 
ment to  pay  it.  ""I^ooke  v.  Bonds,  29 
Tex.  419,  is  to  the  same  effect. 


Interest  cannot  be  compounded 
without  statutory  autliority.  Hoyle 
V.  Page,  41  ]\Hcli.  533.  It  is  pro- 
vided by  statute  in  Michigan  (1 
Ilowell's  Stats.,  §  1599)  "tliat  wlien 
any  instalment  of  inten-st  upon  any 
note,  bond,  mortgage  or  otiier  writ- 
ten contract  shall  have  become  due, 
and  the  same  shall  remain  unpaid, 
interest  may  be  computed  and  col- 
lected on  any  such  instalment  so 
due  and  unpaid  from  the  time  at 
which  it  became  due,  at  the  same 
rate  as  specified  in  any  such  note, 
bond,  mortgage  or  other  written 
contract,  not  exceeding  ten  per 
cent.;  and  if  no  rate  of  interest  be 
specified  in  such  instrument,  then 
at  the  rate  of  seven  per  cent."  This 
does  not  apply  to  new  interest  ac- 
cruing by  lapse  of  time  after  the 
maturity  of  the  debt.  Voigt  v.  Bel- 
ler,  56  Mich.  140;  McVicar  v.  Deni. 
son,  81  Mich.  348;  Wallace  v 
Glaser,  82  Wwh.  190.  21  -\ni.  St 
556. 

Where  the  contract  makes  inter- 
est payable  by  instalments  at  fixed 
periods  and  separately  from  the 
principal,  simple  interest  will  hi'  al- 
lowed on  each  instalment  at  the 
contract  rate;  but  where  the  pay- 
ment of  interest  is  not  stipulated 
for  until  the  principal  becomes  due 
interest  is  allowable  only  on  the 
latter.  Rix  v.  Strauts,  59  Mi.h. 
364. 

11  Whitcomb  v.  Harris.  !i()  Me. 
206. 


120G 


SUTIIEELAND    ON    DAMAGES. 


[§  375 


interest  as  if  he  had  given  a  note  for  the  amount  thereof .^^  By 
this  mode  of  computation  the  court  say  compound  interest  is 
not  given,  but  a  middle  course  is  taken  betv^een  simple  and 
compound  interest."  So  in  Tennessee  "  and  Kentucky.^^  Sw- 
ing, J.,  said  in  the  first  Kentucky  case  cited:  "The  fact  that 
the  amount  so  promised  to  be  paid  is  described  as  interest  ac- 
cruing upon  a  larger  sum  which  is  payable  at  a  future  day 
cannot  the  less  entitle  the  plaintiff  to  demand  interest  upon 
the  amount,  in  default  of  payment,  as  a  just  remuneration  for 
the  detention  or  non-payment."  In  Vermont  ^^  it  is  allowed 
by  way  of  damages  for  delay  of  payment;  but  parties  cannot 
stipulate  for  interest  before  it  becomes  due.  In  South  Caro- 
lina interest  overdue  bears  interest. '^'^  So  in  Rhode  Island,  New 
Hampshire,  Iowa,  Wisconsin,  Ohio,  Texas,  Georgia,  Alabama, 
and  Washington  substantially  the  same  doctrine  prevails,"  in- 


12  Bledsoe  v.  Nixon,  69  N.  C.  89, 
12  Am.  Rep.  642;  Vaughan  v.  Ken- 
nan,  38  Ark.  114.  See  note  to 
§  373. 

13  Kennon  v.  Dickins,  Cam.  & 
Norw.  Conf.  R.  (by  Battle)  357,  2 
Am.  Dec.  642;  Bledsoe  v.  Nixon, 
supra. 

14  House  V.  Tennessee  F.  College, 
7  Heisk.  128. 

15  Talliaferro  v.  King,  9  Dana 
331,  35  Am.  Dec.  140;  Hall  v.  Scott, 
90  Ky.  340. 

leCatlin  V.  Lyman,  16  Vt.  44. 

17  0'Neall  V.  Bookman,  9  Ricli. 
80;  Gibbes  v.  Chisolm,  2  N.  &  McC. 
38,  10  Am.  Dec.  560;  Singleton  v. 
Lewis,  2  Hill  408;  O'Neall  v.  Sims, 
1  Strob.  115;  De  Bruhl  v.  Neuffer, 
id.  426;  Doig  v.  Barclay,  3  Ricb. 
]25;  Watkins  v.  Lang,  17  S.  C.  13; 
Wriglit  V.  Eaves,  10  Rich.  ¥a\.  582; 
Miller  v.  Hall,  18  S.  C.  141. 

18  Alabama  City,  G.  &  A.  R.  Co. 
V.  City  of  Gadsden,  185  Ala.  263; 
Stone  V.  Pettus,  47  Tex.  Civ.  App. 
14;  Hillsboro  O.  Co.  v.  Citizens' 
Nat.  Bank,  ,32  Tex.  Civ.  App.  610; 
Warnock  v.  Itawis,   38   Wash.   144: 


Cramer  v.  Lepper,  26  Ohio  St.  59 ; 
Lewis  V.  Paschal,  37  Tex.  315; 
Mills  V.  Jefferson,  20  Wis.  50; 
Pearce  v.  Hennessy,  10  R.  I.  223; 
Lanahan  v.  Ward,  id.  299;  Missis- 
sippi Valley  T.  Co.  Hofms,  20  Wash. 
272. 

In  Wheaton  v.  Pike,  9  R.  L  132, 
11  Am.  Rep.  227,  Durfee,  J.,  said: 
"The  reasons  assigned  for  not  allow- 
ing interest  are,  first,  that  interest 
on  interest  savors  of  usury  and  is 
liable  to  boar  with  oppressive  liard- 
sliip  on  the  debtor;  and  second,  that 
the  creditor  from  liis  forbearing  to 
call  for  the  instalments  of  interest 
when  they  become  due  may  be  pre- 
sumed to  have  waived  his  claim  to 
interest  on  the  same.  Tliese  reasons 
are  not  entirely  consistent;  for  if 
tlic  interest  is  not  to  be  allowed  for 
tlie  first  reason,  there  can  be  no 
waiver  of  interest  to  be  presumed. 
It  is  also  urged  that  interest,  if  so 
allowable  upon  annual  or  semi-an- 
nual dues  of  interest,  should,  for 
the  same  reason,  when  the  debt  is 
payable  with  interest  at  a  particular 
time,  l)e  allowed  from  tliat  time  up- 


§  375] 


INTEREST. 


ii'o: 


tercst  being  alKtwed  on  un|t;ii(l  oxci-duc  instnliiiriits  (if  interest. 


oil  (lie  iiilrrcst  tlicn  dur  a>  wt'Il  as 
oil  tlio  luiiicipal.  Doe  \'.  Warren,  7 
.Me.  -IS.  Sec  riiioii  I'.aiik  V.  \\  il 
Hams,  :i  Cold.  570.  But,  on  t\\v 
other  hand,  it  is  urged  that  inter- 
est upon  such  interest,  wliatcver 
savor  of  usiiry  it  iuhv  have,  is  not 
usurious;  for  after  sueli  interest  i.s 
due  the  debtor  may  hiwfully  aiiree 
to  pay  interest  thereon;  and  if  lie 
lias  paid  interest  thereon  he  ean- 
not  recover  it  back;  tliat  no  rule 
should  bo  adopted  wliieli  favors  the 
debtor  at  the  expense  of  the  cred- 
itor; and  that  there  is  no  good  rea- 
son why  money  due  at  a  particular 
time  for  the  use  of  money  should 
not  carry  interest  from  that  time  in 
the  same  manner  as  money  due  for 
anything  else.  In  South  Carolina, 
•where  the  ruh»  accords  witli  tliis 
view,  it  has  been  held  that  where  a 
party  contracts  to  pay  a  sum  of 
money  with  interest  thereon  on  a 
given  day  when  the  day  arrives  the 
interest  becomes  principal  and  hears 
interest  for  the  future.  Doig  v. 
Barclay,  .3  Rich.  ]25.  There  is  a 
reason  for  not  allowing  interest 
upon  interest  applicable  to  nego- 
tiable securities  which  we  do  not 
find  referred  to,  namely,  that  it  may 
not  be  known  to  the  debtor  to  wliom 
the  interest  is  to  be  paid:  but  it 
may  be  replied  that  the  same  rea- 
son would  hold  in  regard  to  the 
principal  of  a  negotiahle  security 
payable  at  a  particular  day,  with- 
out interest,  upon  which,  nevertlie- 
less,  interest  accrues  after  its  ma- 
turity." 

Pierce  v.  Rowe.  1  N.  H.  179. 
Woodbury,  J.:  "If  any  interest  can 
be  allowed  on  the  annual  interest, 
it  must  be  allowed  by  virtue  of 
some  general  jirinciples,  and  not  of 


any  cvpicss  ((nitracl  for  it  contained 
in  till'  note.  Unf  tliose  principles 
on  the  sulijrct  of  inteicst  must  lie 
gathered  from  the  reasons  on  whii-li 
interest  is  originally  founded,  and 
on  which  it  is  in  any  case  permit- 
ted witiiout  an  express  contract  for 
its  payment.  Wherever  money  is 
due  to  an  individual,  without  any 
stipulation  as  to  interest,  some  com- 
pensation for  tlie  use  of  the  money 
wliile  wrongfully  detained  seems 
justly  to  be  due;  because  the  use 
of  the  money  must  be  presumed  to 
be  beneficial  to  the  one  party,  and 
the  deti'ution  of  it  injurious  to  the 
oilier.  Indeed,  the  increases  (jf  net 
I'l'olit  of  iirojierty  are  an  appurte- 
nant to  the  property  itself,  and  the 
same  broad  principle  which,  with- 
out a  sjieeial  contract,  would  enable 
the  owner  to  recover  the  property, 
would  also  entitle  him  to  recover 
its  increase.  Hence  a  fair  reward 
for  tlie  use  of  money  while  negli- 
gently or  wrongfully  withheld  from 
the  creditor  ought  always  to  be  al- 
lowed him  in  the  nature  of  damages 
for  its  detention;  and  the  princi- 
ples of  our  civil  actions  justify 
such  an  allowance  by  permitting  the 
damages  recovered  to  be  commen.ui- 
rate  with  the  injury  sustained.  On 
this  theory  interest  will  not  com- 
mence, when  no  express  contract 
exists  for  it,  till  a  wrong  is  done  by 
tlie  debtor's  failure  to  pay  what  has 
become  due.  Mecause  till  that  event 
no  breach  of  duty  has  happened  on 
liis  part  for  which  legal  damages 
can  accrue.  Rut  after  money  be- 
comes due,  every  day's  neglect  to 
make  payment  of  it.  whether  prin- 
cipal or  interest,  is  an  injury  to  the 
creditor;  and  our  civil  remedies 
would    prove    defective,     and     would 


1208 


SDTIIERI.AND    ON    DAMAGES. 


[§  375 


Nebraska  interest  may  be  computed  upon  overdue  interest  if 


not,  as  justice  requires,  approxi- 
mate those  specific  ones  provided  by 
equity  unless  the  money  detained, 
and  a  compensation  for  its  use  while 
so  detained,  could  be  recovered  by 
the  creditor.  Were  this  not  the  \a.w 
a  strong  temptation,  also,  would  be 
presented  to  debtors  to  violate  their 
duties.  They  would,  in  the  lan- 
guage of  Lord  Mansfield,  be  en- 
couraged 'to  make  use  of  all  the  un- 
just dilator ies  of  chicane;'  'and  the 
more  the  plaintiff  is  injured  the  less 
he  will  be  relieved.'  "  Approved  in 
Little  v.  Riley,  43  N.  H.  113; 
Townsend  v.  Eiley,  46  N.  H.  300, 
313. 

But  where  partial  payments  have 
been  made  during  a  year,  the  note 
bearing  annual  interest,  there 
should'  not  be  rests  made  for  such 
intermediate  payments.  If  such 
payments  were  made  on  account  of 
accruing  interest  not  due,  they 
should  be  deducted  at  the  end  of 
the  year,  but  without  interest  upon 
them.  Mann.  v.  Cross,  0  Iowa  327; 
Calhoim  v.  Marshall,  61  Ga.  275. 

In  Preston  v.  Walker,  26  Iowa 
205,  96  Am.  Dec.  140,  and  Burrows 
v.  Stryker,  47  Iowa  477,  interest 
was  allowed  upon  delinquent  inter- 
est upon  notes  made  in  New  York 
and  payable  there. 

If  the  contract  rate  of  interest 
is  higher  than  the  minimum  legal 
rate  interest  will  not  be  allowed  on 
unpaid  interest  unless  the  contract 
explicitly  provides  for  it.  Wofford 
V.  Wyly,  72  Ga.  863. 

In  The  Ship  Packet,  3  Mason  255, 
the  mode  of  computing  interest  on 
a  bottomry  bond  was  discussed  by 
Judge  Story.  "The  rule  laid  down 
by  Mr.  Marshall,  in  his  treatise  on 
Insurance  and  Bottomry    (b.  2,  ch. 


4,  p.  752),  is,  that  'if  when  the  risk 
is  ended  the  borrower  delay  pay- 
ment the  common  interest  begins  to 
run,  ipso  jure,  without  any  demand. 
Discusso  pericit'lo,  majtis  legitima 
usura  non  debebitur.  But  this  in- 
terest runs  only  on  the  principal, 
not  on  the  marine  interest,  for  this 
would  be  interest  upon  interest. 
Acccssio  accessionis  non  est.'  For 
this  doctrine  he  cites  no  English  au- 
thority, but  relies  altogether  upon 
the  civil  law  and  Pothier  and  Em- 
erigon.  The  doctrine  of  the  civil 
law,  denying  compound  interest,  is 
not  of  universal  application  under 
the  common  law.  The  opinions  of 
Pothier  and  Emerigon  seem  certain- 
ly opposed  to  allowance  of  interest 
upon  the  maritime  premium  (com- 
monly, l)ut  somewhat  improperly,- 
called  interest)  ;  but  Emerigon  ad- 
mits in  explicit  terms  that  the  law 
and  practice  in  France  are  in  favor 
of  it.  Upon  examining  liis  reason- 
ing on  tlie  subject  it  is  by  no  means 
satisfactory,  being  obviously  found- 
ed upon  mere  motives  of  compas- 
sion. ]\Iy  opinion  is  that  by  the 
successful  termination  of  the  voy- 
age the  maritime  premium,  as  well 
as  the  sum  lent,  becomes  due;  the 
whole  forms  one  aggregate  debt,  and 
that  any  delay  in  discharging  it 
ought  to  be  allowed  by  the  allow- 
ance of  common  interest,  exactly  as 
in  other  cases  of  debt.  In  making 
up  the  decree  the  sum  lent  and  the 
bottomry  interest  are  to  be  consid- 
ered as  the  principal,  and  common 
interest  upon  this  amount  is  to  be 
added  from  the  time  the  bond  be-- 
comes  due  to  the  time  of  the  de- 
cree." 

The  statute  of  Oregon  allows  par- 
ties to  stipulate  that  delinquent  in- 


§   37GJ 


INTEREST. 


1209 


by  so  doing  the  total  interest  is  not  made  to  exceed  the  mnxininm 
legal  rate.^^ 

§  376.  Separate  agreements  for  interest.  Contracts  for  pay- 
ment of  interest,  when  secured  by  a  separate  instrument,  will 
be  enforced  like  all  other  agreements  for  the  payment  of  money 
at  a  time  certain.  After  maturity  interest  as  damages  will  be 
allowed,  and  proof  that  the  consideration  is  interest  on  a  debt 
secured  by  another  instrument  will  be  of  no  avail  to  prevent 
such  recovery. ^°  Coupons  are  a  familiar  example.  When  so 
framed  that  they  cannot  be  separated  from  the  principal  obli- 
gation they  are'  only  equivalent  to  a  provision  therein  for  the 
payment  of  interest,  and  the  question  of  interest  on  the  amount 
so  agreed  to  be  paid  is  simply  one  of  interest  on  arrears  of 
interest.^^    According  to  the  courts  of  New  York  the  same  rule 


terest  may  bear  interest,  but  not 
to  compound  it  oftener  than  once  a 
year.  In  Murray  v.  Oliver,  3  Ore. 
539,  the  action  was  on  a  note  pay- 
able in  one  year,  "witli  interest  at 
the  rate  of  thirty  per  cent,  per  an- 
num until  paid,  and  interest  to  be 
paid  semi-annually,  and  if  not  paid 
when  due  to  be.  compounded  at  the 
same  rate."  Boise,  J.:  "We  think 
this  contract  divisible.  There  is  an 
agreement  to  pay  tlie  principal  and 
interest  at  the  end  of  one  year  from 
date;  then  it  is  stipulated  that  the 
interest  shall  be  paid  semi-annual- 
ly," etc.  After  referring  to  the 
statutes  he  continues:  "It  would, 
therefore,  result  in  rendering  void 
the  contract  to  pay  intei-est  semi- 
annually, and  would  not  vitiate  the 
contract  to  pay  the  principal  sum 
with  interest  at  thirty  per  cent." 

iSMurtagh  v.  Thompson,  28  Neb. 
.3,58. 

20  Wigton  V.  Elliott,  49  Colo.  1 15 ; 
Lee  V.  Melby,  93  Minn.  4;  ('Tliis 
lias  always  been  treated  as  an  il- 
logical exception  to  the  rule  prohih- 
itiiig   the   making   of   an    agreement 


in  a  single  instrument  obligating 
the  promisor  to  pay  interest  after 
due  upon  interest  then  unma- 
tured") ;  Rice  v.  Shealy,  71  S.  C. 
161;  Ilumplireys  v.  Morton,  100  III. 
.592;  Graeme  v.  Cullen, '  23  Gratt. 
266;  Koshkonong  v.  Burton,  104  U. 
S.  668,  26  L.  ed.  886;  Genoa  v. 
Woodruff,  92  id.  502;  Walnut  v. 
Wade,  103  id.  183;  Mills  v.  Jef- 
ferson, 20  Wis.  .W;  Pruyn  v.  Mil- 
waukee, 18  id.  367;  Forstall  v.  Con- 
solidated Ass'n  of  Planters,  34  La. 
Ann.  770;  Welsh  v.  First  Division 
St.  Paul  &  P.  R.  Co.,  25  Minn.  314; 
North  Peiuisylvania  R.  Co.  v. 
Adams,  54  Pa.  94,  93  Am.  Dec.  677 ; 
Gilljert  v.  Washington,  etc.  R.  Co., 
.■!3  Gratt.  586.  Contra,  Force  v. 
i:iizabeth,  28  N.  .T.  Eq.  403. 

21  Cripple  •Creek  v.  Adams,  3fi 
Colo.  320;  Parsons  v.  Utica  C.  Mfg. 
Co.,  80  Conn.  58:  Graham  v.  Fitts, 
53  Fla.  1046;  Rose  v.  Bridgeport, 
17  Conn.  243.  See  Camp  v.  Bates, 
11  id.  487;  Crosby  v.  New  London, 
etc.  R.  Co.,  20  id.  121;  Clarke  v. 
.lanesville,  1  Biss.  98. 


1210 


SUTHERLAND    ON    DAMAGES. 


[§    37G 


governs  so  long  as  the  coupons  remain  in  the  hands  of  the  origi- 
nal holder;  until  negotiated  or  used  in  some  way  they  serve  no 
independent  purpose,  but  continue  to  he  incidents  of  the  bonds 
and  have  no  greater  force  or  effect  than  the  stipulation  for  the 
payment  of  interest  contained  in  the  bonds.  So  long  as  they 
so  remain  it  can  make  no  difference  whether  the  coupons  are 
attached  or  detached.^^  But  generally,  if  the  coupon  has  in 
itself  all  the  parts  of  a  complete  contract  it  may  be  detached, 
and  if  negotiable  possesses  all  the  qualities  of  commercial 
paper.  An  action  may  be  maintained  on  it  without  production 
of  the  bond,  though  the  bond  may  belong  to  another  party,  has 
never  been  issued  or  has  been  canceled.  And  interest  after 
maturity  will  be  given  as  on  notes  and  bills. ^^  Where  it  is 
provided  by  statute  that,  in  the  computation  of  interest  upon 
any  note,  interest  shall  not  be  compounded,  nor  shall  the  inter- 
est therein  be  construed  to  bear  interest  unless  an  agreement  to 
that  effect  is  clearly  expressed  in  writing  and  signed  by  the 
party  to  be  charged  therewith,  interest  will  not  be  allowed  on 
coupons  maturing  after  the  option  given  the  holder  of  a  note  to 


22  Bailey  v.  Buchanan  County, 
115  N.  Y.  297,  G  L.R.A.  562;  Wil- 
lianisburgh  Sav.  Bank  v.  Solon,  130 
N.  Y.  465,  481 ;  Buffalo  Loan,  T.  & 
S.  D.  Co.  V.  Medina  G.  &  E.  L.  Co., 
12  App.  Div.  199. 

23  Long  Island  L.  &  T.  Co.  v. 
Long  Island  City  &  N.  R.  Co.,  85 
App.  Div.  (N.  Y.)  36;  Trustees  In- 
ternal Imp.  Fund  v.  Lewis,  34  Fla. 
424,  26  L.R.A.  743,  43  Am.  St.  209; 
Cook  V.  Illinois  T.  &  S.  Bank,  68  111. 
App.  478;  Lexingion  v.  Union  Nat. 
Bank,  75  Miss.  1;  Love  v.  Phila- 
delphia &  R.  R.  Co.,  lO^^hila.  304; 
Nash  V.  Meggett,  89  Wis.  493 ;  Drury 
V.  Wolfe,  134  111.  294;  Cairo  v.  Zane, 
149  111.  122,  143;  Rich  v.  Seneca 
Falls,  19  Blatch.  558;  Philadelpliia 
&  R.  R.  Co.  V.  Smith,  105  Pa.  195: 
Same  v.  Knight,  124  id.  58;  Whit- 
aker  v.  Hartford,  etc.  R.  Co.,  8  R. 
I.    47,    86    Am.    Dec.    614;    Thomson 


V.  Lee  County,  3  Wall.  327,  18  L. 
ed.  177;  Aurora  v.  West,  7  id.  82; 
Humphreys  v.  Morton,  100  111.  592; 
Genoa  v.  Woodruff,  92  U.  S.  502, 
23  L.  ed.  586;  Connecticut  Mut.  Ins. 
Co.  v.  Cleveland,  etc.  R.  Co.,  41 
Barb.  9,  26  How.  Pr.  225;  City  v. 
Lanison,  9  Wall.  477,  19  L.  ed.  725; 
Clark  v.  Iowa  City,  20  id.  583; 
Durant  v.  Iowa  County,  Wool.  C.  C. 
69;  Mercer  County  v.  Hacket,  1 
Wall.  83;  Gelpcke  v.  Dubuque,  id. 
175;  Murray  v.  Lardner,  2  id.  110; 
Nortli  Pennsylvania  R.  Co.  v. 
Adams,  54  Pa.  44;  Pollard  v.  Pleas- 
ant Hill,  3  Dill.  195 ;  Rogers  v.  Lee 
County.  1  id.  529;  Mathias  v.  Su- 
[)orior  I.  Co.,  70  Pa.  160;  Norris  v. 
Philadelphia,  id.  332;  Hollingsworth 
V.  Detroit,  3  McLean,  472;  Jeffer- 
son County  V.  Hawkins,  23  Fla.  223 
(if  no  rate  of  interest  is  specified 
in  the  coupon  it  bears  that  fixed  by 


§  '>T7] 


INTEREST. 


1311 


declare  the  wlidk"  snin  llierein  j)r()iiiis('d  to  bo  due  and  ])aval)le 
has  been  exercised,  in  the  a1>seiice  of  such  aiireeuieut.^* 

§  377.  Periodical  interest  after  maturity  of  debt.  In  IJIkuIo 
Ishmd,  wliere  intei-est  is  allowed  on  iiistalineuts  of  iutci-est 
payable  at  stated  times  alter  they  become  due,  the  (luestion 
arose  whether,  after  the  wlmle  principal  nuitnres  and  remains 
unpaid,  interest  will  become  due  thereon  periodically  in  instal- 
ments as  was  stipulated  before  the  principal  fell  due  h  was 
decided  in  the  negative  for  the  reason  that  after  maturity  of 
the  principal  snm  both  the  accruing  interest  and  the  principal 
are  not  due  on  any  particular  day,  but  every  day  until  they  are 
paid.  In  that  case  the  interest  by  the  contract  was  payable  semi- 
annually. The  court  gave  judgment  for  the  principal  with 
simple  interest  to  the  time  of  rendering  judgment,  together  Avith 
interest  on  the  semi-annual  dues  of  interest,  inchiding  that 
which  accrued  when  the  note  became  due.^'*  In  South  Carolina 
interest  after  maturity  'fnay  be  regulated  by  agreement ;  and  it 


statute,  though  the  bonds  bear  a 
higher  rate)  ;  Scotland  County  v. 
Hill,  132   U.  S.   ]07,   33  L.  cd.  261. 

If  there  is  a  discrepancy  as  to 
tlie  rate  of  interest  between  a  cou- 
pon and  the  bond  to  whicli  it  was 
originally  attached  the  latter  will 
control  when  the  former  is  held  by 
one  who  acqviired  it  after  maturity. 
Goodwin  v.  Bath,  77  Me.  462. 

If  bonds  and  coupons  are  issued 
pursuant  to  a  special  statute  which 
does  not  make  provision  for  the 
payment  of  interest  iijxm  eitiier 
after  maturity  tiiey  do  not  bear  in- 
terest. Bates  V.  Gerber,  S2  Cal. 
550;  Sober  v.  Calveras  County,  39 
Cal.  134;  Hewel  v.  Hogin,  3  Cal. 
App.  249,  citing  local  cases.  See 
Davis  V.  Yuba  County,  75  id.  452. 

Coupons  given  by  a  guardian  for 
instalments  of  interest  on  a  mort- 
gage on  the  ward's  lands,  if  not  so 
worded  as  to  bind  eith(>r  of  them 
personally,  do  not  draw  interest 
after  maturity  'as  commercial  paper 


nor  as  "written  instruments"  within 
the  statute  of  Illinois.  United 
States  M.  Co.  v.  Sperry,  26  Fed. 
.727. 

If  coupons  which  do  not  bear 
interest  by  their  terms  are  not  pre- 
sented for  payment  at  tlie  place  des- 
ignated, the  money  l)eing  tliere  to 
pay  tliem,  interest  will  not  hr  al- 
h)we(l  on  tln^m  if  the  residue  of  tlie 
fund  subsequently  passes  to  the 
purchaser  of  tlie  property  at  a  fore- 
closure sale.  (J rand  Trunk  \l.  Co. 
V.  Central  N'ermont  K.  Co.,  10.5  Fed. 
411. 

Interest  may  be  recovered  from 
maturity  without  presentation  as 
stipulated  unless  it  is  shown  the 
debtor  was  prepared  to  pay  on  pre- 
sentation. Abraham  v.  New  Orleans 
B.  Ass'n,  110  La.  1012. 

24  Stubbings  v.  O'Connor,  102 
Wis.   3.')2,   363. 

25Wheaton  v.  Pike,  9  R.  I.  132, 
11  Am.  Kei).  227. 


Iiil2 


aUTlIEKLAND    OJSf    DAMAGES. 


[§  377 


has  been  held  that,  if  agreed  to  be  paid  periodically,  the  instal- 
ments of  interest  accruing  after  maturity  will  bear  interest. 
The  bond  was  given  in  February,  payable  on  the  first  of  the 
following  January,  and  provided  for  interest  annually.^®     But 


26  O'Neall  V.  Bookman,  0  Rich.  80. 
Withers,  J.:  "Within  the  period  of 
the  stipulated  credit,  wlien  the  in- 
terest is  to  be  paid  annually,  no 
one  questions  that  interest  should 
be  computed  on  the  interest  from 
the  respective  periods  fixed  for  the 
payment.  Gibbes  v.  Chisolm,  2  N. 
&  McC.  38,  10  Am.  Dec.  560;  Single- 
ton V.  Lewis,  2  Hill  (S.  C.)  408; 
O'Neall  V.  Sims,  1  Strob.  115;  De 
Bruhl  V.  Neuffer,  id.  426.  Thus 
much  we  must  regard  as  settled 
upon  an  immovable  foundation  of 
authority  in  the  books  of  reports, 
reinforced  by  innumerable  instances 
of  conformity  in  circuit  decisions 
and  transactions  of  daily  occur- 
rence. The  cases  cited,  especially 
Gibbes  v.  Chisolm,  will  show  that 
the  doctrine  stated  has  been  fully 
discussed  upon  considerations,  moral 
and  legal,  Avith  a  consideration  of 
cases  English  and  American  in  law 
and  equity,  and  with  dissent  in  the 
court  at  first  (see  Gibbes  v.  Chis- 
olm) reconciled  subsequently.  See 
Singleton  v.  Lewis.  But  the  ques- 
tion now  before  us  presents  a  varia- 
•  tion  from  some  of  our  cases,  but 
not  from  all  of  them.  Tt  is  a  case 
where  the  special  credit  has  ex- 
pired :  and  shall  the  terms,  'with  in- 
terest payable  annually,'  be  applied 
to  the  interest  annually  accruing  at 
the  period  of  each  year  following 
the  time  set  for  the  payment  of  the 
principal?  Why  should  the^'  not  so 
apply  when  they  were  so  intended 
by  the  parties?  Undoubtedly  they 
must  if  the  law  do  not  forbid. 
There  can  be  no  law  to  forbid  un- 
less it  can  be  found  in  tlie  legisla- 


tion upon  usury.  That  forbids  one 
'to  take,  directly  or  indirectly,  for 
loan  of  any  moneys,  etc.,  above 
value  of  seven  pounds  for  the  for- 
bearance of  one  hundred  pounds  for 
one  year,  and  so  after  that  rate  for 
a  greater  or  lesser  sum,  or  for  a 
longer  or  shorter  time.'  We  have 
already  seen  that  it  is  not  unlaw- 
ful— that  it  is  not  usurious — to 
compute  interest  upon  the  interest 
promised  to  be  paid  at  the  expira- 
tion of  each  year  within  the  period 
of  credit  expressly  stipiilated.  But 
this  decides  the  whole  question ;  for 
it  only  remains  in  each  case  to 
ascertain  what  the  debtor  ha^  prom- 
ised ;  whether  he  intended  to  prom- 
ise to  pay  interest  annually  beyond 
the  time  fixed  for  the  payment  of 
the  principal,  if  forbearance  should 
extend  beyond  that  time ;  for  if  he 
did,  there  is  no  more  usury  in  ap- 
plying tlie  same  rule  of  computa- 
tion to  the  year  next  following  than 
to  tlie  next  preceding  that  time. 
The  matter  is  thus  solved :  A 
party  promises  to  pay  at  a  given 
time  .$100,  with  interest  from  a 
given  time.  At  the  day  of  payment, 
what  is  due?  The  principal  and  in- 
terest. From  that  time,  what  is 
forborne?  Not  the  principal  only, 
but  all  as  to  which  default  is  made, 
to  wit:  the  principal  and  interest; 
both  are  equally  payable  at  the 
time.  So  it  is  not  the  forbearance 
of  $100  merely,  but  of  more;  and 
where  the  contract — whether  ex- 
pressly or  by  legal  implication — ex- 
tends to  another  succeeding  period 
of  time,  when  the  interest  is  again 
payable,    there    is    another    sum,    at 


§  ^77] 


IWTEBEST. 


1213 


if  the  promise  is  to  pay  ut  a  time  fixed  beyond  twelve  months 
from  date,  with  interest  nnnnally,  the  interest  is  not  payable 


such  time,  in  addition  to  tlie  princi- 
pal, again  forborne.  It  is  at  least 
but  seven  per  cent,  per  annum,  or 
at  that  rate,  for  tlic  forbearance  of 
$100,  or  for  a  greater  or  less  sum. 
Singleton  v.  Lewis  presents  a  direct 
autliority  for  the  application  of  this 
rule  of  computing  interest  upon  the 
interest  accrued  for  years  succeed- 
ing the  time  fixed  for  payment  of 
the  principal.  In  that  case  the 
credit  of  the  latter  expired  one  year 
from  date,  according  to  the  terms 
used.  Yet  the  promise  was:  'with 
lawful  interest,  payable  annually.' 
The  necessary  implication  was  that 
the  debtor  promised  to  pay  interest 
annually  for  a  period  beyond  the 
first  year,  else  the  words  to  that 
purport  would  avail  nothing  what- 
ever, inasmuch  as  the  interest  due 
a  year  after  date  would  have  drawn 
interest  without  them.  It  was  said 
in  O'Neall  v.  Sims  'that  in  all  cases 
in  which  the  compounding  of  inter- 
est, whilst  the  collection  of  princi- 
pal during  the  whole  time  is  at  the 
discretion  of  the  creditor,  seems  to 
savor  of  usury  or  may,  by  abuse,  be 
perverted  to  the  purposes  of  the 
usurer.' 

"That  which  touches  tlie  question 
of  mutuality  in  a  contract  need  not 
affect  the  question  of  usury.  There 
can  be  no  illegality  for  any  reason 
in  a  promise  to  pay  $100  with  in- 
terest at  the  end  of  a  year,  and  if 
not  then  paid  and  so  long  as  the 
same  may  remain  unpaid  the  in- 
terest thereon  shall  be  paid  annual- 
ly; and  if  this  can  be  gathered  from 
the  contract  to  be  the  agreement,  it 
is  not  obvious  how  the  mere  fact 
that  the  creditor  is  at  liberty  to 
sue  for  his  money  in  any  case  will 
make   that   usury   which    is   not   so 


for  some  otli(>r  reason.  In  the  case 
of  ]':aton  v  Bell,  7  Kng.  C.  L.  13,  5 
H.  &  Aid.  34,  bankers  who  advanced 
money  made  half-yearly  rests  and 
carried  the  interest  to  tlie  principal, 
and  computed  interest  on  tiie  aggre- 
gate, indulging  for  a  considerable 
space  of  time,  and  this  mode  of 
{•omputation  l)eing  acquiesced  in 
was  ratified  l)y  the  king's  bench  and 
held  free  from  the  taint  of  usury. 
That  court  referred  to  and  recog- 
nized the  doctrine  of  Lord  Eldon,  in 
Ex  parte  Bevan,  9  Ves.  223,  that  a 
prior  contract  for  a  loan  for  twelve 
mouths,  to  settle  tlie  balance  at  the 
end  of  six  months,  and  convert  tlie 
interest  then  accrued  into  principal, 
would  be  bad  for  usury;  yet  that 
the  same  thing  actually  done  at  the 
end  of  six  months,  and  a  stipula- 
tion to  forbear  such  aggregate, 
would  be  legal.  Kelly  on  Usury,  p- 
4S,  sup])oses  sucli  dicta  must  be 
understood  as  api)lying  to  mort- 
gages of  real  property  only.  It  is 
finally  to  be  remarked  that  if  at  the 
end  of  each  year  a  party  may  give 
an  interest-bearing  note  for  the  in- 
terest, which  notes  would  be  un- 
questionably valid,  there  can  be  no 
reason  why  at  the  inception  of  the 
contract  he  may  not  provide  terms 
that  shall  produce  the  self-same  re- 
sult. Of  course  an  inference  fhat 
tlie  parties  agreed  for  compound  in- 
terest may  be  drawn  from  their 
dealings  in  a  like  manner  as  the  in- 
ference may  be  drawn  from  the 
same  source  as  to  simple  interest. 
We  adjudge  that  the  plaintiff  in 
the  present  case  was  entitled  to 
compute  interest  upon  the  interest 
falling  due  each  year  as  was  al- 
lowed in  Singleton  v.  Lewis,  the 
terms  importing  and  the  agreement 


1214 


SUTllER-LAND    ON    DAMAGES. 


[§  377 


annuallj  after  niaturitj.^''^  In  New  Brunswick  an  obligation 
to  pay  the  spccilied  rate  of  interest  until  the  whole  sum  for 
which  it  was  given  is  paid,  and  specifying  that  overdue  interest 
is  to  bear  interest  at  the  same  rate,  carries  interest  at  the  stip- 
ulated rate  on  overdue  interest,  whether  it  accrued  before  or 
after  the  maturity  of  the  principal.^* 

§  378.  Computation,  application  and  effect  of  partial  pay- 
ments. The  established  mode  in  the  court  of  chancery  of  com- 
puting interest  is  that  whenever  a  sum  in  excess  of  the  interest 
at  that  time  due  is  to  be  credited  a  balance  is  to  be  struck.^^ 
And  the  same  rule  applies  at  law.  Where  partial  payments 
are  made  on  a  money  demand  after  maturity  the  payment  is 
applied  in  the  first  place  to  discharge  the  interest  then  due ;  if 
the  payment  exceeds  the  interest  the  surplus  goes  towards  dis- 
charging the  principal ;  and  the  subsequent  interest  is  to  be 
computed  on  the  balance  of  the  principal  unpaid.  If  the  pay- 
ment be  less  than  the  interest  the  surplus  interest  must  not  be 
taken  to  au.gment  the  principal,  but  interest  continues  on  the 
principal  until  sufficient  pa^Tiients  are  made  to  extinguish  the 
interest  to  that  date.  If  there  be  a  surplus  of  such  payment 
it  is  applied  to  the*prineipal.  A  like  application  is  made  of 
all  payments.^"      This   rule   applies   to   payments   upon   judg- 


being  at  least  as  clear  in  the  present 
case  as  in  that." 

27  Westfield  v.  Westfield,  19  S.  C. 
85.     See  Wilson  v.  Kelly,  id.  160. 

28  King  V.  Keith,  1  New  Bruns. 
Eq.  538,  555. 

29  Chapline  v.  Scott,  4  Har.  &  Mc- 
Hen.  91. 

30  Holcombe  v.  Holcombe,  74  N. 
J.  L.  257;  Boggess  v.  Goff,  47  W. 
Va.  139;  Russell  v.  Lucas,  Hemp. 
C.  C.  91 ;  Anonymous,  Martin  & 
Hayw.  169;  Baker  v.  Baker,  28  N. 
J.  L.  13,  75  Am.  Dec.  243;  De  Ende 
V.  Wilkison,  2  Pat.  &  H.  663 ;  Baum 
V.  Moon,  1  Hayw.  323;  Van  Ben- 
schooten  v.  Lawson,  6  Jolms.  Ch. 
313,  10  Am.  Dec.  333;  Stoughton  v. 
Lynch,  2  Johns.  Ch.  209;   Bettes  v. 


Farewell,  15  Up.  Can.  C.  P.  450; 
Scanland  v.  Houston,  5  Yerg.  310; 
Dean  v.  Williams,  17  Mass.  417; 
Story  V.  Livingston,  13  Pet.  359,  10 
L.  ed.  200;  State  v.  Jackson,  1 
Johns.  Ch.  13,  7  Am.  Dec.  471; 
Tracy  v.  Wikoff,  1  Dall.  124,  1  L. 
ed.  65;  Penrose  v.  Hart,  id.  378; 
Lewis  V.  Bacon's  Legatee,  3  Hen.  & 
Munf.  89;  Edes  v.  Goodridge,  4 
Mass.  103;  Meredith  v.  Banks,  6  N. 
J.  L.  408;  Houston  v.  Crutcher,  31 
Miss.  51;  Den's  Est.,  35  Cal.  692; 
Backus  V.  Minor,  3  id.  231  ;  Gwinn 
V.  Whitaker,  1  Har.  &  J.  754; 
Lightfoot  V.  Price,  4  Hen.  &  Munf. 
431;  Wallace  v.  Glaser,  82  Mich. 
190;  Betcher  v.  Hodgman,  63  Minn. 
30,    56     Am.     St.    447;     Peyser    v. 


§  378] 


INTEREST. 


1215 


ments.^^  demands  upon  which  interest  is  allowed  only  in  the  dis- 
cretion of  the  jury,  if  it  is  given,^'^  and  accounts  where  credits 
are  paymeuts.^^    Kests  in  an  account  bearing  interest  and  con- 


Myers,  135  N.  Y.  599;  Clift  v. 
Moses,  75  Hun  517;  Wilson's  Est., 
38  Phila.  56. 

In  Kentucky  if  interest  at  a  high- 
er rate  than  six  per  cent,  is  con- 
tracted for  and  one  of  the  obligors 
(lies  before  the  maturity  of  the  note, 
and  payments  are  made  by  tlio  sur- 
viving obligors,  the  application 
thereof  to  the  interest  due  by  the 
survivors  and  the  remainder  to  the 
principal  is  correct  as  to  them,  but 
erroneous  as  to  the  estate  of  the  de- 
cedent, which  is  liable  for  only  six 
per  cent,  after  the  maturity  of  the 
obligation.  As  to  liis  estate  the 
payments  should  be  credited  witli- 
out  reference  to  the  amount  of  in- 
terest the  living  obligors  were  bound 
to  pay.  Snelling  v.  Atchison,  7  Ky. 
L.  Rep.  752. 

Where  moneys  are  advanced  by 
one  party  in  the  conduct  of  a  busi- 
ness, no  time  for  payment  being 
fixed,  and  credits  are  given  thereon 
from  time  to  time,  interest  is  to  be 
allowed  on  each  item  in  the  deljit 
and  credit  column  from  the  time  it 
was  received  or  paid  until  the  date 
of  final  settlement.  Boreing  v.  Mc- 
Hargue,  152  Ky.  3G0. 

31  Hodgdon  v.  Plodgdon,  2  N.  H. 
109. 

32  Peebles  v.  Gee,  1  Dev.  341. 

33  Ross  v.  Russell,  31  N.  IT.  370. 
was  an  action  on  an  account  stated. 
During  seven  years  after  statement 
of  the  account  nine  payments  were 
made  upon  it,  aggregating  more 
than  the  principal.  Woods,  C.  J., 
said:  "The  mode  of  computing  in- 
terest upon  promissory  notes  seems 
to  have  been  perfectly  settled  by  the 
usages  of  business  and  by  jiulicial 
decisions  in  manv  jurisdictions,  and 


we  are  not  aware  of  any  dellections 
from  tlic  rule  by  any  extended  usage 
or  any  respectable  authorities.  The 
authorities  in  tlie  plaintiff's  argu- 
ment are  uniform  in  support  of  it, 
and  tlie  unvarying  practice  of  this 
court  is  likewise  believed  to  have 
been  in  harmony  with  it.  We  do 
not  umleistand  the  argument  of  th(? 
defendants  as  drawing  tiie  rule  into 
(piestion ;  but  as  insisting  upon  a 
distinction  between  the  present  con- 
tract and  a  promissory  note,  as  well 
as  upon  the  nature  of  the  contract 
itself;  as,  for  the  reason  that  the 
frequenc}'  with  which  tlie  payments 
were  made  renders  tlie  application 
of  such  a  rule  unreasonably  onerous 
to  the  party,  and  therefore  not 
within  tlie  general  maxim  of  allow- 
ing such  interest  as  shall  be  Just 
and  reasonable.  In  other  words, 
they  claim  to  have  paid  the  money 
due  on  the  contract;  that  the  several 
payments  from  time  to  time  made 
in  discharge  of  it  should  be  treated 
like  items  of  a  mutual  account,  in 
which  the  relation  of  debtor  and 
creditor  is  not  recognized  between 
the  parties,  except  upon  final  settle- 
ment or  upon  the  rciiincnce  of  such 
periodical  rests  as  are  allowed  by 
courts  sometimes  when  the  justice 
of  the  case  seems  to  require  it.  If 
this  were  a  correct  view  of  the  case 
the  question  for  the  court  would  be 
as  to  what  interest  ought  to  be  al- 
lowed, and  what  rests  established 
for  computing  it.  *  *  *  Tt  wifs 
from  the  beginning  a  debt  for  goods 
sold  to  the  defendants,  ami  by  the 
admission  of  tlH>  party  drawing  in- 
terest ;  and  the  sums  of  money  from 
time  to  time  received  by  the  plain- 
tilT   (if    llic   defendants   were   not   of 


121G 


SUTHERLAND    ON    DAMAGES. 


[§  378 


sisting  of  numerous  items  are  a  proper  substitute  for  computa- 
tion of  interest  on  each  item.^* 

Where  payment  is  made  on  a  debt  before  it  is  due  and  begins 
to  bear  interest  the  party  who  so  pays  is  not,  without  some 
stipulation  to  that  effect,  entitled  to  interest  up  to  the  time  the 
debt  begins  to  bear  it.^^  If,  however,  the  debt  bears  interest  and 
a  payment  is  made  and  accepted  before  the  money  is  due,  it 
should  be  immediately  applied  to  the  principal  and  accrued  in- 
terest which  would  next  become  due.^^ 


the  nature  of  items  of  mutual  ac- 
count, but  as  the  auditor  finds,  and 
as  clearly  appears,  payments  made 
toward  the  extinguishment  of  the 
debt,  and  applicable  as  payments 
ordinarily  are,  or  should  by  law  be, 
towards  interest  or  principal,  ac- 
cording to  the  direction  that  the 
law  gives  to  such  payments  in  the 
silence  of  the  parties  in  respect  to 
them.  We  find  no  groimd  upon 
which  we  can  exempt  this  contract 
to  pay  money  with  interest  from  the 
general  rule  shown  to  govern  prom- 
issory notes  in  the  particulars  in 
controversy.  The  principal  was 
payable  on  demand,  and  the  inter- 
est, of  course,  also.  The  plaintiff's 
had  a  right  to  insist  upon  the  pay- 
ment of  interest  as  often  as  in- 
terest accrued,  and  could  have 
encountered  any  attempt  of  the  de- 
fendants to  apply  a  payment 
towards  the  principal  by  demand  of 
fresli  payment  on  accovmt  of  inter- 
est. The  legal  presumption,  then, 
was  that  the  payment  was  made 
first  in  reduction  of  the  claim  whicli 
did  not  carry  interest;  that  is,  the 
interest  itself."  McGregor  v.  Gan- 
lin,  4  Up.  Can.  Q.  B.  378. 

The  court  held  in  Gwinn  v.  Whit- 
aker,  1  Har.  &  J.  754,  that  a  pay- 
ment by  a  debtor  must  be  first  ap- 
plied to  extinguish  the  interest  of 
his  debt,  and  then  to  the  principal; 
and    tliat   a   difi"erent   application    is 


not  in  the  discretion  of  the  debtor. 
But  in  Pindall  v.  Bank,  10  Leigh 
484,  it  was  held  tliat  a  debtor  ow- 
ing a  debt  consisting  of  principal 
and  interest,  and  making  a  partial 
payment,  has  a  right  to  direct  its 
application  to  so  much  of  tlie 
principal  in  exclusion  of  the  inter- 
est, and  the  creditor,  if  he  receives 
it,  is  bound  to  apply  it  according- 
ly. And  this  was  approved  in  Mil- 
ler V.  Trevilian,  2  Rob.  (Va.)  1, 
which  decided  also  that  a  case  is 
not  taken  out  of  the  influence  of 
that  principle  by  the  circumstance 
that  the  party  receiving  the  pay- 
ment is  a  fiduciary. 

34  Harding  v.  Handy,  11  Wheat. 
lO.S,  G  L.  ed.  429;  Schieff'elin  v. 
Stewart,  I  Johns.  Ch.  G20,  7  Am. 
Dec.  507. 

35  Killilan  v.  Herndon,  4  Rich. 
000. 

36  French  v.  Kennedy,  7  Barb. 
452 ;  ]\liaiiu  Exp.  Co.  v.  Bank  of 
United  States,  5  Ohio  260 ;  Williams 
V.  Iloughtaling,  .3  Cow.  86 ;  Tracy  v. 
Wikoff,  1  Call.  133. 

In  Miami  Co.  v.  Bank,  supra, 
eight  notes  were  made  October  21, 
1820.  They  were  severally  payable 
nn  or  before  the  first  day  of  Decem- 
ber, 1823,  and  succeeding  years  to 
1830,  and  all  were  on  interest  from 
December  1,  1818.  Large  payments 
were  made  on  these  notes  in  1821 
and  1822.     Hitchcock,  J.,  said :    "On 


§  379] 


INTEREST. 


1217 


§  379.  Same  subject.  In  the  coinpiitatioii,  for  the  purpose 
of  appljin*;-  a  partial  payment  made  after  the  j)riii('ipal  sum  is 
due  no  notice  is  taken  of  the  time  when  such  sum  fell  ihie.  'I'he 
rests  are  to  be  made  when  the  payments  are  actually  made  un- 
less the  latter  fall  short  of  the  interest,  in  which  case,  as  stated, 
the  rest  is  deferred  until  the  amount  paid  equals  or  exceeds  the 
interest  due;  then  the  money  paid  is  applied  first  to  discharge 
the  interest,  and  if  there  is  a  surplus  it  is  applied  to  I'educe  the 


the  part  of  tlio  dcfondaiits  it  is  in- 
sisted tliat  inasiiuich  as  these  notes' 
are  payahh^  on  or  before  a  particu- 
lar day,  and  payments  were  made 
before  that  day,  they  have  a  riglit 
to  compute  interest  upon  the 
principal  sum  up  to  the  time  of 
payment  and  so  on  from  time  to 
time  as  payments  were  made.  Had 
the  interest  been  due  when  the  pay- 
ments were  made  this  rule  would 
not  have  been  so  objectionable,  al- 
though we  are  not  prepared  to  say 
it  would  be  correct.  In  support  of 
the  principle  contended  for  the  de- 
fendants' coiuisel  cite  8  S.  &  R.  378; 
4  Wash.  C.  C.  92;  17  Mass.  417; 
1  Johns.  Ch.  13,  7  Am.  Dec. 
471;  2  Johns.  Ch.  200,  and  a  num- 
ber of  other  cases.  In  all  these 
cases,  I  apprehend,  it  will  be  found 
that  none  of  the  payments  were 
made  until  after  the  debt  was  due ; 
at  least  the  contrary  does  not  ap- 
pear to  have  been  the  fact.  The 
cases  in  Seargent  &  Rawle,  and  the 
one  in  Washington  are  upon  judg- 
ments. In  the  case  before  the  court 
no  interest  was  demandable  until 
the  notes  themselves  became  due.  To 
adopt  this  rule,  then,  would  be  do- 
ing injustice  to  the  plaintiffs.  It 
would  be  charging  them  interest 
before  they  could  be  called  upon  for 
either  principal  or  interest.  To 
adopt  what  is  called  tlie  commercial 
rule  would  lie  equally  unjust  to  the 
defendants.  There  would  not  be  the 
Suth.  Dam.  Vol.  I.— 77. 


same  injustice  in  this  case,  it  is 
Ptrue,  tliat  tliere  would  he  when'  the 
payments  had  been  long  dclaycil  and 
tlie  debt  had  l)cen  even  due  for  a 
great  length  of  time.  In  such  case 
it  might  so  happen  that  tlic  pay- 
ment of  interest  alone  wuuhl  dis- 
charge both  principal  and  interest. 
The  case  cited  from  1  Dallas  seems 
to  recognize  this  prineiplc.  Hut  it 
must  l)e  remembered  that  the  notes 
here  were  payable  on  or  before  a 
certain  day.  Altlu)Ugii  th(>  defend- 
ants could  not  compel  payment  be- 
fore the  day,  yet  the  plaintiffs 
might  pay  before  that  time  and  the 
defendants  miglit  l)e  compelled  to 
receive  it.  They  could  only  l)e  com- 
pelled to  receive  it  ii|)(iii  thi'  liy- 
pothesis  that  full  payment  was 
made;  not  only  principal,  but  in- 
terest. If,  then,  partial  payment 
only  is  made  it  would  seem  to  be 
but  just  that  this  partial  payment 
should  apply  as  well  to  interest  as 
principal.  We  have  found  but  one 
case  reported  similar  to  the  one  now 
before  the  court.  This  case  is  re- 
ported in  3  Cow.  St").  Tiie  court  say: 
'Payment  made  on  an  instalment 
not  due  and  payable  slumhl  be  ap- 
plied to  the  extinguishment  of 
principal  and  such  proportion  of 
interest  as  has  accrued  on  the  ])rin- 
cipal  thus  extinguislied.  For  in- 
stance, a  note  or  l)oiid  is  given  foi' 
tlie  payment  of  .$1(10  on  or  before 
tlie    terMiination    of    one    vcar.      At 


1218  SUTHERLAND    ON    DAMAGES.  [§    379 

principal.^'^  But  in  Ehode  Island,  where,  as  remarked,  instal- 
ments of  interest  bear  interest  while  in  arrear,  a  rest  is  to  be 
made  at  the  time  the  principal  should  have  been  paid  though 
no  payment  is  then  made.  In  a  recent  case  a  rule  was  laid 
down  for  computing  the  amount  due  at  any  given  time  on  a 
bond  to  pay  $7,500  on  or  before  May  7,  1859,  with  interest 
from  date  at  the  rate  of  seven  per  cent,  per  annum,  payable  on 
the  7th  of  May,  1859,  and,  after  that  time,  semi-annually  until 
the  principal  sum  be  paid.  It  was  held  that  the  seven  per  cent, 
instalments  should  be  reckoned  with  interest  on  them  up  to  the 
time  when  the  principal  was  due  and  seven  per  cent,  simple  in- 
terest on  the  amount  then  found  due  and  thence  until  the  time 
to  which  the  amount  is  to  be  computed;  inasmuch  as  by  force 
of  the  words  ''until  the  principal  sum  be  paid"  the  contract  rate 
must  be  held  to  govern  to  the  time  of  actual  payment  although 
after  maturity.^^ 

The  rule  which  has  been  stated  as  applicable  where  partial 
payments  have  been  made  is  intended  to,  and  does,  prevent 
interest  being  computed  upon  interest;  and  of  course  must  be 
modified  where  interest  payable  at  particular  times  and  remain- 
ing unpaid  is  allowed  to  bear  interest.  In  North  Carolina  the 
rule  for  computing  interest  on  a  bond  on  which  it  is  payable 
annually  is  to  calculate  the  interest  on  the  bond  for  the  first 
year,  setting  the  interest  aside,  and  then  for  the  second,  third, 
and  so  on  until  the  time  for  the  first  payment;  then  calculate 
the  interest  on  each  year's  interest  to  the  same  time,  and  apply 
the  payment  first  to  the  extinguishment  of  this  interest  and  the 
surplus,  if  any,  to  the  reduction  of  the  principal.  If  the  pay- 
ment is  not  sufficient  to  pay  this  interest  it  is  applied  first  to 
extinguish  the  interest  calculated  on  each  year's  interest,  and 
the  surplus  to  the  principal  interest  as  far  as  it  will  go.  If  the 
payment  is  not  enough  to  satisfy  the  interest  on  the  interest 

the  end  of  six  months  a  payment  of  due  $50  of  principal  and  the  inter- 

$51.50  is  made.     This  is  not  applied  ^gt  on  tliat  $50  for  one  year.'  " 

tosinktheprincipal  to  $48.50;  but  37  French     v.     Kennedy,    7     Barb. 

the  $1.50  is  applied  to  the  interest 

of  $50  for  six  months,  and  $50  to  '^''^^• 

sink  so  much  of  the  principal.     At  38  Lanahan    v.    Ward,    10    R.    I. 

the   end    of   tlie   year    tliere   will    be  299. 


§    380]  INTEREST.  121 'J 

it  is  set  iisidc,  and  iieitlicr  stops  nor  bears  iiiteresl.^^  Wliere 
only  the  interest  on  the  principal  and  tlie  deferred  interest  is  a 
separate  demand  payments  are  applied  to  the  delayed  annual 
interest  and  the  secondary  interest  accrued  thereon,  and  tlie 
balance,  if  any,  to  the  interest  accrued  on  the  principal  sinco 
the  last  annual  period,  and  then  to  the  principal  itself.'**'  I  f  an 
erroneous  rule  of  computinc,'  interest  is  adopted  with  the  knowl- 
edge and  consent  of  the  parties,  althouiih  ignorantly,  it  is  a 
mistake  of  law ;  but  if  there  is  a  mistake  in  the  calculation  it 
is  one  of  fact.*^ 

Section  9. 

suspension"  of  interest. 

§  380.  Miscellaneous  cases.  Interest  given  as  damages  re- 
sults from  the  debtor's  default.  When  he  owes  money  and 
knows  the  amount  he  is  chargeable  with  interest  from  the 
time  when  he  ought  to  pay  it;  but  if  he  is  prevented  from  pay- 
ing by  the  act  or  neglect  of  the  creditor  ^^  or  l)y  law  he  is  not  in 
default,  and  no  interest  is  allowable  during  the  period  he  is  so 
prevented.  The  fact  that  when  an  instalment  of  interest  be- 
came due  the  mortgagor  was  unable  to  find  the  mortgagee  until 
after  the  period  for  the  payment  of  interest,  in  order  to  prevent 
the  principal  from  coming  due,  is  not,  in  the  absence  of  any 

39  Bratton  v.  Allison,  70  N.  C.  Interest  is  due  under  a  note  stipu- 
498.  lating    therefor    until    paid    and    a 

40  Vaughan  v.  Kcnnan,  38  Ark.  stipulation  in  a  niortKagc  that  it 
114.  sliall    not   bo   duo   or    payable    until 

41  Baker  v.  Baker,  28  N.  J.  L.  13,  ^^^  performance  by  the  mortgagee  of 

75  Am.  Dec.  243.  „    ,,  i-.-  x,  ^       . 
^,     ^      .         all    the    conditions    in    tlie   contract, 

42  Cheney   v.    Bilby,    20    C.    C.    A. 

291,  74  Fed.  .52;  Hart  v.  Brand,  1  <^''^  ^''^^ter  contemplating  that  cor- 
A.  K.  Marsh.  159,  10  Am.  Dec.  715;  tain  work  is  to  bo  done  on  the  prop- 
Thompson  V.  Fullenwider,  5  111.  orty  and  tjiat  one  party  shall  have 
App.  551.  it  in  usable  form  and  the  other  its 
The  maker  of  a  note  is  bound  to  (.quivalent    in    money,    though    the 

know  the  amount  due  upon  it  and  .  ?  i  \     ■      j 

.     '  ,      .  performance    of    such    work    is    de- 

cannot  claim  a  reduction  of  the  in- 

.        J.  ,  .V  r       J  +„       laved    bv    the    mortgagee.     Scandi- 

terest  because  the  payee  refused  to       ""•>   "      ^  '^  « 

inform  him  on  that' point.  Lam-  navian  Am.  Bank  v.  Washington  IT. 
prey  v.  Mason,  148  Mass.  231.  &  I.  Co.,  70  Wa.sh.  223. 


1220  SUTJIEKLAND    ON    DAMAGES.  [§    380 

fraud  on  the  part  of  the  mortgagee,  a  defense  to  a  foreclosnre 
of  the  mortgage  for  the  non-payment  of  the  principaL*^  Nor 
is  interest  suspended  on  a  bond  or  note  which  is  lost  or  mislaid 
unless  a  tender  is  made.*^  The  interest  on  a  note  payable  by 
an  administrator  to  the  estate  he  represents  is  not  suspended  by 
his  appointuient  as  such.*^  N"either  is  that  result  produced  by 
the  death  of  the  payee  of  a  note  although  no  administration  is 
granted  upon  his  estate  and  no  guardian  appointed  for  the  minor 
heirs,  and  it  is  uncertain  whether  there  are  any  claims  against- 
it,  if  the  maker  of  the  obligation  can  cause  letters  of  administra- 
tion to  be  issned.^^  But  where  a  person  entitled  to  an  annuity 
removed  to  parts  nnkno^^'n  and  made  no  demand  of  the  ad- 
ministrator for  many  years  till  suit  was  instituted  the  court 
refused  to  allow  interest  except  from  the  commencement  of 
suit  on  the  ground  that  its  allowance  in  such  case  is  not  matter 
of  positive  law,  but  dependent  on  the  circumstances.*''  If  nego- 
tial)le  municipal  bonds  are  past  due  the  maker  may  pay  them 
at  any  time  upon  reasonal^le  notice  to  their  holders ;  but  a  notice 
published  three  times  within  six  days  prior  to  the  time  fixed 
for  their  payment  does  not  stop  the  interest  at  that  date  unless 
the  holders  had  actual  notice  of  the  call  though  the  money  was 
on  deposit  at  the  place  designated  in  the  notice  for  the  payment 
of  the  bonds.*^  The  owner  of  a  building  holding  money  owing 
a  bankrupt  contractor  pending  adjustment  of  claims  of  sub- 
contractors under  mechanics'  liens  is  not  lial)le  for  interest.*^ 

§  381.  Where  payments  prevented  by  legal  process.  In  case 
of  garnishment,  trustee  process  or  restraint  by  other  judicial 
proceeding,  where  the  indebtedness  is  of  such  a  character  that 
interest  can  only  be  recovered  for  wrongful  detention  of  the 
principal  sum,   the  question  whether  the  debtor  who  is  sub- 

43D\vight  V.  Wcl>i-*ter.  10  Abb.  Pr.  47  Laura      Jane      v.      Hagan,      10 

128.     See  Cheney  v.  Libby,  13-4  U.  S.  Humph.    332.      See   Daniels   v.    Ben- 

68,  33  L.  ed.  818;   Cheney  v.  Bilby,  ton,  ISO  Mass.  559,  §  344. 

supra.  48  Williamson    Co\iiity    v.    Farson, 

44  Payne  v.  Clark,  23  Mo.  250.  100  111.  71,  101  111.  App.  328;  Pvead 
See  Heywood  v.  Hartshorn,  55  N.  v.  Buffalo,  74  N.  Y.  463.  See  §  214, 
H.  476.  note. 

45  Rodenbach's  App.,  102  Pa.  572.  49  Bond   v.   Pickett   Cotton   Mills, 

46  Gale  V.  Corey,  112  Ind,  30  166  N.  C.  20. 


§  381] 


INTEREST. 


1221 


jected  to  such  process  shall  pay  interest  duriiic;  the  pendeiicv  of 
the  suit  has  been  much  discussed  and  variously  decided.  In 
the  New  England  states  and  some  others  tlie  trustee  is  not  gen- 
erally chargeable  with  interest  during  the  time  he  is  under  sucli 
restraint/"  unless  the  funds  have  l>een  retained  under  such 
circumstances  that  the  court  can  infer  that  they  have  earned 
interest  ^^  or  the  trustee  practices  imreasonable  dolav  in  making 
his  answer  for  the  purpose  of  obtaining  a  longer  use  of  the 
money.  ^^ 

Where  a  corporation  Avliose  object  was  not  to  em{)loy  its  funds 
in  trade  and  business  was  the  trustee  the  coui't  held  that  it  had 
done  its  duty  if  it  had  the  money  ready  upon  the  determination 
of  the  case  to  pay  such  judgment  as  should  be  rendered.*^  So  it 
has  been  held  that  if  money  be  enjoined  in  the  hands  of  a  party 
who  is  thereby  prevented  from  making  ajiy  use  of  it  interest  is 
not  allowed.^*     In  an  action  in  Xew  York  upon  a  note  it  was 


50  Newport  VV.  &  L.  Co.  v.  Drew, 
141  Cal.  103;  Walker  v.  Lancashire 
Ins.  Co.,  188  Mass.  560;  Rcnncll  v. 
Kimball,  5  Allen  356;  Prescott  v. 
Parker,  4  Mass.  170;  Adams  v.  Cor- 
dis, 8  Pick.  260;  Smith  v.  Flanders, 
129  Mass.  322;  Huntress  v.  Bur- 
bank,  111  Mass.  213 ;  Greenish  v. 
Standard  S.  Ref.,  2  Low.  553; 
Barnes  v.  Bamberger,  196  Pa.  123 ; 
Burr  V.  Commonwealth,  212  Mass. 
534   (no  agreement  for  interest). 

61  Gage  V.  Lowe  ( Tex.  Civ.  App. ) 
127  S.  W.  1178;  San  Antonio  v. 
Stevens  (Tex.  Civ.  App.)  126  S.  W. 
666;  Norris  v.  Massachusetts  Mut. 
L.  Ins.  Co.,  131  Mass.  294;  Brown 
V.  Silsby,  10  X.  H.  521;  Swanscot 
Mach.  Co.  V.  Partridge,  25  id.  369; 
Pierce  v.  Pvowe,  1  id.  179 ;  Abbott  v. 
Stinchfield,  71  Me.  214;  Woodruff  v. 
Bacon,  35  Conn.  98.  See  Condee  v. 
Skinner,  40  id.  463. 

The  intervention  of  trustee  proc- 
ess will  not  relieve  the  defendant 
from  interest  where  judgment  was 
entered  on  tlie  debt  after  a  defense 


on  tlie  merits,  during  tbe  rontiiui- 
ance  of  the  attachment,  no  applica- 
tion having  been  made  to  continue 
the  action  for  judgment  initil  such 
process  was  disposed  of.  Albion  L. 
Works  V.  Citizens'  Ins.  Co.,  3  Fed. 
197. 

52  OiiciitMl  Bank  v.  I''rcin(iiit  Ins. 
Co.,  4  :\Iet.  1;  llusliton  v.  Howe,  64 
Pa.  63. 

The  cxeniplion  nf  a  garnishee 
from  lialiility  for  interest  only  ap- 
plies where  he  stands  in  all  resj)ccls 
rcctufs  in  curia  as  a  mere  stakehold- 
er. It  never  applies  wbiii  he  as- 
sumes the  attitude  of  :i  litigant. 
Ray  \.  Lewis,  67   .Miiiii.  :!(i.'). 

Liabilitj'  for  interest  does  not  an- 
tedate the  return  day.  Huff  v. 
Citizens'  Nat.  Bank,  09  Ark.  '.t7. 

53  Swanscot  Mach.  Co.  v.  I'art 
ridge,  25  N.  H.  391.  See  Norris  v. 
Hall,  18  Me.  332;  Chase  v.  Man- 
hardt,  1  Bland,  333. 

54  Watson  V.  McManus,  223  Pa. 
583;  Osborn  v.  Bank  of  United 
States,  9  Wheat.  738,  6   L.  ed.  204; 


1322 


SUTIIKKLAJSID    ON    DAMAGES. 


[§  381 


said  tJmt  a  person  who  is  prohibited  by  in  junction  from  paving 
the  principal  will  not  be  compelled  to  pay  interest ;  and  one  who 
causes  sucli  injunction  is  not  entitled  to  it.  The  debtor  in  that 
case  supposed  he  was  enjoined,  but  was  not;  and  not  being  com- 
pelled to  retain  the  money  was  held  liable  to  pay  interest.^^  But 
a  municipality  enjoined  from  paying  money  due  on  a  contract 
for  public  works,,  being  in  possession  and  enjoyment  thereof, 
will  be  charged  interest  on  claims  at  the  same  rate  it  would  have 
had  to  pay  for  money  borrowed  to  meet  such  claims  when  duc.^® 
A  party  who  ties  up  funds  in  the  hands  of  a  trustee  may  not 
recover  a  larger  rate  of  interest  than  was  realized  on  them.^'  In 
the  absence  of  an  attachment  a  garnishee  who  holds  assigned 
funds  must  pay  interest  on  them.^^  Where  a  garnishee  may  pay 
money  after  garnishment,  if  a  writ  is  issued  upon  a  false  affi- 
davit the  defendant  may  recover  interest  on  the  entire  sum 
garnished  from  the  issuance  of  the  writ  until  it  was  quashed, 
thougli  the  plaintiif  obtained  judgment  for  a  part  of  such  sum.®^ 
As  a  general  rule  after  the  property  of  an  insolvent  passes  into 
the  hands  of  a  receiver  or  of  an  assignee  in  insolvency  interest 
is  not  allowed  on  the  claims  against  the  funds.  The  delay  of 
distribution  is  the  act  of  the  law ;  it  is  a  necessary  incident  to 
the  settlement  of  the  estate.^"     The  creditors,   however,  have 


Wade  V.  Wade,  1  Wash.  C.  C.  477; 
Bowman  v.  Wilson,  2  McCrary  394; 
Laurel  Springs  L.  Co.  v.  Fougeray, 
57  N.  J.  Eq.  318. 

55  East  Tennessee  L.  Co.  v.  Leeson, 
183  Mass.  37 ;  Stevens  v.  Barringer, 
13  Wend.  639. 

56  John  Agnew  Co.  v.  Board  of 
Education  City  of  Paterson,  83  N. 
J.  Eq.  49. 

57  Pryor  v.  Buffalo,  61  N.  Y.  Misc. 
162. 

58  Cox  V.  Cronan,  82  Conn.  175. 

59  Battle  V.  White  (Tex.  Civ. 
App.)   124  S.  W.  216. 

60  Tredegar  v.  Seaboard  A.  L.  R., 
183  Fed.  289,  105  C.  C.  A.  501; 
Blair  v.  Clayton  E.  Co.  (Del.)  77 
Atl.  740;  Attorney  Gen'l  v.  Supreme 
Council,  206  Mass.   131;    Forscliirm 


V.  Mechanics'  &  Traders'  Bank,  137 
App.  Div.  149;  Atlanta  Nat.  Bank 
V.  Four  States  G.  Co.  (Tex.  Civ. 
App.),  135  8.  W.  3135;  Thomas  v. 
Western  C.  Co.,  149  U.  S.  95,  116, 
37  L.  ed.  603,  671  ;  Williams  v. 
American  Bank,  4  Mete.  (Mass.) 
317,  323;  Thomas  v.  Minot,  10 
Gray  263;  Grand  Trunk  R.  Co.  v. 
Vermont  Cent.  R.  Co.,  91  Fed.  569; 
New  York  S.  &  T.  Co.  v.  Lombard 
I.  Co.,  73  Fed.  537 ;  Guignon  v.  First 
Nat.  Bank,  22  Mont.  140. 

As  to  the  right  of  an  assignee  to 
pay  the  creditors  of  the  assignor  in- 
terest on  their  claims,  see  Matter  of 
Fay,  6  N.  Y.  Misc.  462;  Bryant  v. 
Russell,  23  Pick.  508,  533;  Scott  v. 
Morris,  9  S.  &  R.  123. 

"Where  the   assets   of   a   corpora- 


!81] 


INTEREST. 


1223 


equal  rights;  if  dividends  liave  been  paid  some  of  them  others 
whose  claims  to  dividends  have  been  contested  by  the  assigiiees 
are  entitled  to  interest  on  dividends  which  should  have  been 
paid  them."  Preferred  creditors  are  not  entitled  to  interest 
unless  the  order  for  the  distribution  of  the  proceeds  of  the 
property  sold  under  foreclosure  provides  tlierefor,  the  fund  \>eu\'^ 
insufficient  to  pay  all  the  creditors.^^  But  mortgagees  whose 
claims  cannot  be  paid  in  full  out  of  the  proceeds  of  a  receiver's 
sale  may  claim  interest  as  against  creditors  without  liens  down 
to  the  time  of  the  order  directing  the  receiver  to  make  payment.^^ 
Where  all  the  money  due  when  an  order  of  interpleader  is  made 
is  paid  into  court  the  plaintiff  is  not  liable  for  interest  which 
would  have  been  earned  by  that  money  between  the  time  of  its 
payment  and  the  rendition  of  judgment.^*  A  custodian  of  a 
fund  who  has  not  paid  the  money  into  court  pending  the  deter- 
mination of  a  cause  in  which  he  has  been  interpleaded  must  pay 


tion,  including  stock  liability,  are 
less  than  its  indebtedness  and  it 
passes  into  the  control  of  a  court 
of  chancery  for  administration  of  its 
assets  and  for  dissolution,  the  gen- 
eral rule  is  that  interest  is  not  al- 
lowed on  the  claims  against  the 
funds.  The  delay  in  distribution  is 
the  act  of  tlie  law.  It  is  a  neces- 
sary incident  to  the  settlement  of 
the  estate.  The  rights  of  all  the 
creditors  are  fixed  when  the  court 
takes  jurisdiction  of  the  property. 
It  is  therefore  inequitable  that  in- 
terest should  thereafter  be  allowed 
on  the  claims  where  certain  of  the 
claims  draw  interest  at  one  rate  and 
others  draw  interest  at  a  lower  rate 
or  not  at  all."  Gillett  v.  Chicago  T. 
&  T.  Co.,  230  111.  373,  415.  On  tlie 
other  hand,  it  has  been  said  that  a 
creditor  entitled  to  interest  may  not 
be  responsible  for  the  proceedings 
and  should  not  lose  thereby  so  far 
as  his  claim  may  be  paid  out  of  the 
proceeds  of  the  securities  he  holds; 
but  lie  may  not  demand  it  out  of  the 
debtor's  general  assets  after  tlie  aji- 


pointment  of  a  receiver  unless  there 
should  be  a  surplus  to  be  returned 
to  the  stockholders.  First  Nat. 
Bank  v.  Campbell,  r)2  Tex.  Civ.  App. 
445. 

IFnder  sec.  STli.  Bankruptcy  Act 
1898,  the  creditor  of  a  bankrupt 
liolding  a  security  wliicli  is  li(pii- 
dated  after  the  adjudication  of 
Inmkruptcy  by  being  converted  into 
money  is  entitled  to  inter(>st  uj)  to 
the  time  of  sucli  liijuidatioii.  in  re 
Kessler  &  Co.,  171  Fed.  751.  The 
opinion  notes  English  cases  to  the 
contrary. 

<51  Bank  v.  Lanipton,  1(14  Miss. 
427. 

62  St.  Louis  U.  T.  Co.  v.  St.  Louis, 
etc.  K.  Co.  (Tex.  Civ.  App.t.  1-lii  S. 
W.  348. 

63  Walter  v.  I'cniisylvMiiia  ( '.  S. 
Co.,  n  Del.  Ch.  374.  See  tin-  casos 
cited  in  the  opinion. 

64  Clinton  B.  &  I.  Works  v.  First 
Nat.  Bank,  103  Wis.  117. 

All  till'  ei]ui(ics  will  be  weighed 
in  delennining  whellier  iuteicst 
shall   lie  jiaid  nii   nioney  de|)osited   in 


1224  SUTHERLAND    ON    DAMAGES.  [§   331 

interest  during  its  pendency  if  the  facts  justify  the  presumption 
that  he  had  the  beneficial  use  of  it.^^ 

In  New  Jersey  the  obligee  of  a  bond,  for  the  purpose  of  hav- 
ing it  collected,  made  an  unconditional  assignment.  After- 
wards, fearing  that  the  assignee  would  appropriate  the  money 
to  his  own  use,  the  assignor  filed  a  bill  in  equity  to  restrain  the 
obligor  from  paying  the  money  to  the  assigiiee  and  the  latter 
from  receiving  it.  It  was  held  that  during  the  continuance  of 
the  injunction  the  obligor  was  not  chargeable  with  interest.^® 

In  Pennsylvania  where  the  debt  is  the  subject  of  a  foreign 
attachment  interest  ceases  on  the  service  of  the  writ  if  the  debtor 
is  ready  and  willing  to  pay  the  debt  and  interest ;  but  he  is  not 
entitled  to  the  benefit  of  this  rule  where  the  delay  is  caused  by 
his  litigiousness  and  unreasonable  conduct.  The  court  suggest 
that  a  sure  way  for  the  garnishee  to  avoid  liability  for  interest 
is  to  pay  the  money  into  court. ^' 

In  an  Ohio  case  the  court  said  the  exemption,  by  reason  of 
an  injunction  or  garnishment,  seems  to  rest  entirely  upon  the 
idea  of  the  party  having  the  money  actually  in  readiness  to  be 
disposed  of  as  directed  by  the  court,  and  so  being  in  the  custody 
of  the  law  it  is  to  be  regarded  as  a  gu«5r-payment,  as  if  placed 
on  deposit  subject  to  the  order  of  the  court;  and  referring  to  the 
case  in  hand  said :  "Nothing  short  of  such  a  state  of  facts,  we 
think,  should  have  exempted  the  defendant  in  this  case  from  the 
payment  of  interest  during  the  pendency  of  the  attachment  pro- 
ceedings. The  record  shows  no  proof  of  such  a  state  of  facts  in 
this  case.  It  is  not  pretended  that  the  defendant,  either  before 
or  during  the  attachment  proceedings,  expressed  a  wish  or  even 
a  willingness  to  pay  his  indebtedness.  Nor  does  it  appear  that 
he  was  ready  to  pay.     If,  then,  he  is  in  law  exempt  from  the 

court  in  performance  of  the  contract  64  id.  63.  See  Fitzgerald  v.  Cald- 
between  the  parties.  Townsend  v.  well,  2  Dall.  215,  1  L.  ed.  354 ;  Jack- 
Swallow,  91  Neb.  564.  son  v.   Lloyd,   44   Pa.   82;    Irwin  v. 

65  Elgin,  etc.  R.  Co.  v.  Northwest-  Pittsburgh,  etc.  R.  Co.,  43  id.  488 ; 
ern  Nat.  Bank,  ]65  111.  App.  35.  Mackey  v.  Hodgson,  9  id.  468;   Up- 

66  Brantliwait  v.   Halsey,   9  N.  J.  degraff  v.   Spring,   11   S.   &   R.  188; 
L.  3.  also   Stevens  v.   Gwathmey,   19  Mo. 

67  Jones    V.    Manufacturers'    Nat.  628;    Goodwin   v.   McGehee,   19   Ala. 
Bank,  99  Pa.  317 ;  Rushton  v.  Rowe,  468. 


881] 


INTEREST.  222/ 


payment  of  interest  diirin-  tlie  time  of  Ins  o-arnishniont  for  tlu' 
reason  that  lie  M-as  actually  holding  the  money,  ready  and  will- 
ing to  pay,  but  was  prevented  by  the  attachment  proceedings 
such  state  of  facts  must  be  presumed.  But  a  presumption  is  the 
supposition  of  a  truth  grounded  on  circumstantial  or  prohahlc 
evidence.  It  should  always  be  a  natural  and  reasonable  .leduc- 
tion  from  pertinent  circumstances  and  relative  existing  facts  to 
constitute  a  legal  presumption."  ^^ 

In  Alabama  where  a  bill  was  tiled  for  the  purpose  of  subject- 
ing a  sum  of  money  in  the  hands  of  a  third  person  to  the  paN- 
ment  of  a  debt  due  the  complainant  it  was  held  that  if  such 
person  is  enjoined  from  using  it,  and  does  not  offer  to  bring  it 
into  court,  but  insists  upon  his  right  to  retain  it  both  against 
the  complainant  and  his  debtor,  he  should  be  charged  with  inter- 
ests^ In  a  later  case  a  debtor  M^as  enjoined  from  paying  money 
over  to  his  creditor,  but  was  not  restrained  from  using  it  in  any 
other  manner;  it  was  held  that  he  could  only  discharge  himself 
from  liability  for  interest  by  paying  the  money  into  court. '^^ 

In  Kentucky  a  debtor  is  not  excused  from  paying  interest 
because  the  fund  is  attached  in  his  hands  by  a  bill  in  chancery 
unless  he  brings  the  money  into  court  or  shows  that  he  was  pre- 
vented from  using  it.'^ 

In  Maryland  in  a  suit  upon  an  injunction  bond  given  upon 
the  granting  of  an  injunction  to  restrain  the  payment  of  a  sum 
of  money  interest  on  this  sum  is  recoverable  as  a  matter  of  riglit 
up  to  the  time  it  was  paid  into  court  upon  the  dissolution  of  the 
injunction.  This  right  of  action  and  recovery  proceeded  on  the 
assumption  that  the  debtor  enjoined  was  exempt  from  paying 
interest  during  the  continuance  of  the  injunction.'* 

In  Virginia  it  is  held  that,  although  a  debtor  is  restrained 
from  paying  money  by  attachment,  he  ought  nevertheless  to  pay 
interest  during  the  time  he  was  so  restrained  if  he  continued  to 
hold  the  funds.'^^ 

68Candee  v.  Webster,   0  Ohio  St.  71  Shackelford    v.    Helm,    1    Dana 

452.     In    accord:    Shawnee    v.    Tre-  338. 

aiiff,   36   Okla.   280.  '2  Wallis  v.  nilley,  7  Md.  237. 

69  Kirkman  V.  Vanlier,  7  Ala.  217.  73  Tem pieman     v.     Fountleroy,     3 

70  Bullock    V.    Ferguson,    30    Ala.  Rand.  434.    Carr,  J.,  said :  "The  last 
227-  objection   to   the   decree    is  that   it 


1226 


SUTllEKLAND    ON    DAMAGES. 


L§  381 


This  is  contrary  to  the  rule  in  Maine.  There  a  stockholder 
in  a  bank  was  denied  interest  either  on  ordinary  dividends  de- 
clared on  his  shares  or  on  money  due  him  by  reason  of  the 
reduction  of  the  bank's  capital  stock  for  a  period  during  which 
the  bank  was  prevented  from  paying  him  the  same  by  attach- 
ments of  his  stocks  in  suits  pending  between  him  and  other 
parties,  notwithstanding  the  money  was  mingled  with  that  of 
the  bank,  which  was  ready  and  willing  to  pay  it  to  him  but  for 
the  attachments,  there  being  no  promise  on  the  part  of  the  bank 
to  pay  interest.''* 

A  garnishee  who  admits  his  indebtedness  is  liable  for  interest 
thereon  pendente  lite  unless  he  deposits  the  money  in  court.'^ 
There  is  practical  good  sense  in  this  rule  as  applied  to  debtors 
generally  in  all  judicial  proceedings.  A  debtor  who  is  in  de- 
fault,  and   therefore   liable  to   interest    when   the   restraining 


gives  interest  wliile  the  money  was 
stayed  in  the  party's  hands,  and  it 
would  have  been  a  contempt  to  have 
paid  it  out.  I  have  examined  the 
case  of  Tazewell  v.  Barrett,  4  Hen.  & 
Munf.  159,  and  think  the  principle 
decided  there  directly  applicable  to 
the  present  question.  Tazewell  owed 
money  to  Bland  by  bond.  He  was 
served  with  a  siibpana  on  behalf  of 
Bland's  executors,  attaching  this 
money  in  his  hands.  After  this  serv- 
ice he  received  notice  that  the  bond 
had  been  assigned.  An  order  of 
court  was  subsequently  served  on 
him  to  restrain  him  from  paying 
the  money  imtil  further  order.  It 
was  five  or  six  years  before  this 
order  was  discharged;  and  in  a  suit 
by  the  assignees  of  the  bond  the 
question  was  whether  during  this 
time  Tazewell  should  pay  interest. 
The  court  decided  that  he  should. 
Judge  Roane  considered  the  princi- 
ple as  settled  by  Hunter  v.  Spots- 
wood,  1  Wash.  14.5,  where  a  sheriff 
sold  attached  effects  under  an  order 
of  court  directing  him  to  pay  the 
money  to  Hunter  on  his  giving  secur- 


ity, which  he  failed  to  do ;  the  money 
remained ;  and  it  was  said  died  in 
tlie  slieriff's  hands  by  depreciation. 
Yet  he  was  decreed  to  pay  interest. 
In  all  such  cases  I  think  the  safe 
and  sound  doctrine  is  that  if  the 
party,  though  restrained  from  pay- 
ins;;,  holds  and  uses  the  money  (and 
we  must  presume  he  vises  if  he  con- 
tinues to  hold  it)  he  ought  to  pay 
interest;  and  if  the  liolder  does  not 
think  so  he  has  always  the  privilege 
of  bringing  the  money  into  court; 
and  because  if  the  debtor  could 
under  the  restraining  process  hold 
the  debt  for  years  witliout  interest 
it  would  offer  a  strong  temptation 
to  him  to  stir  up  claims  of  this  l<ind 
and  to  tlirow  all  possible  obstacles 
in  the  way  of  a  decision  of  tlie  ques- 
tion raised."  See  Ross  v.  Austin,  4 
Ilcn.  &  Munf.  502. 

74  Mustard  v.  Union  Nat.  Bank, 
86  Me.  177. 

75  Work  V.  Glaskins,  ,33  Miss.  539 ; 
Smith  V.  German  Bank,  60  id.  69; 
Stephens  v.  Pennsylvania  Gas.  Co., 
135  Mich.  189. 


§    382]  INTEREST.  1227 

process  is  served,  has  no  cause  to  complain  that  that  lialiility 
continues ;  for  the  process,  in  restraining  him  for  the  time  being, 
operates  in  harmony  with  his  own  choice.  When  the  course  of 
the  proceedings  admonishes  him  that  the  money  may  be  re- 
quired so  soon  that  he  can  make  no  further  ])eneiicial  use  of  it 
the  option  to  pay  it  into  court  is  equivalent  to  the  option  to  pay 
to  his  creditor,  and  having  this  election  from  the  first  it  cannot 
be  said  that  the  law  compels  him  to  keep  the  money  at  all ;  he  is 
not  prevented  for  any  time  whatever  from  making  payment. ''^^ 

§  382.  Where  war  prevents  payment.  War  suspends  all  com- 
mercial intercourse  between  belligerent  nations,  and  the  citizens 
or  subjects  of  each  are  enemies  of  the  citizens  or  subjects  of  the 
other.  Their  contracts  are  prevented  by  law  from  being  per- 
formed while  this  hostile  relation  subsists.  Interest  cannot  be 
allowed  on  money  becoming  due  during  a  war  between  enemies, 
the  payment  of  which  could  not  be  made  by  reason  of  such  sus- 
pension of  commercial  intercourse,  because  the  debtor  is  not  in 
fault  for  the  delay.''''  On  a  bond  given  in  one  of  the  American 
states  to  a  British  creditor  before  the  war  of  the  revolution,  and 
confiscated,  it  was  held  that  the  creditor  was  not  entitled  to 
interest  except  from  the  time  the  debt  was  demanded  after  the 
treaty  of  peace;  but  that  it  ought  to  be  disclosed  by  plea  that 
the  creditor  was  beyond  sea  and  that  the  debtor  had  always  been 
ready  since  the  treaty  to  pay,  and  is  now  ready ;  in  verification 
of  which  he  should  pay  the  money  into  court.'''*  (Viurts  are 
powerless  to  abate  interest  on  a  judgment  for  any  time  on  the 
ground  that  the  creditor  was  within  the  lines  of  the  enemy.''^ 

Interest  on  loans  made  previous  to,  and  maturing  after,  the 

76  See    Greenish    v.    Standard    S.  77  Bean  v.  Chapman,  f)2  Ala.  58; 

Ref.,    2    Low.    553;     McKnight    v.  Brewer  v.  Harti.-,  3  C;ill  21 ;  Dunia- 

Chauncey,   Seldcn'8   Notes    (N.   Y.),  ton  v.   Tmbrie,   3   Wash.   C.   C.   396; 

07.  Birdley  v.  Eden,  3  Har.  &  McHen. 

A    vendee    wlio    may    remove    all  1(57.      See  Oulany  v.   Wells,    id.   20; 

question   concerning  his   right  to   a  Court  v.  Vanbibber,  id.  140. 

chattel   by  paying  according  to  his  78  Anonymous,    IMartin    &    TIayw. 

contract  is  not  relieved  from  liabil-  3f)3.     See  Sheppard  v.  Taylor,  5  Pet. 

ity  for  interest  because  of  the  pen-  (!75,  8  L.  ed.  2(!9;  Selden  v.  Preston, 

dency  of  a  replevin  suit  brought  by  11  Bush.  101. 

the   vendor.      Johnson   v.    Crawford,  79  IJowe  v.  Hardy,  97  Va.  074. 
144  Fed.  005. 


1228  SUTllKKLAlSiD    ON    DAiUAGES.  [§    382 

commeneeiiient  of  a  war  ceases  to  run  during  the  subsequent 
continuance  of  it  although  it  was  stipulated  for  in  the  con- 
tract.*" But  interest  which  accrued  during  the  war  of  the  rev- 
olution on  a  bond  to  a  citizen  of  Maryland  bj  a  principal  and 
surety,  the  former  a  British  subject  and  the  latter  a  citizen  of 
that  state,  was  held  to  be  recoverable  in  an  action  against  the 
surety.^^  The  rule  that  interest  is  not  recoverable  between  alien 
enemies  during  a  war  between  their  respective  countries  was 
held  to  be  applicable  to  debts  between  citizens  of  states  in  re- 
bellion and  citizens  of  states  adhering  to  the  national  govern- 
ment in  the  late  civil  war ;  but  it  only  applied  when  the  money 
was  to  be  paid  to  the  belligerent  directly.*^  It  cannot  apply 
when  there  is  a  known  agent,  resident  within  the  same  jurisdic- 
tion with  the  debtor,  appointed  to  receive  the  money ;  in  such  a 
case  the  debt  will  draw  interest.*^ 

§  383.  Tender  stops  interest.  Tender  has  been  considered 
in  a  broader  sense  in  another  connection.*^  It  is  only  needful 
here  to  explain  when  admissible,  in  what  it  consists,  and  its 
effect  to  stop  interest.  The  theory  of  charging  interest  after  a 
debt  is  due  and  ought  to  be  paid  is  that  the  debtor  is  in  default ; 
that  he  might  voluntarily  pay,  and  should  be  charged  with  in- 
terest because  he  does  not,  but  withholds  the  money  without  the 
creditor's  consent;  hence  a  tender,  being  an  offer  of  payment, 
has  the  eif ect  of  preventing  all  the  consequences  of  the  default ; 
it  stops  interest  and  protects  the  party  against  costs ;  for,  if  the 
tender  is  refused,  it  is  not  his,  but  the  creditor's,  fault  that  the 
debt  remains  unpaid.*^  The  tender  and  refusal  only  cause  a 
suspension    of    interest    and    exempt    the    debtor    from    costs. 

80  Brown  v.  Hiatts,  15  Wall.  177,  Ark.  463 ;  Roberts  v.  Cocke,  28 
20  L.  ed.  128;  Lush  v.  Lambert,  15       Gratt.  207. 

Minn.  416,  2  Am.  Rep.  142.  For    circumstances    under    which 

81  Paul  V.  Christie,  4  Har.  &  McH.  trustees  were  relieved  from  paying 
161 ;   Bean  v.  Chapman,  62  Ala.  58.  interest  during  the  civil  war,  though 

82  Pillow  V.  Brown,  26  Ark.  240;  residing  in  the  southern  states, 
Ward  V.  Smith,  7  Wall.  447,  19  L.  where  their  creditors  or  cestui  que 
ed.  207;  Lush  v.  Lambert,  supra;  fri/s#  also  resided,  see  Lacy  v.  Stem- 
Bigler  v.  Waller,  Chase's  Dec.  316;  per,  27  Gratt.  42;  Brent  v.  Cleving- 
Brown  v.  Hiatts,  15  Wall.  177.  er,  78  Va.  12. 

83  Ward  v.  Smith,  7  Wall.  447,  19  84  §§  260-278. 

L.   ed.    207 ;    Williams   v.    State,   37  85  Slioop  v.  Fidelity  &  Deposit  Co. 


§  384] 


INTEREST. 


1229 


Where  tlie  iiuiker  of  a  promissory  note  paid  iiionev  into  the 
hands  of  an  agent  to  secnre  it  and  the  latter  tendered  the  money 
to  the  holder  of  the  note  on  condition  of  having  it  delivered  up, 
the  note  being  mislaid,  this  condition  was  not  complied  with, 
and  the  agent  afterwards  became  bankrupt  with  the  moiiov  in 
his  hands,  the  maker  was  still  respousil)]e  on  the  note,  but  iiitei-- 
est  was  not  recoverable  after  the  time  of  the  tender.®^ 

§  384.  Tender  not  allowed  for  unliquidated  damages.  A 
tender  can  only  be  made  of  a  debt  which  is  certain  in  auiuunt;  it 
is  not  available  at  connnon  law  whei-o  the  demand  consists  of  un- 
liquidated damages.*''^  The  debt  must  also  be  certain  to  justify 
interest  by  reason  of  the  debtor's  default.  The  theory  <tf  the 
law  is  that  the  debtor  is  able  by  his  own  voluntary  act  to  prevent 
such  interest.  ITis  act  can  never  be  more  than  a  tender,  without 
the  concurring  act  of  the  creditor  in  accepting  the  money.     A 


of  Maryland,  124  Md.  130;  Neff  v. 
Heimer,  —  Tex.  Civ.  App.  — ,  1C3 
S.  W.  140 ;  Kiefert  v.  Maple  Valley 
Mut.  Home  Fire  Ins.  Co.,  158  Wis. 
340 ;  Neely  v.  Williams,  149  Fed.  60, 
79  C.  C.  A.  82 ;  Wadleigh  v.  Phelps, 
149  Cal.  G27;  Glos  v.  Ambler,  218 
111.  269 ;  Hibernia  Bank  &  T.  Co.  v. 
Smith,  89  Miss.  298;  Tetley  v.  Mc- 
Elmurry,  201  Mo.  382;  Farmers"  & 
Traders'  Baiik  v.  Kelsay,  186  ^lo. 
648;  German-Am.  Bank  v.  Martin, 
]29  Mo.  App.  484;  Reitz  v.  Hay- 
ward,  100  Mo.  App.  216;  Heal 
V.  Richmond  County  Sav.  Bank, 
127  App.  Div.  (N.  Y.)  428;  Su- 
preme Lodge  V.  Selby,  ]r)3  N. 
C.  203;  Pittsburg  P.  G.  Ins.  Co. 
V.  Leary,  25  S.  D.  2.56,  31  L.R.A. 
(N.S.)  746-;  Baldwin  v.  San  Anto- 
nio (Tex.  Civ.  App.),  125  S.  W. 
596;  Ward  v.  Thorndyke,  65  Wash. 
11;  Murray  v.  O'Brien,  56  Wasb. 
361,  28  L.R.A.  (N.S.)  998;  Puget 
Sound  I.  Co.  v.  Frankfort,  etc.  Ins. 
Co.,  52  Wash.  124;  Eau  Claire  v. 
Eau  Claire  W.  Co.,  137  Wis.  517; 
Bremyer   v.   School   Ass'n,   86   Kan. 


644;  Sanders  v.  IMosbarger,  159  Mo. 
App.  488;  Patterson  v.  Sharp,  41 
Cal.  133 ;  Raymond  v.  Bearnard,  12 
Jolnis.  274,  7  Am.  Dec.  317;  Jack- 
son V.  Law,  5  Cow.  248 ;  Woodruff 
v.  Trapnall,  12  Ark.  640;  Wheeler 
V.  Woodward,  66  Pa.  158;  Dixon  v. 
Clark,  5  C.  B.  365;  Waistell  v. 
Atkinson,  3  Bing.  389;  Carley 
v.  Vance,  17  Mass.  389;  Cornell  v. 
Green,  10  S.  &  R.  14;  Johnson  v. 
Triggs,  4  G.  Greene,  97 ;  Freeman 
V.  Fleming,  5  Iowa  460 ;  Shant  v. 
Southern,  10  id.  415;  Mohn  v. 
Stoner,  11  id.  30;  Hayward  v.  Hun- 
ger, 14  id.  516;  Dooley  v.  Smith,  13' 
Wall.  604,  20  L.  ed.  547;  Wihox  v. 
Richmond  &  D.  R.  Co.,  3  C.  C.  A. 
73,  52  Fed.  264,  17  L.R..\.  804. 

A  tender  of  the  amount  due  does 
not  suspend  interest  if  the  debtor 
subsequently  assails  the  validity  of 
the  demand  and  seeks  to  have  it 
canceled.  Tishmingo  Sav.  Bank  v. 
Buchanan,  60  Miss.  496. 

86  Dent  V.  Dunn,  3  Camp.  290. 

87C;illey  v.  Hawkins.  48  111.  .308; 
Gregory  v.  Wells,  62  id.  232;  ]\'ar\e 


1230  SUTHEELAND    ON    DAMAGES.  [§    384 

tender,  however,  being  all  the  debtor  can  do  towards  performance 
of  the  promise  to  pay  has  the  effect  of  preventing  damages  for 
non-performance.  On  principle,  a  party  should  have  a  right 
by  tender  to  prevent  default  wherever  in  the  absence  of  such 
tender  interest  would  be  chargeable  on  the  ground  of  default.** 
In  N'ew  Hampshire  the  plaintiff  in  a  tort  action  will  not  gen- 
erally be  allowed  interest  if  he  recovers  less  on  the  trial  than 
the  defendant  offered  him  although  the  offer  was  not  strictly  a 
tender.*^  The  interest  is  allowed  in  such  a  case  as  damages  fol- 
lowing the  delay  in  obtaining  redress,  and  if  the  wrong-doer  is 
not  responsible  for  the  delay  he  certainly  ought  not  to  be  called 
upon  to  compensate  the  other  party  for  a  loss  he  has  brought 
upon  himself. 

§  385.  When  tender  may  be  made.  A  tender  is  the  offer  of 
performance  by  a  party  who  is  under  a  contract  obligation  to 
pay  money.  It  should,  to  prevent  interest  altogether,  be  made 
on  the  day  the  money  becomes  due ;  the  offer  is  then  of  the  very 
thing  promised,  and,  if  accepted,  there  is  a  specific  performance 
of  the  contract.  In  Massachusetts  a  tender  afterwards  could 
not  be  pleaded  and  was  unavailing  as  a  defense,  vmtil  the  rule 
was  changed  by  statute.^"  And  this  is  the  doctrine  of  the 
English  courts.  There  it  is  said  a  plea  of  tender  is  in  truth  a 
plea  of  performance  of  the  contract  as  far  as  the  party  contract- 
ing can  perform ;  and  where  money  is  to  be  paid  the  debtor  can- 
not pay  it  unless  the  creditor  will  receive  it.  A  tender,  there- 
fore, at  the  time  it  is  due  is  sufficient  because  it  is  payment  so 
far  as  the  debtor  can  pay,  but  a  tender  afterwards  is  too  late.^^ 
Nothing  can  discharge  a  covenant  to  pay  on  a  certain  day  but 
actual  payment;  acceptance  afterwards  may  have  the  effect  of 
discharge  as  accord  and  satisfaction.®'^    But  neither  in  England 

V,  Barrett,  2  Ad.  &  E.  82 ;  Green  v.  89  Thompson   v.    Boston   &   M.    R. 

Shurtliff,    19    Vt.    592;    Dunning   v.  Co.,  58  N.  H.  524. 
Humphrey,   24  Wend.   31.     See  Mc-  90  city    Bank    v.    Cutter,    .3    Pick. 

Dowell  V.  Keller,  4  Cold.  258;  Hop-  414;     Suffolk     Bank    v.     Worcester 

son  V.  Fountain,  5  Humph.  140.  Bank,  5  id.  106;   Dewey  v.  Humph- 

88  In  Dearie  v.  Barrett,  2  Ad.  &  E.  rey,   id.  187 ;   Maynard  v.  Hunt,  id. 

82,  it  is  assumed,  or  referred  to  as  240;  Frazier  v.  Cushman,  12  Mass. 

true,  that  a  tender  is  pleadable  to  a  277. 

quantu7n  meruit.    See  note  h  to  this  91  Dobie  v.  Larkan,  10  Ex.  770. 

case.  92  Poole  v.  Tumbridge,  2  M.  &  W. 


385] 


INTEREST. 


1231 


nor  Massachusetts  is  a  tender  of  the  debt  after  it  is  due  without 
effect.  The  denial  of  the  right  to  plead  such  a  tender  is  techni- 
cal, and  the  benefit  of  it  is  afforded  in  another  way.  The  tender, 
or  even  an  offer  to  pay  without  going  far  enough  to  constitute  a 
tender,  may  so  negative  default  as  to  take  away  the  riglit  to 
damages  or  any  penalty  for  detention  of  the  money.  A  bank 
was  by  statute  subjected  to  additional  damages  at  the  rate  of 
twenty-four  per  cent  per  annum  for  the  time  it  should  refuse  or 
delay  payment ;  and  demand  for  payment  of  a  large  sum  of  its 
bills  was  made,  which  was  partially  complied  with ;  but  the 
amount  required,  exceediug  the  specie  in  the  vaults  of  the  bank, 
there  waiS  a  deficiency  in  the  payment  which  was  tendered  after 
suit  brought,  on  the  day  after  the  demand,  and  au  additional 
sum  for  interest  and  costs.  This  tender  was  refused ;  after 
which  the  money  was  deposited  in  another  bank  subject  to  the 
order  of  the  creditor  and  notice  thereof  given  to  such  creditor. 
Under  a  rule  of  the  trial  court  the  money  was  brought  into 
court  and  taken  by  the  plaintiffs.  The  court,  by  Parker,  ('.  J., 
said :  ^^    "The  tender,  though  not  technically  good  as  a  defense. 


223.  In  this  case  Jolmson  v.  Clay, 
7  Taunt.  480,  is  doubted. 

In  Hume  v.  Peploe,  8  East  168, 
Lord  Ellenborongh,  C.  J.,  said:  "In 
strictness,  a  plea  of  tender  is  appli- 
cable only  to  cases  where  the  party 
pleading  it  has  never  been  guilty  of 
any  breach  of  his  contract;  and  we 
cannot  now  suffer  a  new  form  of 
pleading  to  be  introduced  different 
from  that  which  has  always  pro- 
vailed  in  this  case.  The  damages, 
indeed,  have  sometimes  varied,  as 
the  rate  of  interest  has  been 
changed.  And  thougli  the  courts 
have  adopted  the  practice  of  refer- 
ring it  to  their  officers  to  compute 
principal  and  interest  on  bills  of 
exchange,  instead  of  sending  it  to  a 
jury  to  make  the  same  computation, 
yet  it  is  a  matter  always  in  the  dis- 
cretion of  the  court,  and  not  to  be 
obtained  without  motion." 

93  Suffolk  Bank  v.  Worcester 
Bank,  5  Pick.  106.  The  chief  justice 
cites  the  practice  in  England  in  sup- 


port of  the  exemption  of  the  debtor 
from  liability  to  pay  interest  in  such 
cases.  Eeferring  to  Dent  v.  Dunn,  .3 
Camp.  296,  l)e  says:  "The  action 
was  brought  by  Dent  against  the 
executrix  of  Dunn  on  two  promis- 
sory notes  given  by  the  testator  in 
his  life-time.  It  appeared  that  after 
his  death  his  executrix  had  given 
lior  agent  a  sum  stifficient  to  take 
up  the  notes.  The  agent  offered  to 
pay  the  principal  and  interest  on 
having  the  notes  delivered  up  to 
liim,  but  they  were  mislaid,  and  so 
the  money  was  not  paid.  'Jlie  agent 
failed  with  the  money  in  his  hands. 
Afterwards  the  notes  were  found 
and  the  action  broiight.  These  facts 
were  relied  upon  in  defense  of  the 
action,  but  not  admitted  as  sucli. 
A  question  then  arose,  to  what  time 
the  interest  should  be  made  up. 
Lord  Ellenborough  said  he  thought 
interest  ought  to  he  stopped  from 
the  time  of  the  offer  to  pay.  Inter- 
est,   he    said,    is    a    compensation 


1232 


SUTIJEKLAND    ON    DAMAGES. 


[§  385 


is   a   legal   equitable   shield  against  the   just  but   severe   pen- 
alty for  neglecting  and  refusing  to  redeem  their  bills  from  the 


agreed  to  Ijc  paid  for  the  use  of 
money  for))orne  by  the  lender  at  the 
borrower's  request.  It  is  more  fre- 
quently recovered  in  the  shape  of 
damages  for  money  improperly  re- 
tained by  the  debtor  contrary  to  the 
request  of  the  creditor.  But  in 
neither  of  these  ways  can  interest 
run  after  an  offer  to  pay  the  prin- 
cipal upon  a  reasonable  condition, 
which  the  party  to  receive  refuses, 
or  is  not  in  a  situation  to  fulfill. 
And  a  verdict  was  taken  for  the 
principal  and  interest  down  to  the 
tender.  Here,  it  will  be  observed, 
was  no  legal  tender.  The  offer  to 
pay  was  after  the  notes  had  become 
due,  and  a  condition  was  insisted  on, 
which,  however  reasonable,  would 
have  rendered  the  offer  nugatory  as 
a  tender ;  but  yet  it  had  its  effect, 
because  the  money  was  not  unlaw- 
fully detained,  but  it  was  the  negli- 
gence of  the  plaintiff  in  regard  to 
the  notes  which  prevented  the  pay- 
ment. 

"So  in  the  case  before  us  there 
was  no  legal  tender  but  an  offer  to 
pay  the  money  on  the  same  day  that 
the  action  was  commenced,  together 
with  a  surplus  sufficient  to  cover  the 
interest  or  penalty  which  had  ac- 
crued, and  vipon  the  refusal  to  re- 
ceive, the  money  was  deposited  in  a 
bank  for  their  use,  with  a  notice 
that  they  might  at  any  time  draw 
it  out.  The  case  is  more  favorable 
for  tlie  defendants  tlian  the  one 
cited,  and  it  differs  also  in  this,  that 
there  was  no  contract  for  interest, 
so  that  it  could  be  recovered  only  as 
damages  for  improper  detention; 
whereas  in  the  case  cited  the  prom- 
issory notes  themselves  were  without 
doubt  upon  interest,  it  being  stated 
that  the  offer  by  the  agent  was  to 


pay  the  principal  and  interest. 
There,  too,  the  money  was  lost  so 
that  the  payment  of  the  principal 
itself  was  disputed.  Here  the  prin- 
cipal and  interest  due  at  the  time 
of  the  offer  and  the  costs  which  had 
accrued  were  at  all  times  after  the 
offer  at  the  disposal  of  the  plain- 
tiffs. The  court  of  common  pleas 
in  England  liave  adopted  the  same 
just  principle,  and  applied  it  more 
extensively  as  appears  by  the  case 
of  Zeevin  v.  Cowell,  2  Taunt.  203. 
The  case  was  that  after  the  action 
was  commenced,  and  before  the  dec- 
laration was  made  out,  the  defend- 
ant offered  to  pay  the  debt  and  costs 
whicli  the  jjlaintiff  refused  to  take, 
and  proceeded  to  make  out  his  dec- 
laration. The  motion  was  that  the 
defendant  should  be  permitted  to 
pay  into  court  the  debt  and  costs 
up  to  the  time  of  the  offer  to  pay; 
which  was  allowed  and  the  plaintiff 
was  made  to  pay  the  costs  of  the  ap- 
plication and  all  subsequent  costs. 
And  in  the  case  of  Roberts  v.  Lam- 
bert, 2  Taunt.  283,  the  same  order 
was  made.  Tliis  rule  is  exceedingly 
just,  as  it  goes  to  repress  the  spirit 
of  litigation,  and  punishes  the  party 
for  his  vexatious  proceedings.  These 
cases  fully  justify  us  in  the  conclu- 
sion we  have  come  to  in  the  present 
case,  that  the  money  brought  in 
under  the  rule  was  sufficient;  which 
having  been  taken  out  by  the  plain- 
titl's,  judgment  must  be  for  the  de- 
fendants for  costs  after  that  time." 
Goff  v.  Rehoboth,  2  Cush.  475.  See 
Jeter  v.  Littlejohn,  3  Murph.  186; 
Cornell  v.  Green,  10  S.  &  R.  14;  Hey- 
wood  v.  Hartshorn,  55  N.  H.  476. 

In  Donohue  v.  Chase,  139  Mass. 
407,  the  rates  of  interest  stipulated 
for   in  mortgage  notes  varied  from 


§    385]  UNTTEKEST.  1283 

time  when  tliey  would  have  redeemed  tliciii  Iml  lor  tlic  rcl'usal 
of  the  other  party  to  reeeive.  We  iliiuk,  too,  that  the  ]>huntifTs 
ought  not  to  rceovcr  even  sinqjic  interest  al'tei'  tlie_\'  mii;ht  lia\e 
rceeived  their  money  and  refused,  under  the  eireumstance.s  of 
this  case.  The  bank  hills  or  notes  sued  were  promises  to  pay 
money  on  demand,  without  any  engagement  to  i)ay  interest. 
Interest  was  no  part  of  the  contract ;  hut  after  denuind  and  non- 
payment interest  would  be  recovered  in  the  form  of  damages 
for  detention.  This  claim  of  damages  might  l)c  answered  be- 
fore a  jury  by  proving  that  it  was  the  fault  of  the  plaint  ill's 
themselves  that  they  had  not  received  their  debt  and  that  the 
money  had  been  placed  subject  to  their  order  so  that  the  debtor 
could  not  put  it  to  profitable  use.  If  there  were  any  question 
about  the  amount  due  the  case  might  be  diiferent;  but  where 
the  sum  is  certain  and  the  creditor  refuses  to  receive  the  debt, 
which  is  not  by  the  terms  of  the  contract  on  interest,  and  the 
debtor  deprives  himself  of  the  use  of  the  money,  putting  it  under 
the  control  of  the  creditor  without  any  condition,  we  can  see  no 
principle  of  law  or  justice  which  will  oblige  the  debtor  to  pay 
interest  subsequently."  It  has  also  been  held  in  Kentucky  that 
a  tender  after  the  day  fixed  for  payment  is  not  good.^* 

seven  to  twelve  per  cent.     The  mort-  superior    courts    where   such    action 

gagor  made  an  offer  to  pay  the  sum  is  pending,  or  a  judge  of  any  of  said 

due,  M'hich  was  refused  unless  com-  superior  courts,  to  pay  into  court  a 

pliance   was   made   with    an    illegal  sum  of  money  l)y  way  of  compensa- 

demand  of  the  mortgagee.   The  court  tion  or  amends,  in  such  action  and 

observe  that  the  debtor  did  all  that  under    such    regulations    as    to    the 

was  necessary  to  be  done  before  re-  payment   of   costs   and   the    form   of 

ceiving  the  creditor's  account.     He  pleading  as  the  said  judges  or  such 

was    in   fault,   and   it   would    be   in-  eight  or  more  of  them  as  aforesaid 

equitable  to  allow  him  to  avail  liim-  shall,  by  any  rule  or  orders  l)y  them 

self    of    his    own    wrongful    act    to  to  be  from  time  to  time  made,  orch^r 

secure  the  payment  of  an  excessive  and  direct." 

rate  of  interest.     The  ofl'er   to  pay  9*  Huston  v.  Noble,  4  J.  .J.  Marsh, 

did  not  amount  to  a  legal  tender,  but  130.     See  Ciould  v.   Banks,  8  Wend, 

the  court  reduced  the  subsequent  in-  562,  24  Am.  Dec.  90;  Day  v.  LafTer- 

terest  to  the  legal  rate.  ty,  4  Ark.  4.50. 

The  statute  of  .3  and  4  Wm.  4,  c.  In   Dixon   v.   Clark,   5  C.   B.   36.5, 

42,   §  21,  enacts:     "That  it  shall  be  Wilde,   C   J.,   said:     "In   actions  of 

lawful  for  the  defendant  in  all  per-  debt  and  assuitipsii,  the  i)rinciple  of 

sonal   actions    (with   certain   e.\cej)-  the  plea  of  tender,  in  our  apprehen- 

tions)    by  leave  of  any  of  the  said  sion,  is  that  the  d(>fondant  has  been 
Suth.  Dam.  Vol.  I.— 78. 


1234 


SUTllEKLAND    ON    DAMAGES. 


[§  386 


§  386.  Same  subject.      After  a  debt  has  become  due  an  action 
accrues  for  the  recovery  of  damages;  the  whole  demand  is  one 


alvvaj's  ready  (tonjours  prist)  to 
perform  entirely  the  contract  on 
which  the  action  is  founded;  and 
that  he  did  perform  it  as  far  as  he 
was  ahle  by  tendering  the  requisite 
money;  the  plaintiff  himself  preclud- 
ing a  complete  performance  by  re- 
fusing to  receive  it.  And  as,  in 
ordinary  cases,  the  del)t  is  not  dis- 
charged by  such  tender  and  refusal, 
the  plea  must  not  only  go  on  to 
allege  that  the  defendant  is  still 
ready  (nncorc  prist),  but  must  be 
accompanied  by  a  profert  in  curiam 
of  the  money  tendered.  If  the  de- 
fendant can  maintain  this  plea,  al- 
though he  will  not  thereby  bar  the 
debt  (for  that  would  be  inconsistent 
with  the  iincore  prist  and  profert  in 
curiam),  yet  he  will  answer  the  ac- 
tion, in  the  sense  that  lie  will 
recover  judgment  for  his  costs  of  de- 
fense against  the  plaintiff, — in  which 
respect  the  plea  of  teiuler  is  essen- 
tially different  from  that  of  pay- 
ment of  money  into  court.  And,  as 
the  plea  is  tlnis  to  constitute  an 
answer  to  the  action,  it  must,  we 
conceive,  be  deficient  in  none  of  the 
requisite  qualities  of  a  good  plea  in 
bar.  With  respect  to  the  averment 
of  ton  jours  prist,  if  the  plaintiff  can 
falsify  it  he  avoids  the  plea  alto- 
gether. Therefore,  if  he  can  show 
that  an  entire  performance  of  the 
contract  was  demanded  and  refused 
at  any  time  when,  by  the  terms  of  it, 
he  had  a  right  to  make  such  a  de- 
mand, he  will  avoid  the  plea.  Hence 
if  a  demand  of  the  whole  sum  origi- 
nally due  is  made  and  refused  a  sub- 
sequent tender  of  part  of  it  is  bad, 
notwithstanding  that,  by  part  pay- 
ment, or  other  means,  the  debt  may 
have  been  reduced,  in  the  interim, 
to  the  sum  tendered.   And  this  is  the 


principle  of  the  decision  of  Cotton  v. 
Godwin,  7  M.  &  W.  147.  If,  however, 
the  demand  were  of  a  larger  sum 
than  that  originally  due  under  the 
contract,  a  refusal  to  pay  it  would 
not  falsify  the  toujours  prist^  even 
though  the  amount  demanded  were 
made  up  of  the  sum  due  under  the 
contract,  and  some  other  debt  due 
from  the  defendant  to  the  plaintiff. 
And  this  is  the  principle  of  the  de- 
cisions of  Brandon  v.  Newington,  3 
Q.  B.  915,  and  Hesketh  v.  Fawcett, 
11  M.  &  W.  356,  which  appear  to 
overrule  Tyler  v.  Bland,  9  M.  &  W. 
338. 

"This  principle,  however,  we 
think,  is  only  applicable  where  the 
larger  sum  is  demanded  generally, 
and  can  hardly  be  enforced  where  it 
is  explained  to  the  defendant  at  the 
time  how  the  amount  demanded  is 
made  up ;  for,  in  such  case,  the 
transaction  appears  to  be  nothing 
less  than  a  simultaneous  demand  of 
the  several  debts  so  as  to  falsify  the 
averment  of  toujours  prist  as  to 
each.  But,  besides  the  averment  of 
readiness  to  perform,  the  plea  must 
aver  an  actual  performance  of  the 
entire  contract  on  the  part  of  the 
defendant  as  far  as  the  plaintiff 
wotild  allow.  And  it  is  plain  that 
where,  by  the  terms  of  it,  the  money 
is  to  be  paid  on  a  future  day  cer- 
tain, this  branch  of  the  plea  can 
only  be  satisfied  by  alleging  a  tender 
on  the  very  day.  And  this  is  the 
principle  of  the  decisions  of  Hume  v. 
Peploe,  8  East  168,  and  Poole  v. 
Tumbridge,  2  M.  &  W.  223.  It  is 
also  obvious  that  the  defect  in  the 
plea  in  this  respect  cannot  be  rem- 
edied by  resorting  to  the  previous 
averment  of  toujours  prist.  Con- 
sequently a  plea  by  the  acceptor  of 


386] 


INTEREST. 


1235 


for  their  recovery,  the  right  to  which  is  given  by  law  for  failure 
to  perform  the  contract.  A  tender  then  is  not  an  offer  of  strict 
performance,  but  of  damages;  a  tender  of  the  full  amount  to 
which  the  creditor  is  entitled,  if  received,  is  accord  and  satis- 
faction; but  since  the  damages  are  certain  in  amount,  consisting 
of  the  debt  and  interest,  the  general  American  doctrine  is  that 
a  tender  may  be  made  after  the  debt  is  due  and  may  be  pleaded 
as  such.  To  be  sufficient,  however,  it  must  include  the  interest 
np  to  date  it  is  made.^^  In  cases  of  promises  to  pay  in  chattels 
or  in  paper  money  of  fluctuating  value  an  eifectual  tender  in 
kind  of  the  thing  stipulated  to  be  paid,  can  only  be  made  on  the 
day  appointed  for  payment.^^  It  is  only  upon  debts  due  that  a 
tender  will  stop  interest ;  a  tender  to  pay  a  debt  bearing  interest 
before  it  is  due  will  not  have  that  effect.^^  The  creditor  has  a 
right  to  keep  his  money  at  interest  according  to  the  contract.^' 


a  bill  or  the  maker  of  a  note  of  a 
tender  post  diem  is  bad,  notwith- 
standing the  tender  is  of  the  amount 
of  the  bill  or  note,  with  interest 
from  the  day  it  became  due  up  to  the 
day  of  the  tender,  and  notwithstand- 
ing that  the  plea  alleges  tliat  the 
defendant  was  always  ready  to  pay, 
not  only  from  the  time  of  the  tender 
(as  the  plea  was  in  Hume  v.  Pep- 
loe ) ,  but  also  from  the  time  when 
the  bill  or  note  became  payable.  On 
the  same  reasoning  it  appears  to  us 
that  tliis  branch  of  the  plea  can  only 
lie  satisfied  by  alleging  a  tender  of 
tlie  whole  sum  due  under  the  con- 
tract, for  that  a  tender  of  a  part  of 
it  only  is  no  averment  that  tlie 
defendant  performed  the  whole  con- 
tract as  far  as  the  plaintift'  would 
allow.  If  it  be  said  that  tlie  plea  of 
tender  is,  in  effect,  only  in  preclusion 
of  damages  subsequent  to  the  tender, 
and  that  it  would  be  unjust  to  give 
the  plaintiff  those  damages  whicli 
have  been  incurred  merely  in  con- 
sequence of  his  refusal  to  receive  the 
money  tendered,  the  answer  is  that 
the  same  argument  miglit  lie  apj)licd 


to  the  instance  of  the  tender  post 
diem  of  the  amount  of  a  bill  or  note 
with  the  interest  then  due ;  but  that, 
in  each  case,  the  defendant  is  unable 
to  allege  that  he  has  performed  tlie 
terms  of  his  contract  as  far  as  the 
plaintiff  would  allow  him,  and  is, 
therefore,  disabled  from  pleading  a 
tender." 

95  0rdvvay  v.  Farrow,  79  Vt.  192, 
118  Am.  St.  951  ;  Tracy  v.  Strong,  2 
Conn.  659;  Stadwell  v.  Cooke,  38  id. 
549 ;  Ashburn  v.  Poulter,  35  id.  553 ; 
Patterson  v.  Siiar])e,  41  Cal.  133; 
Haman  v.  Dimmick,  14  Ind.  105; 
Livingston  v.  Harrison,  2  E.  D. 
Smith  197;  Rudulpli  v.  Wagner,  3(1 
Ala.  098;  San  .\ntunio  v.  Alamo 
Nat.  Bank  (Tex.  Civ.  App.),  155  S. 
VV.  620. 

96Powe  V.  Powe,  42  Ala.  113; 
Toulmin  v.  Sager,  id.  127,  94  Am. 
Dec.  033. 

97  Ellis  v.  Craig,  7  Johns.  Ch.  7; 
Mitchell  v.  Cook,  29  Barli.  243.  See 
Wood  V.  Howland,  127  Iowa  304. 

98  Id. ;  Saunders  v.  Frost,  5  Pick. 
259,  260;  Kingman  v.  Pierce,  17 
Mass.  247. 


1236  SUTHERLAND    ON    DAMAGES.  [§    386 

In  a  Wisconsin  case  the  question  arose  whether  a  tender  can  be 
made  before  an  interest-bearing  debt  becomes  due  by  tendering 
interest  also  to  the  maturity  of  the  debt.  The  court  remarked 
that  the  question  was  somewhat  novel  in  its  character,  and  upon 
which  authorities  are  not  numerous,  owing  doubtless  to  the 
rarity  of  the  occurrence  as  matter  of  fact.  It  is  seldom,  at  least 
in  modern  times,  that  the  debtor  offers  to  pay  before  the  debt  is 
due,  including  interest  up  to  the  time  it  is  due;  still  more  sel- 
dom, such  offer  being  made,  that  the  creditor  refuses  it.  The 
two  Massachusetts  cases  seem  to  rest  the  decision  upon  the  right 
of  the  creditor  to  keep  his  money  at  interest  according  to  the 
contract.  But  where  the  debtor  tenders  the  whole  amount  of 
the  interest  which  could  accrue  up  to  the  time  of  payment  fixed 
by  the  contract  this  reason  would  seem  to  fail.  But  can  it  not 
be  said  that  the  creditor  may  have  an  interest  in  keeping  his 
money  invested  upon  security  rather  than  to  have  it  in  his  own 
hands  ?  Can  it  not  be  said  that  he  may  insist  on  it,  even  arbi- 
trarily or  obstinately,  and  without  advantage  to  himself,  so  long 
as  the  contract  provides  for  ?  It  would  seem  so,  unless  the  rule 
of  the  civil  law  is  to  prevail,  which  was  that  the  day  of  payment 
was  fixed  for  the  convenience  of  the  debtor  only ;  that  he  might 
not  be  compelled  to  pay  before  that  time,  leaving  him  at  liberty, 
however,  to  do  so  if  he  chose.^^  A  tender  should  be  made  before 
suit  brought  though  it  may  be  made  after  the  creditor  has 
directed  it  to  be  brought,^  and  even  taken  the  initiatory  steps.^ 
But  under  a  rule  of  court  the  defendant  may  pay  into  court  the 
amount  he  acknowledges  to  be  due.'  A  tender  made  in  a  bill 
for  the  specific  performance  of  a  contract  to  convey  land  and  an 
offer  to  bring  the  money  due  into  court  whenever  that  should 
be  directed  is  sufficient  to  stop  interest,*  the  entire  obligation 
being  covered.^ 

99  Moore    v.    Cord,    14    Wis.    213.       S.)    241;   Retan  v.  Drew,  19  Wend. 
See  McHard  v.  Whetcroft,  3  Har.  &       304;    Bennett  v.   Bayes,   5  H.   &  N. 
McH.  85;  Tillon  v.  Eritton,  9  N.  J.       391. 
L.  120. 

1  Hubbard   v.    Chenango   Bank,    8 
Cow.    88 ;    Fishburne   v.    Sanders.    1 
N.  &  McC.  242;  Winningham  v.  Tied-  *  Cheney  v.  Bilby,  20  C.  C.  A.  201, 
ding,  6  Jones  125.                                       74  Fed.  52. 

2  Knight  V.  Beach,  7  Abb.  Pr.   (N.  5  Wood  v.  Howland,  127  Iowa  394. 


3  Murray  v.  Windley,  7  Ired.  201, 
47  Am.  Dec.  324. 


§    387]  INTEREST.  12o7 

The  law  of  tender  has  been  more  or  less  regulated  by  statute 
in  nearly  all  the  states,  and  a  tender  is  generally  allowed  after 
suit  commenced;  but  when  so  made  the  costs  that  have  accrued 
up  to  that  time  must  also  be  tendered.^  The  tender  may  be 
made  generally  for  the  debt,  interest  and  costs,  and  will  be  suffi- 
cient if  the  amount  is  large  enough ;  but  a  tender  for  the  debt, 
not  mentioning  costs,  will  not  be  good,  though  the  plaintiif  re- 
cover no  more  than  is  paid  into  court ;  for  tenders  are  strictl 
juris.''  If  at  the  time  of  the  tender  the  debtor  has  no  knowledge 
of  the  commencement  of  a  suit  and  the  cre(lit()i'  dues  not  iiilorm 
him  thereof,  nor  make  any  claim  of  costs,  but  refuses  to  accept 
the  amount  tendered  solely  on  account  of  its  insufliciency  to  pay 
the  debt,  it  may  be  regarded  as  a  waiver  of  all  claims  for  costs.' 
After  judgment  the  only  way  to  make  a  tender  effectual  is  to 
bring  the  money  into  court  and  move  for  and  obtain  a  rule  to 
enter  satisfaction  upon  the  record.^  But  where  a  defendant,  on 
being  taken  on  execution  under  a  ca.  sa.,  tendered  the  debt  and 
costs  to  the  plaintiif's  attorney  and  required  him  to  sigii  his  dis- 
charge, which  such  attorney  refused  to  do  until  the  debtor  i)aid 
an  independent  collateral  demand  for  costs,  it  was  held  that  the 
plaintiff  and  his  attorney  were  liable  to  an  action  on  the  case 
for  such  refusal.^" 

Section  10. 

pleading. 

§  387.  How  interest  claimed  in  pleading.  It  is  a  rule  of 
pleading  that  those  damages  which  are  iin])lio(l  by  law  or  neces- 
sarily result  from  the  facts  stated  as  the  cause  of  action  need 
not  be  specially  declared  for."  Under  this  rule  interest  at  the 
legal  rate,  which  may  l>e  claimed  as  damages  for  nonpayment  of 
money  when  due,  may  be  recovered  without  being  specially 

6  Freeman  V.  Fleming,  5  Iowa  4f)0 ;  8  Haskell  v.  Brewer,  11   Me.  258 ; 

Emerson  v.  White,  10  Gray  351.  Hull  v.  IVtcrs,  7  Barb.  .331. 

7Shotwell  V.  Denman,  1  N.  J.  L.  9  Jackson  v.  Law,  5  Cow.  248. 

174;   State  Bank  v.  Holeomb,  7   id.  10  Crozer  v.  Pillin<f.  G  D.  &  R.  129. 

193.     See  Gammon  v.  Stone,  1  Veg.  n  Padley  v.  Catterlin,  04  Mo.  App. 

Sr.  339.  629.    See  ch.  10. 


1238 


SUTHERLAND    ON    DAMAGES. 


[§  387 


claimed  in  pleading.^^    Where,  in  an  action  for  conversion,  the 
damages  asked  largely  exceeded  the  recovery,  it  was  proper  to 


12  Haley  v.  Supreme  Court  of  Hon- 
or, 139  111.  App.  478;  Moll  v.  Sani- 
tary Dist.,  131   id.  155    (in  eminent 
domain)  ;  Meyer  v.  Johnson,  122  id. 
87;    Manchester    F.    Assur.    Co.    v. 
Fitzpatrick,    120    id.    535;    Fremont 
County   V.    Fremont    County    Bank, 
145   Iowa   8;    Travelers'   Ins.   Co.  v. 
Henderson  C.  Mills,  120  Ky.  218,  117 
Am.   St.   585;    Houston  v.  Lubbock, 
35  Tex.  Civ.  App.  106;   Spokane  v. 
Costello,   42   Wash.   182;    Larson  v. 
Anderson,   122  Minn.  39;   Ansley  v. 
Jordan,  61  Ga.  482;  Tucker  v.  Page, 
69  111.  179;  McConnell  v.  Thomas,  3 
111.    313;    Washington    v.    Planters' 
Bank,  1  How.    (Miss.)    230,  28  Am. 
Dec.  333;  Grand  Lodge  A.  0.  U.  W. 
v.    Bagley,    164    111.    340.      Contra. 
Farrell  v.  Farmers'  Mut.  F.  Ins.  Co., 
66  Mo.  App.  153;  Davis  v.  Creamer, 
179  Mo.  App.  374;  Rawls  v.  Ameri- 
can Cent.  Ins.  Co.,  97  S.  C.  189 ;  Hig- 
gins  V.  J.  I.  Case  Threshing  Macli. 
Co.,  95  Neb.  3 ;  Morley  v.  St.  Joseph, 
112  Mo.  App.  671;  South  Omaha  v. 
Ruthjen,  71  Neb.  545    (if  in  excess 
of  the  demand   of  the   complaint)  ; 
Peterson   v.   Mannix    (Neb.)    90    N. 
W.   210.     But   when   interest   is   in- 
cluded in  the  agreement  it  is  part  of 
tlie  debt  agreed  to  be  paid,  and  the 
interest  promise  and  its  breach  must 
be  alleged.     In  Chinn  v.  Hamilton, 
Hemp.  C.  C.  438,  debt  was  brougiit 
on  a  promissory  note  for  $3,919.53, 
to  be  paid  one  day  after  date,  witli 
interest  at  ten  per  cent,  from  date 
until  final  payment.     In  the  declara- 
tion tlie  plaintifl'  demanded  the  sum 
of  $3,919.53,  and  assigned  as  a  breacli 
the  non-payment  of  that  sum,  made 
no  averment   in   relation   to  the   in- 
terest, and  concluded  the  breach  in 
these  words:    "to  the  damage  of  the 
plaintiff,    $2,000."      And    ilie    court 


say :  "In  actions  upon  oljligations, 
or  promissory  notes  for  the  payment 
of  money,  containing  no  stipulation 
in  regard  to  interest,  it  has  not  been 
deemed  necessary  to  demand  in  the 
declaration  the  interest  that  may  be 
due,  nor  to  negative  its  payment  in 
the  assignment  of  l)rcaches.  The  uni- 
form and  settled  practice  is  to  de- 
clare for  the  debt  alone,  and  interest 
is  recovered  as  damages  for  its  de- 
tention. Upon  the  failure  to  pay 
money  at  the  time  it  is  due  the  cred- 
itor is  justly  and  legally  entitled  to 
be  remunerated  by  the  debtor  for 
tlie  damages  he  has  sustained  by  the 
fault  of  the  debtor.  The  law  has  de- 
clared the  amovmt  of  these  damages, 
and  fixed  them  at  the  rate  of  six  per 
cent,  per  annum,  and  allowed  the 
parties  to  the  contract  to  vary  this 
rate,  so  that  in  no  case  shall  it  ex- 
ceed the  rate  of  ten  per  cent,  per 
annum  upon  the  amount  loaned  or 
withheld.  In  lieu  of  the  damages 
that  the  creditor  would  be  entitled 
to  recover  for  the  unjust  detention 
of  the  debt  the  law  has  given  in- 
terest ;  and  although  the  law  denom- 
inates it  interest,  it  is  in  fact  the 
damages  whicli  tlie  creditor  has  sus- 
tained. He  is  therefore  always  al- 
lowed to  recover  the  interest  due  at 
the  rendition  of  the  judgment  as 
damages  for  the  detention  of  the 
debt.  But  in  cases  where  the  parties 
stipulate  in  the  contract  for  the  pay- 
ment of  interest  before  the  debt  falls 
due,  the  interest  cannot  be  regarded 
in  the  light  of  damages,  but  consti- 
tutes a  part  of  the  contract  itself. 
The  interest  in  this  ease  accrues  by 
the  stipulations  of  the  contract,  and 
not  as  a  legal  consequence  of  a 
breach.  It  cannot  be  in  the  nature 
of  damages,  for  it  arises  before  any 


§  387] 


INTICBKST. 


1-2'','.} 


allow  interest  althou!j;h  it  was  not  speci tit-ally  deiuaiuled.   "Since 
it  was  immaterial  whether  the  interest  was  recovered  as  dani- 


infraftioii  of  tho  contract  or  failure 
to  perform  it.  *  *  *  Tlic  promise 
to  pay  the  debt,  and  tlic  promise  to 
pay  interest  from  tlie  date  of  tiie 
contract,  are  two  separate,  distiiui 
promises  or  undertakinfjs ;  one  may 
be  performed  without  perfm  iniii.L; 
the  other.  In  declaring  iii)on  a  cove- 
nant or  a  parol  contract  in  writing 
containing  various  undertakings,  lh(> 
plaintill'  has  his  election  to  complain 
of  tlie  breach  of  one  or  of  all  of  the 
covenants  or  promises.  If  he  com- 
plains of  the  breach  or  the  non-per- 
formance of  one  only  of  the  covenants 
or  promises,  he  thereby  admits 
that  the  others  have  been  performed. 
The  intendment  is  to  be  made  most 
strongly  against  the  pleader,  and  as 
he  complains  of  the  breach  of  only 
one  of  the  covenants  or  obligations, 
the  presumption  arises  that  the 
others  have  been  performed.  It,  at 
all  events,  waives  any  right  of  ac- 
tion upon  them;  for,  having  sued  up- 
on the  contract  once,  he  is  forever 
barred  from  suing  again.  It  will 
not  be  allowed  to  split  up  the  vari- 
ous covenants  or  promises  contained 
in  one  contract  and  sue  upon  each  of 
them — he  can  have  but  one  recovery 
upon  one  contract,  which  then  be- 
comes merged  in  the  judgment  of 
the  court. 

"If  the  foregoing  remarks  are  well 
founded  the  declaration  is  not  de- 
fective. Can  the  plaintiff  in  this 
case  recover  interest  after  the  debt 
becomes  due;  and  if  he  can,  at  what 
rate?  He  is  entitled  to  recover  in- 
terest as  damages  for  the  detention 
of  the  money  after  it  became  due, 
and  where  the  contract  is  silent  the 
law  fixes  the  rate  at  six  per  cent,  per 
annum;  but  when  the  contract  fixes 
the  rate  of  interest  at  ten  per  cent., 


the  law  declares  that  to  be  the  rate. 
Ill  this  case  tlu>  contract  is  set  n\it  in 
the  declaration,  and  fixes  the  rate  of 
interest  at  ten  per  cent.  i)er  annum; 
(■(Hisequently  the  plaintill"  is  entitled 
to  recover  interest  at  the  rate  of  tr-n 
per  criit.  jiiT  animiii.  'I  lir  fact  that 
the  parties  have  agreed  upon  Die 
rate  of  interest  does  not  change  the 
luiture  of  interest  after  the  delit  be- 
comes due;  but  it  is  still  justly  re- 
garded in  the  nature  of  damages  for 
the  failure  to  pay  at  the  time  stipu- 
]at(-d  by  the  parties." 

l?ut  in  De  Croot  v.  Darby.  7  Itieli. 
TiO,  VVliitner,  .1.,  said:  ■■'Ww  jilain- 
till  claims  interest  in  tliis  ease,  'i'iie 
action  was  for  goods  sold  and  de- 
livered. The  declaration  contained 
no  count  for  interest,  and  although 
it  did  contain  the  usual  count  for 
money  had  and  received,  the  bill  of 
particulars,  we  are  informed  in  the 
course  of  tlie  argument,  was  for 
goods  alone,  and  without  any  item 
for  interest.  It  cannot  be  saiil,  in 
the  ordinary  transaction  of  the  sale 
of  goods,  that  interest  is  an  incident 
of  the  contract  itself.  The  first  in- 
quiry is  whether  there  was  a  special 
agreement  to  ])ay  interest,  (»  nntu- 
ine,  or  to  do  something  towards  tlic 
payment  of  an  admitted  sum.  That 
would  imply  a  promise;  for  in  im 
just  sense  can  it  be  maintaineil  that 
the  interest  constitutes  a  part  of  th^ 
price  of  the  goods.  I  do  not  under- 
stand this  i)rincii)le  to  be  drawn  into 
controversy.  Cases  in  our  own  stat<< 
are  numerous  in  reference  to  such 
contracts  as  carry  interest  with 
them.  Harp.  83;  1  Hill  :19:<;  :?  Mc- 
Cord  505;  2  Bailey  304.  The  mere 
statement  of  such  a  proposition,  it 
would  seem,  discloses  the  necessity 
of    its    appearance    in    pleading    in 


1240 


si;tiierland  on  damages. 


[§  387 


ages  or  as  interest  it  was  G(|ually  immaterial  whether  it  was 
demanded  in  the  prayer  of  the  complaint  as  the  one  or  the 
other.''  ^^  If  the  action  is  brought  upon  an  express  promise  to 
pay  money  and  the  contract  set  out  includes  a  promise  to  pay 
interest  at  a  rate  which  it  is  lawful  to  stipulate  for  until  the 
debt  is  paid,  a  general  broach  with  an  ad  damnum  large  enough 
to  cover  the  principal  and  interest  will  entitle  the  plaintiff  to 


some  form.  The  very  object  of  all 
pleading  is  to  advertise  the  party 
sought  to  be  charged  of  the  matter 
or  thing  claimed.  Hence  the  neces- 
sity of  a  declaration;  and  when  ac- 
cording to  our  forms  and  the  nature 
of  the  demand  it  might  otherwise 
be  too  general,  hence  the  propriety 
of  a  bill  of  particulars.  The  law 
abhors  surprise  and  undue  advan- 
tage, and  therefore  requires  all 
reasonable  certainty.  In  this  partic- 
ular case  the  party  would  be  wholly 
at  sea  if  he  may  be  made  liable  for 
that  which  is  outside  of  the  con- 
tract set  forth,  which  in  no  way 
springs  from  it  as  an  incident, 
which,  though  susceptible  of  allega- 
tion, is  neither  set  out  by  special 
count  nor  notified  in  the  bill  of  par- 
ticulars. Such  a  rule  would  be  ob- 
noxious to  the  double  implication  of 
surprising  the  defendant  and  of  giv- 
ing to  tlie  plaintiff  what  he  has  not 
asked  for.  On  tlie  contrary,  that  is 
but  a  reasonable  rule  which  requires 
such  an  advertisement  at  least  as 
may  enable  the  parties  to  prepare  to 
meet  proof  by  proof,  that  the  truth 
may  be  known." 

Tills  decision  is  not  adverse  to 
that  in  the  preceding  case,  if  in- 
terest by  agreement  was  sought  to 
be  recovered,  before  the  account  was 
due,  or  put  upon  interest  by  demand 
or  unreasonable  delay.  But  if  it  is 
deemed  necessary  to  specifically 
claim  interest  on  an  account  after 
it  is  due,  and  after  interest  would 


accrue  by  reason  of  default  in  pay- 
ment, then  it  would  seem  to  be  in 
conflict  with  the  principle  univer- 
sally recognized  that  those  damages 
which  are  implied  by  law  need  not 
be  specially  claimed. 

Tlie  true  distinction  is  pointed  out 
in  Adams  v.  Palmer,  30  Pa.  346, 
where  it  was  held  that  where  a 
usage  of  trade  has  fixed  a  period  at 
which  book-accounts  bear  interest 
this  becomes  a  law  of  the  contract, 
and  it  is  not  necessary  to  demand  it 
in  the  copy  of  the  claim  filed.  Hum- 
mel V.  Brown,  24  Pa.  310;  Watt  v. 
Hoch,  25  id.  411.  If  a  bargain, 
however,  exists  for  interest  at  an 
earlier  period  than  the  usage  would 
allow,  or  if  a  special  contract  be 
relied  on  as  giving  it,  then  it  must 
be  set  forth  in  or  added  to  the  copy 
of  the  claim;  otherwise  the  plain- 
tifi"  cannot  include  it  in  his  judg- 
ment. 

13  New  Dunderberg  M.  Co.  v.  Old, 
38  C.  C.  A.  8fl,  97  Fed.  150 ;  Buffalo 
Pitts  Co.  V.  Strinfellow-H.  Co., 
(Tex.  Civ.  App.),  129  S.  W.  1161. 
Cfmtra,  Morris  v.  Smith,  51  Tex. 
Civ.  App.  357. 

Interest  is  not  recoverable  as 
damages  unless  the  allegation  of 
damage  covers  those  sustained  and 
the  interest  thereon  in  the  absence 
of  a  demand  for  it.  San  Antonio, 
etc.  R.  Co.  V.  Addison,  96  Tex.  71; 
Erie  City  I.  Works  v.  Noble  (Tex. 
Civ.  App.),  124  S.  W.  172. 


§  387] 


INTEREST. 


1241 


recover  interest,  to  the  date  of  the  judgnicnt  at  tlie  contract  rato.^* 
It  has  been  held  in  Ahibama,  however,  that,  in  general,  a  conrt 
of  equity  will  not  decree  interest  on  a  balance  unless  it  is 
specially  asked  for  in  the  bill ;  but  this  rule  only  applies  to 
interest  duo  at  the  filing  of  the  bill.  When  interest  accrues  snlv 
se([uently  it  is  the  practice  of  the  court,  upon  further  directions, 
to  order  that  it  be  computed  although  there  is  no  })rayer  to  that 
etfeet.^^  Interest  should  be  asked  for  in  an  action  for  an  ac- 
counting,^® in  an  action  to  enforce  payment  of  an  account."  in 
condemnation  proceedings,^^  in  an  action  for  breach  of  the 
covenant  of  warranty,^^  in  an  action  of  fraud  to  re(!over  un- 
liquidated damages,'^"  and  in  an  action  to  recover  over  charges.^^ 
Oidy  such  creditors  of  an  insolvent  are  entitled  to  interest  as 
ask  for  it.^^  Under  a  statute  requiring  that  the  relief  demanded 
shall  be  stated  in  the  complaint  interest  on  a  contract  after  its 


H  Thrasher  v.  Moran,  146  Cal. 
083;  Camp  v.  First  Nat.  Bank,  44 
Fla.  497;  Chinn  v.  Hamilton,  Hemp. 
C.  C.  438;  McConnell  v.  Thomas,  3 
HI.  313. 

In  the  last  case  suit  was  upon  a 
note  payable  in  a  year,  with  interest 
at  the  rate  of  thirty  per  cent,  per 
annum  from  date  until  paid.  Breach 
assigned:  "yet  the  debt  remains  un- 
paid ;  wherefore  the  plaintiff  prays 
judgment  for  his  debt  and  damages 
for  the  detention  of  the  same."  A 
verdict  was  given  for  debt  and  in- 
terest, and  it  was  held  right.  The 
"debt"  in  that  case  included  the 
principal  and  interest  to  the  time  of 
the  action. 

In  Nunnelle  v.  Morton,  Cooke  21, 
an  action  of  debt  on  a  judgment  in 
which  interest  was  specifically  asked 
for,  it  was  at  first  a  question  wheth- 
er the  claim  of  interest  did  not 
render  the  demand  uncertain.  But, 
with  some  hesitation,  the  court  held 
that  the  amount  of  the  judgment 
could  be  claimed  as  a  debt  and  the 
interest  from  its  rendition  as  dam- 
ages. 


Under  a  statute  interest  may  be 
recovered  though  tht;  aggregate  sum 
excei'ds  the  ail  (lannnnn.  Salem  T. 
T.  Co.  V.  McGraw,  GG  W.  Va.  321. 

15  Godwin  v.  McGehee,  19  Ala.  4G8. 
See  Mills  v.  Heeney,  35  111.  173; 
Carter  v.  Lewis,  29  id.  ^^00•,  Prescott 
V.  Ma.vwell,  48  id.  82;  Heiman  v. 
Schroeder,  74  id.  158. 

Under  a  demand  for  a  specified 
sum  with  interest  and  costs  judg- 
ment cannot  be  recovered  on  the  in- 
terest due  on  the  judgment  sued 
upon  anterior  to  the  time  suit  was 
begvm.  Haven  v.  Baldwin,  f)  Iowa 
403.  See  David  v.  Coiuird,  1  G. 
Greene  336. 

16  Cheney   v.   Ricks,   187    111.    171. 

17  Van  Riper  v.  Morton,  61  Mo. 
App.  440. 

18  C'unningham  v.  San  Saba  Coun- 
ty, 11  Te.x.  Civ.  App.  r^'yl,  .')63. 

19  Vinton   v.   Lyons,    131    La.   673. 

20  Corder  v.  O'Neill,  176  Mo.  401. 

21  Straight  Creek  C.  &  C.  Co.  v. 
Straight  Creek  M.  Co.,  130  Ky.  oSfi. 

22  1ilair  v.  Clayton  K.  Co.  (Del.), 
77   .All.  740. 


1242  SUTIIEELAND    ON    DAMAGES.  [§    387 

breach  must  be  claimed.^^  If  payment  has  been  unreasonably 
and  vexatiously  delayed  a  bill  of  particulars  need  not  claim 
interest.^* 

A  claim  against  the  estate  of  a  decedent  will  support  an  al- 
lowance of  interest  though  it  was  not  specifically  mentioned 
upon  the  principle  that  interest  may  be  allowed  on  money 
illegally  withheld  or  property  converted  without  proof  of  special 
damage.  It  is  the  common  practice  in  actions  for  breach  of 
contract  to  allow  interest  without  a  special  averment.  Whether 
the  liability  was  for  an  unlawful  conversion  or  for  breach  of 
contract  the  same  is  true.^^  But  as  interest  before  the  maturity 
of  the  principal  is  the  creature  of  contract  no  case  can  be  made 
for  the  recovery  of  such  interest  without  alleging  the  contract 
and  a  breach  of  it.^''  A  demand  for  principal  and  interest  on  a 
covenant  to  pay  a  specific  sum  with  interest  is  divisible.^"^ 

Under  the  code  an  office  judgment  in  case  of  failure  to  an- 
swer is  authorized  to  be  taken  for  the  amount  specified  in  the 
summons;  if  an  answer  is  filed  judgment  may  be  rendered  for 
the  principal  and  interest  added  thereto  though  the  complaint 
only  prays  for  judgment  for  the  principal.^^  Interest  may  be 
allowed  from  the  time  action  was  begun  in  a  default  judginent 
although  the  damages  were  unliquidated  and  there  was  no  speci- 
fic prayer  therefor  in  the  complaint.^^  Equity  will  allow  it 
where  fraud  has  been  practised  in  the  exchange  of  properties 
from  the  date  of  the  exchange  though  it  is  not  demanded.^"  If 
the  right  to  interest  depends  upon  a  demand  the  time  of  making 
it  must  be  alleged  or  interest  will  be  computed  only  from  the 
commencement  of  the  action.^^  Under  the  code  of  Colorado, 
which  requires  only  a  statement  of  the  cause  of  action  in  ordi- 

23  Ferguson  v.  Reiger,  43  Ore.  505.  28  Cassacia  v.  Plicenix  Ins.  Co.,  28 

24  Wabash  P.  Co.  v.  Bracey,  160  Cal.  028;  Corcoran  v.  Doll,  32  Cal. 
111.   App.   18.  g2 

25  Davton  v.  Estate  of  Dakin,  103 

j^j^.jj    (jV,  29\Vhereatt  v.  Ellis,  68  Wis.   61. 

26  Chinn  v.  Hamilton,  Hemp.  C.'C.  30  Rob])ins  v.  Selby,  144  Iowa  407. 

438,  quoted  from  supra;  McConnell  31  Hall    v.    Farmers'    &    Citizens' 

V.  Thomas,  3  111.  313.  t,     ,      rr   t  pio     u^       •       q*   * 

„-,,  .^,  ^,  ,      „  ^,     ,  .   ^„  Bank,   55   Iowa   612;    Empire   State 

27McClure  V.  Cole,  6  Blackf.  290;  '  ^ 

Vernev  v.  Iddings,  2  Cl.iltv  234.  S-  ^'o.  v.  Lindernieier,  54  Colo.  497. 


^    oSS]  INTJOREST. 


I24;j 


Jiary  langiuise,  a  count  in  a  complaint  l.ascd  (.11  :in  accuuiit 
stated  wliich  alleges  facts  from  which  the  hiw  implies  a  (.nmiise 
to  pay  is  good  though  the  promise  is  not  allegc<l,  and  will  sus- 
tain a  judgment  allowing  interest.^'^  The  statutory  oud it i..ns 
upon  which  interest  is  demandable  must  be  alleged.^^  If  there 
are  two  defendants,  only  one  of  whom  answers,  it  is  error  to 
allow  judgment  against  both  f..i-  interest,  the  relief  asked  for 
not  including  interest.^*  No  greater  rate  of  interest  can  be 
recovered  than  is  asked  for,^^  nor  will  it  be  allowed  anterior  to 
the  time  for  which  it  is  asked.^^  If  it  is  sought  to  recover  inter- 
est in  excess  of  the  statutory  rate  as  damages  by  reason  of  the 
special  contract  between  the  parties,  the  declaratimi  should 
appraise  the  defendant  of  the  claim  therefor." 

Section  11. 

INTEREST  DURING  PROCEEmNGS  TO  COLl.ECT  A  DEBT. 

§  388.  Interest  on  verdict  before  judgment.  When  the  cause 
of  action  is  such  as  to  carry  interest  and  judgment  is  delayed 
after  verdict  by  the  act  of  the  defendant,  by  an  unsuccessful 
motion  for  new  trial  or  writ  of  error,  in  Xew  York  the  plaintiff 
was  held  entitled  to  interest  on  the  entire  amount  of  the  verdict 
for  the  time  of  the  delay,  to  be  taxed  as  part  of  the  general  costs 
in  the  canse.^^  Interest  is  so  allowed  in  cases  where  the  contract 
sued  on  carries  it,^^  l)ut  only  for  the  period  during  which  the 


881 


32  Mine  &  Smelter  8.  Co.  v.  Parke  36  Huctter   v.   Redliead.   ;U   Wash. 
L.  Co.,  47   C.  C.  A.  34,   107  Fed.  320. 

37  (amp   V.    First   Nat.    ]?ank.    44 
An  allegation  as  to  the  time  crops  ^la.  497.    See  Ashhv  v.  Shaw,  82  Mo 
were    destroyed    and    a    prayor    for  -^     . ,                 ^,  ,  '    ,  . 
,1,.             •     i-c      ii                         r  ■  '"'  Ahrams  V.  Columbia,  etc.  K.  Co, 
damages  justifies  the  recovery  of  in- 
terest.    Trinity,  etc.  N.  Co.  V.  Doke  73  S.  C.  542. 
(Tex.  Civ.  App.),  152  S.  W.  1174.  38  Lord  v.  Mayor,  :!  1 1  ill  42ti;  TVo- 

33  Young  V.  Kimber,  44  Colo.  448,  P'e  v.  Gaines,  1  Johns.  343;   N'reden- 
28  L.R.A.(N.S.)   626.  bergh  v.  Hallett,  1  Johns.  Cas.  27; 

34  Pickett  V.  Handy,  9  Colo.  App.  Henning  v.  Van  Tyne,  19  Wend.  101; 
357.  Williams  v.  Smith,  2  Cai.  253;  Bull 

35  Merchants'  Sav.  Rank  v.  Moore,  ^'-  Keteiium,  2  Denio  188;  Bissell  v. 
5   Kan.   App.   362;    Sanders   v.    Bag-  Hopkins,  4  Cow.  .")3. 

well,  37  S.  C.  145.  39  Vredenbergh   v.   Hallett,  supra. 


1244 


SUTJIERLAND    ON    DAMAGES. 


[§   388 


plaintiff  has  been  delayed  in  obtaining  judgment  by  the  act  of 
the  defendant.*"  In  other  jurisdictions  interest  during  this 
interval  has  been  computed  and  added  to  the  judgment.*^ 

If  the  demand  sued  for  is  of  such  a  nature  that  it  carries  in- 
terest before  verdict  the  plaintiff's  right  thereto  between  verdict 
and  judgment  for  him,  when  there  is  delay  by  the  act  of  the 
defendant,  rests  upon  sound  principles.  The  fact  that  he  dis- 
j)utes  his  liability  or  the  amount  of  it  does  not  suspend  interest 
before  verdict ;  nor  should  the  pendency  of  a  defendant's  motion 


40  Bull  V.  Ketchum,  2  Denio  1 88 ; 
Vail  V.  Nickerson,  6  Mass.  261.  See 
Buckman  v.  Davis,  28  Pa.  211. 

Where  the  verdict  was  taken  sub- 
ject to  the  opinion  of  the  court  on  a 
case  to  be  made  and  the  plaintiff 
rested  nearly  thirty  years  before 
having  judgment  entered,  he  was 
allowed  interest  only  from  its  entry. 
Eedfield  v.  Ystalyfera  I.  Co.,  110  U. 
S.  174,  28  L.  ed.  109. 

Where  the  court  refused  to  receive 
the  verdict  in  a  tort  action  until  re- 
quired to  do  so  by  the  supreme  court 
the  plaintiff's  right  to  interest  did 
not  accrue  until  the  mandate  of  the 
latter  court  was  acted  upon  by  the 
trial  court.  Kansas  City,  etc.  K.  Co. 
V.  Berry,  55  Kan.  186. 

"Berry  v.  Kingsbaker,  118  111. 
App.  198;  Hueni  v.  Freehill,  125  id. 
345;  Kansas  City,  etc.  R.  Co.  v. 
Berry,  supra;  Griffith  v.  Baltimore 
&  O.  R.  Co.,  44  Fed.  574. 

Interest  may  be  computed  from 
the  day  the  verdict  was  rendered, 
whether  the  action  be  tort  or  con- 
tract. Gibson  v.  Cincinnati  En- 
quirer, 2  Flip.  88;  Sproat  v.  Cutler, 
^^'right  157;  Winthrop  v.  Curtis,  4 
Me.  297 ;  Johnston  v.  Atlantic,  etc. 
R.  Co.,  23  N.  H.  410;  Weed  v.  Weed, 
25  Conn.  494;  Renther  v.  State,  3 
Ind.  86;  Carson  v.  Germania  Ins. 
Co.,  62  Iowa  433.  But  not  from  the 
first  day  of  the  term  in  which  it  was 


rendered.     Gibson  v.  Cincinnati  En- 
quirer, supra. 

In  South  Dakota  if  the  recovery  is 
for  the  breach  of  an  obligation  not 
arising  out  of  contract  the  allowance 
of  interest  is  witliin  the  discretion  of 
the  jury.  liollister  v.  Donahoe,  16 
S.   D.  206. 

Interest  is  not  to  be  added  to  the 
verdict  on  motion.  By  failing  to  ask 
for  an  instruction  awarding  it  the 
right  is  waived.  Parsons  v.  Jam- 
eson, 70  N.  H.  625. 

In  Irvin  v.  Hazleton,  37  Pa.  465,  a 
verdict  was  taken  in  1853 ;  no  fur- 
ther proceeding  was  liad  until  1860, 
wlien  judgment  was  entered  for  the 
amount  of  the  verdict  with  interest 
from  its  date.  The  allowance  of  in- 
terest was  held,  on  error  brought, 
to  be  proper.  Strong,  J.,  said:  It 
"was  in  substance  an  exercise  of 
the  ordinary  and  well  recognized 
power  of  entering  a  judgment  nunc 
pro  tunc ;  and  if  they  had  the  power 
we  mvist  presume,  in  the  absence  of 
reasons  to  the  contrary,  that  it  was 
riglitfully  exerted."  Referring  to 
Kelsey  v.  Murphy,  30  Pa.  340,  he 
said  tlie  learned  judge  in  that  case 
'"denied  that  interest  was  a  neces- 
sary incident  to  a  verdict."  The 
case  called  for  nothing  more,  and 
nothing  more  ought  to  be  consid- 
ered as  decided  by  it. 


§  388] 


INTEREST. 


1245 


for  a  new  trial  or  in  arrest  of  judgment  on  iintenal)lo  i«ronn'ls 
suspend  it  between  verdict  and  judgment.*'^    The  same  rule  has 


42  American  Nat.  Bank  v.  Nation- 
al W.  P.  Co.,  23  C.  C.  A.  33,  77 
Fed.  85;  Swails  v.  Cissna,  61  Iowa 
693;  Dowell  v.  Griswold,  5  Sawyer 
23. 

The  reasoning  in  Kelsey  v.  Mur- 
phy, 30  Pa.  240,  which  sccma  to  be 
disapproved  in  the  later  case  of  Ir- 
vin  V.  Hazleton,  37  Pa.  465,  is 
plansilile;  but  interest,  in  general, 
is  not  refused  upon  such  grounds. 
Thompson,  J.,  says:  "Interest  has 
bt'en  defined  'to  be  a  compensation 
for  delay  of  payment  by  the  debt- 
or,' and  is  said  to  be  impliedly  due 
'whenever  a  liquidated  sum  of 
money  is  unjustly  withheld.'  10 
Wheat.  440.  And  again — but  rather 
by  way  of  amplification — it  is  said 
'to  be  a  legal  and  uniform  rate  of 
damages  allowed  in  the  absence  of 
any  express  contract  when  payment 
is  withheld  after  it  has  become  the 
duty  of  the  debtor  to  dischai'ge  the 
debt.'  From  these  definitions,  dif- 
fering but  little  in  essentials,  two 
things  must  necessarily  pre-exist  to 
raise  this  duty  on  the  part  of  the 
debtor;  namely,  the  ascertainment 
of  the  amount  to  be  paid,  and  its 
maturity.  If  these  essentials  are 
wanting,  the  debt,  althougli  exist- 
ing, cannot  be  said  to  be  due  and 
withheld,  and  the  duty  to  pay  has 
not  become  imperative  upon  the 
debtor.  Unliquidated  demands,  past 
due,  will,  if  otherwise  entitled,  l)ear 
interest,  upon  the  maxim  of  ad  rcr- 
tum,  etc.  They  can  be  rendered  cer- 
tain. But  while  the  question  of 
indebtedness,  under  all  the  ascer- 
tained facts  in  the  case,  is  in  abey- 
ance, as  is  the  case  on  a  motion  for 
a  new  trial,  the  contract  of  the  debt- 
or is  suspended.  Tlie  case  is  prcmio 
legis,    and    is   presumed    to    lie    bcld 


under  consideration  by  the  minis- 
ters of  tlie  law.  The  delitor  can 
neitlier  jjay  nor  tender  so  as  to 
avail  anything,  even  if  disposed  to 
abandon  tiie  contest.  It  is  em- 
phatically, and  in  truth,  tbe  'law's 
delay.'  It  is  an  incident,  insepar- 
able from  the  civil  macliinery  that 
the  law  puts  in  operation  to  ascer- 
tain tlie  trutli  between  man  and 
man,  and  until  the  process  is  gone 
tlirough  witb  it  presumes  that  er- 
rors may  exist,  and  hence  not  only 
indulges  such  delays,  occasionally, 
but  sometimes  brings  out  of  them 
the  finest  achievements  of  its  mis- 
sion." See  lloopes  v.  l?rinton,  8 
Watts  73. 

In  Johnson  v.  Atlantic,  etc.  R.,  43 
N.  II.  410,  it  was  held  that  interest 
between  verdict  and  judgment  upon 
the  amount  of  the  verdict  should  be 
added  in  rendering  judgment.  Such 
a  motion  was  made  and  denied  liy 
tile  trial  court.  IJellows,  J.,  said: 
''Upon  the  facts  reported  we  are  of 
opinion  tbat  the  allowance  of  inter- 
est upon  the  amount  of  the  verdict 
would  have  accorded  with  the  gen- 
eral course  of  practice  in  this  state, 
and  is  sustained  both  by  principle 
and  autliiirify.  I'p  to  tlie  time  of 
the  decision  of  Robinson  v.  Blann, 
2  Burr.  1085,  the  general  principle 
appears  to  have  been  the  other  way 
in  England,  and  even  to  allow  no 
interest  after  tlie  commencement  of 
the  action.  But  tlie  question  was 
iiuu'h  discussed  in  that  case  by  Lord 
Mansfield,  and  the  allowance  of  such 
interest  in  general  [uit  upon  very 
solid  ground;  holding  that  'nothing 
can  be  more  agreeable  to  justice 
than  that  the  interest  should  he 
carried  down  (piite  to  the  actual 
|)a\  iiii'iit ;    liut   as  tliat  cannot  be,   it 


1246 


SUTIIEKI.AND    ON    DAMAGES. 


[§  388 


been  applied  to  tort  actions,  interest  being  allowed  on  the  ver- 
dict from  the  time  of  its  rendition  notwithstanding  motions  for 


sliould  be  carried  on  as  far  as  tlio 
time  when  tlie  demand  is  complete- 
ly liquidated;'  and  he  says  he  'don't 
know  of  any  court  in  any  country 
whicli  does  not  carry  interest  down 
to  the  time  of  the  last  act  by  which 
tlie  sum  is  liquidated.'  The  recov- 
ery in  this  case  was  for  money 
loaned,  which  was  found  by  a  spe- 
cial verdict  to  be  £300,  and  to  that 
interest  was  added  by  the  court  to 
the  rendition  of  the  judgment;  and 
there  are  remarks  which  seem  to 
point  to  a  distinction,  in  this  re- 
spect, between  actions  of  assumpsit 
and  a,ctions  of  trespass  and  tlie 
like;  but  the  general  course  of  tlie 
reasoning  applies  to  both  kinds  of 
actions.  The  decision  accords  also 
with  the  course  of  practice  of  courts 
of  equity,  where  interest,  after  the 
master's  report,  is  usually  added  in 
making  up  the  decree.  2  Dan.  Ch. 
Pr.  1442,  and  notes;  Brown  v.  Bark- 
ham,  1  P.  Wms.  652,  and  Perkyns 
V.  Baynton,  ]  Bro.  Ch.  574.  The 
general  doctrine  of  these  cases  is 
recognized  in  Vredenbergh  v.  Hal- 
lett,  1  Johns.  Cas.  27;  People  v. 
Gaine,  1  Johns.  343;  Williams  v. 
Smith,  1  Cai.  253;  Lord  v.  Mayor,  3 
Hill,  426;  Bull  v.  Ketchum,  2  De- 
nio,  188;  Vail  v.  Nickerson,  6  Mass. 
262;  Winthrop  v.  Curtis,  4  Me.  297. 
In  many  or  most  of  these  cases,  the 
allowance  of  interest  upon  the 
amount  of  the  verdict  is  confined 
to  cases  where  the  delay  was  caused 
by  the  act  of  the  defendant;  and 
now,  by  statute  in  New  York,  this 
distinction  is  disregarded.  By  our 
statute  interest  is  now  payable  on 
all  executions  in  civil  actions  from 
the  time  judgment  is  rendered. 
Comp.  St.  296,  sec.  6.  And  it  will 
be   perceived   that   no   distinction    is 


nmde  as  to  the  nature  of  the  action 
in  which  the  judgment  is  rendered ; 
and  it  will  also  bo  observed  that 
this  law  carries  out  the  suggestion 
of  Lord  Mansfield,  that  justice  re- 
quires that  interest  should  be  car- 
ried down  to  the  time  of  payment. 
The  verdict  of  the  jury,  if  judgment 
is  rendered  upon  it,  must  be  regard- 
ed as  showing  the  amount  justly 
due  at  the  time  it  is  rendered,  and, 
in  most  cases,  whether  ex  contractu 
or  ex  delicto  interest,  eo  nomine,  is 
included  in  the  verdict,  at  least 
from  the  commencement  of  the  suit; 
and  in  the  other  cases  it  may  rea- 
sonably be  supposed  that  it  is  in 
some  form  taken  into  account.  No 
solid  reason,  we  tliink,  can  be  given 
for  withholding  the  interest  between 
the  finding  of  the  jury  and  the  ren- 
dering of  judgment,  as  it  is  quite 
clear  that,  imder  our  law  and  prac- 
tice, interest  should  be  allowed  at 
all  other  times  from  the  conmence- 
ment  of  the  suit  at  least  until  pay- 
ment and  satisfaction  of  the  judg- 
ment. 

"In  Bull  V.  Ketchum,  2  Denio 
188,  the  defendant  delayed  judgment 
for  a  time  by  proceedings  designed 
to  set  aside  the  verdict,  but  aban- 
doned them;  and  the  plaintiff  after- 
■wards  took  steps  attended  with  de- 
lay for  a  new  trial,  the  motion  for 
which  was  denied.  Interest  was  al- 
lowed on  the  verdict  and  taxed  with 
the  costs  for  the  time  judgment  was 
delayed  by  the  defendant,  and  then 
ceased;  and  no  interest  was  given 
while  the  plaintiff's  motion  for  new 
trial  was  pending." 

A  verdict  of  a  stated  sum  "with 
interest"  in  an  action  on  a  contract 
whicli  provided  for  payment  in  in- 
stalments, the  amount  of  principal 


§    388]  INTEREST.  1247 

uew  trial  or  in  arrest  of  judgment.*^  As  interest,  regulated  by 
law  or  the  agreement  of  the  parties,  is  a  definite  measure  of  dam- 
ages not  requiring  testimony  to  prove  or  a  jury  to  decide,  there 
is  no  difficulty  in  the  matter  of  practice  in  allowing  it  to  run 
until  judgment.  The  right  and  the  convenience  of  practice  con- 
cur to  favor  the  allowance.  Interest  during  this  period,  however, 
is  not  universally  allowed.  In  Maryland,  West  Virginia,  Colo- 
rado, Georgia  and  Louisiana  it  is  denied.**  Under  a  statute 
allowing  interest  after  ascertainment  of  the  balance  due,  where 
a  judguient  for  the  defendant  was  reversed  and  a  new  trial  re- 
sulted in  a  judgment  for  the  plaintiff  his  right  to  interest  was 
limited  to  the  rendition  of  the  second  verdict.**  If  a  fund  or 
property  in  court  is  subject  to  lien  claims  of  different  priorities 
interest  is  allowable  only  from  the  date  of  decree.*^  So  far  as 
the  federal  courts  are  concerned  the  question  of  interest  gener- 
ally as  well  as  the  matter  of  allowing  it  between  verdict  and  judg- 
ment, is  one  of  local  law.*''^  It  has  been  suggested,  however, 
that  if  the  allowance  of  interest  in  the  latter  case  rested  solely 
upon  a  statute  permitting  its  recovery  on  judgments  it  is  diffi- 
cult to  see  how  it  could  be  computed  upon  verdicts,  ''inasmuch 
as  the  specific  allowance  of  interest  upon  judgments  would  seem 
to  exclude  the  inference  that  interest  should  be  allowed  upon 
verdicts  before  judgment."  **    Interest  on  costs  runs  only  from 

found  due  being  less  than   the  last  44  Baltimore  City  R.  Co.  v.  Sewell, 

instalment,   was   construed   to  mean  37   Md.   44:5;    Fowler   v.  B.  &  0.  R. 

with   interest  from  tlie  maturity  of  Co.,  IS  W.  Va.  f)?!!,  7  Am.  Neg.  Cas. 

such    instalment.      Van    \YinkU'    v.  10.5;   Hawley  v.  Barker,  a  Colo.  118 

VVilkins,  81  Ga.  n:i,  12  Am.  St.  2nn.  (under  statute)  ;  Bonner  v.  Copley, 

But  in  Kansas  "it  is  error  to  al-  1,5  La.  Ann.  504;  Cuernsey  v.  Phin- 

low   interest  in   a   verdict  for  unli-  izy,  11.3  Ga.  808.     See  Kquitable  L. 

quidated  damages  for  the  time  be-  Assur.  Soc.  v.  Trimble,  27  C.  C.  A. 

tween   its  finding  and  the  rendition  .,. .    go  y^A    j^- 

of    the    judgment    thereon."      Clyde  '^.     ,        ^.. ,      ,„  ^r     ^    ro 

,,.„.        ■;    T?,        ,        r'            T>           -1  45  Priest  V.  P:ide,  19  Mont.  5.1. 
Milling  &  Elevator  Co.  v.  Buoy,   /I 

Kan.    293;    Roe    v.    Snattinger,    91  46  McDonald   v.   Loewen,   145   Mo. 

Kan.  5G7.  App.  49;  Anderson  v.  Red  Metal  M. 

43  Meyer  V.  .Johnson,  122  111.  App.  ^^^■,^    ;5(;    :\l,„it.    ."{12;     .lunrolmoii    v. 

87;    Hiiton   v.    State,   GO   Neb.   421;  y^^,.^^^  29  C.  C.  A.  41,  85  Fed.  103. 

Missouri  Pac.  R.  Co.  V.  Fox,  60  Neb.  ^^  ,,          ,        x.     t>       ,-i    4     . 

531,    555,    8    Am.    Neg.    Rep.    403;  *' Massachusetts  Beneht   Ass  n  v. 

Fremont,    etc.    R.    Co.    v.    Root,    49  Miles,  137  U.  S.  C89,  34  L.  ed.  834. 

Neb.  914.  «ld. 


1248  SU'rilERLAND    ON    DAMAGES.  [§    388 

the  entry  of  judgment.^^  The  right  to  recover  interest  oi^  the 
verdict  rests  upon  the  law  of  the  state  in  which  the  cause  of 
action  arose.  ^° 

§  389.  On  judgments  pending  review.  On  general  principles 
a  judgment  or  money  decree  bears  interest  from  the  time  of 
being  pronounced  unless  a  different  time  is  fixed  for  payment, 
because  the  moneys  so  adjudged  or  decreed  are  liquidated  and 
due.  But  interest  on  such  debts,  being  allowed  only  as  damages 
for  detention  of  money  which  ought  to  be  paid,  can  only  be  re- 
covered by  action  or  judicially  awarded  in  a  pending  proceed- 
ing. A  ministerial  officer,  with  the  usual  process  for  carrying 
into  execution  the  judgment  or  decree,  cannot  assess  and  collect 
such  interest  as  part  of  the  debt  he  is  authorized  and  required 
to  levy  unless  he  is  empowered  to  do  so  by  statute  or  by  the 
execution.^^  A  defendant  in  an  execution  is  not  chargeable 
with  interest  upon  the  debt  due  by  him  beyond  the  return  day 
of  the  writ,  although  the  plaintiff  does  not  receive  his  money, 
unless  the  delay  is  occasioned  by  the  former.^^ 

In  the  distribution  of  a  fund  raised  by  a  sheriff's  sale  inter- 
est is  allowable  on  a  mechanics'  lien  to  the  date  of  sale  only,  and 
not  to  that  of  distribution.^^  In  an  action  upon  an  interpleader 
bond  conditioned  that  the  property  shall  be  forthcoming  on  the 
determination  of  the  issue,  the  issue  is  determined  when  judg- 
ment is  rendered,  not  on  the  return  of  the  verdict. ^^  If  the  real 
estate  of  an  insolvent's  estate  is  sold  by  order  of  court  to  pay 
debts,  creditors  can  claim  interest  only  up  to  the  return-day  of 
the  order  of  sale.^^  But  if  the  estate  is  solvent  interest  may  be 
recovered  until  payment  is  made.^^     Upon  sale  or  confirmation 

49  Matter  of  MaeFarlane,  G5  App.  date  of  the  trial  of  the  action  de- 
Div.  (N.  Y. )  93.  pends  upon  the  action  of  the  review- 

50  Frounfelker  v.  Delaware,  etc.  ing  court.  Borthwick  v.  Elderslie 
R.  Co.,  73  App.   Div.    (N.  Y.)    350.  S.  S.  Co.    (]905)   2  K.  B.  516. 

51  Klock  V.  Robinson,  22  Wend.  52  Strohecker  v.  Farmers'  Bank,  G 
]57.  Watts  Ofi. 

In   England   on   the  reversal   of  a  53  Allen   v.   Oxnard,    152   Pa.   621. 

judgment    denying   the    recovery    of  54  Lowenstein  v.  Soff,  G  Pa.  Dist. 

unliquidated  damages  and  directing  533. 

that    judgment    be    entered    for    the  55  Sollenberger's  Est.,  8  Pa.  Dist. 

plaintiff    for    a    sum    to    be    ascer-  G2G;   Ramsey's  App.,  4  Watts  71. 
taincd  tlie  right  to  interest  from  the  56  Yeatman's  App.,  102  Pa.  207. 


§    3S9]  INTEREST.  1249 

of  sale  of  the  debtor's  property  to  satisfy  the  debt,  interest 
ceases  to  run.*'  In  case  of  the  sale  by  an  assi^iec  for  the  bene- 
fit of  creditors  under  the  Pennsylvania  act  of  1876,  interest 
upon  the  liens  divested  ceases  on  final  confirmation  of  the  sale." 
In  the  case  of  distribution  of  the  property  of  a  decedent  in  the 
ordinary  administration  of  his  estate,  specialty  creditors  are 
entitled  to  interest  until  the  order  of  distribution.*'  The  same 
rule  is  applicable  to  the  distril)ution  of  the  assets  of  an  insolvent 
bank.^  Under  a  contract  of  indemnity  providing  for  the  pay- 
ment of  a  specific  sum  on  the  payment  thereof  by  the  assured 
and  giving  the  insurer  the  right  to  determine  v^'hether  an  appeal 
shall  be  taken  from  the  judgment,  interest  does  not  run  until 
the  appeal  is  pending,  the  assured  not  having  made  payment 
theretofore.^^ 

Unless  a  new  judgment  is  rendered  by  the  appellate  court  or 
by  its  direction  all  damages  pending  the  review  must  be  awarded 
in  its  judgment  of  afiirmance;  the  adjudication  below  re- 
mains; if  aflirmed,  it  is  available  from  the  time  it  was  made; 
and  interest  is  not  suspended  by  appeal,  writ  of  error  or  certi- 
orari.  It  may  be  collected  by  suit  or  by  execution,  legally  in- 
cluding accruing  interest,  as  though  no  proceedings  had  been 
had  in  an  appellate  court.^^     The  interest  on  a  judgTiient  pend- 

57  Strohecker    v.    Farmers'    Bank,  ment   affirmed   on    writ   of   error   in 

supra;   McCruden   v.   Jonas,    6    Pa.  the  court  of  last  resort.     The  final 

Dist.  146.  judgment     of     affirmance     expressly 

68  Carver's     App.,     89     Pa.     276;  awarded  to  the  successful  party  in- 

Tomlinson's  App.,  90  Pa.  224.  terest    from    the    date    of    the   judg- 

89Shultz's   App.,   11   S.   &   K.   182.  ment    of    affirmance    below,    and    a 

60  Estate     of     Bank     of     Pennsyl-  question  arose  whether  the  right  to 
,  vania,  60  Pa.  471;   Bank  Com'rs  v.  interest   from   the   rendition   of   the 

Security  T.  Co.,  70  N.  H.  536.  original  judgment  to  the  first  affirm- 

61  Saratoga  T.  R.  Co.  v.  Standard  ance  was  thereby  taken  away.  It 
Ace.  Ins.  Co.,  143  App.  Div.  (N.  was  held  that  the  adjudication  be- 
Y.)  852;  Brewster  v.  Empire  State  low,  being  affirmed,  remained  avail- 
S.  Co.,  145  App.  Div.    (N.  Y. )    678.  able  from  tlie  time  it  was  made,  and 

62  Lexington    R.    Co.    v.    Johnson,  such    interest   was   allowed.      McLi- 
139    Ky.   323;    Oliver   v.   Love,    104  mans  v.  Lancaster,  65  Wis.  240. 
Mo.  App.  73.     See  In  re  Ryer,  120  The  omission  of  the  trial  court  to 
App.  Div.   (N.  Y.)    154.  award  interest  during  the  period  the 

In  Lord  v.  Mayor,  3  Hill  426,  a  cause  was  pending  on  appeal  cannot 

judgment    of    affirmance    was    ren-  be  remedied  after  its  removal  there- 

dered  on  cerliorari,  and  this  judg-  from,  no  effort  having  been  made  to 
Suth.  Dam.  Vol.  I.— 79, 


1250  SUTHEKLAKD    ON    DAMAGES.  [§    389 

ing  appeal  is  to  be  added  to  the  principal  and,  on  affirmance, 
bears  interest  the  same  as  the  original  principle.^^  And  so 
where  the  appellate  conrt  corrects  a  decree  as  to  the  principal 
sum  due,  but  affirms  it  otherwise,  the  interest  accrued  from  the 
filing  of  the  bill  up  to  the  time  of  the  decree  may  be  treated  as 
principal  upon  which  interest  runs  from  the  time  the  bill  was 
filed.®*  If  an  appeal  results  in  a  trial  de  novo  interest  is  sus- 
pended during  its  pendency.®^  A  district  court  sitting  as  a 
court  of  admiralty,  which  has  awarded  a  decree  including  inter- 
est, cannot  after  the  modification  thereof  and  the  receipt  of  the 
mandate  of  the  reviewing  court  directing  the  entry  of  a  decree 
for  a  specified  sum  give  interest  thereon  from  the  time  the  libel- 
ant's cause  of  action  accrued. ®®  The  afiirmance  of  the  judgment 
of  such  a  court  which  is  silent  concerning  interest  puts  it  beyond 
its  power  thereafter  to  allow  interest  on  the  decree  of  the  review- 
ing court.®'  On  the  reversal  of  an  order  granting  a  new  trial 
in  a  tort  action  and  a  remand  of  the  cause  with  directions  to 
enter  judgment  on  the  verdict  interest  is  to  be  computed  on  the 
judgment  only  from  the  time  it  was  entered  in  pursuance  of  the 
mandate.®*  If  a  judcinent  carrying  interest  is  reversed  and 
judgment  directed  to  be  given  for  a  larger  sum  with  interest 
the  allowance  of  interest  is  to  be  made  by  the  trial  court  from 
the  same  date  as  its  original  judgment.®^  In  some  states  inter- 
est on  so  much  of  the  judgnnent  as  the  plaintiff  retains  after 
complying  with  the  order  of  the  reviewing  court  directing  the 
remitter  of  a  part  thereof  runs  from  the  time  the  judgment  was 
rendered ;  ''^  but  in  Missouri  the  view  has  been  taken  that  a  re- 
mitter requires  a  new  judgment  which  takes  effect  only  from  its 

have  the  judgment  corrected.    Hunt-  68  Scullin  v.  Wabash   R.  Co.,   192 

ington   V.   Newport   News   &   M.   V.  Mo.  6. 

Co.,  78  Conn.  .3.5.  ^^  Everett  v.  Gores,   92  Wis.   527. 

63  Arkansas  S.  R.  Co.  v.  German  ^ut  in  Washington  if  liability  for 
Nat.  Bank,  85  Ark.  1.36.  interest   depends  upon   the  determi- 

„^,,         '  -r     »^^    ,       ^  nation   of  the   sum   due  it  is  to  be 

64  JNIontgomerv    I.    \A  orks    Co.    v.  .    i       i     ^  j.i      j   i.       *  xv, 

°  '  computed  onlv  from  the  date  ot  the 

Capital  City  Ins.  Co.,  162  Ala.  420.  j^^^ign^ent    of 'the    reviewing    court. 

65  Smith  V.  Clark,  38  Colo.  89.  Johnston  v.  Gerry,  34  Wash.  524. 

66  Brown  v.  Merritt  W.  Organiza-  70  Rawlings  v.  Anheuser-B.  B.  Co., 
tion,  28  C.  C.  A.  38,  83  Fed.  720.  69  Neb.  34;  McLimans  v.  Lancaster, 

67  The  Glenochil,  128  Fed.  963.  65  Wis.  240. 


§    389]  I2<TEKEST.  1251 

entry,  and  destroys  the  original  judgmont.''^  Whore  leave  was 
granted  a  defendant  to  appeal  from  a  judgment  on  paying  into 
court  the  amount  thereof  witli  one  year's  interest  and  the  appeal 
was  kept  pending  for  two  years  and  a  half,  when  it  lapsed  for 
lack  of  prosecution,  the  plaintiff  was  entitled  to  interest  from 
the  expiration  of  the  year  for  wliioh  it  had  l>een  paid  to  the  re- 
ceipt of  the  certificate  showing  the  dismissal  of  the  appeal.''^ 

Under  a  system  of  practice  by  which,  on  appeal  or  writ  of 
error,  a  final  judgment  is  entered  in  the  appelhite  court  the  new 
judgment  will  of  course  embrace  the  former,  in  case  of  affirm- 
ance, as  well  as  the  costs  and  damages  incident  to  the  appeal  or 
writ  of  error.  But  where  the  appeal  is  from  a  judgment  of  a 
single  judge  to  the  general  term,  as  in  Xew  York,  botli  judg- 
ments being  in  the  same  court,  the  general  term  does  not  enter 
a  new  judgment  on  affirmance  for  the  original  claim ;  but  de- 
clares that  it  is  satisfied  to  let  the  fonner  judgment  stand,  and 
therefore  merely  affirms  it.  The  judgment  of  affirmance  is 
added  to  the  original  judgment  roll,  and  in  case  of  oppcal  to  the 
court  of  last  resort  the  whole  case  is  carried  up;  but  the  former 
judgment  is  not  thereby  vacated.'^^  Under  this  practice  the 
judgment  of  affirmance  should  not  include  interest  on  the  judg- 
ment which  is  affirmed.  It  has  become  the  established  practice 
in  that  state  to  exclude  from  the  judgment  of  affirmance  all 
sums  secured  by  the  judgment  in  the  court  below.'* 

In  an  equity  case  the  mandate  of  the  supreme  court  directed 
the  court  of  chancery  to  make  a  decree  that  the  plaintiff  should 
pay  the  defendant  a  certain  sum  as  damages  for  an  injunction, 
but  directed  nothing  in  respect  to  the  interest  on  the  same ;  and 
the  court  of  chancery  made  the  decree  granting  interest  only 
from  the  date  thereof.  It  was  held  that  the  decree  was,  in  this 
respect,  in  accordance  with  the  mandate,  the  plaintiff  not  being 
in  default  for  not  paying  the  damages  until  it  was  made,  and 
therefore  not  liable  for  interest  prior  thereto.     The  defendants 

71  Stolze  V.  St.  Louis  T.  Co.,  122  74  Bcardsley  S.  Co.  v.  Foster,   36 
Mo.  App.  458.                                               jj   Y.  561 ;  Halsev  v.  Fink,  15  Abb. 

72  Smart  v.   O'Callaglian,   4   Vict. 

L.  R.   (law)   448.  ^'-  ^^''^-     ^'^  Dougherty  v.  Miller, 

73  Eno  V.  Crooke,  6  How.  Pr.  462.       38  Cal.  548. 


1252  SUTHEKLAND    ON    DAMAGES.  [§    389 

having  appealed  from  the  decision  refusing  interest,  the  plaintiff 
was  also  held  not  liable  to  pay  interest  while  the  cause  was  in 
the  supreme  court  on  appeal,  but  only  from  the  time  it  was  re- 
manded to  the  court  of  chancery.'^  In  Tennessee  upon  the 
affirmance  of  a  money  decree  rendered  by  the  court  of  chancery 
appeals  the  supreme  court  will  enter  a  new  judgment  embracing 
the  amount  of  the  decree,  witli  interest  thereon  from  the  date  of 
its  rendition  to  the  date  of  its  affirmance.'^  Where  the  original 
decree  on  a  creditor's  bill  was  reversed  in  part  it  was  proper  for 
the  court  on  a  second  hearing  to  compute  interest  on  the  judg- 
ments from  their  dates,  rather  than  on  the  sums  found  by  the 
first  decree." 

In  Pennsylvania,  on  affirmance  of  a  judgment  in  the  appel- 
late court  on  error,  interest  is  to  be  charged  on  the  judgment 
below  till  affirmance  and  then  the  aggregate  is  to  bear  interest ; 
and  this  results  from  the  statute  giving  interest  on  every  judg- 
ment. Whenever  a  judgment  is  given  it  is  understood  that 
interest  on  any  former  judgment  in  the  same  action  is  to  be 
charged.'''^  In  Montana,  in  the  absence  of  any  special  direction 
as  to  interest  in  a  judgment  of  the  supreme  court,  its  clerk  must 
add  interest  from  its  date  to  the  time  of  the  entry  of  such  judg- 
ment, and  that  is  the  extent  of  his  authority.'^  In  Illinois 
interest  may  be  allowed  from  the  time  of  filing  the  master's 
report  up  to  the  date  of  the  decree.^" 

Where  the  damages  for  delay  during  an  unsuccessful  appeal 
or  other  mode  of  review  by  an  appellate  court  are  subject  to  the 
determination  of  that  court  its  judgment  controls  the  question 
of  interest  between  the  rendition  of  the  judgment  below  and  its 
affirmance  in  the  superior  court.^^  If  a  new  trial  upon  the  facts 
takes  place  on  appeal  interest  is  to  be  computed  in  the  appellate 

75Stiirges  V.   Knapp,  36  Vt.  439.  J.  J.  Marsh.  100;  Smith  v.  Todd,  id. 

See    Vanvalkenbergh     v.     Fuller,     6  306,  20  Am.  Dec.   142. 

Taige  10.  79  State  v.  Reece,  43  Mont.  291. 

76  Cowan  V.  Donaldson,  95  Tenn.  80  Ruddy    v.    McDonald,    149    111. 

32"-  App.  111. 

77  Dilworth  v.  Curts,  139  111.  508. 


81  Butcher  v.  Norwood,  1  H.  &  J. 
55;  Contee  v.  Findley,  id.  331. 
6   B.  Mon.    197;    Young  v.   Pate,   3       Kelsey  v.  Murphy,  30  Pa.  340. 


78  McCausland  v.  Bell,  9  S.  &  R. 
388.     See  Brigham  v.  Van  Buskirk,       485;  Contee  v.  Findley,  id.  331.    See 


§    389]  INTEREST.  1253 

court  on  such  trial  as  though  no  previous  trial  had  been  had, 
and  not  on  the  judgment  appealed  froni.^^  Where  under  a  stat- 
ute interest  is  allowed  from  the  finding  of  a  verdict  such  interest 
is  to  be  added  in  determining-  whether  the  amount  involved  is 
sufficient  to  authorize  the  suing  out  of  a  writ  of  error  cm  a 
subsequent  setting  aside  of  the  verdict.'^ 

If  the  successful  party  in  the  trial  court  withdraws  fluids  in 
litigation  after  an  adjudication  adverse  to  interveners  and  such 
judgment  is  reversed,  and  on  a  second  trial  they  are  successful, 
the  party  who  has  the  funds  will  be  liable  for  interest  from  the 
time  they  came  to  his  possession."  Intei-\'enors  who  secure  the 
payment  of  money  into  court  to  abide  the  further  order  thereof 
are  not  liable  for  interest  while  it  is  detained  there  under  an 
erroneous  order,  though  they  fail  to  establish  their  right  to  it." 
On  the  reversal  of  a  judgment  turning  over  a  fund  to  claimants 
they  are  chargeable  with  interest  received  by  them  pending  the 
determination  of  the  appeal,  less  expenses  incurred  in  managing 
the  fund.®^  It  is  immaterial  that  there  are  rival  claimants  to  the 
fund  if  the  holder  could  pay  it  into  court  or  obtain  a  waiver  of 
the  right  to  interest."  The  complainant  in  a  bill  in  the  nature 
of  a  bill  of  interpleader  is  not  liable  for  interest  on  the  fund 
which  he  deposits  in  court  at  the  commencement  of  suit  if  he 
is  not  responsible  for  delays  occurring  in  the  course  of  the  litiga- 
tion.*' 

82Tindall  v.   Meeker,   2  111.   137;  entitled   bore  interest   against  him. 

Hamilton  v.  Baltimore  &  0.  R.  Co.,  VVliitall  v.   Cressman,   18  Neb.   508. 

11  Ohio  N.  P.  (N.  S.)  437.    See  Eno  86  independent   Foresters  v.  Keli- 

V.  Crooke,  6  How.  Pr.  462.  her,  3G  Ore.  501,  78  Am.  St.  785. 

83  Stone   V.    First   Nat.    Bank,   72  g?  Adams  v.  Cox,  10  Ont.  L.  R.  96. 

^-  ^^-  ^'^^-  88  Phoenix   Ins.   Co.   v.   Carey,   80 

84Heidenheimer    v.    Johnson,    76       ^  .^^     n  a_  a  n    *io  /-> 

'  Conn.  426;   Groves  v.  Sentell,  13  C. 

„;.';■         ,  ^        ,       .    T  C.  A.  386,  66  Fed.  179.     In  Spring 

85  Van  Gordon  V.  Ormsby,  60  Iowa  ^  ^       „  „„      ,    , „    ,, 

_.-  •  V.  Insurance  Co.,  8  VVheat.  2/0,  the 

510. 

^r  •  1      J-  i.  •         i.-  e  couii)lainant  was  required  to  pay  in- 

Money  paid  into  court  in  satisfac-  '  if.' 

tion  of  a  decree  and  for  distribution  Merest  on  the  fund   because  he  had 

does  not  bear   interest   in   favor  of  ""*  P^id  it  into  court.     In  Richards 

the   party    who    is    entitled    thereto  v.  Salter,  6  Johns.  Ch.  445,  interest 

pending  an  appeal,  though  the  order  was  not  required  because  the  com- 

of     distribution     is     clianged;     but  plainant  had,  with   reasonable  dili- 

money  to  which  the  party  was  not  geuce,  paid  the  money  into  court. 


1254 


SUTHEKLAND    ON    DAMAGES. 


[§   389 


By  section  twenty-three  of  the  judiciary  act  of  1789  ^^  it  was 
provided  that  when  the  supreme  or  circuit  court  should  affirm 
a  judgment  or  decree  they  should  adjudge  or  decree  to  the  re- 
spondent in  error  just  damages  for  his  delay,  and  single  or 
double  costs  at  their  discretion.  Under  this  law  there  was  no 
distinction  made  between  cases  in  equity  and  at  law.  In  either 
the  allowance  of  damages  in  addition  to  the  amount  fouud  to  be 
due  by  the  judgment  or  decree  of  the  court  below  was  confided 
to  the  discretion  of  the  appellate  court.  If,  upon  affirmance,  no 
allowance  of  interest  or  damages  was  made  it  was  equivalent  to 
a  denial  of  either,  and  the  court  below,  in  carrying  into  effect 
the  judgment  or  decree  of  affirmance,  could  not  enlarge  the 
amount  thereby  allowed,  but  was  limited  to  the  mere  execution 
of  the  mandate  in  the  terms  in  which  it  was  expressed.®"  That 
court,  in  1803  and  1807,  made  rules  by  which  its  discretion 


89  See  §  1010,  R.  S.  of  U.  S. 

90  This  rule  is  not  applicable 
when  the  question  is  whether  inter- 
est shall  be  allowed  on  a  verdict 
when  an  erroneous  judgment  there- 
on has  been  reversed  and  direction 
given  by  the  supreme  court  to  enter 
tlie  proper  judgment  in  favor  of  the 
prevailing  party.  In  Knecland  v. 
American  L.  &  T.  Co.,  138  U.  S.  509, 
34  L.  ed.  1052,  a  decree  was  reversed 
for  error  in  a  part  of  the  sum  for 
which  it  was  given,  another  distinct 
part  being  approved.  The  mandate 
was  to  strike  out  certain  allowances 
and  to  allow  others  as  fixed,  noth- 
ing being  said  as  to  interest.  Upon 
that  order  the  circuit  court  gave  a 
second  decree,  allowing  interest 
from  the  date  of  the  first  decree, 
which  decree,  upon  a  second  appeal, 
was  affirmed.  Per  Woods,  C.  J.,  in 
Metcalf  V.  Watertown,  16  C.  C.  A. 
37,  42,  68  Fed.  859. 

In  the  ease  last  referred  to  the 
trial  court  made  a  finding  of  facta 
from  which  the  sum  due  the  plain- 
tiff for  principal  and  interest,  if  he 
was    entitled    to    recover,    could    be 


computed,  but  gave  the  defendant 
judgment.  This  judgment  was  re- 
versed and  the  entry  of  judgment 
for  the  plaintiff  on  the  finding  was 
directed  by  the  supreme  court.  The 
circuit  court  of  appeals  ruled  that 
the  plaintiff  was  entitled,  under  a 
local  statute,  to  interest  on  the  find- 
ing to  the  entry  of  judgment  on  the 
mandate  of  the  supreme  court  upon 
the  whole  amount  of  principal  and 
interest  due  him  when  the  finding 
was  made.  The  local  statute  for- 
bidding the  compounding  of  inter- 
est was  not  applicable;  it  and  the 
statute  allowing  interest  on  verdicts 
must  stand  together. 

If  the  right  of  equitable  recovery 
has  been  settled  by  the  supreme 
court  and  nothing  remains  for  the 
court  of  original  jurisdiction  to  con- 
sider except  the  amount  for  which 
judgment  shall  be  given,  if  no  inti- 
mation to  the  contrary  has  been 
given  the  latter  court  will  allow  in- 
terest from  the  filing  of  the  bill. 
Nashua  &  L.  R.  Co.  v.  Boston  &  L. 
R.  Co.,  9  C.  C.  A.  468,  61  Fed.  237. 


§  389] 


INTEREST. 


1251 


was  gui(l(Hl.  l!,v  the  scvontceiilli  rule,  wlicn  ti  case  appoarod  to 
be  broui;lit  merely  for  delay,  damages  were  awarded  at  the  rate 
of  ten  per  cent,  on  the  amount  of  the  judgment;  and  by  the 
eighteenth  rule,  the  damages  were  to  be  at  the  rate  of  six  pci 
cent.  wluMi  it  appeared  that  there  was  a  real  controversy.®' 
Is^ow,  by  the  twenty-third  rule,  interest  and  danuiges  are  thus 
regulated : 

"1.  In  cases  where  a  writ  of  error  is  prosecuted  to  this  court. 
and  the  judgment  of  the  inferior  court  is  affirmed,  the  interest 
shall  l)e  calculated  and  levied  from  the  date  of  the  judgiuent 
below  until  the  same  is  paid,  at  the  same  rate  that  similar  judg- 


91  Perkins  v.  Fourniquet,  14  How. 
338.     In  this  case  Taney,  C.  J.,  re- 
ferring to  Mitchell  v.  Harmony,  13 
How.  115,  14  L.  ed.  75,  said:     "The 
judgment  brought  up  by  the  writ  of 
error    was    rendered    in   the   circuit 
court    of    ^'ew    York,    and    was    af- 
firmed by  this  court.     The  sum  re- 
covered was  large,  and  interest,  even 
for  a  short  time,  was  therefore  im- 
portant.   And  counsel  for  Harmony, 
the   defendant    in   error,   moved   the 
court  to   allow   him  the  New   York 
interest  of  seven  per  cent,  upon  the 
amount  of  the   judgment,   and   that 
the    interest    should    run    until    the 
judgment    was    paid."      But    as   the 
rules    [mentioned  in  the  text]   were 
still  in  force,  the  court  held  that  he 
was  entitled  to  only  six   per  cent., 
to   be  calculated   from   the   date   of 
the  judgment  in  the  circuit  court  to 
the    day    of    affirmance    here.      The 
case  now  before  us  was  decided  in 
the  early  part  of  the  last  term,  be- 
fore  the    case   of   Mitchell    v.    Har- 
mony, and  consequently  falls  within 
the  operation  of  the  same  rules,  and 
damages  upon  tiie  affirmance  of  tlie 
decree  must  be  calculated  in  a  like 
manner.     Indeed,   in  the  New  York 
case,  the  claim  for  interest  stood  on 
stronger    ground    tlian    the    present 
one,  for  thai   was  an  action  at  law. 


The  act  of  1842,  therefore,  applied 
to  the  judgment  in  the  circuit  court, 
and  it  would  have  carried  the  state 
interest  until  paid,  if  it  had  not 
been  brought  here  by  writ  of  error. 
But  this  is  a  decree  in  equity,  and 
not  embraced  in  the  act  of  1842, 
and,  according  to  the  settled  chan- 
cery practice,  no  interest  or  dam- 
ages could  have  been  levied  under 
process  of  execution  upon  the 
amount  ascertained  to  be  due  and 
decreed  to  be  paid  if  there  had  I)een 
no  appeal.  2  Ves.  157.  IGS.  n.  1, 
Sumn.  ed.;  2  Dan.  Chan.  PI.  &  Pr. 
1442,  1437,  1438.  Nor  could  any 
damages  or  interest  have  been  given 
on  its  affirmance  here  but  for  tin' 
discretionary  power  vested  by  the 
act  of  1789."  Boyce  v.  Grundy,  fl 
Pet.  275,  9  L.  ed.  127. 

In  Hoyt  V.  Gelston,  15  Johns. 
221,  it  was  said:  "This  court  can- 
not pronounce  any  new  judgment  in 
this  case.  It  can  only  carry  into 
effect  the  judgment  of  tlie  Supreme 
Court  of  the  United  States.  In  the 
computation  of  interest,  therefore, 
the  taxing  officer  must  not  go  be- 
yond the  time  of  the  judgment  of 
affirmance,  that  being  tlie  lust  act  of 
the  court  above.  The  i)ractice  in 
this  respect  in  our  state  courts  is 
regulated  by  statute,   which   cannot 


1256  SUTHERLAND    ON    DAMAGES.  [§    389 

ments  bear  interest  in  the  courts  of  the  state  where  such  judg- 
ment is  rendered.^^ 

"2.  In  all  such  cases  where  a  writ  of  error  shall  delay  the 
proceedings  on  the  judgment  of  the  inferior  court,  and  shall 
appear  to  have  been  sued  out  merely  for  delay,  damages  at  a 
rate  not  exceeding  ten  per  cent.,  in  addition  to  interest,  shall 
be  awarded  upon  the  amount  of  the  judgment.^^ 

"3.  The  same  rule  shall  be  applied  to  decrees  for  the  pay- 
ment of  money  in  cases  in  equity,  unless  otherwise  ordered  by 
this  court.^* 

"4.  In  cases  in  admiralty,  interest  shall  not  be  allowed  un- 
less specially  directed  by  the  court."  ®^ 


93  Adopted  1803,  1871. 


apply  to  this  case."     See  same  case,  82  Adopted  1803,  1851. 

3  Wheat.  246,  336,  4  L.  ed.  381,  404. 

See,  also,  Himely  v.  Rose,  5  Crancli 

313,  3  L.  ed.  Ill;  Kilbourne  v.  State  ^*  See   Scliell   v.   Cochran,   107   U. 

Sav.   Inst.,   22  How.   503,   16  L.   ed.       s.   625,   27   L.   ed.  543;    Whitnev  v. 

370;  Hennessv  v.  Sheldon,  12  Wall. 

440,   20   L.   ed.   446;    Insurance   Co.       ^'«°^''  ^^   ^'-  ^-   «07,  25  L.  ed.  446. 

V.  Huchbergers,  id.  166.  95  Adopted  1884. 


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